KUALA LUMPUR: The government has reviewed the Poverty Line Income (PGK) calculation methodology to ensure that the consumption patterns, needs, as well as demographics of Malaysian households are on par with the development the country has achieved since 2018.
Minister in the Prime Minister's Department (Economy) Datuk Seri Mustapa Mohamed said the national monthly PGK was RM2,208 per household in 2019 – this is a revision following a review of the calculation methodology.
He said the PGK methodology was last updated in 2005, and in 2016 it was RM980 a month per household.
"Based on this new PGK, the poverty rate was 5.6 per cent (405,441 households) for 2019. The poverty rate in 2016 was 0.4 per cent (24,700 households), which was measured based on PGK 2005.
"If the PGK 2019 methodology is used to measure the poverty rate in 2016, the percentage would be 7.6 per cent (525,743 households).
"This means that, if measured using the new PGK methodology, the country's poverty rate has decreased by two percentage points from 7.6 per cent in 2016 to 5.6 per cent in 2019. This clearly shows the poverty eradication programmes and initiatives carried out by the government, supported by various parties such as non-governmental and private bodies, have yielded good results," he said in a statement.
Mustapa said efforts to improve the poverty measures began from the presentation of the mid-term review of the 11th Malaysia Plan in Oct 2018.
He also said the research was conducted by the Economic Planning Unit, the Prime Minister's Department, with the collaboration of the Department of Statistics, the Health Ministry and several other ministries and related agencies from March 2019 until June this year.
He explained that based on the review's outcome, the PGK methodology has been improved on three aspects.
"The concept setting of PGK food that is refined from 'minimum' to 'optimum minimum' is to calculate the improvement of the quality of food basket items based on the Food Pyramid 2020 and food group Malaysian Diet Guide (PDM) 2020 in line with daily physical activities and healthy living.
For example, sweetened condensed milk previously in food baskets has been replaced with healthier powdered milk.
"For non-food PGKs, the needs of the lowest 20 per cent (B20) households identified increased from 106 to 146 items. This means that 40 items that were not previously considered basic requirements for the B20 group, have now been included in the list.
"There were changes in household spending patterns, prices of current goods and services in 2019 compared to 2005," he said.
Mustapa said besides using the PGK, the government also uses several other methods in measuring the poverty rate.
One of them, he said, is the multi-dimensional poverty measurement method which emphasises aspects of improving quality of life, such as health, education, housing, living standards, access to information, and household monthly income.
"Efforts to improve this method of poverty measurement are a manifestation of the determination, concern and transparency to ensure the well-being of the people.
"Ministries, departments and government agencies including state governments should take note of PGK 2019 in planning their policies and programmes, as well as reviewing policies on poverty eradication and social assistance, including reviewing re-targeted groups under their supervision and responsibilities in the next five months," he added.
With the right statistics, the government will be able to formulate policies and strategies as well as design more appropriate, dynamic and pragmatic approaches for each target group, Mustapa said.