Urban Development & Urban Poverty In Malaysia

InternationalJournal of SocialEconomics24,12

1524

Urban development and urbanpoverty in Malaysia

Chamhuri Siwar andMohd. Yusof Kasim

Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia

Urbanization and urban povertyUrbanization trend and its impacts on rural-urban relationsMalaysia has been experiencing rapid economic and social transformation overthe past three decades. Its economy grew 6.7 per cent per annum during 1971-1990, Malaysia, 1991) and currently Malaysia is one of the fastest growingeconomies in the world. Its gross domestic product (GDP) has been growing bymore than 8 per cent consecutively for the past eight years (Bank NegaraMalaysia, 1995, p. 16)

Empirical evidence derived from Asian Development Bank’s study (1986) onUrban Development in Malaysia indicates that periods of rapid economicgrowth have been concurrent with the periods of rapid urban growth and therate of urbanization is closely related with the level of development. As a resultof three main factors, namely natural increase (56 per cent), reclassification ofurban boundaries (39 per cent) and net migration (5 per cent), the urbanpopulation growth in Malaysia had increased from 3.3 per cent during 1957-1970 to 4.9 per cent during the 1971-1990 period. Similarly the overall rate ofurbanization rose from 27 per cent in 1970 to 34 per cent in 1980 and 51 per centin 1991 (see Table I). The figure is expected to reach 55 per cent in 1995(Malaysia, 1993).

It is interesting to note that increasing trend of urbanization in Malaysia wascharacterized not only by the doubling number of urban centres during 1980-1991 period but also accompanied by the concentration of people in themetropolitan as well as the large urban areas. The number of urban areas hadincreased from 67 in 1980 to 129 in 1991. As shown in Table II, urban populationin the metropolitan area (defined as an urban areas with 75,000 or moreinhabitants) had increased substantially from 58.5 per cent in 1970 to 72.6 percent in 1991. At the same time, however, figures for small and medium sizetowns had decreased.

Excessive urban growth in general and concentration of people andeconomic activities in the large urban areas, in particular, will lead to not onlyincreasing urban diseconomies and escalating social costs (Johan and Baldev,1989) but also resulting in uneven distribution of development benefits betweenurban centres as well as between urban-rural areas.

International Journal of SocialEconomics, Vol. 24 No. 12, 1997,pp. 1524-1535. © MCB UniversityPress, 0306-8293

Urban development and

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Given the present development policy of the Malaysian government whichemphasizes rapid industrialization in the context of a laissez-faire economy, thefuture pace of urbanization is very likely to accelerate. Unless urban problemssuch as congestion, inadequate amenities, pollution, shortage of housing, etc.,are given sufficient attention, the quality of urban life will deteriorate. Inaddition, the industrial competitiveness may also be eroded. This could lead toa reduction in labour absorption and hence increasing unemployment andincidence of urban poverty.

Meanwhile, following Johan and Baldev (1989), excessive concentration ofurban growth can siphon off funds necessary for the development of the ruralareas, lagging regions, and other lower order urban centres, therebyperpetuating structural inequality and symmetrical rural-urban relationresulting in the persistence of regional and rural-urban disparities.

Total population Rural population Urban populationYear (’000) (’000) (’000) Per cent urban

1911a 2,339 1,937 402 17.21947a 4,908 3,607 1,301 26.51957a 6,279 3,610 2,669 42.51970 10,439 7,621 2,819 27.01980 13,136 8,670 4,466 34.01991 17,567 8,671 8,896 50.6Note: a Data for Peninsular Malaysia onlySource: Department of Statistics (1970, 1980, 1991).

Table I.Urban population

in Malaysia,1911-1991

1970 1980 1991Population Percentage Population Percentage Population Percentage

Population size (’000) of total (’000) of total (’000) of total

10,000-19,999 305.7 12.1 381.2 8.0 772.7 8.720,000-29,999 172.2 6.8 316.2 6.7 560.3 6.330,000-49,999 167.2 6.6 257.5 5.4 562.8 6.350,000-74,999 405.0 16.0 549.0 11.6 538.3 6.175,000-99,999 261.0 10.3 267.8 5.6 552.2 6.2100,000 and above 1,218.9 48.2 2,975.7 62.7 5,909.9 66.4Total 2,530.0 100.0 4,747.3 100.0 8,896.2 100.0Sources: Adapted from ADB Asian Development Bank (1985) and Department of Statistics

(1991)

Table II.Malaysia: city-size

distribution of urban population (1970,

1980 and 1991)


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Urban povertyReview of past and present statusTable III provides some pictures on the past and present conditions of urbanpoverty in Malaysia respectively. From this, one may tend to conclude thaturban poverty is not a serious phenomenon. As shown in Table III, incidence ofurban poverty in Peninsular Malaysia had decreased significantly from 21.3 percent in 1970 to about 7 per cent in 1990. In Sabah the incidence of urban povertywas reduced rather marginally from 19.2 per cent in 1976 to only 14.7 per centin 1990. As for Sarawak, the extent of urban poverty is relatively minimal. In1990 the corresponding figure for Sarawak was 4.9 per cent compared to 6.4 percent in 1976.

The incidence of poverty in Malaysia as a whole decreased even further from7.5 per cent in 1990 to 5.3 per cent in 1993. The figure for 1995 is expected to bemerely 2.2 per cent. The pattern of change was similar in Peninsular Malaysia.However, incidence of urban poverty in Sabah and Sarawak had increasedduring 1990-1993 period and in 1995 the poverty incidence in Sabah andSarawak is projected at 14.5 per cent and 4.6 per cent respectively. According tothe Mid-Term Review of the Sixth Malaysia Plan, 1991-1995 (Malaysia, 1993),the increase in urban poverty was the result of the migration of the rural poorto the urban areas in search of job opportunities. In Sabah, an additional factorwas the presence of a large number of foreign migrants who accounted forabout half of the poor in the urban areas.

Peninsular Malaysia Sabah SarawakRural Urban Total Rural Urban Total Rural Urban Total

1970Number of households 1,203.4 402.6 1,606.0 n.a n.a n.a n.a n.a n.aNumber of poor households 705.9 85.9 791.8 n.a n.a n.a n.a n.a n.aPoverty incidence 58.7 21.3 49.3 n.a n.a n.a n.a n.a n.a

1976Number of households 1,400.8 530.6 1,931.4 133.0 30.7 163.7 167.8 39.3 207.1Number of poor households 669.6 94.9 764.4 78.0 5.9 83.9 100.7 6.4 107.1Poverty incidence 47.8 17.9 39.6 68.5 19.2 51.2 60.0 16.3 51.7

1984Number of households 1,629.4 991.7 2,621.1 177.3 52.3 229.6 230.6 51.4 282.0Number of poor households 402.0 81.3 483.3 68.5 7.5 76.0 85.9 4.2 90.1Poverty incidence 24.7 8.2 18.4 38.6 14.3 33.1 37.3 8.2 31.9

1987Number of households 1,800.0 1,008.1 2,808.1 202.8 49.4 252.2 240.7 60.0 300.7Number of poor households 403.2 82.6 485.8 80.9 8.1 89.0 69.8 4.5 74.3Poverty incidence 22.4 8.1 17.3 39.9 16.4 35.3 29.0 7.5 24.7

1990Number of households 1,924.3 1,062.2 2,986.4 233.1 57.7 290.8 274.6 62.8 337.4Number of poor households 371.4 77.5 448.9 91.1 8.5 96.6 67.8 3.1 70.9Poverty incidence 19.3 7.3 15.0 39.1 14.7 34.3 24.7 4.9 21.0

Source: Malaysia (1981, 1986, 1989, 1991)

Table III.Malaysia: incidence of poverty by urban –rural strata, 1970, 19761984, 1987 and 1990


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Although the overall incidence of urban poverty in Malaysia is low comparedwith that of rural poverty, it must be noted that the poverty line income (PLI)used in measuring poverty incidence in urban areas is similar to that of ruralareas, i.e. RM405 per month for a household size of 4.8 in Peninsular Malaysia,RM582 for a household size of 5.1 in Sabah and RM495 for a household size of5.1 in Sarawak. Thus, if one uses different PLI for urban areas, say 20-30 percent higher from that of rural areas, reflecting the higher cost of living in theurban areas, one will find higher incidence of urban poverty.

Furthermore, it is also interesting to note that if we enlarge the urbanboundary to include urban periphery as illustrated by the study on urbansquatters in Miri Sarawak, the incidence of urban poverty would be higher thanthat of the urban centre alone (Ko, 1991).

Another point that one should also consider in assessing urban poverty is thevery concept of urban poverty itself. It is observed that using income as ameasurement is necessary but not sufficient. Consequently, if we consider othersocio-economic variables such as housing conditions, amenities, etc., inmeasuring the incidence of urban poverty in addition to income, the extent andmagnitude of urban poverty may be more serious.

Causes of urban povertyAlthough there are numerous studies on urban underdevelopment, most ofthem focused on squatter problems. A comprehensive study on urban povertyis relatively limited. However, the following will give a brief account on profilesof urban poor and causes of urban poverty.

Onn’s (1989) study focuses on the state of urban poverty in four urbancentres comprising Kuala Lumpur, Penang, Kota Bharu and Johor Bharurepresenting four different regions of West Malaysia. With 2,000 samplescovering 100 locations, the study found out that unlike rural areas, the presenceof poverty in the urban areas transcends ethnicity and the main causes of urbanpoverty were low level of education, lack of job opportunities, large family size,and lack of access to social facilities.

The study by Hassan and Salleh (1991) focuses on the magnitude of urbanpoverty in the six Malay Reserve Areas (MRAs) of the Federal Territory ofKuala Lumpur, namely Gombak, Selayang, Sungai Pencala, Segambut,Kampung Baru and Datuk Keramat. The study reveals that the incidence ofMalay poverty in the MRAs is quite low (4 per cent) and the extent of Malaypoverty in this area is less than those in the squatter area of Kuala Lumpur.Similar to Onn’s finding, the poor not only have low level of income and wealth,but also lack access to public utility.

Johari and Kiong (1991) attempt to develop a rough profile of the urban poorin Sabah. Their findings include the following: urban poor are found in allethnic groups; the urban poor are wage earners and concentrated in low wagesectors, they have low level of education, limited access to employmentopportunities, social facilities and services.


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To sum up, it is clear that the “causes” of urban poverty are multi-dimensional. They include structural, institutional and cultural factors.

Urban policy for the urban poorAt present there is no explicit or specific national policy which directlyaddressed problems of the poor in the existing urban centres. However, asimplicitly stated in the five-year development plan, policies and programmesfor the urban poor may be classified into four components, namely employmentcreation, provision of housing and social amenities, development of growthcentres and special programmes called NADI.

Employment creationJob opportunities in urban areas are generated in many ways, though they arenot necessarily directed at the poor. Most of the employment may be found inthe industrial and service sectors. The government has encouraged the growthof these sectors by providing infrastructural facilities and fiscal incentive.Although this effort has resulted in creation of new jobs, the extent to whichthey benefited the poor is questionable, since most of the urban poor have avery low level of education and skills.

Other programmes for creating urban job opportunities include thedevelopment of small-scale industries or business and industrial villages. Theseprogrammes have the potential to succeed but their implementations areconfined to certain large urban areas and target groups and this does notnecessarily benefit the poor (Kasim, 1991).

Provision of housing and social amenitiesIn order to raise the standard of living and quality of life of the lower incomegroups in urban areas the government implemented various projects includingthe provision of low-cost housing units and social amenities. Although theGovernment has controlled the price of low-cost housing, most of the urbanpoor cannot afford to buy house owing to low income. They cannot obtainloans or even service the loan if they had one. On the supply side, most of theproblems are related to finance, management and business profit motive. Theseproblems limit the achievement of the private developer in developing even atarget of 30 per cent low-cost houses. The short supply of low-cost housing hasresulted in high house rents and the establishments of squatter settlements. Onsocial amenities, however, there has been a lot of improvement. The provision ofsocial amenities are important components in upgrading programme withinsquatter settlements (Kasim, 1991).

Development of growth centresThe main aim of this programme is to meet the objective of the New EconomicPolicy (1971-1990), namely poverty eradication and restructuring of society.This programme has been implemented in three different forms or place asfollows:


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(1) Centres within centres. In Kuala Lumpur for example four growth centreshave been developed, namely Wangsa Maju, Bandar Tun Razak,Damansara and Bukit Jalil. This programme could create jobopportunities in secondary as well as tertiary sectors and provided low-cost and medium-cost housing.

(2) Centres in a new region. A number of urban centres/new township havebeen planned in regional development authorities such as DARA,KEJORA and KETENGAH. However, their achievements have beenunsatisfactory (Kasim, 1988).

(3) Rural urbanization. The main activities included in this programme arevillage regrouping and the establishment of small-scale industries. Whilethe former aims at improving the quality of life the latter provide jobopportunities as well income generating activities.

NADI (Nerve) programmeThe implementation of this programme is limited to squatter areas and low-costflats in Kuala Lumpur. Under this programme, the poor in squatter areasbenefited from the provision of electricity, water stand-pipes and health care,while those in low-cost flats were provided with tuition and day-care centres.Furthermore, income generating projects such as small business forhousewives to supplement household income, were also implemented(Malaysia, 1993, p. 59).

Issues in urban development and urban povertyNumerous issues in urban development have affected not only the performanceof urban development but also the extent of urban problems. Some of the mainissues of urban development and the present approach in solving the problemsof urban poverty are discussed below.

Town centric approach in urban planningIn general town planning in Malaysia is generally done in isolation of othertowns and its hinterland and emphasis is given to physical planning rather thanon the socio-economic aspect of planning. This approach of urban planningmay result in two problems. First, it limits the potential growth of the peripheralareas and causes secondary weakening of the linkages between urban-ruraland also between urban centres of different sizes.

Lack of national policy on urban poverty alleviationIt may be argued that to some extent urban planning tends to bypass the poor(Kasim, 1991). Policies and programmes for the urban poor are ad hoc and mostof them are not specifically aimed at the poor. Furthermore, local authorities,other than Kuala Lumpur City Hall, have not undertaken specific programmesto eradicate urban poverty.


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Lack of institutional capabilityMost local authorities face deficiency in human and financial resources. Theysuffer from insufficient administrative and technical capacity. Local authorities– except City Hall of Kuala Lumpur, city councils and municipalities which arestate capital – have a small number of staff and limited financial resources.Some of them are even incapable of collecting arrears which have accumulatedover the years (Kasim and Noor, 1995). Thus their capability to undertake urbandevelopment and implementing an anti-poverty programme (if any) is severelylimited.

In addition, the role of private sector in financing urban developmentespecially in the less developed regions has been discouraging. Thedevelopment of urban centres in these regions relies heavily on the government.As a result urban activities in the poor regions are therefore limited (Kasim,1991).

Case study of urban povertyAn action-oriented study of urban poverty was conducted in 1995, sponsoredby the Malaysian Islamic Economic Foundation (YPEIM). The study is aimed atidentifying the urban poor, developing capabilities in the poor in Kuala Lumpurto become urban entrepreneurs.

A purposive sample of 510 respondents were interviewed using a structuredquestionnaire. The sample was chosen from poor heads of households that wereon Baitulmal’s assistance recipients’ list.

The respondents were predominantly Malay (97 per cent), with an averagefamily size of 4.87. About 63 per cent of respondents have a family size of up tofive, and 36 per cent have between six to ten members. Two per cent of respondentshad between 11 and 15 members, with the maximum family size of 15.

Characteristics of the poorHousehold income was used to determine the level of poverty. A comprehensiveincome concept was used incorporating cash and non-cash incomes of heads ofhousehold and household members. Non-cash incomes include imputed valueof own house, assistance and subsidies in kind.The respondents were classified into very poor, poor and non-poor based on aper capita equivalent of a poverty income line (PLI). Using the national PLI ofRM405 per month for a family of five and considering a higher urban cost ofliving of about 23 per cent, an urban PLI of RM500 per month or its per capitaequivalent of RM100 per month was used. The very poor are defined as thosehaving half the PLI income. Hence those with a per capita income of less thanRM50 per month were determined to be the very poor. The non-poor were thosewith per capita income of more than RM100 per month. Using this measure, theincidence of very poor was at 3.3 per cent, poor 28.2 per cent and non-poor 68.4per cent.

Using an alternative measure of household income of RM500/month as thePLI results in a higher incidence of very poor (5.7 per cent) and a lower


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incidence of poor (17.4 per cent) and non-poor (76.9 per cent). The incidence ofpoverty (very poor and poor) is higher by 8.4 percentage points using the percapita income. However the incidence of non-poor is higher using the householdincome concept. The higher household size of the very poor results in a lowerincidence of poverty among the very poor using the per capita measure (seeTable IV).

Characteristics Very poor Poor Non-poor All

By household income PLI RM500/month1. Incidence of poverty (%) 5.7 17.4 76.9 100.02. Mean monthly household income (RM) 175.8 425.2 1,107.1 935.13. Maximum monthly household income (RM) 250 500.0 7,605 7,6054. Minimum monthly household income (RM) – – 300.0 510.05. Mean monthly head of household

income (RM) 227.9 411.1 565.3 511.0

By per capita income, PLI RM100/month6. Incidence of poverty (%) 3.3 28.2 68.4 100.07. Mean monthly per capita income (RM) 40.5 83.2 220.0 252.48. Maximum monthly per capita income (RM) 50 100.0 839.0 839.09. Minimum monthly per capita income (RM) – 52.0 101.0 –

10. Mean monthly per capita expenditure (RM) 61.8 88.5 164.9 139.9

Socio-economic characteristics11. Average family size 5.7 5.7 4.5 4.912. Average age 48.2 46.1 48.0 47.413. Average family member employed 1.18 1.53 2.06 1.914. Place of origin (%):

Rural 72.7 63.2 69.4 67.8Urban 27.3 36.8 30.6 32.2

15. Employment (%)Unemployed 28.6 22.1 22.1 22.3Labourer 7.1 23.7 18.1 19.3Self-employed 28.6 23.7 29.3 27.7Government employee 14.3 9.9 10.6 10.5Private sector employee 21.4 20.6 19.9 20.2

16. Education (%):No formal education 23.5 27.1 28.9 28.2Primary education 52.9 43.1 37.2 39.4Secondary education 23.5 29.9 33.8 32.4

17. Interest in entrepreneurship (%): 41.2 59.4 65.9 63.2Possess entrepreneurial skills 50.0 60.0 62.2 61.2Possess capital 10.0 15.0 9.4 11.4Willingness to borrow capital 50.0 64.0 66.2 65.3Type of loan

Individual 71.4 96.3 92.1 92.8Group 28.6 3.7 7.9 7.2

Mean loan required (RM) 950.9 17,518.5 11,905.0 13,444.5Mean ability to pay per month (RM) 150.0 164.8 165.0 160.0

Table IV.Characteristics of the

very poor, poor andnon-poor in urban

Kuala Lumpur (N = 510)


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The mean household income of all respondents was RM935.1. The meanhousehold income of the very poor was only 18.8 per cent of mean householdincome, while that of the non-poor was 18.4 per cent higher than the meanhousehold income. The mean income of the poor was 45.5 per cent of meanhousehold income.

The incomes of head of household form a large portion (55 per cent) ofhousehold incomes, while the remaining 45 per cent was contributed byhousehold members’ income. The mean head of household income was RM511.The head of household income of the very poor form only 45 per cent of meanhead of household income compared to 80 per cent of the poor. The non-poorhead of household income exceeds the mean head of household income by 11per cent.

The very poor and the poor have a relatively larger family size of 5.7respectively, compared with the non-poor (4.5).

In terms of age, there is no significant difference between the ages of verypoor, poor and non-poor. The average age of all respondents is 47.4 years, withthe average age of the very poor and non-poor slightly higher, respectively at48.2 and 48 years.

In terms of residence, about 60 per cent of respondents are squatters, 20 percent of them living in transit squatter houses waiting for relocation intopermanent houses, which for some take more than 20 years before actualrelocation takes place. About 40 per cent of respondents reside in low costhouses (6 per cent) and low cost flats (34 per cent).

With regard to place of origin, we investigated whether the respondentsoriginated from rural or urban surroundings. It was hypothesized that ruralpoverty might be transferred to urban areas through rural-urban migration.Our data indicated that 68 per cent of respondents originated from rural areas.In fact the non-poor had a greater percentage (49 per cent) of rural migrants,compared with the poor (17 per cent) and very poor (2 per cent). We cannotconclude definitively concerning the transfer of rural to urban poverty. Rural-urban migration is a continuing phenomenon since the 1970s, induced by therestructuring strategies of the New Economic Policy (1970-1990) and therespondents’ desire to seek better opportunities in the urban industrial areas.About 32 per cent of respondents originated from urban areas.

Household income is influenced by the number of family members employed.On average, 1.9 members of family are employed. Lower household incomes ofthe very poor and poor households could be explained by a smaller number ofmembers employed, 1.18 for the very poor and 1.53 for poor household. Thenon-poor had a larger employment of family members, at 2.06.

In per capita terms, the mean per capita income is RM252 per month. Themean per capita income of the very poor and poor formed about 16 per cent and33 per cent respectively of overall mean per capita income. The mean per capitamonthly income of the non-poor was 87 per cent of the mean. In terms ofexpenditure, the mean per capita monthly expenditure was RM140, with theexpenditure of the very poor and poor forming about 44 per cent and 63 per


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cent, respectively, of mean expenditure. Comparing mean per capita income andexpenditure of respondents, it can be observed that the expenditure of the verypoor and poor exceed their incomes, implying inadequacy of incomes to meetexpenditure and basic needs requirement. While it is recognized that the verypoor and the poor live on meagre incomes and have a tight budget, thisinadequacy may also arise due to underreporting of income by respondents.

There is no significant difference in employment among the very poor, poorand non-poor. Among the non-poor, there are also the unemployed (23 per cent)labourers (18 per cent), self-employed (23 per cent), government employees (11per cent) and private sector employees (20 per cent). The participation rates ofthe very poor and poor in most categories of employment do not differsignificantly from the non-poor. The unemployed among the very poor, poorand non-poor are mainly the old aged, pensioners and those receiving religiousassistance among heads of households. In these cases, the incomes of householdmembers contributed significantly towards determining the status ofrespondents as very poor, poor and non-poor.

The educational levels of the respondents are considered low. About 28 percent of respondents had no formal education, 39 per cent completed primaryeducation and 32 per cent completed primary education. Among therespondents there is no significant difference in the level of education of the verypoor, poor and non-poor. A larger percentage of the very poor (53 per cent) andpoor (43 per cent) completed primary education, compared to the non-poor (37per cent). Conversely, the non-poor had a higher percentage completingsecondary education (34 per cent), compared to the very poor (24 per cent) andpoor (30 per cent).

The education levels are expected to play an important role in determiningthe employment status of respondents. As can be observed, low educationallevels are associated with low employment status of most respondents. Eventhose employed as government and private sector employees are engaged in lowpaying employment.

Urban entrepreneurship programmeOne of the aims of this action-oriented research is to come up with policyoptions for an urban poor entrepreneurship programme. In this paper wehighlight some issues related to this programme. The urban entrepreneurshipprogramme was thought of as an effective means to uplift the status of theurban poor. The programme will provide the enterprising urban poor withcredit through a benevolent loan scheme which will enable the urban poor toparticipate in various small-scale enterprises and other income generatingactivities that will alleviate their poverty problems.

Our initial results show that 63 per cent of respondents expressed interest inthe urban entrepreneurship programme. Not surprisingly, the programmeinterests the non-poor (66 per cent) more than the very poor (41 per cent) andpoor (59 per cent). The non-poor have more entrepreneurial skills (62 per cent),higher willingness to borrow capital (66 per cent) and higher ability to earn


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(RM165) per month. Nevertheless the poor show moderately high interest (59per cent), possess skills (60 per cent), are willing to borrow capital (64 per cent)and have the comparable ability to earn (RM165). The interests of the very poorare encouraging (41 per cent), with moderate willingness to borrow capital (50per cent) and slightly lower ability to pay (RM150).

Regarding the type of loan, the majority of respondents, especially the poor(96 per cent) and non-poor (92 per cent) preferred an individual loan scheme.Among the very poor, the preference for group loan scheme is higher (29 percent), reflecting the need to design group loan scheme to share the burden of theloan to provide strength through joint liability and group responsibility.

Initial response indicates that the types of enterprise preferred by therespondents are food stalls (63 per cent), retail outlets (22 per cent), tailoring (8per cent), night markets (4 per cent) and motor workshop (4 per cent). Basicallythe types of enterprises are small to medium, requiring loan capital of betweenRM500-RM10,000. About 56 per cent of respondents require between RM1,001-5,000 loan capital, 25 per cent requiring more than RM10,000. Although the loanrequirements are substantial, the respondents’ ability to pay seems much lower.

Policy optionThe experience of the Grameen Bank in Bangladesh and its successfulreplication in many countries in Asia, including Malaysia (Gibbons and Kasim,1990; Hossain, 1985) show that credit or benevolent loan could be an importantinstrument for poverty eradication and uplifting the socio-economic conditionof the rural poor. The institutionalization of the benevolent loan schemethrough an NGO Amanah Ikhtiar Malaysia show the credibility of this schemein alleviating the problem of rural poverty (Siwar, 1991, 1992).

In Malaysia, there is no similar credit scheme for the urban poor. Strategiesfor urban poverty alleviations are mainly in the area of generating employmentopportunities and improving basic urban amenities like housing for the poor,sanitation, education, health and nutrition.

The urban entrepreneurship programme represents a paradigm shift inattempt to eradicate urban poverty in Malaysia. The programme will betargeted specially on the very poor and poor urban households. Theprogramme will have a specialized delivery mechanism, requiring no interest,no collateral, with simple procedures, supervised training and scrutiny toensure viability and sustainability of projects and repayment of loan.

A training and motivational course will to be organized to motivateprospective participants and to train them in basic project management,marketing, accounting, bookkeeping, entrepreneurship development andbusiness strategies. Project supervision, monitoring and impact analysis willalso be conducted.

The sustainability of the entrepreneurship programme will be an importantfactor in determining the success of the programme. An initial launching grantfor administrative and loan capital will need to be provided by YPEIM andIslamic Banking institutions to start the project. If successful, the programme


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will represent an effective poverty alleviation strategy based on self-help, self-reliance and the capabilities of the poor themselves.

References and further readingAsian Development Bank (1985), Malaysia Urban Sector Profile Study, Asian Development Bank,

Manila.Asian Development Bank and Government of Malaysia (1986), Urban Development Policy and

Programme Study, Manila.Bank Negara Malaysia (1995), Bank Negara Annual Report, 1994. Bank Negara Malaysia, Kuala

Lumpur.Department of Statistics (1970), General Report on the Population Census, Vol. 1 & 2, Kuala Lumpur.Department of Statistics (1980), General Report on the Population Census, Kuala Lumpur.Department of Statistics (1991), Population and Housing Census, Kuala Lumpur.Gibbons, D.S. and Kasim, S. (1990), Banking on the Rural Poor, Amanah Ikhtiar Malaysia, Penang.Hassan, O.R. and Salleh, A.M. (1991), “Malays in the reserve areas of Kuala Lumpur: how poor are

they?”, in Johari, M.Y. (Ed.), Urban Poverty in Malaysia, Institute for Development Studies(Sabah), Kota Kinabalu.

Hossain, M. (1985), Credit for the Rural Poor: The Experience of Grameen Bank in Bangladesh,Research Monograph No. 4, Bangladesh Institute of Development Studies, Dhaka.

Johari, M.Y. and Kiong, C.S. (1991), “An overview of urban poverty in Sabah”, in Johari, M.Y. (Ed.),Urban Poverty in Malaysia, Institute for Development Studies (Sabah), Kota Kinabalu.

Johari, M.Y. and Sidhu, B.S. (1989), Urbanisation and Development: Prospects and Policies for Sabahbeyond 1990, Institute for Development Studies (Sabah), Kota Kinabalu.

Kasim, M.Y. (1988), “Ketidakseimbangan Wilayah: Satu Penilaian Terhadap Dasar dan StrategiPembangunan Wilayah dalam Tempoh Dasar Ekonomi Baru (1970-1990)”, in Siwar, C. and Piei,M.H. (Eds), Dasar dan Strategi Pembasmian Kemiskinan, DBP, Kuala Lumpur.

Kasim, M.Y. (1991), “Urban development and urban poverty: current thinking”, in Johari, M.Y. (Ed.),Urban Poverty in Malaysia, Institute for Development Studies (Sabah), Kota Kinabalu.

Kasim, M.Y. (1994), “Kemiskinan dan Pembangunan Bandar Selepas 1990: Isu dan Penyelesaian”, inAli, S. and Saleh, M.Z. (Eds), Rancangan Malaysia Keenam: Prioriti Pengukuhan Negara,. UKMPress, Bangi.

Kasim, M.Y. and Noor, M.S.H. (1995), “The role of local government in urban development towardsmeeting vision 2020”, Paper presented at National Workshop on Local Government: EffectiveGovernance for Vision 2020, 10 June, Subang Jaya, Malaysia.

Ko, J. (1991), “Studying urban poverty in Sarawak: some methods, logical issues and problems”, inJohari, M.Y. (Ed.), Urban Poverty in Malaysia, Institute for Development Studies (Sabah, KotaKinabalu.

Malaysia (1981), Fourth Malaysian Plan, 1981-1985, Government Printer, Kuala Lumpur.Malaysia (1986), Fifth Malaysian Plan, 1986-1990, Government Printer, Kuala Lumpur.Malaysia (1989), Mid-term Review of the Fifth Malaysian Plan, Government Printer, Kuala Lumpur.Malaysia (1991), The Second Outline Perspective Plan, 1991-2000, Government Printer, Kuala

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Kuala Lumpur.Onn, F.C. (1989), “Kemiskinan Bandar di Malaysia: Profil dan Kedudukan pada Pertengahan

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Documents

Urban Development & Urban Poverty In Malaysia