Malaysia: Bumiputera, poor hit most by subsidy cut

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Ampang StreetThe Malaysian government’s subsidy cuts may lead to a higher incidence of poverty among Malays and Bumiputera in Malaysia, with the urban poor expected to be the hardest hit, a study by University of Malaya (UM) said on March 5 according to the Malay Mail. The study also confirmed that the reform measures has increased inflation rate by 0.8 per cent, despite a potential increase in real GDP by 0.6 per cent.

“The subsidy rationalisation programmes may lead to an increase in the incidence of poverty in urban areas for all ethnic groups, the study by UM’s Centre for Poverty and Development Studies (CPDS) said. “We can tell that the increase in the incidence of poverty is relatively high among Malay/Bumiputera compared to Chinese and Indian households,” it added.

The study found projected that the income gap among the urban poor especially within ethnic Malay or Bumiputera households may increase significantly compared to the rural poor. The study by CPDS measured the impact of hiking energy and food prices on the poor using three indicators: head count poverty index, poverty gap index and poverty severity index – which had corroborated each other.

Based on head count poverty index, subsidy cuts may lead to the highest increase in poverty among rural Bumiputera households at 4.2 per cent, compared to the Chinese (4 per cent) and the Indians (2 per cent). Based on poverty gap index, Bumiputera households recorded a higher increase in poverty incidence by around 15 per cent, compared to the Chinese (6 per cent) and the Indians (5 per cent).

In addition, the poverty severity index showed that 37.5 per cent of urban poor Bumiputera are at severe risk, compared to 23.3 per cent in the rural areas. The study also added that the subsidy cuts might contribute towards a bigger income disparity among the different ethnic groups.

Apart from increases in the inflation rate and GDP, the subsidy reforms also hiked the exchange rate by 0.3 per cent, leading to a fall in imports by 0.7 per cent as well as exports by 0.3 per cent. However, total real investment has increased total real investment by 1.7 per cent, coming possibly from a rise in government revenue and savings from the reforms.

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Reading Time: 2 minutes

The Malaysian government’s subsidy cuts may lead to a higher incidence of poverty among Malays and Bumiputera in Malaysia, with the urban poor expected to be the hardest hit, a study by University of Malaya (UM) said on March 5 according to the Malay Mail. The study also confirmed that the reform measures has increased inflation rate by 0.8 per cent, despite a potential increase in real GDP by 0.6 per cent.

Reading Time: 2 minutes

Ampang StreetThe Malaysian government’s subsidy cuts may lead to a higher incidence of poverty among Malays and Bumiputera in Malaysia, with the urban poor expected to be the hardest hit, a study by University of Malaya (UM) said on March 5 according to the Malay Mail. The study also confirmed that the reform measures has increased inflation rate by 0.8 per cent, despite a potential increase in real GDP by 0.6 per cent.

“The subsidy rationalisation programmes may lead to an increase in the incidence of poverty in urban areas for all ethnic groups, the study by UM’s Centre for Poverty and Development Studies (CPDS) said. “We can tell that the increase in the incidence of poverty is relatively high among Malay/Bumiputera compared to Chinese and Indian households,” it added.

The study found projected that the income gap among the urban poor especially within ethnic Malay or Bumiputera households may increase significantly compared to the rural poor. The study by CPDS measured the impact of hiking energy and food prices on the poor using three indicators: head count poverty index, poverty gap index and poverty severity index – which had corroborated each other.

Based on head count poverty index, subsidy cuts may lead to the highest increase in poverty among rural Bumiputera households at 4.2 per cent, compared to the Chinese (4 per cent) and the Indians (2 per cent). Based on poverty gap index, Bumiputera households recorded a higher increase in poverty incidence by around 15 per cent, compared to the Chinese (6 per cent) and the Indians (5 per cent).

In addition, the poverty severity index showed that 37.5 per cent of urban poor Bumiputera are at severe risk, compared to 23.3 per cent in the rural areas. The study also added that the subsidy cuts might contribute towards a bigger income disparity among the different ethnic groups.

Apart from increases in the inflation rate and GDP, the subsidy reforms also hiked the exchange rate by 0.3 per cent, leading to a fall in imports by 0.7 per cent as well as exports by 0.3 per cent. However, total real investment has increased total real investment by 1.7 per cent, coming possibly from a rise in government revenue and savings from the reforms.

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