Cushioning the Impacts of Global Price Shocks: Current Policy and ProgramShocks: Current Policy and Program Initiative and future Directions: 

C f MALAYSIACase of MALAYSIA 

By:

hd k hMr. Mohd Sukri Mat JusohPrincipal Assistant Director

b d d lDistribution and Corridor Development SectionEconomic Planning Uniti i i ’Prime Minister’s Department

Malaysia 1

Year %

2000 1.6

2002

2004

1.8

1.52004

2006

1.5

3.6

2008 (Jan.-March)

2008 (Jan.-August)

2.8

8.5( g )

2

Inflation of Food & Non-Alcoholic Beverages Items, Jan-March 2008

Component Jan - March 2008

g ,

Component Jan - March 2008

Milk, Cheese & Eggs 12.3

Rice, Bread & Other Cereals 5.7

Meat 4.9

Other Food Products 3.1

Fish & Seafood 3.0

Fruits 2.8

Sugar, Jam, Honey, Chocolate & Confectionery 1.7

Vegetables 1.6

Oils and Fats 1.4

3

Background: Household Income

HIS 2007 Est. 2008Malaysia 3,686 4,182Urban 4,356 4,942Rural 2,283 2,590

Quantitative study 4

I id f P tIncidence of Poverty

Incidence of Incidence of HardcorePoverty (%) Poverty (%)

2007 Est.2008 2007 Est.20082007 Est.2008 2007 Est.2008

Malaysia 3.6 3.8 0.7 0.8

Urban 2.0 2.4 0.3 0.4

Rural 7.1 7.7 1.4 1.8

Quantitative study 5

Number of Poor Households

Estimated no. of poor households2007 Est. 2008 Increase

Malaysia 209,000 218,200 9,200U b 76 400 80 200 3 800Urban 76,400 80,200 3,800Rural 132,600 138,000 5,400

Estimated no. of hardcore poor householdshouseholds

2007 Est. 2008 Increase lMalaysia 38,400 43,700 5,300

Urban 11,900 13,700 1,800Rural 26,600 30,000 3,400

6

CURRENT POLICY AND PROGRAM INITIATIVES TO MITIGATE IMPACTSINITIATIVES TO MITIGATE IMPACTS

OF GLOBAL PRICE SHOCKS ON POVERTY

Intervening on food prices & supply

H i f th Housing for the poor

Reducing family burdeng y

Enhancing employment opportunities

Human resource development

E ti ti i ti f Encourage active participation from NGOs

Other policy measuresPolicy Measures

GOVERNMENT INTERVENTION GOVERNMENT INTERVENTION ON FOOD PRICE & SUPPLYON FOOD PRICE & SUPPLY

E f i ili i f ti l f d it

ON FOOD PRICE & SUPPLYON FOOD PRICE & SUPPLY

Enforcing ceiling prices for essential food itemsto avoid hoarding due to unnecessaryspiralling of the food prices

Intervening food production to ensure an Intervening food production to ensure anadequate food supply

Price Reduction Campaign through Ministry ofDomestic Trade and Home Affairs – involvesDomestic Trade and Home Affairs involvesmajor hypermarket/department stores in town

d F ld i i k t i th l8

areas and Felda mini market in the rural areasPolicy Measures

HOUSING FOR THE POORHOUSING FOR THE POOR

F l th t ti t f For rural poor – the construction cost for new house increased to RM35,000 per familyfamily

For urban poor – house & room rental assistance : RM124 per month

Construction of 70,000 new low cost housing

Policy Measures

REDUCING FAMILY BURDEN

Expenses to meet initial schools enrolmentRM200-RM250 /pupil/year (Uniforms, shoes, bags &stationery)stationery)

Expenses to meet initial university enrolmentp y

One off RM 1,000 cash/student

A i t th t f hild t t Assistance on the cost of childcare as encouragement tomothers working for the first time/re-employmentRM200 per month/actual amount/whichever is lowerp

Transportation expenses assistance

RM50 /mother/monthRM30/pupil/month

Continue…Policy Measures

TRAINING

For family members who have the potential tocommence/continue business/employment

Skills training in public training institutions(Actual cost determined by the training(Actual cost determined by the traininginstitutions)

Motivational program (Including programsorganized by NGOs)

Policy Measures

ENHANCING EMPLOYMENT OPPORTUNITIESENHANCING EMPLOYMENT OPPORTUNITIES

Local Authorities to create networking withpotential employers to identify employmentpotential employers to identify employmentopportunities for poor families.

Policy Measures

NGO: AMANAH IKHTIAR MALAYSIA NGO: AMANAH IKHTIAR MALAYSIA INITIATIVESINITIATIVES

INITIATIVESINITIATIVES

Amanah Ikhtiar Malaysia (AIM) is activelyinvolved in poverty alleviation program.Previously it provides microloan to the poorPreviously, it provides microloan to the poorhouseholds in rural areas to facilitate theireconomic activitieseconomic activities

Currently, AIM extends it’s micro credit toyinclude urban poor.

13Policy Measures

Other Policy Measures

1. Raising the eligible monthly household income forwelfare assistance from RM400 to RM720 forwelfare assistance from RM400 to RM720 forPeninsular Malaysia, RM830 for Sarawak andRM960 for Sabah An estimated 110 000RM960 for Sabah. An estimated 110,000households and 40,000 senior citizens areexpected to benefit from this facility.p y

2. Commencing 1st Jan. 2009, Government retireesare entitled to minimum of RM720 pension.

3. To control the retail price of the Local Super ricevariety between RM1.65-RM1.80 per kilo and to

ffi i t l th h t th tiensure sufficient supply through out the nation.Policy Measures 14

Other Measures (continued..)

4. Commencing 1st October 2008 until end 2009,households with electricity bill of RM20 per monthhouseholds with electricity bill of RM20 per monthare exempted from paying. An estimated 1.1million households would benefit from thismeasure.

5. Reduced import duty from 10%-60% to 5%-30% onseveral household items such as food processor,rice cooker, microwave oven and electric kettle.

6 E ti f i t d t tl t 2% 20%6. Exemption of import duty, currently at 2%-20%, onseveral types of food such as rice vermicelli,biscuits fruit juices and canned sweetened cornbiscuits, fruit juices and canned sweetened corn.

Policy Measures 15

Other Measures (continued..)( )

7. To extend micro credit scheme, whichl i d lcurrently is targeted to rural poor, to

urban poor households nationwide.

8. Monthly allowance of RM150 tol d di bl d d i i thunemployed disabled and increasing the

allowance for disabled students in speciald ti h l f RM50 t RM150education schools from RM50 to RM150.

9 R b t f RM625 f i t hi l ith9. Rebate of RM625 for private vehicles withless than 2000c.c. and RM150 for

t l ith l th 200motorcycle with less than 200 c.c.Policy Measures 16

Future Direction

Increase supply of food items− Increase productionp− Liberalize imports− Enhance efficiency of supply chain

B ild k il− Build stock pile

Adjust demand Adjust demand− Change consumption pattern− Change lifestyleg y− Avoid wastage

Thank youThank youforfortt tiyour attention

18

P ti St dP ti St dPerception StudyPerception Study

Although carried out after the increase

in petrol price, the study was able to

throw some light pertaining to

measures taken by the society tomeasures taken by the society to

shoulder the impact of increasingshoulder the impact of increasing

household expenditure.p

19

Expenditure on Selected Services

Expenditure

p

Type of Expenditure

p

Increase Maintain ReducedNot sure

Not Applicable

Electricity 56% 36% 4% 1% 1%

Water 37% 51% 5% 1% 5%

Transportation 52% 15% 9% 3% 21% Fixed Telephone 6% 32% 5% 2% 55%Telephone 6% 32% 5% 2% 55%Mobile Telephone 14% 58% 10% 3% 15% Recreation &Recreation & Entertainment 6% 14% 33% 8% 38%

Tourism 7% 9% 29% 8% 47%

Perception Study 20

Ed i d R l d A i i iEducation and Related Activities

Type of Expenditure

Expenditure

Increase Maintain ReducedNot sure

Not ApplicableExpenditure Increase Maintain Reduced sure Applicable

Tution 19% 14% 1% 1% 65% Books &Books & Stationery 34% 23% 1% 2% 41% Daily School Allowance 43% 14% 1% 1% 41%

Public Bus 20% 5% 0% 1% 73% Expenses for higher education 13% 2% 0% 1% 84%

Perception Study 21

Household Expenditure Pattern : Alternative Adjustment

Alternative Adjustments Yes No

Urban Rural Urban Rural

Seek additional employment/income 31% 34% 69% 66%

Utilise savings 37% 29% 63% 71%

Reduce contribution to savings 29% 25% 71% 75%Reduce contribution to savings 29% 25% 71% 75%

Loans 9% 5% 91% 95% E i i lt l ti iti fEngage in agricultural activities for own consumption 17% 32% 83% 68%

Perception Study 22