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THE ENVIRONMENTS OF THE POOR IN THE CONTEXT OF CLIMATE CHANGE AND THE
GREEN ECONOMY: Making Sustainable Development Strategies Inclusive

New Delhi, 24-26 November 2010

MALAYSIA: Policies pertaining to poverty eradication and the environment

Malaysia’s policy against poverty first took a clear and coordinated shape with the
introduction of the New Economic Policy (NEP) in 1970. It was designed to be an
integral part of the NEP, thereby underscoring its importance to overall development.
One of the vehicles established in monitoring and evaluating the implementation of
poverty eradication programmes is the five-year Malaysian Development Plans, the
most recent being the 10th Malaysia Plan (10thMP), covering the period of 2011-2015.
The 10thMP has dedicated two specific chapters, each incorporating policy direction
and programmes pertaining to poverty eradication and the environment.

Moving Towards Inclusive Socio-Economic Development


The economic policies pursued since independence, underpinned by the development
Poverty has been declining significantly since 1970 in both urban and philosophy of growth with
rural areas

Incidence of poverty by strata, Malaysia, 1970– 2009


distribution, provided decades of
outstanding economic
%

Incidence of poverty
Malaysia

performance. This resulted in Urban


Rural

significant poverty reduction,


more balanced economic
participation and wider coverage
of essential services such as
healthcare and education
1970a 1976 1979 1984 1987 1989 1992 1995 1997 1999 2002 2004 2007 2009

a = Ref ers to Peninsular Malaysia only.


Starting 1989 data is based on Malaysian citizen. From 1999 onwards, calculation of p overty is b ased on 2005 methodology

nationwide.
SOURCE: Economic Planning Unit and Department of Statistics– Ho usehold Income Surveys

Despite the successes, whereby


the incidence of poverty was
reduced significantly from 49.3% in 1970 to 3.8% in 2009, there remain vulnerable
sections of the population due to their low income or disadvantaged circumstances
and located in pockets of areas. Therefore, an inclusive development approach that
broadens the ability of Malaysians to participate in and benefit from economic
development will be pursued.

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Alleviation of socio-economic inequalities needs to be implemented in the context of
an expanding economy. Since the Asian Financial Crisis in 1997-1998, Malaysia’s
growth has weakened and aggregate investment as a share of gross domestic product
(GDP) has continued to decline. In line with the inclusive development approach, one
of the principles that directly support the poor is the principle of:
• Needs-based. Bottom 40% households and disadvantaged groups with specific
needs will be targeted.

Based on the most recent Household Income Survey (HIS) 2009, the bottom 40%
households were evenly distributed between urban and rural areas; thus Poverty
Eradication programmes need to be target-specific to address the needs of the groups
in the urban-rural dichotomy.

Elevating the Quality of Life of Rural Households

Programmes to increase the incomes of rural households will focus on upgrading their
skills,linking them to employers in nearby clusters and cities as well as providing
support for self employment, micro-businesses and small scale industries. Efforts will
also be undertaken to increase the productivity and sustainability of agro-based
activities through the adoption of modern agricultural technology and expansion of
contract farming. Programmes will include:
• Providing holistic support programmes for micro-enterprises;
• Linking rural talent pool to employers in nearby clusters and cities;
• Increasing sustainability of income in the agriculture sector through the concept of
contract farming;
• Providing opportunities for business ownership for capable rural entrepreneurs;
• Increasing land productivity and yield through land amalgamation;
• Improving human capital productivity within rural agriculture and agro-based
industries; and
• Expanding the application of the agropolitan concept to other agriculture and agro-
based industries.

Enhancing the Economic Participation of Urban Households

Initiatives to increase income and quality of life of this group will include capacity
enhancement programmes through skills training and skills upgrading to enable them
to secure higher paying jobs as well as engage in skills-based businesses. In addition,

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to ensure sustainability of business ventures, efforts to modernize and scale-up small
businesses will be implemented through various programmes, including:
• Establishing industry-specific skills centres based on targeted geographic areas;
• Expanding micro-enterprise support programmes for bottom 40% households in
urban areas;
• Enhancing mentor-mentee programmes to create additional business opportunities;
• Extending the incubator concept to increase entrepreneurship and employment
opportunities; and
• Expanding anchor company programmes to enable the formation of partnerships
and clusters.

Building An Environment That Enhances Quality of Life

The 10thMP emphasize on valuing Malaysia’s Environmental Endowments. Currently,


Malaysia ranks 54 out of 163 countries under the Environmental Performance Index
that measures and ranks the environmental performance of countries. Moving
forward, Malaysia’s agenda will be one of protecting the environmental quality of life,
caring for the planet, while harnessing economic value from the process. To achieve
this, the Government has introduced several progressive policies to set the national
agenda on environmental protection and conservation and the focus during the 10thMP
will be to operationalise these policies.

Table 1: Progressive National Policies on Environmental Protection and


Conservationl Policy on the
National Policy on the National Green Technology National Climate Change
Environment (2002) Policy (2009) Policy (2009)
• Ensure economic, social and • Ensure sustainable • Streamline and coordinate
cultural progress through development across existing legislation
environmentally sustainable • Develop roadmaps to guide and policies
development application of green • Establish inter-ministerial and
• Strategies focus on effective technologies in various cross-sectoral committee to
management of natural sectors, including power drive and facilitate
resources and the generation, transport and implementation of
environment, prevention and construction adaptation and mitigation
control of pollution, • Establishment of a Green measures
strengthening institutional Technology Financing Scheme • Identify options and
capacity, education and (GTFS) with a RM1.5 billion strategies to achieve a low-
awareness efforts and fund to encourage carbon economy
formulation of action and investments in green
implementation plans technology, construction and
innovation
Developing a Climate Resilient Growth Strategy

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Climate change is a global issue with significant implications for Malaysia. Carbon
dioxide (CO2) from fuel combustion and deforestation activities contributes to global
warming and has caused a shift in the climate system. During the Plan period,
Malaysia will adopt a dual strategy in addressing climate change impacts: firstly,
adaptation strategies to protect economic growth and development factors from the
impact of climate change; and secondly, mitigation strategies to reduce emission of
greenhouse gases (GHGs).

Climate Adaptation: Protecting the Nation from the Risks of Climate Change

Due to its climate and location, Malaysia is among the many economies that are likely
to feel the force of climate events sooner, rather than later – in the form of coastal
and inland flooding, rise in vector borne diseases, or drops in agricultural yields due
to continuous occurrence of droughts. These events not only have the potential to
destroy lives and communities, but also pose a significant economic risk. The
Government will review the value at risk for communities to develop a clear
understanding of the cost-benefit trade-offs involved in averting or reducing the
impact of such climate-related hazards. During the Plan period, the following
measures will be taken:
• Developing a robust risk framework to assess and quantify the climate risk faced by
the economy and prioritise measures to address those risks;
• Implementing policy decision frameworks to ensure that future infrastructure
investments are climate resilient; and
• Enhancing capacity in the field of climate prediction and modeling to develop
stronger Malaysia-specific and sector-specific knowledge.

Climate Mitigation: Reducing Malaysia’s Carbon Footprint

The Government has embarked on several programmes aimed at reducing emission of


greenhouse gases (GHGs). During the Plan period, these efforts will continue to focus
on five areas:
• Creating stronger incentives for investments in renewable energy (RE);
• Promoting energy efficiency to encourage productive use of energy;
• Improving solid waste management;
• Conserving forests; and
• Reducing emissions to improve air quality.

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As rightfully mentioned in the Conference dossier, that:

“……Green growth is a relatively new agenda in the Asian developing countries


context. To be relevant for poverty reductions, such programs would need to create
jobs and income opportunities for the poor and vulnerable people and produce goods
ands services relevant for their daily living…...Inclusive and sustainable growth
requires a closer view on technologies and value chains that are both pro-poor and
environment friendly…....There is also growing literature and programs suggesting
that green growth works for poverty when public and private sector engage in closer
partnerships.”

There is much legitimate concern at present about the rise in incidence of


environmental problems such as climate change, droughts, floods, and unsustainable
exploitation and incremental destruction of biodiversity. Many government
institutions, in particular, increasingly have to bail out failing financial and social
institutions and are greatly concerned about the confluence of these with ecosystem
and climate system collapse. With persistent poverty, especially in pockets of areas,
in part entrenched by such system failures, there is a growing interest in ways to
minimise the chain of costs that arise from environmental shocks and stresses.
Environment is becoming recognised as a key component in policies for security,
stability and sustainability. The need for a more high-level and cross-sectoral
approach to integrating environment and development has never been more urgent.
With pressure on resources, more innovative ways must be found to generate greater
welfare from limited environmental assets. Infrastructure and agriculture must be
climate-proofed. Industry must be energy- and water-efficient. Poor people’s
environmental deprivations must be tackled in development activity. Their
environmental rights must be recognised, respected, protected and fulfilled
(Experience of integrating environment into development institutions and decisions by
Barry Dalal-Clayton and Steve Bass, IIED 2009).

Economic development is an important factor in reducing poverty and in generating


the resources necessary for human development and environmental restoration. As a
developing county, Malaysia will continue her efforts in eradicating hardcore poverty,
at the same time, maintaining environmental integrity. The Government is,
therefore, embarking on an economic transformation, aimed at delivering sustained
high growth and moving Malaysia towards a high-income nation.

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In order to be consistent with competitiveness and economic growth, a pragmatic
approach will be adopted in pursuing inclusiveness. The new approach is anchored on
two objectives:

• Enabling equitable opportunities for all Malaysians. This will enable all
Malaysians to participate in the economy according to their requirements and
needs. This involves stepping up capacity and capability building, enhancing
access to employment opportunities and adopting a more targeted approach in
encouraging innovation-driven entrepreneurship: and

• Providing a social safety net for disadvantaged groups. Equitable access to


health, education and basic infrastructure will be emphasized, while mechanisms
for targeted income support will be enhanced as general subsidies are phased out.

Efforts are underway to continuously strengthen environmental concerns to ensure


sustainable income and quality of life improvement among the lower income groups
into development planning and in the process, will ultimately address poverty issues.

Economic Planning Unit,


Putrajaya, Malaysia
2nd December 2010

Note:
These policies were drawn from the Tenth Malaysia Plan that was launched on
June 6th, 2010 in Kuala Lumpur, Malaysia.

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