Regions and Countries

	Table of Contents
p. 3 of 18 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Assessment of Socio-Environmental Performance C. Governance: Sound Development Management D. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Malaysia : I. Country Performance Assessment

---

B. Assessment of Socio-Environmental Performance

1. Poverty Issues

13. Malaysia's record on poverty reduction has been steady and impressive. The incidence of poverty in Peninsular Malaysia was 49.3 percent in 1970. High levels of economic growth and the favorable impact of government targeted programs brought this level down to 9.6 percent by 1995. From 1995 to 1997 further improvements were recorded with the incidence of poverty declining to 6.8 percent. Poverty is predominantly a rural phenomenon. In 1997, the incidence of rural poverty was 11.8 percent against 2.4 percent in urban areas and the percentage of the poor residing in rural areas increased from 77 percent in 1995 to 81 percent in 1997. The incidence of hardcore poverty defined as those whose incomes are 50 percent of the poverty line⁵ also fell from 2.2 percent in 1995 to 1.4 percent in 1997 and the decline was more rapid in urban than in rural areas. Poverty remains entrenched in the traditionally poorest states of Kelantan, Terengganu, Sabah, Kedah and Perlis.

14. The economic slowdown caused by the crisis has reversed the trend in poverty reduction. The overall incidence of poverty in1998 is estimated to have increased by nearly one percentage point to 7.6 percent. However the incidence of hardcore poor is projected to increase only slightly from 1.4 percent to 1.5 percent. The majority of the new poor are expected to be from urban areas where the problems of retrenchment, unemployment and inflation are greater.

15. During the crisis, income inequality may have declined in 1998; the mean income from the urban sector is projected to have fallen slightly while income in the agricultural sector has risen. Income inequality as measured by the Gini coefficient has increased somewhat during the 1995-1997 period from 0.462 to 0.470. This places Malaysia in a relatively "high" income inequality category.

2. Gender Issues

16. The Gender Development Index⁶ measures achievements in basic human capabilities (life expectancy, adult literacy, secondary and tertiary school, gross enrollment ratio and share of earned income) but takes note of inequalities of achievements between men and women. According to the 1998 Human Development Report, Malaysia ranked 45th out of 165 countries. Gender Empowerment Measure (GEM) examines whether women and men are able to participate in economic and political life and take part in decision-making. In the GEM, Malaysia ranked 45th out of 102 countries. In general, Malaysia compares favorably with the regional comparators in terms of human achievement, particularly in gender empowerment.

17. Regional differences exist in the status of women, particularly between Western Peninsular Malaysia and Sabah and Sarawak, due to differences in historic, ethnic and economic conditions. The Malaysian national framework for addressing women's concerns has been established and is poised to play an increasing role in mainstreaming women's concerns into national development. Overall, Malaysia's commitment to improving the status of women is reflected by its endorsement of international instruments on women's rights and their translation into national policy and action plans. Legislation to improve women's position in the family, community and workplace has been reviewed and amended during the Seventh Malaysia Plan (7MP). Outstanding social issues include womens' under-representation at higher levels of employment, and the provision of child care to support the female labor force. As with other crisis affected countries, women have been particularly affected in the work place. The textile and electronic industries, where women employment is concentrated, have undergone higher levels of retrenchment. It is estimated that two thirds of those retrenched in these industries were women. In addition, in their role as home managers responsible for domestic budgeting, women have had to match declining real incomes against fixed needs. This double burden has been met by increasing informal sector labor participation, which has resulted in crowding and lower overall incomes in petty trade and food catering. Female headed households, which comprise 17 percent of all households, are vulnerable to rising prices and reduction in income, particularly in the case of young mothers with children.

3. Human Development

18. The Human Development Index (HDI) measures development in terms of life expectancy, educational attainment in terms of adult literacy and income inequality. Based on the 1998 Human Development Report, Malaysia ranked 60th out of 174 countries. Malaysia has performed well in other key human indicators such as contraceptive prevalence rate, maternal mortality, infant mortality and enrollment in secondary schools. 19. The Government has provided social safety nets after the onset of the crisis to protect the past gains made in human development. Means tested scholarships were increased for college students to help offset the cost of rising education. Also, additional funds were allocated to the development program for the hardcore poor, the Program Pembangunan Rakyat Termiskin, in anticipation of a higher incidence of poverty. Finally, microcredit, labor intensive public works and entrepreneurial training activities were stepped up to help revitalize the economy at the lowest levels as well as to offset the hardships faced by poor households.

4. Environment

20. Government objectives in environmental protection and management are well developed, though the regulatory framework to achieve these is not yet fully developed. The Government’s objective is to integrate environmental considerations into development planning to promote sustainable growth. Key initiatives in environmental management include applying economic approaches in addressing environmental issues and improving the environmental and natural resources database and information system for more effective planning and decision-making. Malaysia’s federal system provides that the states have primary responsibility for land, forests and other matters of particular importance to natural resource management and environmental protection. Hence, strengthened coordination between the central Government and the states is a key objective of environment policy.

____________________

Back A. Economic Performance Assessment	Next C. Governance: Sound Development Management