ECONOMIC AND SOCIAL COMMISSION FOR WESTERN ASIA

SOCIAL POLICIES IN MALAYSIA

Social Policy Series, No. 4

United Nations

Distr.GENERALE/ESCWA/SDD/2003/16 February 2003ORIGINAL: ENGLISH

ECONOMIC AND SOCIAL COMMISSION FOR WESTERN ASIA

SOCIAL POLICIES IN MALAYSIA

Social Policy Series, No. 4

United NationsNew York, 2003

The opinions expressed are those of the author and do not necessarily reflect the views of the Economic and Social Commission for Western Asia.

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Preface

Since the beginning of 2001, the Economic and Social Commission for Western Asia (ESCWA) has been considering the issue of integrated social policies, with a view to forging a harmonized social vision that takes into consideration the social and economic priorities of each member country. ESCWA realized the importance of integrating social policies in the 1990s, while it was implementing a series of activities related to the eradication of poverty. Those activities demonstrated the need for genuine political commitment to the eradication of poverty and for a specialized administrative mechanism responsible for both drawing up the related policies and for coordinating between the various actors, including the Government, the private sector and civil society.

At its third session, held in Beirut in March 2001, the ESCWA Committee on Social Development recommended that ESCWA should study the feasibility of “conducting a comprehensive survey on social policy in the region”. The twenty-first session of ESCWA, held in Beirut in May 2001, adopted that recommendation.

Pursuant to the recommendation, the Human Development Section of the ESCWA Social Development Issues and Policies Division undertook the preparation of a project document entitled “Towards Integrated Social Development Policies in ESCWA Countries”. The project aims to forge an integrated social vision for the social sphere that is appropriate for the society and economy of the country concerned. It also aims to consider the process of formulation and implementation of social policies in sectors including education, health, employment and social security, and to support coordination between the principal actors in Government institutions, civil society and private sector institutions, research centres and the relevant parliamentary commissions.

The project comprises two main types of activity. The first calls for a series of background studies to be carried out on successful experiences in the design, implementation and coordination of social policies in developed capitalist countries and in other countries which have had notable success in the field of social and economic development. Naturally, the primary aim of such studies is to seek guidance from those successful experiences rather than to replicate them exactly, given that the differences in political, institutional and economic situations preclude such replication. The project also includes a series of background studies on the concept of social policy as articulated in development literature, and a further study on social policy in the Arab context. The second type of project activity relates to a field survey aimed at determining the methodology and mechanisms used in designing, implementing, coordinating and evaluating social policies in a particular country, with a view to recommending specific proposals that may assist in formulating a comprehensive, integrated social vision.

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It gives me great pleasure to present the reader with the fourth of the series of studies on social policy, as part of ESCWA’s vision of the concept of integrated social policies. The study, “Social policies in Malaysia”, that has been prepared by Mr. Fadil Azim Abbas, deals with social policy-making, implementation and monitoring in Malaysia. Given the importance of an integrated social vision in strengthening the social and economic development process, I hope that the study will assist decision makers in the region in forging such a vision.

Mervat TallawyUnder-Secretary-General

Executive Secretary

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CONTENTS

Page

Preface............................................................................................................. iii Abbreviations.................................................................................................. viiIntroduction..................................................................................................... 1

Chapter

I. THE EVOLUTION OF SOCIAL POLICY IN MALAYSIA......... 2

A. Introduction................................................................................... 2B. General features of social policy................................................... 2C. The context of social policy in Malaysia...................................... 3D. Integrating social and economic policies and national

development plans........................................................................ 4E. The evolution of social policy in Malaysia................................... 5F. Distinguishing features of the evolution of

social policy in Malaysia.............................................................. 7

II. FORMULATION, IMPLEMENTATION, MONITORING AND COORDINATION OF SOCIAL POLICY IN MALAYSIA: INSTITUTIONAL FRAMEWORK AND PRACTICE ................. 8

A. Introduction................................................................................... 8B. Formulation of social policy: institutional framework

and practice................................................................................... 8C. Implementation of social policy: institutional framework

and practice................................................................................... 13D. Monitoring and coordination of social policy:

institutional framework and practice............................................ 14 E. Conclusion.................................................................................... 16

III. SOCIAL PROGRAMMES AND REDUCTION OF POVERTY.................................................................................... 17

A. Introduction................................................................................... 17B. Health............................................................................................ 17C. Education...................................................................................... 26

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CONTENTS (continued)

Page

D. Employment.................................................................................. 31E. Social protection........................................................................... 34F. Reduction of poverty..................................................................... 40G. Women.......................................................................................... 43H. Youth............................................................................................. 46

IV. CHALLENGES AND RENEWAL................................................... 47

A. Factors affecting the social policy process................................... 47B. Globalization and social policy..................................................... 50

V. CONCLUSION................................................................................... 52

LIST OF TABLES

1. Federal Government allocation and expenditure by sector, 1966-2005............................................................................................. 18

2. Development allocation for health services, 1996-2005...................... 233. Public health facility and coverage, 1995 and 1999............................. 244. Selected indicators of health status, 1957, 1990 and 2000................... 265. Development allocation for education and training, 1996-2005.......... 306. Enrolment of students in local public institutions, 1995-2005............. 317. Incidence of poverty and number of poor households,

1995, 1997 and 1999............................................................................. 43

ANNEXES

I. New Economic Policy.......................................................................... 53II. Vision 2020........................................................................................... 54III. National Development Policy............................................................... 56IV. National Vision Policy.......................................................................... 58V. Concept and measurements of poverty................................................. 60

References ....................................................................................................... 61

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ABBREVIATIONS

ADS Administrative and Diplomatic ServiceBCG Bacille Calmette-GuerinBCIC Bumiputera Commercial and Industrial CommunityCPI consumer price index CT Computerized TommographyEPF Employees’ Provident FundEPU Economic Planning UnitHIS Health Information SystemHIV/AIDS Human Immunodeficiency Virus/Acquired Immunodeficiency

Syndrome IAPG Inter-Agency Planning GroupICT information and communications technologyILO International Labour OrganizationIMR Institute of Medical ResearchIRPA Intensified Research in Priority AreasIT information technologyMAMPU Malaysian Administrative Modernization and Management Planning

UnitMARA Majlis Amanah Rakyat (Council of Trust for the Indigenous People)M&C monitoring and coordinationMBC Malaysian Business CouncilMCA Malaysian Chinese Association PartyMIC Malaysian Indian Congress PartyMP Malaysia PlanMRI magnetic resonance imagingM$ Malaysian ringgitNDP National Development PolicyNGO non-governmental organizationNEP New Economic PolicyNVP National Vision PolicyOPP Outline Perspective PlanPLI poverty line income PMD Department of the Prime MinisterPMS Project Monitoring SystemRED Rural Economic DevelopmentSOCSO Social Security OrganizationTHIS Total Health Information SystemTWG Technical Working GroupUMNO United Malays National OrganizationWHO World Health Organization

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Introduction

The social policy process engenders a number of complex challenges for national Governments in developed and developing nations. These challenges pertain to the provision of accessible and affordable social services for the public; the role of Government, particularly with regard to the delivery of essential social services; funding; and the relative importance of expanding social services in relation to economic growth, in the broader context of national development.

Malaysia is an example of a developing country that has devised its own approach to the provision of social services and to socio-economic development in general. This approach has been developed over a period of approximately half a century. While a number of improvements have been made to the original social policy formula in Malaysia, its core attributes have remained intact. These are as follows: (a) emphasis on the development of social services as an integrated component of the national development agenda; (b) Government and public sector provision of social services; and (c) equitable provision of services to rural populations and to poor and low-income groups.

The Malaysian approach to social policy has resulted in improvements in education, health and medical care and has ensured greater employment opportunities and a higher level of social protection for all people. Furthermore, it has made considerable progress with regard to the eradication of poverty and has boosted the participation of women and youth in the national development process. However, there is always room for improvement. Social policy in Malaysia must respond and adapt to new challenges, including in particular, those posed by globalization.

The salient features of social policy and the social development process in Malaysia are reviewed in this study: chapter I examines the evolution of social policies in Malaysia; chapter II highlights the major features pertaining to the formulation and implementation of social policy and examines the monitoring and coordination process; chapter III outlines the policies and programmes pertaining to the areas of health, education, employment, social protection, poverty reduction, women and youth; chapter IV examines the various factors that have affected the social policy process in Malaysia, including globalization; and chapter V offers a brief conclusion.

I. THE EVOLUTION OF SOCIAL POLICY IN MALAYSIA

A. INTRODUCTION

The evolution of social policy in Malaysia, from the late 1950s to the early twenty-first century, can be divided into three stages. The Government of Malaysia has played a leading role in providing social services during these three stages. However, non-governmental organizations (NGOs) and the private sector are becoming increasingly involved in the social policy process.

B. GENERAL FEATURES OF SOCIAL POLICY

The term social policy incorporates objectives and strategies that address a number of social concerns and problems. These include health, education, training, housing, unemployment, poverty and income disparity, crime, substance addiction, ethnic and community relations and family violence. The ultimate aim of social policy is to improve the welfare or well-being of people and of particular groups, namely, women, youth, children, the elderly, the disabled and ethnic groups or minorities.

Sound social policies do not merely address social problems; they also deal with the economic and political context of those problems. For example, the primary aim of poverty reduction programmes is to upgrade employment skills and to improve education, housing and health care for the poor. This ensures better employment opportunities and promotes micro or small businesses. The ultimate goal of poverty reduction programmes therefore, is to empower the poor.

Another common factor with regard to social policies is that they are usually initiated and administered by Governments using public funds. This is based on the fact that social problems are usually too complicated and too costly for NGOs, corporations or private philanthropists to tackle fully or effectively without external assistance. While no one disputes the leading role of the Government in social policy, there is a continuing debate as to the size of that role. In other words, those in the social policy field are concerned with the nature of the welfare state: should it follow the institutional or residual model,1 or should it be a combination of both?

A related issue concerns the form and amount of social assistance that should be provided by a Government. In this case, form refers to remuneration or kind, namely, food, services and jobs, or a combination of remuneration and kind. The amount of assistance provided is circumscribed by considerations pertaining to maintaining a

1 An institutional welfare system provides welfare for the population as a whole. It provides for all people, not solely for those who are poor. A residual welfare system, however, is one in which welfare is considered to be a safety net, provided only to those who are unable to manage otherwise. Robert Gordon University, “An introduction to social policy”. Available at: http://www2.rgu.ac.uk/publicpolicy/ introduction/socpolf.htm.

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certain minimum standard with regard to the needs of recipients that does not dissuade them from seeking productive employment.

C. THE CONTEXT OF SOCIAL POLICY IN MALAYSIA

Social policy in Malaysia has evolved within the context of political stability and an absence of serious natural disasters or debilitating armed conflict. Malaysia has experienced almost continuous economic expansion during the latter half of the past century and more significantly, has enjoyed a lengthy period of equitable growth. This type of environment has facilitated the evolution and implementation of social policies that have kept pace with economic growth; have remained integral components of overall national development strategies; and which have improved the well-being of Malaysians.

Political stability has been maintained in Malaysia since 1963, when the former British colonies of Sabah, Sarawak and Singapore2 were united with Malaya,3 which had been independent since 1957, and self-governing since 1955.

This stability has been based on the fact that successive Governments have been formed by the same coalition of political parties. Prior to the foundation of Malaysia, this coalition was known as the Alliance Party and comprised the United Malays National Organization (UMNO), the Malayan Chinese Association Party (MCA) and the Malayan Indian Congress Party (MIC).4 After the formation of Malaysia, the coalition was expanded to include political parties from Sabah and Sarawak and was renamed the National Front. These two coalitions have won at least two-thirds of the Parliamentary seats they contested in all general elections held in Malaysia, except in 1969. They have also continuously won control of State Assemblies during the same period with the exception of those in Kelantan and Terengganu and Sabah. Therefore, the evolution of social policies and indeed of all public policies in Malaysia has not been affected by intermittent swings from one political ideology to another. This has fostered stability and continuity and permitted incremental improvements to social policies and programmes.

Political and economic stability have been complemented by the virtual absence of major natural disasters. The geographical location of Malaysia has protected it from earthquakes, volcanic eruptions, typhoons, droughts and famines. Floods have thus far only affected a small portion of the country.

Another important factor with regard to stability, is that Malaysia has witnessed very little conflict over the past half a century. Exceptions have included sporadic

2 Singapore ceased to be a member state of Malaysia in 1965.3 After independence, Malaya was renamed Peninsular Malaysia.4 After the formation of Malaysia, the Malayan Chinese Association Party was renamed the

Malaysian Chinese Association Party and the Malayan Indian Congress Party was renamed the Malaysian Indian Congress Party.

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skirmishes between Government forces and communists, which ended in 1960; limited military action between Malaysia and Indonesia in 1963 and short-lived racial riots in May 1969 in Kuala Lumpur. These led to a countrywide state of emergency and the appointment of a National Operations Council to rule the country. The state of emergency ended in 1971.

However, the adoption of a new development philosophy in 1970, in the wake of the 1969 ethnic unrest, has had a significant impact on social policy. The new policy replaced the former development model, which emphasized a laissez-faire urban-based economy, and was complemented by large-scale Government-funded agricultural/rural development programmes. Laissez-faire was perceived as having widened economic and income disparities between, on the one hand, the rural-based Malay and native ethnic groups of Sabah and Sarawak—collectively known as Bumiputera or sons of the soil—and, on the other, the urban or modern economy-based Chinese and Indians. British colonial policy had in general, compartmentalized the Bumiputera in traditional small-scale agriculture, the Chinese in urban-based trade and commerce and the Indians in rubber plantations. In the post-colonial period, the free market perpetuated the separate economies and the Bumiputera, in particular, the Malays, who held political power, lamented this shortcoming.

The new development philosophy incorporated the concept of growth with equitable distribution. It was predicated upon the firm belief that economic growth was insufficient to either inspire national development or to be considered as an end in itself, particularly in the context of contemporary ethnic configurations of economic occupation and wealth ownership. The ultimate goal of this philosophy was national unity. It was felt that without harmony, economic growth, higher incomes and improved standards of living would be more costly to achieve and less meaningful.

Unity was therefore to be achieved by equitably sharing the fruits of economic growth among the major ethnic groups and the poor of all groups. The aim of this approach was to share new wealth; wealth that had been acquired in the past was not to be redistributed.

Furthermore, the philosophy of growth with equity and its associated goals of equitable distribution and greater well-being, entailed a commitment on behalf of the Government to play an active role in the economy and the provision of social services. Experience prior to the 1969 riots had demonstrated that the free economy was not necessarily capable of ensuring the distribution of new wealth.

D. INTEGRATING SOCIAL AND ECONOMIC POLICIES AND NATIONAL

DEVELOPMENT PLANS

The national development philosophy was cemented in the form of the New Economic Policy (NEP). NEP became the policy framework or basis for the first long-term development plan, which was known as the First Outline Perspective Plan (OPP I), 1971-1990. Furthermore, NEP circumscribed the programmes and projects of

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the four medium-term development plans which fell within the framework of OPP I, namely, the Third (1971-1975), Fourth (1976-1980), Fifth (1981-1985) and Sixth (1986-1990), Malaysia Plans.

Despite its name, the goal of NEP was national unity, not maximum economic growth. NEP therefore incorporated two major strategies, namely, the eradication of poverty, irrespective of race, and the restructuring of Malaysian society to ensure that race would not be an issue with regard to particular economic activities. Both strategies were implemented within the context of a rapidly expanding economy (see annex I).

These strategies incorporated the particular goal of improving opportunities and reducing poverty among the Bumiputera, one of the poorest ethnic groups in the country. This focus can be attributed to the fact that the Bumiputera lagged behind other groups in terms of wealth ownership, representation in science and science-related subjects at the university level and employment in professions including medicine, law, engineering and architecture.

Indeed, the introduction of NEP and its accompanying development plans was the first instance where social policies were integrated with core national development policies and plans. Previously, social policies, which were accorded due importance by colonial and post-independent governments, were less integrated with economic and other national policies.

As a strong indication of the critical importance of the principles of NEP to Malaysia, the Government introduced Vision 2020 during the first meeting of the Malaysian Business Council in 1991. Vision 2020 encouraged Malaysia to achieve developed nation status (see annex II).

Another clear indicator of the relevance and acceptance of the philosophy underlying NEP was the continuation of its strategies after the 1990s. The policy that replaced NEP, the National Development Policy (NDP), 1991-2000, retained the major features of NEP and formed the basis of the Second OPP (OPP II), 1991-2000. Subsequently, the National Vision Policy (NVP), 2001-2010, has been incorporated into the Third Outline Perspective Plan (OPP III), 2001-2010. It retains the growth with equitable distribution premise of its predecessor policies (see annexes III and IV).

E. THE EVOLUTION OF SOCIAL POLICY IN MALAYSIA

Social policy in Malaysia, from 1957 to 2002, can be divided into three phases. These phases are reviewed in greater detail below. The distinguishing characteristics of social policy in Malaysia have always been linked to the pivotal role of the Government and the public sector in funding and implementing social policies and the more limited participation of the private sector and NGOs. The above-mentioned

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phases can be interpreted within the context of modifications to the role of the Government in the overall socio-economic development of the country.

The first phase in the evolution of social policy in Malaysia extended from 1957 until the mid-1980s. It was characterized by the fundamental role of the Government in terms of providing funds and organizational infrastructure for educational and health services, welfare assistance for poor and other underprivileged groups, social protection and other related programmes. A small percentage of private schools and hospitals, and a smaller number of NGOs provided various forms of limited welfare assistance during this phase.

Social policy during this phase can be characterized by the extraordinary attention afforded to rural areas. This attention manifested itself in a drive to upgrade the scope and quality of social services in rural areas. This was in accord with similar efforts to build and improve roads, bridges, community halls and post offices, to provide electricity, piped water and telephone services and in general, to improve the quality of rural life, which had been neglected during colonial times.

The Social Security Organization (SOCSO) was established during this period. Other social protection and pension schemes already in existence included the Employees’ Provident Fund, Workmen’s Compensation Scheme, Public Sector Pension Scheme, Armed Forces Provident Fund and the occupational pension schemes of major employers. During this phase, the Government also established programmes pertaining to social welfare assistance and implemented a broad range of agriculture-rural development and skills enhancement programmes that catered to poor and low-income groups.

During the second phase of social policy in Malaysia, which extended from the mid-1980s to 1997, the fundamental role of the Government in developing and implementing social policies continued and the role of the private sector and to a lesser extent, NGOs, increased. This was very apparent with regard to the provision of education and health services. The emergence of a larger middle class resulted in a growing demand for better education and health care. This demand was satisfied by private schools, institutions of higher learning, hospitals and medical centres. The Government, however, continued to expand and improve the coverage and quality of its services in urban and rural areas.

During this phase the Government also adopted tougher measures in the fight against poverty. One of these was the Development Programme for the Hardcore Poor, which targeted hardcore or extreme poverty in a coordinated and comprehensive manner. Furthermore, the Government supported the work of the Amanah Ikhtiar

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Malaysia (AIM), an NGO organized along the principles of the Grameen Bank of Bangladesh.5

The role of Government with regard to managing social policies in the second phase was modified in the context of accelerating and encouraging private sector investment in the economy. Deregulation and privatization were seen as a means of reducing the financial burden on the public sector, while advancing the restructuring process. The Government recognized that public debt and taxes needed to be increased in order to maintain heavily subsidized services for increasingly sophisticated consumers. The Government realized that privatization was capable of further accelerating the ongoing momentum of economic restructuring, enhancing productivity and efficiency and raising potential output.

Another benefit of privatization, with specific regard to the provision of selected social services, was that it entailed a wider choice of benefits for consumers, particularly for those who could afford to pay for them. Moreover, public sector social services remain available to those who cannot afford to pay for private services. This ensures that all people have access to assistance.

The third phase of social policy in Malaysia, began in mid-1997 and is ongoing. This phase has been influenced by the financial crisis of 1997, which forced the Government to take swift measures to counter balance the devaluation of the currency, the subsequent economic slow-down and the repercussions of that slow-down on poor and other groups, while at the same time maintaining the delivery of welfare assistance and various social services. The Government, in its regulatory capacity, has continued to ensure that public and consumer interests are adequately safeguarded in terms of price and that availability and quality of services are maintained.

F. DISTINGUISHING FEATURES OF THE EVOLUTION OF SOCIAL POLICY IN MALAYSIA

Two features distinguish social policy in Malaysia from that of other countries. These are as follows:

(a) A lengthy and continuous period of stability combined with a supportive environment. This has ensured an orderly and incremental development of social policies. Few developing countries have had the benefit of such an environment;

(b) A succession of strong Governments and a public sector committed to improve the welfare and well-being of all Malaysians.

II. FORMULATION, IMPLEMENTATION, MONITORING AND COORDINATION OF SOCIAL POLICY IN MALAYSIA:

5 The basic principles of Amanah Ikhtiar Malaysia and the Grameen Bank are that: (a) hardcore poor families are provided with small loans for the purpose of starting up, and subsequently expanding, microbusinesses; and (b) loans are interest-free.

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INSTITUTIONAL FRAMEWORK AND PRACTICE

A. INTRODUCTION

The institutional framework for the formulation, implementation, monitoring and coordination of social policy in Malaysia is the product of an ongoing process of development and refinement carried out over a period of nearly half a century. This framework has been structured to incorporate broad-based participation and the establishment of policies tailored to the needs of the people.

B. FORMULATION OF SOCIAL POLICY: INSTITUTIONAL FRAMEWORK AND PRACTICE

The formulation of social policy in Malaysia is very similar to the formulation of economic and other policies. All policy is developed within the same institutional framework and according to the same system. The process of formulating social policy comprises political, administrative, legal and parliamentary components; all associated decision-making is circumscribed by the main principles of the equitable growth philosophy.

Three major types of social policies are formulated through this institutional framework. The first type comprises policies that are introduced or modified in the process of formulating national development plans, namely, OPPs, five-year development plans and mid-term reviews of the five-year plans. These tend to be major and long-term policies stated in broad terms. The second type comprises policies that are components of the annual budget of the Government. These tend to be short-term or one-year versions of the broad policies in the long-term plans. The third type of policy comprises programmes that are formulated to address a specific social problem or concern in greater detail than those outlined in the plans or annual budgets.

The institutions that participate in the social policy formulation process include individual members of the public; interest groups and NGOs; the mass media; political parties; federal public service entities, including those at sub-federal levels; the Cabinet; Parliament (House of Representatives and Senate); and the King (see figure I). With regard to matters affecting Islam and the Malaysian culture, the Council of Rulers is referred to for decisions.

Federal public service institutions play a leading role in the formulation of social policies. These institutions include the central agencies, ministries, departments and statutory authorities (hereinafter referred to as Ministries) that in particular, implement social policies. They work together intimately and under the aegis of the Cabinet.

Figure I. Formulation of policy: institutional framework

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The central agencies comprise the Treasury or Ministry of Finance, Economic Planning Unit (EPU), Malaysian Administrative Modernization and Management Planning Unit (MAMPU), Implementation Coordination Unit and the Public Services

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PARLIAMENT

KING

CABINET

MINISTRIES CENTRALAGENCIES

DEPARTMENT AND

AUTHORITIES

MEDIA POLITICALPARTIES

STATEADMINISTRATIONS

NGOs AND INTEREST GROUPS

INDIVIDUALS

COUNCIL OFRULERS

Department. With the exception of the Treasury, the central agencies are under the Department of the Prime Minister (PMD).6 Central agencies are authorized to consider and approve requests for projects and funds from relevant Ministries.

The Treasury, with authority from Parliament, manages public finances. It prepares the annual budget that is presented to Parliament and then to the King for final approval. Representatives from relevant private sector bodies and NGOs attend a series of dialogues concerning the preparation of the budget. These sessions are attended by representatives of other central agencies and relevant Ministries. These dialogues are in addition to the long-standing practice of budget negotiations or discussions between Ministries, including those that implement social policies, and the Treasury which determines the annual budget allocation. The allocation is divided into two sub-allocations, namely, for operating and capital purposes and development expenditures.

EPU drafts development plans for the federal Government. Its primary function is to formulate OPPs and five-year development plans in addition to reviewing five-year plans. In order to carry out this task, EPU gathers data and proposals from members of Inter-Agency Planning Groups (IAPGs) and Technical Working Groups (TWGs) of each IAPG. Each IAPG focuses on a subject of importance, namely, education, health or the eradication of poverty. Its members are senior officials from relevant Ministries and central agencies.

TWGs focus on specific and technical aspects of the work of an IAPG. The members of a TWG are usually subordinates of members of the related IAPG. In addition, many TWGs enlist members from academia, NGOs and the private sector. A crucial aspect of the planning process is the identification of projects and the provision of the necessary budget allocation for the relevant period. This exercise is conducted independently of meetings of IAPGs and TWGs. Moreover, each Ministry must conduct a thorough examination of the viability of a proposed new project or the continuation of an existing programme.

When this has been done, the completed draft plan prepared by EPU is submitted to the National Development Planning Committee. The chairman of this Committee is the Chief-Secretary to the Government. Its members comprise the Secretary-General of the Treasury, Governor of the Central Bank,7 Director-General of the Public Services Department, Director-General of Public Works Department, Director-General of the Ministry of Education and the Secretaries-General of the Economic Ministries. Other senior officials are invited to join discussions relevant to their work. The approved draft is submitted to a special Cabinet Committee and subsequently to the full Cabinet for approval.

6 The Department of the Prime Minister (PMD) is a Ministry. All major departments under PMD are known as units.

7 Bank Negara Malaysia.

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A briefing for local and foreign media is held by EPU one day before the tabling of the Plan in Parliament. This briefing is subjected to a time embargo that ends with the presentation of the plan to Parliament. The early briefing enables the media, in particular television stations, to prepare the necessary graphics to accompany the live transmission of the Parliamentary session and the print media to prepare analyses of the Plan for their readers the following day.

The Prime Minister tables the plan in Parliament. The Plan is debated for several days and then approved. Any proposals for amendments to the plan are noted and if found to be acceptable, are incorporated in the following annual budgets and mid-term review of the plan. The final stage of the process is the presentation of the Plan to the King.

Since the implementation of the First Malaysia Plan, 1966-1970, Plans have

comprised chapters devoted to education and training, health and family planning and social and community services. They have also contained chapters on employment and manpower, agriculture and rural development and utilities, in other words, policy areas related to poverty and other social concerns. Reflecting the shifting concerns of the Government and the nation, individual chapters on poverty reduction and restructuring of society, youth, women and housing have also been included on a temporary basis. However, with the implementation of the Eighth Malaysia Plan, 2001-2005, these concerns have become permanent chapters in the development plans of the country.

The other central agencies have no direct role in the formulation of social policies. MAMPU is concerned with managing the utilization of information and communications technology (ICT). Moreover, it aims to improve work processes and procedures in Ministries. The Public Services Department is the central personnel agency, and is therefore concerned with providing necessary personnel support to Ministries. The Implementation Coordination Unit is the central agency for monitoring and coordinating policy implementation. Their contributions are reviewed below.

As previously stated, Ministries that implement social policies are components of the social policy formulation process by token of their participation in the preparation of plans and annual budgets. In this regard, their contribution is either in the form of supplying data or feedback on policies that are being implemented at the request of central agencies or in certain cases, submitting proposals to amend existing policies or introduce new ones.

Another significant participant in the social policy formulation process is the Cabinet. Its significance is rooted in the fact that according to the system of governance in Malaysia, proposals that are of national importance have to be

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submitted to the Cabinet for consideration and approval. Cabinet meeting are held every week and are followed by post-Cabinet meetings at respective Ministries.

The Chief-Secretary to the Government, who acts as the Secretary to the Cabinet, also attends cabinet meetings. As such, he is in the appropriate position to convey any Cabinet decision affecting public service to the Ministries. Therefore, the Cabinet, which is assured of parliamentary support, is effectively the most powerful decision-making body in the governmental system of Malaysia.

Moreover, Parliament itself plays a useful role in the process of formulating social and other policies in Malaysia. All documents related to Plans are tabled in Parliament. Furthermore, regular sessions, which include debates on various social and other issues, provide opportunities for Members of Parliament to register opinions with regard to the shortcomings of particular policies and programmes. Concerns raised at these sessions can be incorporated into future policies and programmes.

Political parties, including component parties of the National Front, are also key participants in the policy process. These parties represent various ethnic groups or subgroups, and reflect their concerns. They generate awareness of the social needs of their affiliated group and try to ensure that the policy formulation process meets those needs.

Interest groups and NGOs play a similar role to that of the political parties with regard to submitting the views of society to those concerned with the national social policies agenda. However, interest groups and NGOs tend to be less influential than political parties. These groups usually complement the efforts of Ministries that actively deal with a range of social issues including women, youth, consumer and aboriginal affairs, poverty and disability.

The media also participates in the formulation of social policy by providing information and generating awareness of social issues among its readers from a governmental and personal perspective.

Finally, individual citizens make a small contribution to the formulation of social policy process by voicing their opinions through channels that include NGOs, interest groups, political parties, the media and the departments of various governmental bodies.

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C. IMPLEMENTATION OF SOCIAL POLICY: INSTITUTIONAL FRAMEWORK AND PRACTICE

Several Ministries and their respective departments and authorities are involved in implementing social policies. These are the Ministries of Health, Education, National Unity and Social Development, Human Resources, Rural Development and the Ministry of Housing and Local Government. The remaining Ministries also provide some assistance with regard to implementing social policy. In addition, NGOs and foundations receiving Government funds provide assistance with regard to implementing social programmes.

Ministries are led by politicians who are members of the elected House of Representatives. A typical Ministry comprises a Minister, one or more Deputy Ministers and one or more parliamentary secretaries. Each Ministry is headed by a Secretary-General, who is a professional either from the Administrative and Diplomatic Service (ADS) or from other services such as the Medical and Health Service, Education Service or Labour Service. Policies and programmes that have been approved by the Government are implemented by respective Ministries.

Ministries are guided by four sets of regulations with regard to the implementation of social policies. These are as follows:

(a) Regulations related to objectives, strategies and programmes of a particular social policy. These are in written form;

(b) Regulations related to the financial management of social programmes. These are determined by the Treasury and apply to all Ministries and policies. The core document is the Treasury Instructions, which is complemented by more detailed financial circulars and circular letters;

(c) Regulations pertaining to personnel management. These are determined by the Public Services Department and apply to all Ministries. The core document is known as the General Orders, which is complemented by services’ circulars and circular letters;

(d) Regulations concerning the purchases, installation and management of ICT equipment by Ministries. These are determined by MAMPU.

As a result of the federal system of governance and administration in Malaysia, the hierarchy of Ministries which implement social policies is organized on three levels, namely, federal, state and district. Ministries in Sabah and Sarawak include another two levels, namely, residencies and divisions, which are respectively between the state and district levels. Furthermore, sub-district, mukim8 and village levels

8 Mukim is an administrative area. It is smaller than a sub-district but bigger than a village.

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operate below the district level. Therefore all Ministries, with the exception of the Ministry for Foreign Affairs, have offices at the federal, state and district levels whilst the larger Ministries, namely, the Ministry of Health and Ministry of Education, have service delivery points, namely, schools and clinics, even at village levels. With regard to health, mobile clinics serve very remote areas.

D. MONITORING AND COORDINATION OF SOCIAL POLICY: INSTITUTIONAL FRAMEWORK AND PRACTICE

The same institutions monitor and coordinate the implementation of social policies in Malaysia. The data generated by the monitoring process is a vital contribution to the coordination of social policy. As in cases of social policy formulation and implementation, monitoring and coordination (M&C) represents the joint efforts of many public services organizations at many levels of the Government and administration. However, unlike policy formulation, the M&C process is more technical than political in nature.

The Implementation Coordination Unit of PMD manages the M&C function. The Unit introduced a monitoring system for development projects known as the Rural Economic Development (RED) Book. The system monitors the construction of physical projects, such as schools or hospitals and oversees their budgets on a weekly and monthly basis to ensure that targets are being met.

The RED Book was derived from a technique that was utilized during the fight against communists in the post-World War II years. When it was first introduced in the 1950s, the system was manually operated. However, during the Third Malaysia Plan, 1976-1980, it was converted into a computer-based system. The initial computer-based system was known as the Project Monitoring System I (PMS I). It was subsequently reviewed, improved and renamed the Project Monitoring System II (PMS II). PMS II can be accessed through the Internet by all Ministries and state administrations including district offices.

The RED Book accelerated the implementation of physical projects. This was particularly noticeable during the period 1950-1970 when successive Ministers for Rural and National Development spent considerable time personally inspecting rural projects and checking the accuracy of the RED Book. This proved to be a strong motivating factor for project implementers to adhere to project schedules and resulted in the majority of projects being completed on time.

The central management technique utilized in the coordination of social policies, programmers and projects is the multi-agency or multi-organization committee. There are six such committees (see figure II).

14

Figure II. Implementation mechanism for NVP

Source: Government of Malaysia, Department of the Prime Minister (PMD), Directive No. 1, 2001 (Kuala Lumpur, 8 May 2001).

District Development Working Committees exist in every district and are the lowest level of a state. The District Officer chairs the Committee and the members comprise district heads of federal departments and agencies or authorities. Monthly meetings focus on the progress of projects, reason for delays and steps to overcome these delays.

At the next level are the State Development Working Committees. The State Secretary, the highest-ranking civil servant in the state, chairs each Committee. Members include all federal heads of departments and agencies in the state and all District Officers. Among them is the State Development Officer who reports to the Director-General of the Implementation Coordination Unit. This Committee coordinates project implementation at the state level and resolves, wherever possible, coordination problems at the district level that could not be resolved by the District Development Working Committee.

15

National Development

Council

National Development

Working Committee

ImplementationCoordination

Unit,PMD

District DevelopmentWorking Committee

State DevelopmentCouncil

Ministry Level Development Committee

State Development Working Committee

The State Development Council is the highest level in each state. It is chaired by the Chief Minister of the State and its members include selected members of the state government. The State Secretary is the Secretary to the Council; senior state heads of departments and authorities are in attendance at Council meetings. The Council rules on coordination problems that have been referred to it by the State Development Working Committee.

At the federal level, each Ministry includes a Ministry Level Development Committee, which is chaired by the Secretary-General. Its members are senior Ministry officials and heads of departments, agencies and authorities under that Ministry. This Committee discusses the progress of development projects related to the Ministry and resolves any coordination problems. The output of these meetings, in particular progress reports on the implementation of projects, are transmitted to the Implementation Coordination Unit and discussed at periodic meetings of its Development Projects Coordination Committee. The Deputy Director-General of the Implementation Coordination Unit chairs the meetings of this Committee and its members comprise representatives of all Ministries.

The National Development Working Committee operates on the next level. It is chaired by the Chief-Secretary to the Government and its members are heads of central agencies and the Secretaries-General of all Ministries. This Committee is concerned with the implementation of Government projects and any related problems. It attempts to resolve any problems and refers certain cases to the National Development Council.

The National Development Council comprises selected Ministers and is chaired by the Prime Minister. It resolves serious issues related to coordinating the implementation of development projects. It is particularly concerned with poverty reduction projects and programmes to improve the socio-economic position of the Bumiputera.

In addition, Ministers and administrators employ several other mechanisms to monitor and coordinate social policy implementation. One such mechanism is the weekly Post-Cabinet Meeting, held at each Ministry. These meetings often concern Cabinet discussions that pertain to the progress and problems of implementing projects.

Finally, the Cabinet is also responsible for M&C activities. The weekly Cabinet meeting is, in effect, a coordination meeting at the very highest level of Government. It facilitates the resolution of real or perceived overlaps in the functions and activities of Ministries that implement social policies.

E. CONCLUSION

Malaysia has an established institutional framework for formulating, implementing, monitoring and coordinating social and other policies. The main participants are public sector institutions and personnel, in addition to political parties, interest groups, NGOs, the media and individuals.

16

III. SOCIAL PROGRAMMES AND REDUCTION OF POVERTY

A. INTRODUCTION

Development initiatives in Malaysia have been underpinned by the philosophy that growth cannot be pursued as an end in itself. For all segments of society to benefit, growth must always coexist with the principle of equitable distribution. To this end, Malaysia has committed itself to rapid and sustainable economic development, with the aim of providing a larger volume of resources for social development. The Government believes that economic growth alone is insufficient to guarantee social harmony, particularly in a multi-ethnic country such as Malaysia. The aim of the Government has always been to ensure that social development policies are people-centred and that economic resources are tailored to meet human needs as effectively as possible. As such, social development, which is aimed at building a better life and enhancing its quality, remains a central component of the overall development agenda. This goal is illustrated in table 1, which outlines Government allocations to certain sectors under various five-year development plans.

One of the major development concerns of newly independent Malaya in 1957 was to integrate the population, in particular the indigenous segment, into the modern economy as swiftly as possible. To this end, redistribution of wealth programmes in addition to programmes that provide essential social services, namely, education, health and housing were developed. The provision of social services was irrespective of individual incomes, thereby ensuring that large sections of the population had access to services they would otherwise have been unable to afford.

B. HEALTH

1. Health policy and programmes

In Malaysia, investment in health has been a central component of the overall development strategy. Improved health status is perceived as an outcome of economic development and indeed, as a means of achieving economic development.

Since 1957, health sector development programmes have concentrated on improving the health of all Malaysians. They aim to do this by providing an integrated and comprehensive range of quality health services including primary, secondary and tertiary levels of care. In addition, the Government, which is responsible for providing health care as stipulated in the Federal Constitution, has ensured a more equitable distribution of services, thereby improving access to health care.

17

TABLE 1. FEDERAL GOVERNMENT ALLOCATION AND EXPENDITURE BY SECTOR, 1966-2005(Millions of ringgits)

Sector

First MPa/

1966-1970Second MP1971-1975

Third MP1976-1980

Fourth MP1981-1985

Fifth MP1986-1990

Sixth MP1991-1995

Seventh MP1996-2000

Eighth MP2001-2005

Allocation % Allocation % Allocation % Allocation % Allocation % Allocation % Allocation % Allocation %Economic 2 210.8 63.3 7 394.72 72.3 12 655.16 68.3 30 103.81 61.41 24 048 64.8 29 875 51 49 351.6 47.7 50 514.6 45.9Social 644.7 17.7 1 431.03 13.7 3 092.15 16.6 10 340.99 21.09 9 046 24.8 14 780 25.3 32 156.0 31 37 518.1 34.1Security 645.7 15.7 1 104.84 10.4 2 200 11.9 7 741.78 15.79 2 955 7.2 11 139 19 12 747.6 12.3 10 750 9.8General

administration 109 3.3 369.86 3.6 597.68 3.2 838.84 1.71 1 241 3.2 2 706 4.7 9 309.7 9 11 217.3 10.2

Source: Government of Malaysia, Mid-Term Reviews of First, Second and Third Malaysia Plans (Kuala Lumpur, Government Press, various years); Mid-Term Reviews of Fourth and Fifth Malaysia Plans (Kuala Lumpur, National Printing Department, various years); Mid-Term Reviews of Sixth and Seventh Malaysia Plans (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, various years); and Eighth Malaysia Plan 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001).

a/ Malaysia Plan.

19

In the 1950s, provision of health facilities in rural areas was a priority. During that period, the economic structure in Malaysia was agriculture-based. A high percentage of the population was located in rural areas with high infant and maternal mortality rates in addition to high mortality and morbidity rates. In order to combat this, a largely free rural health service programme that delivered health services directly to the rural population was established. This endeavour provided comprehensive health care, including services such as maternal and child health care, medical and dental care, immunization, family planning, communicable diseases control and environmental sanitation. Periodic upgrading of the rural health service programme has contributed towards its continued relevance.

Furthermore, the Government continues to establish hospitals that provide a range of primary, secondary and tertiary care in urban areas. These facilities have a higher level of care than rural health units. In fact, rural health units serve as outposts of hospitals. They are linked through a referral system and offer out- and inpatient care.

The steady expansion of health services, particularly in the first two decades after 1957, was beneficial to an increasing proportion of the population. By the 1990s, common diseases such as malaria, tuberculosis and diarrhoea, and the principle causes of morbidity, namely, poor sanitation and malnutrition, which were associated with poverty and underdevelopment, had been replaced by illnesses associated with affluence, such as cardiac problems and hypertension.

The present objective of the health sector is to improve the delivery of health care services. Primary health care remains at the heart of national health development plans. At the same time, there are ongoing attempts to improve equity and quality with regard to the provision of health care services. This goal entails the further development of primary, secondary and tertiary health care, greater use of ICT in the delivery of services and an increase in the quantity and capabilities of health personnel.

Malaysia has four principal health programmes. These are reviewed below.

(a) Promotive and preventive health service programmes

It is Government policy to advocate promotive and preventive health services, with the aim of reducing expenditures on curative and rehabilitative services. One component of this strategy is to alter the pattern of disease in Malaysia, for example, by replacing communicable diseases with non-communicable illnesses. Non-communicable illnesses are related to affluent lifestyles, accidents in the workplace and homes. In addition, this approach endeavours to contain new and re-emerging strains of communicable diseases. The success of this strategy depends upon a better-educated and more informed public. The Government is therefore launching an increasing number of health education and awareness programmes. These are detailed as follows:

19

(i) Healthy lifestyle programme

This programme advocates healthy behaviour and the prevention of disease. It raises awareness of environmental, occupational, socio-economic and behavioural factors that have a potential impact on the health of all individuals. An HIV/AIDS prevention programme for youth and adolescents falls within the framework of this endeavour. All the programmes under this banner are implemented in coordination with private hospitals, clinics, NGOs and Ministries.

(ii) Immunization programme

This programme ensures that the following vaccinations are made available for all children: Bacille Calmette-Guerin (BCG), Triple Antigen (Diphtheria, Pertussis and Tetanus), Poliomyelitis and Measles. It also encourages Hepatitis vaccinations for adults.

The surveillance and control of infectious diseases has been improved by establishing greater cooperation among various agencies, including the World Health Organization (WHO) and the Centres for Disease Control and Prevention, Atlanta, United States of America. Moreover, an Infectious Disease Centre has been established in Malaysia.

(iii) Family health programme

This programme promotes the health of the individual, family and community and is being expanded. One component of this programme is the Family Medicine Specialist Service, which was introduced in 1997. The aim of this service is to ensure the early detection of diseases and to provide the appropriate management of patients at the primary health care level. The success of this endeavour, combined with the decentralization of outpatient departments from hospitals to health clinics and the provision of comprehensive primary health care to health clinics, has made comprehensive primary health care more accessible and reduced unnecessary referrals to hospitals.

(iv) Food and nutrition programme

The National Plan of Action on Nutrition is implemented under the banner of this programme. The Plan highlights the importance of food safety and hygiene in the home, market or point of origin of foodstuff. It also advocates equitable access to nutritional food and promotes healthy eating habits, particularly among school children and adolescents.

(v) Environmental health and sanitation programme

The goal of this programme is to supply all urban homes with piped water and to improve access to piped water in rural areas. This programme provides alternative

20

safe water sources, namely, community wells and facilities to tap groundwater, to rural areas that do not have access to piped water. The ultimate aim is to phase out alternative water supplies in rural areas and replace them with piped water.

(vi) Occupational safety and health programme

This programme advocates the establishment of a safer and healthier work culture and environment. It does this by means of public campaigns and through training and education programmes for workers and employers. In addition, increased law enforcement aims to reduce the incidence of occupational accidents and diseases.

(b) Medical care services programmes

Medical care services programmes include the construction and establishment of new medical facilities and the expansion and upgrading of existing facilities.

New medical facilities are being equipped with the latest equipment and technology. In addition, two information technology (IT)-based specialist hospitals have been commissioned since 2000. Furthermore, a computerized Total Hospital Information System is being introduced in selected new hospitals.

The installation of new diagnostic machines in major hospitals aims to ensure the improved quality of diagnosis and care while existing equipment is upgraded. These new machines include magnetic resonance imaging machines, computerized tomography scanners, mammography equipment and bone densitometers.

In addition, the facilities, equipment and technology of rural health programmes are being upgraded. The Government is establishing new primary health care clinics and community and midwife clinics are being upgraded to provide a broader range of primary health care. This process is being complemented in rural facilities by the provision of medical equipment and technology, including imaging and laboratory diagnostic facilities and teleprimary IT systems. In addition, mobile health services for rural and remote areas are being improved.

The Government is implementing programmes to monitor the regulation, control, production and use of pharmaceutical and medicinal products, including traditional medicines. A Quality Assurance Programme, designed to improve the efficiency and effectiveness of delivery of health services is also being established.

(c) Health manpower programmes

Several training programmes have been initiated to ensure that the manpower requirements of health services provided by the Government are fulfilled. New facilities are being constructed while existing institutes are being expanded. In addition, training is being outsourced. Doctors, medical specialists, dentists,

21

pharmacists and other health personnel are trained in Malaysia and abroad. However, given that Malaysia has a shortage of medical personnel, foreign doctors and specialists are being recruited and retired personnel are being re-employed on a contractual basis.

(d) Medical research and development programmes

The Institute of Medical Research (IMR) was founded in Malaysia in 1900. IMR has been designated as a WHO Regional Centre for Research and Training in Tropical Diseases and Nutrition. It develops methods for the control of major communicable and non-communicable diseases, particularly the parasitic and nutritional diseases prevalent in Malaysia and the Western Pacific Region. In addition, IMR is the WHO Collaborating Centre for Ecology, Taxonomy and Control of Vectors of Malaria, Filariasis and Dengue, in addition to being the focal point for the WHO Collaborative Surveillance Programme on Antibiotic Resistance in the Western Pacific Region. The establishment of various National Institutes of Health has complemented the work of IMR.

Its work has also been reinforced by research conducted by universities and other institutions, including those financed by the Intensified Research in Priority Areas (IRPA) Programme. The focus of recent IMR research has been on the diagnosis, treatment, prevention and control of diseases of concern to Malaysians, namely, HIV/AIDS; Hand, Foot and Mouth disease; Nipah virus and the effects of pollution on health. The issues that concern IRPA include: health implications associated with lifestyle and demographic changes; occupational safety and environmental health; communicable diseases; new health technologies and the development of medical biotechnology; healthcare systems and industry; the socio-economic impact of HIV/AIDS; and food production.

2. Role of private health service providers

The number of private health service providers has increased in recent years. According to the EPU, there were 225 private hospitals in the country in 1999, largely located in urban areas. These facilities provide curative care, usually at a higher fee than Government hospitals.

In addition to providing medical care, private firms provide support services to Government hospitals, pursuant to a privatization exercise in 1996. These support services are non-medical in nature and include clinical waste management, bio-medical equipment maintenance, maintenance of facilities and linen and laundry services. Other privatized activities include the production of medical and pharmaceutical products and the medical screening of foreign workers.

22

3. Federal development expenditure for health services

From 1996 to 2000, federal Government expenditure on health services amounted to some 3.7 billion ringgits (M$) (see table 2).9 This accounted for approximately 12 per cent of total social sector expenditure and 3.7 per cent of the total development spending of the Government.

TABLE 2. DEVELOPMENT ALLOCATION FOR HEALTH SERVICES, 1996-2005(Millions of ringgits)

Programme

Seventh MPa/

1996-2000Allocation Expenditure

Eighth MP2001-2005Allocation

Patient care services New hospitals Upgrading and renovation

Public health services Urban health Rural health Environmental health

Other health services Training Research and developmentb/

Total

2 691.851 510.861 180.99

889.32375.15500.17

14

155.93150.93

5

3 737.1

2 640.041 447.391 192.65

917.91456.37447.54

14

167.55162.55

5

3 725.5

4 1692 284.61 884.4

1 020.6306.1708.3

6.2

310.4285.4

25

5 500

Source: Government of Malaysia, Eighth Malaysia Plan, 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), p. 497.

a/ Malaysia Plan.b/ Excluding allocation from the Intensified Research in Priority Areas programme.

The budget allocation for the development of the health sector for the period of the Eighth Malaysia Plan, 2001-2005 has increased considerably. It amounts to M$ 5.5 billion, or 14.7 per cent of the social sector budget and 5 per cent of the total development budget.

The largest expenditure during the 1996-2000 period was for the construction of new hospitals and clinics (see table 2); this activity has also been allocated the largest budget for 2001-2005. In addition, the budget allocation for research and development for 2001-2005 has been increased to M$ 25 million, a significant jump from its allocation of M$ 5 million during the 1996-2000 period.

9 US$ 1 = M$ 3.8, as of 2 September 1998. See Government of Malaysia, White Paper: Status of the Malaysian Economy (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 1999), p. 43.

23

4. Conclusion

Government health programmes have resulted in the establishment of an increased number of health facilities and a wider coverage of health services (see table 3).

TABLE 3. PUBLIC HEALTH FACILITY AND COVERAGE, 1995 AND 1999

CategoryNumber Ratio of facility to population

1995 1999 1995 1999

Health facilities Rural health facilities Community clinicsb/

Health clinics Mobile unitsc/

1 987721284

1 992725194

1: 4 7171: 12 998

1: 4 7581: 13 194

Urban health facilities Maternal and child health clinics Health clinics

10251

10754

1: 22 909 1: 25 853

Patient care services Hospitals Acute bedsd/

Dental unitse/

11824 4542 327

11924 7802 597

1: 8461: 8 891

1: 4951: 8 540

Coverage (percentage)

Beneficiaries (thousands)f/

Outpatient visitsg/

Inpatientsg/

Rural water supply Sanitary latrines (rural) School dental clinics Supplementary feeding

24 2901 4487 3978 1322 808

510

27 0391 543

8 398a/

8 761a/

4 029528

85.894.963.4

19

93.5a/

99a/

83.118.4

Immunization (under one year old) BCG h/

Diphtheria, Pertussis and Tetanus (third dose) Hepatitis B (third dose) Measles Polio (third dose)

554501

485458500

479499

483457495

10093.7

90.785.593.5

10094.1

91.186.293.4

Source: Adapted from the Government of Malaysia, Eighth Malaysia Plan, 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), p. 485.

a/ Figures for 2000.b/ Includes rural and midwife clinics that have been upgraded into community clinics. c/ Dispensary services, village health teams, flying doctor and dental services.d/ Hospital beds under the Ministry of Health; does not include beds for chronic cases.e/ Dental chairs in Government clinics.f/ Thousands.g/ Attendance in public health facilities.h/ Bacille Calmette-Guerin.

24

More importantly, programmes have led to the improved health of Malaysians. For example, the life expectancy at birth for males has increased from 56 years old in 1957, to 69 years old in 1990 and 69.9 years old in 2000. Similarly, the life expectancy for females at birth increased from 58 years old in 1957 to 74 years old in 1990 and 74.9 in 2000 (see table 4). This improvement was accompanied by a marked decline in infant mortality. This dropped from 76 per 1,000 live births in 1957 to 13 in 1990 and 7.9 in 2000. In addition, the maternal mortality rate has decreased over the past half a century, from 280 per 1,000 live births in 1957, to 20 in 1990, down to 0.2 in 2000 according to the Government of Malaysia.

TABLE 4. SELECTED INDICATORS OF HEALTH STATUS, 1957, 1990 AND 2000

(Years)

Indicator 1957 1990 2000Life expectancy at birth Male FemaleInfant mortality rate per 1,000Maternal mortality rate per 1,000

565876

280

69741320

69.974.97.90.2

Source: Adapted from the Government of Malaysia, Eighth Malaysia Plan 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), p. 479.

In terms of cost, the Government has heavily subsidized health and medical care in State facilities. Moreover, such facilities are virtually 100 per cent subsidized by the Government in the case of rural populations and the poor. Private sector contributions to medical care have been a factor in the improvement of services, particularly in urban areas where most private hospitals and clinics are located.

C. EDUCATION

1. Introduction

The federal Government is responsible for all matters pertaining to education, with the exception of Islamic education, which is provided by state governments. Exceptional advances have been made with regard to the goal of increasing access to education and satisfying the manpower needs of the economy.

2. Education policy and programmes

Education and training are important components of socio-economic policies. Several objectives underpin education policy in Malaysia. These are: to expand the capacity of educational establishments; to increase access to all forms of education; to strengthen the delivery of services; and to improve the general quality of education.

25

The long-standing objectives of education policy in Malaysia are linked to the core national policies of NEP, NDP and NVP. These objectives aim to achieve the following:

(a) Provide an education for all Malaysians;(b) Generate an adequate pool of national human resources;(c) Produce sound, well-rounded individuals;(d) Produce a loyal and united nation.

In 2000, the literacy rate in Malaysia was 93.8 per cent, one of the highest in the world.10 This reflects the importance of education within the national development agenda. The Government provides 11 years of free schooling. While education is not compulsory, more than 99 per cent of all six-year olds during this period were enrolled in schools and more than 92 per cent of all students were enrolled at the upper secondary level.

The Ministry of Education implements pre-school, primary, secondary and tertiary education programmes in addition to teacher training projects. Other Ministries maintain educational programmes, albeit in a more limited or specialized capacity. For example, the Council of Trust for Indigenous People, an organ of the Ministry of Entrepreneur Development,11 sponsors fully residential junior science colleges that cater largely to Bumiputera students. In addition, the Ministry of Rural Development organizes pre-school classes for rural children through its Community Development Division, and the Ministry of National Unity and Social Development organizes pre-school classes for urban children through its Department of National Unity.

Other programmes include the following:

(a) Pre-school education programme

This programme caters to children in the five to six years old age group. In addition, governmental and non-governmental agencies and the private sector have set up kindergartens throughout the country. The Guidelines on Pre-school Curriculum, which were formulated in 1996, determine standard curriculum and regulate requirements pertaining to facilities and teacher training for all pre-school centres. In addition, pre-school education has been strengthened and streamlined by its incorporation into the scope of the Education Act.

(b) Primary school education programme

10 Government of Malaysia, Kualiti Hidup Malaysia: Malaysian Quality of Life, 2002 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2002), p. 36.

11 Government of Malaysia, Seventh Malaysia Plan, 1996-2000 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 1996), p. 321.

26

This programme is applicable to children from seven years of age and must be completed within five to seven years. It emphasizes the acquisition of strong reading and writing skills and aims to build a solid foundation in mathematics and basic sciences. New primary schools are established within the framework of this programme, which also provides educational support in the form of financial assistance, textbooks-on-loan and hostel facilities for underprivileged children and those from lower-income households.

These incentives have reduced expenses and contributed towards an increase in the number of students completing their education. Efforts to improve the performance of rural schools vis-à-vis their urban counterparts have also been undertaken. This has been done by upgrading facilities and improving the quality of teaching in rural schools. Rural schools with less than 150 students have been amalgamated, thereby ensuring that students have access to better facilities. Residential facilities continue to be built in many rural schools to improve access and provide students with a more conducive learning environment. Government figures indicate that initiatives resulted in a 97 per cent participation rate of children in 2001.

(c) Secondary education programme

The curriculum of this comprehensive programme includes a wide range of subjects that have a practical bias and a hands-on approach to learning. At the upper secondary level, students move into more specialized fields of study. Several technical and vocational schools provide technically biased academic education and pre-employment skills. At this stage, the theoretical and practical application of knowledge is integrated into the learning process with the aim of increasing the understanding of science and technical subjects. The participation rate of students at the secondary level has approximately 85 per cent in 2001.

Furthermore, the Government caters to children with special needs. Wherever possible, the particular needs of visually- and hearing-impaired students and those with learning difficulties are addressed within the mainstream school system.12 As of 2001, 822 primary schools and 132 secondary schools were equipped with facilities for children with learning disabilities; and there were 28 primary and four secondary special education schools.

(d) Tertiary education programme

This programme provides education at the degree, diploma and certificate levels at new institutions of higher learning such as universities and polytechnics, and through distance-learning courses. Moreover, this programme is concerned with the upgrade and expansion of existing universities. One feature of the tertiary education programme is a strong emphasis on science and technology-based courses, namely,

12 According to data compiled by the Government of Malaysia.

27

medicine, dentistry, engineering, architecture and ICT. Financial assistance is offered to various groups of students and undergraduates, including those from low-income households, through the National Higher Education Fund. This ensures that all young people have access to tertiary education. With regard to improving quality of education, private sector representatives have been included in the governing bodies of these public sector institutions.

Government education policies also cater to less academic students in the form of vocational training and technology-based advanced vocational training centres. Institutions that offer such programmes provide training from basic to advanced levels. Graduates of vocational training institutions provide the trained manpower desperately needed by the industrial sector. The Skills Development Fund caters to these institutions and provides financial assistance to poor students in particular.

(e) Teacher training programme

The programmes under this banner are continuously reviewed. In addition, they integrate new courses into their syllabuses on a regular basis. These programmes cover such areas as counselling, interpersonal skills, environmental education and computer and multimedia utilization in the teaching of mathematics, science, Malay13

and English.

3. The role of private educational institutions14

Private education existed in former Malaya, Sabah and Sarawak prior to 1957. This form of education was largely provided by Christian missionaries of various denominations, Chinese educationists in collaboration with Chinese businessmen and Indian community leaders. After 1957, the establishment of a national education system gradually diminished the role of these institutions, which were integrated into the national system. However, some private institutions have been re-established in Malaysia. They provide a welcome boost to Government programmes.

The private sector is involved at all levels of education, from pre-school to tertiary. At the tertiary level, this involvement takes the form of sponsoring local private universities and campuses that are affiliated to foreign universities. The Private Higher Educational Institutions Act, 1996 and the Ministry of Education Guidelines are ensuring the healthy growth of private tertiary education in Malaysia.

4. Federal development expenditure for education

13 Malay is also referred to as Bahasa Malaysia or the Malaysian language.14 F.H.K. Wong, “History, structure, administration and objectives”, Readings in Malaysian

Education (Kuala Lumpur, Penerbit Universiti Malaya, 1977), pp. 1-27; and Government of Malaysia, Eighth Malaysia Plan, 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001).

28

During the period 1996-2000, federal Government development expenditure on education amounted to some M$ 17.5 billion (see table 5). This was approximately 56 per cent of the development expenditure of the social sector and 17.7 per cent of the total development expenditure. In effect, expenditure on education was the highest outlay in the social sector. The largest component of the M$ 17.5 billion was expenditure on secondary education. This amounted to some M$ 5.3 billion, or 30.3 per cent of that figure. Tertiary education accounted for some M$ 5 billion, or 28.6 per cent of that figure. For the period 2001-2005, the development allocation for education has been increased to some M$ 18.7 billion.

TABLE 5. DEVELOPMENT ALLOCATION FOR EDUCATION AND TRAINING, 1996-2005(Millions of ringgits)

Programme

Seventh MPa/

1996-2000Eighth MP2001-2005

Allocation Expenditure AllocationEducation Pre-school Primary education Secondary education Government and Government-aided schools MARA junior science colleges Technical and vocational schoolsb/

Tertiary education Teacher education Other educational support programmes

Training Industrial training Commercial training Management training

Total

17 948.5123.6

2 632

5 330.1 3 860 710

760.1

5 362.8 350 4 150

2 237.3 1 876

71.3 290

20 185.8

17 542.2107.5

2 631.8

5 317.53 853.7

707.2756.6

5 005.1332.5

4 147.8

2 181.9 1 827

71.2283.7

19 724.1

18 660147.4

2 750

4 862.63 262.6

700 900

8 900 300 1 700

4 0003 760.0

100.0 140

22 660

Source: Government of Malaysia, Eighth Malaysia Plan, 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), p. 128.

a/ Malaysia Plan.b/ Majlis Amanah Rakyat (Council of Trust for the Indigenous People).

29

5. Conclusion

The national education system was created gradually. Moreover, the desire to achieve universal primary education has ensured that students are taught in several languages. This addresses the needs of every ethnic group. In addition, education continues to be free in primary schools. Secondary education is conducted in the national language. Table 6 illustrates the fact that the enrolment of students at all levels of education is increasing.

TABLE 6. ENROLMENT OF STUDENTS IN LOCAL PUBLIC INSTITUTIONS, 1995-2005*

Level of education 1995 Percentage 2000 Percentage 2005a/ Percentage

Increase (Percentage)

Seventh MPb/ Eighth MP

Pre-school

Primary

Lower secondary

Government and

Government-aided

schools

MARA junior science

colleges

Upper secondary

Government and

Government-aided

schools

MARA junior science

colleges

Vocational and

technical schools

Post-secondary

Government and

Government-aided

schools

Pre-diploma and pre-

university courses

Teacher education

(non-graduates)

253 675

2 799 359

1 124 910

1 122 180

2 730

502 964

459 850

6 320

36 794

80 080

64 610

15 470

35 410

13 556

5.1

56.6

22.8

10.2

1.6

0.7

0.3

399 980

2 945 906

1 245 523

1 239 563

5 960

697 223

626 353

11 370

59 500

76 755

48 035

28 720

14 460

28 154

7

51.7

21.8

12.2

1.4

0.3

0.5

549 000

3 035 018

1 364 153

1 348 084

16 069

921 271

804 922

16 594

99 755

134 134

83 174

50 960

31 310

88 848

8.4

46.3

20.8

14

2

0.4

1.4

57.7

5.2

10.7

38.5

-4.2

-59.2

107.9

37.3

3

9.5

32.3

74.8

116.5

99.8

30

TABLE 6 (continued)

Level of education 1995 Percentage 2000 Percentage 2005a/ Percentage

Increase (Percentage)

Seventh MPb/ Eighth MP

Certificate

Diploma

Degreec/

Total

46 480

87 891

4 944

325

0.9

1.8

100

92 304

201 271

5 701

576

1.6

3.5

100

148 025

289 806

6 561

565

2.3

4.4

100

98.9

129

15.3

19.1

44

13.9

Source: Government of Malaysia, Eighth Malaysia Plan, 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), p. 99.

* Enrolment refers to total student population in that particular year at the particular level of education.

Note: The contents of this table have been reproduced in the form in which they were received.

a/ Projected figures.

b/ Malaysia Plan.

c/ Includes enrolments at first degree and post-graduate levels in public universities and in the private college, Kolej Tunku Abdul Rahman.

D. EMPLOYMENT

1. Introduction

Malaysia has maintained high or full employment from the 1970s until 2000. This can be attributed to the almost continuous rapid expansion of the economy over the past three decades.15 In fact, in certain sectors of the economy, the demand for labour has been so great that there have been shortages. Programmes to increase employment and overcome labour shortages have boosted employment opportunities.

2. Employment policy and programmes

Labour market policy in Malaysia has always been a component of the major strategies pertaining to the policies of NEP, NDP and NVP. The practice of creating new jobs at a rapid and continuous rate has been an important component of efforts to reduce poverty and to restructure society.

The central aim of national employment policy has been to maintain full employment. Other goals are concerned with increasing labour productivity and wages and satisfying the labour demands of an economy that has been expanding rapidly and

15 This period of growth was interrupted in 1985, in the wake of a global recession and in 1998, following an attack on the Malaysian ringgit. See Government of Malaysia, Sixth Malaysia Plan, 1991-1995 (Kuala Lumpur, National Printing Department, 1991), p. 6; and Government of Malaysia, White Paper: Status of the Malaysian Economy (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), pp. 12-22.

31

undergoing a variety of structural changes.16 The onset of the financial crisis in 1997 and the subsequent increase in unemployment has added impetus to these aims as policies endeavour to ensure that the newly unemployed are able to find productive employment.17

The Government drive to maintain full employment has entailed the implementation of programmes and strategies that have focused on both the demand and supply sides of the employment market. Strategies to reduce demand for labour, in particular unskilled and semi-skilled labour, were conceived in response to the strained labour market situation in the early 1990s. One of these strategies focused on encouraging new investments in capital or technology-intensive rather than labour-intensive industries. Within this context, incentives were provided to small- and medium-scale industries for the purposes of modernization and upgrading. Furthermore, local investors and entrepreneurs were encouraged to locate their operations abroad, particularly in neighbouring countries, to take advantage of more abundant and cheaper labour. Another strategy was focused on measures to increase productivity. These included on-the-job training, increasing motivation and linking productivity to wages.

Strategies designed to benefit the supply side of the economy have focused on the maintenance of an effective education system that is capable of producing graduates who can satisfy the labour needs of the economy.18 Other efforts include the implementation of comprehensive industrial training programmes. These are sponsored by the Ministries of Human Resources, Entrepreneur Development and Youth and Sports in coordination with accredited private industrial training providers. These programmes have been strengthened by the financial support and expertise of France, Germany, Japan, Spain and the United Kingdom of Great Britain and Northern Ireland.

Other efforts to ensure an adequate supply of trained manpower include the introduction of a programme to upgrade the skills of employed workers and retrain the unemployed. The programme is monitored by the Human Resources Development Fund, which is managed by the Ministry of Human Resources. It provides financial assistance for training. Firms must contribute a small percentage of their earnings towards the Fund.

Salary policy is another feature of efforts to ensure an adequate supply of labour. The Government determines salaries in the public sector. While basic salaries

16 Government of Malaysia, PMD, Economic Planning Unit (EPU), Malaysia: National Report World Summit for Social Development, Copenhagen, 1995: Poverty Eradication, Expansion of Productive Employment and Social Integration in Malaysia, 1971-1994 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 1995), p. 24.

17 Government of Malaysia, PMD, EPU, National Economic Recovery Plan: Agenda for Action (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 1998), pp. 115-117.

18 Education is reviewed in chapter III, section C of the present study.

32

in this area are generally lower than those in the private sector, civil servants enjoy a number of privileges, including security of tenure. Private sector salaries are determined by mutual agreements between employers and employees, and are formalized by collective agreements. Various laws ensure the rights of workers, and disputes are resolved through arbitration and by the Industrial Court.

The Government has also implemented measures to deal with the large influx of workers from neighbouring countries. This includes the passing of laws to regulate and facilitate their legitimacy. In addition, the Government has outlined the sectors and industries in which such workers are permitted to seek employment. It has also granted amnesties to illegal foreign workers, whereby offenders are repatriated to their country of origin.

In addition to the strategies reviewed above, a service to disseminate information concerning job vacancies was established. This was eventually upgraded and replaced with a more comprehensive and computerized system, known as the Electronic Labour Exchange.

Particular measures were introduced to cope with unemployment in the wake of the financial crisis of 1997.19 These included the promotion of self-employment in organized petty-trading, farming and small businesses; persuading employers and industries to delay retrenchments in favour of pay-cuts, shorter working hours or shifts and part-time employment; and facilitating the mobility of workers.

3. Federal development expenditure for employment

From 1996 to 2000, federal Government expenditure on training amounted to some M$ 2.2 billion (see table 5). Industrial training accounted for approximately M$ 1.8 billion of this amount, and represented approximately 82 per cent of total training expenditure and some 17.4 per cent of total social sector development expenditure.

4. Conclusion

The employment programmes and strategies implemented by the Government during periods of economic strain were instrumental in maintaining close to full employment levels in Malaysia, despite retrenchments. It is therefore evident that the employment policy of the Government has achieved its target of maintaining close to full employment. This has primarily been achieved by ensuring that prudent modifications within the sphere of education have met the requirements of a fluctuating economy.

19 Fears concerning increased levels of unemployment proved to be unfounded. The unemployment rate increased from 2.5 per cent in 1996 to some 3.2 per cent in 1998 and 3.4 per cent in 1999. See Government of Malaysia, Eighth Malaysia Plan, 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), pp. 37 and 38.

33

E. SOCIAL PROTECTION20

1. Introduction

Government agencies tend to be the main providers of social protection. Private initiatives in this regard tend to be smaller and less comprehensive. While social protection coverage is extensive, there is a degree of overlap among certain schemes and funds.

2. Policy and programmes

Social protection policies aim to improve the well-being of the population. Such policies pertain to the provision of welfare assistance, the implementation of poverty alleviation programmes and the provision of basic amenities such as housing, water and sanitation. These policies also incorporate measures that are aimed at increasing incomes through the provision of training and credit facilities.21

For the purposes of this study, however, social protection refers to universal benefits for the public and employment-related measures that protect the population against standard social security contingencies.22 Programmes related to these concerns are detailed as follows:

(a) Employees Social Security Scheme

This scheme is administered by SOCSO and was established under the Employees Social Security Act of 1969. The Act stipulates that all employees receiving an initial monthly salary of less than M$ 2,000 are entitled to benefits administered under the Scheme. Employees whose salaries subsequently exceed M$ 2,000 continue to be entitled to assistance. Those who have an initial salary equivalent to more than this amount are entitled to participate in the scheme with the agreement of their employers.

Certain categories of workers, namely, domestic servants, tributers, spouse(s) of the employer, members of the armed forces, police officers, persons detained in a prison or detention centre and all public sector employees, are not covered by this scheme. In addition, immigrant workers have been excluded from the scheme since April 1993. Employees who have attained the compulsory age of retirement or who

20 This section is largely derived from International Labour Organization (ILO) and United Nations Development Programme (UNDP), Malaysia: Report to the Government on the Development of Social Protection Policy and Strategy (Geneva, ILO, 1996) (ILO/UNDP/MAL/R.31), pp. 11-27.

21 Ibid., p. 11.22 Ibid., p. 11. Standard social security contingencies refer to economic and social distress caused

by the discontinuance or substantial reduction of earnings as a result of sickness, maternity, injury as a result of employment, unemployment, invalidity, old age and death.

34

receive an invalidity pension whilst in employment are excluded from coverage with regard to invalidity benefits. However, they are covered for injuries in the workplace.

This Scheme insures employees against injury in the workplace and any invalidity that results from such an injury. Insurance against injury in the workplace requires a contribution of 1.25 per cent of the average assumed wage of the wage class of the employee and must be paid by the employer.23 The contribution for invalidity is one per cent of the wage of the employee and is shared equally by the insured employee and his employer.

Injury benefits cover industrial injuries, occupational diseases and commuting accidents. These benefits also cover medical care, temporary disablement, permanent disablement, rehabilitation and in the event of the death of an employee, dependents’ and funeral expenses. Invalidity benefits are in the form of pensions for the invalid employee, invalidity grants, rehabilitation expenses, funeral expenses and survivors’ pensions. These benefits are reviewed periodically, including actuarial reviews, to ensure that the real value of benefits are maintained and that the scheme is working in an effective and efficient manner.

(b) Employees’ Provident Fund

This was introduced in 1951 under the Employees Provident Fund (EPF) Act of the same year. It was the first national provident fund of its kind in the world. It was set up as a corporate body and an agency of the federal Government and is under the aegis of the Ministry of Finance.

The Fund ensures the financial security of its members, particularly after retirement by means of a savings scheme that requires contributions from employees and employers. Employees not covered by this scheme include nomadic aborigines, domestic servants (except those employed by registered societies, businesses, corporations or by designated employers, or who can elect to join), outworkers (except those employed by designated employers), detainees, legal immigrant workers (unless they elect to join and are not already covered by other provident or pension schemes) and any person who is a member of the administration, namely, Ministers, Deputy Ministers and Parliamentary Secretaries. In addition, self-employed persons or pensionable employees are entitled to become members and public sector employees can enlist as members during their probationary period. At the end of their probation, they are permitted to continue contributing to the Fund in lieu of the Government pension scheme.

Employees pay a monthly contribution that amounts to 23 per cent of their wage. Eleven per cent of the contribution is paid by the employee, and 12 per cent by the employer. Self-employed persons and pensionable employees who are members determine the size of their contribution, as long as it is at least M$ 20 per month.

23 Wages are divided into 24 classes.

35

Individual contributors are permitted to withdraw a portion of his or her contribution, prior to reaching the age of 55, for certain reasons. These include buying a house and meeting the medical costs of a serious disease.24 The total balance of an account can be withdrawn in the following instances: death, incapacitation and emigration or attaining the age of 55. In addition, there are provisions for lump-sump benefits in the event of death and incapacitation.

(c) Workmen’s Compensation Scheme

Established under the Workmen’s Compensation Act, 1952, this scheme is managed by the Ministry of Human Resources. Its target groups are manual and non-manual workers earning less than M$ 500 per month. It has also catered to legal immigrant workers since 1993. Those not covered by the scheme include casual workers not connected with the employer’s trade, domestic servants, outworkers, tributers, family workers and those excluded by order of the Minister of Human Resources. In addition, workers covered by SOCSO, the armed forces and police personnel and other public servants who are entitled to service benefits in the event of employment injury are not covered by the scheme.

The employer is liable for payment of benefits under this scheme and must therefore take out insurance with an approved insurance firm. The scheme provides for four types of benefits, namely, medical, temporary disablement, permanent disablement and death resulting from an injury in the workplace.

(d) Sickness, maternity and termination of employment benefits

These benefits were introduced under the Employment Act, which is enforced by the Ministry of Human Resources. It covers all employees earning less than M$ 1,250 per month and manual workers and their supervisors, operators of mechanically propelled vehicles and those engaged on a vessel (except officers), irrespective of salary.

The Employment Act stipulates that sick leave is to be provided at full pay for a total number of days per year ranging from 12 to 22. This is determined according to the length of service. The number of days of sick leave increases to 60 days per year if hospitalization is required.

Maternity leave is provided with full pay, subject to a minimum of M$ 6 per day. This covers a period of 60 days. In addition, the Act stipulates that employers must provide benefits in the case of termination of employment. Benefits increase in accordance with length of service. Furthermore, voluntary separation schemes for mutually agreed termination are available.

24 For a short period, the contributor was permitted to withdraw part of his or her contribution to purchase a personal computer. This provision was withdrawn in 2002.

36

(e) Public sector pension scheme

This provides for the welfare of retired public sector employees and their dependents and survivors and is administered by the Public Services Department. This scheme is regulated by a number of pieces of legislation, namely, the Pensions Act, 1980; Judges Remuneration Act, 1971; Members of Parliament (Remuneration) Act, 1980; Service Commissions Act, 1957; and Regular Forces (Pension, Gratuities and other Benefits) Regulations, 1982. The scheme covers pensionable members of the public services, statutory bodies and local authorities; judges; MPs and members of the administration; political secretaries; members of services commissions; and the armed forces, excluding those who have opted to join the Employees Provident Fund.

The pension scheme is non-contributory for individual employees. Pension and gratuity payments are the responsibility of the federal Government. The Pension Trust Fund was established in 1991 with the purpose of replacing Government pension assistance. Federal Government statutory bodies and local authorities contribute 5 and 17.5 per cent respectively, of the basic salaries of pensionable employees to the Fund.

These schemes offer two types of benefits: service pensions and gratuity payments. These are reviewed below:

(i) Service pensions

The service pension is paid upon retirement and continues until death. Upon the death of the retiree, pension payments are transferred to the widow or widower and children. This derivative pension is reduced by approximately a third, 12.5 years after the first payment. Moreover, the derivative pension is paid in the event that a public servant who is a member of the scheme dies while in office. Dependents receive this pension only if they are residing in Malaysia. Payments cease in the following cases: the widow or widower remarries, the child attains the age of 21, marries or ceases studying in an institution of higher learning. This does not apply if the child is mentally incapacitated or is permanently physically incapacitated.

A disability pension is payable in the event that a member of the public service, who is a member of the scheme, sustains an injury in the course of performing his or her official duty, or contracts a disease to which he or she was exposed by the nature of his or her duty. The payment is subject to the condition that no award or benefit has been or will be made under the Workmen’s Compensation Act. The pension of the dependent pension is payable if the aforementioned injury or disease leads to death within seven years.

In addition, an alimentary allowance is granted to the dependents of a pensioner who is adjudged a bankrupt or receives a jail or death sentence.

(ii) Service gratuity payment

37

This one-time payment is available to the public servant upon retirement. A derivative gratuity, payable to dependents in the event of the death of the pensionable public servant while in service, is also available.

(f) Armed Forces Fund

Established in 1972 under the Armed Forces Act of the same year, the purpose of this Fund is to protect the welfare of contributors and their dependents upon retirement, discharge from service, attainment of age 50 and death.25 The lower ranks of the armed forces are obliged to contribute to the scheme. Officers are permitted to participate voluntarily. Contributions of members of the lower ranks amount to 10 per cent of their basic salary in addition to a Government contribution of 15 per cent of their basic salary. Officers contribute between M$ 25 and M$ 200 per month. Contributions increase through annual dividends and bonuses. Benefits take two forms. In the case of non-pensionable lower ranks and officers, benefits are in the form of a refund of the accumulated balance of the account of each contributor. In the case of pensionable lower ranks, the benefit is in the form of a refund of the accumulated balance of each contributor’s account minus the amount contributed by the Government. In addition, supplementary disability or death benefits and a facility that allows compulsory contributors to withdraw a portion of the accumulated balance to purchase a house or piece of land subject to conditions are available.

(g) Social welfare assistance

This is one component of the social protection package provided by the Ministry of National Unity and Social Development. The programmes that fall within the framework of this banner target disadvantaged groups. They are means-tested and comprise allowances for the disabled, older people, families and children in need. Assistance is also provided to the physically disabled with regard to acquiring artificial limbs and other appliances.

25 The official web site of the Armed Forces Fund, Lembaga Tabung Angkatan Tentara, is available at: http://www.ltat.org.my/biltat.html.

38

These programmes are complemented by a poverty eradication programme,26

social welfare NGOs, private corporations, individual philanthropists and in particular, the zakat system. According to Islam, zakat is the redistribution of wealth from rich to poor. It is managed by the religious councils of the states.

(h) Occupational pension schemes

These are created by major employers and tend to be in the form of trust funds, managed by trustees. However, a proportion is administered by banks and insurance companies. The benefits are modest and typically take the form of a lump sum payment on retirement.

(i) Private insurance

This form of social protection is becoming increasingly popular, particularly with regard to life insurance and endowment assurance policies. Provisions under the Insurance Act of 1963, govern insurance and the industry is under the aegis of the Central Bank of Malaysia.

(j) Health care

The majority of health services are provided by the Ministry of Health. These are highly subsidized by the Government. Fees fall into three categories with regard to inpatient care. Charges for third class services are minimal and often waived for the very poor. This ensures that all people are permitted access to health care.

3. Conclusion

Malaysia has a large number of well-established social protection schemes, some of which have been in existence since the 1950s. These schemes have remained solvent and financially viable despite two serious, albeit short, economic recessions in the 1980s and 1990s.

The social protection schemes in Malaysia incorporate not only employees or workers but also their dependents. Even temporary legal foreign workers are provided with employment-related protection and in the case of medical care, all foreign workers, including those who are illegal, are not denied access.

However, problems do exist. A recent study, entitled “Malaysia; Report to the Government on the development of social protection policy and strategy”, carried out by the International Labour Organization (ILO) and United Nations Development Programme (UNDP), has highlighted several shortcomings in the functioning of these schemes, particularly with regard to EPF and SOCSO schemes. The study concluded

26 This is reviewed in greater detail in Section F below.

39

that there has been insufficient coordination with regard to the overall management of social security. It also noted that the fairly broad coverage of social protection schemes does not include those self-employed people. The Government has accepted these findings and is taking steps to improve the implementation of social services.

F. REDUCTION OF POVERTY27

1. Introduction

Poverty reduction has been at the top of the national development agenda since 1970, when it was first accepted as one of the twin strategies of NEP. Efforts to reduce poverty have been led by the federal Government. However, state governments, NGOs and business entities have also started to play an important role in this regard. The results have been favourable. In 1970, approximately half of all households in Malaysia were categorized as being below the poverty line. By the end of the 1990s, the number of households below the poverty line was reduced to a single digit percentage according to, inter alia, the Government of Malaysia.28

2. Policy and programmes

Policies pertaining to poverty in 1970 aimed to eradicate poverty in the long-term and reduce it in the short- and medium-terms. In 1989, the primary focus was shifted from reducing poverty to reducing hardcore or extreme poverty. The objective of the present policy is to virtually reduce poverty by 2005.

The poverty reduction strategies or programmes that were conceived in 1970 had four aspects. These were as follows:

(a) The promotion of rapid economic growth to generate employment and business opportunities, particularly for the poor;

(b) The improvement of access to all forms of education and training to enable poor people to gain employment in higher paid jobs or operate their own micro or small businesses;

27 Government of Malaysia, PMD, EPU, Malaysia: National Report World Summit for Social Development Copenhagen 1995; Poverty Eradication, Expansion of Productive Employment and Social Integration in Malaysia 1971-1994 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 1995); and Government of Malaysia, “Poverty reduction and restructuring of society”, Eighth Malaysia Plan 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 1995).

28 Government of Malaysia, PMD, EPU, Malaysia: National Report World Summit for Social Development Copenhagen 1995; Poverty Eradication, Expansion of Productive Employment and Social Integration in Malaysia 1971-1994 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 1995).

40

(c) The improvement of access of poor households to social amenities and facilities, namely, better housing, access to piped or potable water, electricity, sanitation, health and medical services, schools, rural hostels, roads and transportation services;

(d) The provision of assistance in cash and kind to members of poor households incapable of earning an income through work because of old age or some form of physical disability.29

These aspects continue to be relevant. For example, steps taken to promote economic growth during the 1998 recession, including reviving it, were taken with these strategies in mind. Moreover, these values continue to be an integral component of programmes to increase the income and productivity of poor households by the following means: modernization and commercialization of the agriculture smallholder subsector; consolidation and rehabilitation of fragmented and small-sized agriculture land; replanting of rubber and oil palm plantations; and expansion of rural-based industries.

A selection of poverty reduction measures are reviewed below.

(a) Development Programme for the Hardcore Poor

The establishment of this programme in 1989 was an important development in the drive to eradicate poverty. It was conceived in response to the realization that further reductions in the incidence of poverty could only be achieved by tackling the issue of the hardcore poor. The programme focuses on income-generating projects including petty trading, cottage industries, livestock rearing, aquaculture and commercial production of food crops. Furthermore, it provides training, improved housing, other basic amenities and financial assistance. For example, the largest Government land development agencies provide financial assistance to selected hardcore poor households that are headed by disabled persons or persons aged 60 years old and over.

(b) Non-governmental assistance

NGOs and to a lesser extent, state-government foundations and agencies and the private sector have attempted to address the issue of hardcore poverty by providing assistance in cash and kind in addition to training and employment opportunities. Amanah Ikhtiar Malaysia, a micro finance institute that operates a local version of a microcredit scheme operated by the Grameen Bank of Bangladesh has in particular made concerted efforts to combat hardcore poverty.

29 Preceding the initial determination and selection of these four strategies, the concepts of poverty and relative poverty were formulated and methods for measuring them were devised. In 1989, the concept of hardcore poverty was formulated and methods for measuring it were devised (see annex V).

41

Efforts to reduce the effects of the 1998 recession on the hardcore poor have included the provision of funds for the start-up of microcredit schemes for petty traders and hawkers in urban areas. Furthermore, additional funds have been made available in rural areas for the purposes of expanding and improving pre-schools, schools and medical facilities and providing potable water and electricity. Various measures have been taken to reduce the effects of inflation, including increasing the production of vegetables and promoting Malaysian goods.

(c) Orang Asli programme

One poverty reduction programme caters specifically to the Orang Asli, the aboriginal people of Malaysia. In 1999, Government statistics revealed that the incidence of poverty in Orang Asli households was approximately 51 per cent.30

Assistance takes the form of encouraging involvement in income-generating activities, namely, land development schemes, vegetable farming, livestock-rearing, retail business and cottage industries. Moreover, the Orang Asli are permitted to participate in the National Equity Trust Scheme for the hardcore poor.

3. Federal government expenditure for poverty reduction

During the period 1996-2000, the budget allocation for the Development Programme for the Hardcore Poor amounted to M$ 300 million. This did not include expenditures on broader poverty reduction efforts, which were including in the budgets of relevant Ministries.

4. Conclusion

As a result of poverty reduction programmes, the incidence of poverty fell from 8.7 per cent in 1995 to 7.5 per cent in 1999 while the incidence of hardcore poverty during the same period was reduced from 2.1 to 1.4 per cent (see table 7). The incidences of poverty in both urban and rural households were reduced. However, in 1999 the incidence of poverty among rural households was calculated at 12.4 per cent, which was considerably higher than that of urban households, which recorded a level of 3.4 per cent.

The poverty reduction programme in Malaysia has succeeded in drastically reducing the overall incidence of poverty. However, rural poverty still remains relatively high and the incidence of poverty among the Orang Asli is a major concern.

30 Government of Malaysia, Eighth Malaysia Plan 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 1995), p. 60.

42

TABLE 7. INCIDENCE OF POVERTY AND NUMBER OF POOR HOUSEHOLDS,1995, 1997 AND 1999

1995a/ 1997a/ 1999

Total Urban Rural Total Urban Rural Total Urban Rural

Incidence of poverty

(percentage)

Number of poor households

(thousands)

Incidence of hardcore

povertyb/ (percentage)

Number of hardcore poor

households (thousands)

Total households

(thousands)

8.7

365.6

2.1

88.4

4 212.3

3.6

83.8

0.9

20.1

2 315.8

14.9

281.8

3.6

68.3

1 896.5

6.1

274.2

1.4

62.4

4 488.1

2.1

52.4

0.4

10.6

2 449.8

10.9

221.8

2.5

51.8

2 038.3

7.5

351.1

1.4

64.1

4 681.5

3.4

86.8

0.5

13.5

2 548

12.4

264.3

2.4

50.6

2 133.5

Source: Government of Malaysia, Eighth Malaysia Plan, 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), p. 57.

a/ Based on the 1999 household population data. b/ Estimated using half the poverty line income measure (see annex V).

G. WOMEN31

1. Introduction

The political, economic and social empowerment of women in Malaysia has been boosted by a policy of encouraging equal access to development programmes and the implementation of non-gender-discriminating regulations and practices.

2. Policy and programmes

The National Policy for Women was formulated in 1989. Its objective was to enhance the role of women and ensure their integration in the process of development. The Plan of Action for the Advancement of Women was established to realize the goals of this policy and is being used as the basis for various programmes and projects.

These programmes are outlined in general terms as follows:

(a) Education

In Malaysia, equal access to all educational and training opportunities, at all levels, is guaranteed. Financial assistance for educational expenses is also provided on a non-discriminatory basis. Other forms of assistance in this area include programmes

31 Government of Malaysia, “Women and development”, Chapter 21, Eighth Malaysia Plan, 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), pp. 557-566.

43

that provide vocational training for women and the provision of financial benefits for female business ventures.

(b) Health

Two main strategies have been adopted to improve the health of women. The first aims to improve the general health of the family, including maternal and child health, immunization, family planning, nutrition and early detection of serious diseases. The objective of the programme is to reduce maternal and infant mortality, improve prenatal and antenatal health care and to provide education on the subject of nutrition. To this end, access to safe delivery services has been increased and the coverage of antenatal care has been expanded. The second approach is concerned with health education and awareness programmes for women of all ages. Steps that have been taken with regard to this approach include the conducting of seminars and workshops on healthy lifestyles, nutrition and the need for regular medical examinations. Attention was also afforded to creating awareness of, and providing information on, HIV/AIDS to young women.

(c) Households headed by women

Particular attention is afforded to poor households headed by women in Malaysia. This can be attributed to the fact that they are considerably poorer than their male counterparts. In 1999, the incidence of poverty in female-headed households was approximately 16 per cent, more than double the national incidence of 7.5 per cent according to the Government of Malaysia.32 In an effort to combat this problem, women are being encouraged to embark on micro-business ventures.

(d) Legislation

Efforts to review existing laws and to formulate new legislation are a component of the drive to improve the status and well-being of women. These efforts include amendments to the Employment Act, 1955, which focus on ensuring more flexible working hours. These have enabled an increasing number of women to join the labour force. In addition, the provision of equal pay for full and part-time employment is aimed at encouraging housewives to join the labour force as part-time employees. Attempts are also being made to ensure greater uniformity in the judgements of state institutions such as the Syariah courts on matters pertaining to Islamic family law.33

32 Ibid., p. 564.33 In Malaysia, Syariah courts are specialized courts that judge cases on the basis of Islamic law.

In addition, Malaysia has a long-established federal judiciary that decides cases on the basis of laws passed by Parliament.

44

(e) Ministry of Women and Family Development

Established in 2001, this Ministry aims to ensure greater coordination and integration in the implementation of programmes and strategies for women.

3. Federal development expenditure for programmes for women

As of 2000, budgeting for programmes and projects was not gender-disaggregated, although efforts are being made to this end. However, in addition to the budget of the Ministry of Women and Family Development, a considerable portion of the budgets of the Ministries of Health, Education, Rural Development, Human Resources and Youth and Sports are utilized for projects related to women.

4. Conclusion

While it is true that a number of non-discriminatory policies and strategies have been implemented in Malaysia, there is room for improvement. This is particularly the case with regard to increasing the number of women in the labour force and enhancing the role of women in the corporate sector.

H. YOUTH34

1. Introduction

The federal Government plays an active role in national development efforts in this sphere. These have been largely directed towards the goal of ensuring that young people receive an adequate and proper formal education. Efforts have also been exerted in preparing young people for the job market and life in general. Measures to enhance the role of young people with regard to national development have also been taken.

2. Policy and programmes

The Youth Development Policy was instigated in 1997. It replaced the National Youth Policy of 1985. The new policy retained the 1985 definition of youth as those aged between 15 and 40 years old but focused on the 18 to 25 years old age group in its programmes.

The objective of youth development programmes is to produce well-rounded individuals. In order to achieve this, young people are encouraged to do the following:

(a) Broaden their knowledge; 34 This section is largely derived from Government of Malaysia, “Youth in development”,

Chapter 20, Government of Malaysia, Eighth Malaysia Plan, 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), pp. 573-581.

45

(b) Acquire positive values and attitudes; (c) Increase their vocational and technical skills; (d) Improve social interaction; (e) Promote the importance of a healthy lifestyle; (f) Coordinate with Government agencies, the private sector and NGOs.

Programmes that target young people incorporate these aims and cover such areas as leadership training, vocational skills, entrepreneurial development, healthy lifestyle, sports and arts and culture. These programmes are implemented by the Government, usually through the Ministry of Youth and Sports, in cooperation with youth organizations, NGOs and the private sector.

In addition, there are programmes for problem youths. These include the rehabilitation of young people who have been involved in substance abuse and criminal activities. Programmes are implemented in collaboration with the National Association for the Prevention of Dadah35 and the Malaysian Crime Prevention Foundation.

3. Federal development expenditure for youth programmes

Federal Government development expenditure for the Ministry of Youth and Sports amounted to approximately M$ 1.4 billion for the period 1996-2000. This amount represents 1.4 per cent of the total development expenditure for that period.

4. Conclusion

Millions of young people have participated in youth development programmers. However, the success of such programmes has not yet been ascertained.

35 Illegal drugs.

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IV. CHALLENGES AND RENEWAL

A. FACTORS AFFECTING THE SOCIAL POLICY PROCESS

1. Introduction

Three factors have contributed to the success of the social policy process in Malaysia: a sound political environment; administrative competence and technical expertise; and non-domestic or global factors. These factors are reviewed in greater detail below.

2. The political environment

Social policy is always enforced within the framework of a political environment, which in the case of Malaysia has been stable since 1957. This state of affairs has been conducive to fostering a positive social development process in the country.

The political environment in Malaysia has at least four positive features. These are reviewed as follows:

(a) Strong Governments

Since its creation, Malaysia has been governed by a series of strong Governments. This can be attributed to the fact that successive ruling parties have always had large majorities in the House of Representatives. This state of affairs has been further bolstered by the fact that the country has always been governed by the same coalition, namely, the Alliance Party, later the National Front.36 The Alliance Party won 51 of the 52 contested seats in the first general election before the independence of Malaya, in 1955. In all subsequent general elections, the Alliance and then the National Front have won more than two-thirds of the seats in the House of Representatives, with the exception of in 1969.37

These large majorities have meant that successive Governments have had the right, confidence and continuity to enact consistent policies designed to meet the needs of the people. In addition, these coalitions have comprised ethnic-based parties. This has guaranteed the support of the majority of the multi-ethnic population in Malaysia.38

36 See chapter I, section C.37 This type of majority is significant in that it entitles the ruling party to amend the federal

constitution if necessary.38 The coalition of parties that has traditionally formed the Government of Malaysia is of a

permanent nature. These have been formed prior to elections. This differs from other countries, which tend to form such coalitions after elections to enable several parties to gain a majority in the legislative assembly and form a Government.

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Furthermore, there has always been a high degree of inter-ethnic cooperation with regard to politics in Malaysia. This has engendered a stable system of governance, unhindered by inter-ethnic conflicts and violence that would have drained resources away from social and economic development.

(b) Government commitment to equitable growth

This commitment has been evident in policies that reflect a genuine commitment to the poor and which are dedicated to real and broad-based improvements in social services, public amenities and the quality of life of all Malaysians. Moreover, hefty budget allocations and actual expenditure on education, health, other social services and rural development in addition to the existence of special Ministries for the development of education, health, women, youth, social welfare and rural areas highlight this commitment. In addition, the importance of NEP, NDP and NVP within the framework of national development policy agenda emphasizes the importance of social and economic development for the Government of Malaysia.

(c) Transparent social policy formulation process

The structure of the social policy formulation process in Malaysia permits constructive criticism. This has been a major factor with regard to sound social development. Ordinary citizens, NGOs and interest groups are free to express opinions to decision makers through political parties, the public service and the media. This openness has been further complemented by the fact that the views and opinions of opposition political parties are taken into consideration by the Government. As a result, alternative policies/programmes have been implemented.

(d) Preference for moderation and consensus with regard to resolving political issues

A preference for moderation and consensus in resolving political issues, including those pertaining to social policies, has contributed to the effectiveness of the social policy process in Malaysia. Ideals of national unity and social harmony are widely accepted in Malaysia and the majority of people reject extreme points of view. Therefore, contentious issues tend to be resolved by political parties in a harmonious fashion.

These four features have indeed strengthened the social policy process. However, broader public participation, particularly of poorer rural populations, would improve it further. One way of ensuring this is to implement frameworks capable of gauging the needs of various groups of people. Another is to ensure that information concerning social Government policies, programmes and projects is disseminated effectively and in such a way that it is easily understood. The public needs to be able to do more than voice its complaints; it must also be able to contribute suggestions with regard to formulating social policy.

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3. Administrative competence and technical expertise

The success of the social policy process in Malaysia can also be attributed to some extent to administrative competence and the technical expertise of social service providers and implementers.

Administrative competence and technical expertise have been effected through a combination of the following six factors:

(a) Clear guidelines

Social service providers have benefited from clear guidelines, namely, NEP, NDP and NVP, the long- and medium-term national development plans and annual budgets in addition to specific legislation and policies concerning areas of social concern.

(b) Professional public service

The upper levels of Ministries involved in the field of social policy have included well-trained, highly qualified staff with the relevant experience.

(c) Adequate financial resources

Adequate financial resources have enabled the successful implementation of social policy in Malaysia. Multilateral organizations have made some contributions to financing in this area. However, the bulk of resources have been from domestic sources, which have been accrued as a result of continuously rapid growth in Malaysia. It follows that as Malaysia has not had to rely too heavily on foreign investment it has had a degree of freedom with regard to the manner in which it undertakes and implements social policies.

(d) Nominal fees

The administration has ensured that basic services are available to all people, including the poor. They have done this by charging nominal or in certain cases, no fees for education, health and other social services.

(e) Encouraging the private sector

Malaysia has witnessed an increase in the number of Government-licensed private providers of education and health services and certain types of social protection. Private institutions now play a valuable role with regard to complementing Government efforts in these areas. The increase in private providers has been made possible by the presence of a favourable enabling environment.

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(f) Rapid response to crises

A notable feature of the Government has been its ability to react and respond rapidly to major changes/crises. For example, the Government tackled the economic recession of 1998 by formulating its own package of reforms. These successfully revived the economy in 1999 without any social unrest.

4. The non-domestic or global factor

The social policy process in Malaysia has also been shaped by two global factors. These are reviewed as follows:

(a) Large influx of foreign workers

The large influx of foreign workers, mainly from Bangladesh, Indonesia and the Philippines has helped to sustain the growth of the construction and agricultural sectors in Malaysia. In addition, foreign live-in maids have enabled Malaysian women to enter the job market in increasing numbers. However, the large number of foreign workers, who constituted approximately 8 per cent of the 9.6 million-strong labour force in 2000, according to the Government of Malaysia, have created a strain on the capacity of social services, in particular on health facilities.39 In addition, the shortage of low-cost housing has led to the establishment of illegal settlements. These unhealthy living conditions have resulted in various social problems such as petty crimes and the increased incidence of communicable diseases.

(b) Attack on the Malaysian ringgit

One of the global factors affecting the social policy process in Malaysia was the currency attack on the Malaysian ringgit in 1997. This devalued the ringgit, caused stock prices to plummet and froze the real economy. As a result, unemployment and the incidence of poverty increased. The initial response of the Government was to reduce its budget in a number of areas, including social services. This decision was reversed and the original budget was not only reinstated, it was increased in certain areas, namely, health, education, poverty reduction and rural development.

B. GLOBALIZATION AND SOCIAL POLICY

Globalization and the liberalization of trade are credited with the ability to promote the growth of national economies and therefore to increase productive employment, reduce poverty, eliminate hunger and generally improve quality of life.

39 Government of Malaysia, Eighth Malaysia Plan, 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), p. 92.

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While Malaysia has always been an active participant in the world economy, it remains cautious with regard to unfettered globalization and cross-border trade, particularly, if they are to be effected at a rate determined by developed nations and multinational companies.

Globalization and the liberalization of trade do not always ensure positive results. In some cases, free and rapid movement of capital from one country to another engenders unemployment and contributes to an increase in the incidence of poverty, as was the case in Indonesia, Malaysia, South Korea and Thailand, in the wake of the 1997 currency crisis.

In view of this, Malaysia has opted for a gradual approach to the introduction of globalization and trade liberalization. The primary aim of this is to ensure that Malaysia remains in control of its economy, thereby retaining the ability to determine its policies without external influence, including those pertaining to social development.

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V. CONCLUSION

Quality of life has steadily improved in Malaysia since 1957. This can be attributed to the availability and effective utilization of financial resources for social services. Investments in health and education, in particular basic health and education, have been critical with regard to laying the foundation for broader, more comprehensive development in this field.

The principal objective of the national development agenda of Malaysia is national unity. Indeed, the realization of development objectives in Malaysia depends upon continued social and political stability. The formulation of social policy and the social development it engenders must be viewed within the context of the economic, political, cultural and ecological environment. The ultimate aim of development is to improve the quality of life of the people. While continuous rapid economic growth plays an important role in this respect, it alone cannot guarantee social harmony. Therefore, the formulation of social policy must be integrated into the overall development agenda.

It is therefore possible to conclude that Government-driven programmes that provide a broad range of social services on a nationwide basis are effective in improving quality of life. However, countries wishing to emulate this social policy model must note that certain unique internal and external factors have facilitated the success of the social policy process in Malaysia.

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Annex I

NEW ECONOMIC POLICY40

The principal objective of NEP was the promotion of national unity. This was to be achieved by the following:

(a) Eradicating poverty, raising income levels and increasing employment opportunities for all Malaysians, irrespective of race by means of programmes aimed at raising productivity and providing a broad range of social services, particularly for low-income groups;

(b) Accelerating the restructuring of society to correct economic imbalance. The aim of this was to reduce and eventually eliminate the identification of race with economic function. Related programme pertained to the modernization of rural life, the rapid and balanced development of urban activities, the establishment of new growth centres41 and the creation of a Malay42 commercial and industrial community in all categories and at all levels of operation. The objective of NEP was to ensure that Malays and other indigenous people became full partners in all aspects of the economic life of the nation.

Efforts to attain these objectives were to be exerted in the context of rapid structural change and expansion of the economy.

40 This has been adapted from Government of Malaysia, Mid-Term Review of the Second Malaysia Plan 1971-1975 (Kuala Lumpur, Government Press, 1973), p. 1.

41 The creation of new growth centres was a regional development strategy. These centres were located in rural areas and were equipped with social services including schools, health clinics/hospitals, police stations, bus services, community halls and sports and recreational facilities. The purpose of these centres was twofold: (a) they provided the rural population with better and more accessible services; and (b) they stemmed flow of rural-urban migration and therefore reduced strains on services in urban centres.

42 This refers to efforts to involve Malays in the modern sectors of the economy at all levels (including as managers, executives and owners), rather than in small-scale traditional agriculture, which had been their traditional form of work prior to 1957.

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Annex II

VISION 202043

“By the year 2020, Malaysia can be a united nation, with a confident Malaysian society, infused by strong moral and ethical values, living in society that is democratic, liberal and tolerant, caring, economically just and equitable, progressive and prosperous, and in full possession of an economy that is competitive, dynamic, robust and resilient.

“There can be fully developed Malaysia until we have finally overcome the nine central strategic challenges that have confronted us from the moment of our birth as an independent nation. The first of these is the challenge of establishing a united Malaysian nation with a sense of common and shared destiny. This must be a nation at peace with itself, territorially and ethnically integrated, living in harmony and full and fair partnership, made up of one Bangsa Malaysia44 with political loyalty and dedication to the nation.

“The second is the challenge of creating a psychologically liberated, secure, and developed Malaysian Society with faith and confidence in itself, justifiably proud of what it is, of what it has accomplished, robust enough to face all manner of adversity. This Malaysian Society must be distinguished by the pursuit of excellence, fully aware of all its potentials, psychologically subservient to none, and respected by the peoples of other nations.

“The third challenge we have always faced is that of fostering and developing a mature democratic society, practicing a form of mature consensual, community-oriented Malaysian democracy that can be a model for many developing countries.

“The fourth is the challenge of establishing a fully moral and ethical society, whose citizens are strong in religious and spiritual values and imbued with the highest of ethical standards.

“The fifth challenge that we have always faced is the challenge of establishing a matured, liberal and tolerant society in which Malaysian of all colours and creeds are free to practice and process their customs, cultures and religious beliefs and yet feeling that they belong to one nation.

“The sixth is the challenge of establishing a scientific and progressive society, a society that is innovative and forward-looking, and one that is not only a consumer of

43 Ahmad Sarji Abdul Hamid, Malaysia’s Vision 2020 (Kuala Lumpur, Pelanduk Publications, 1993), pp. 403-420.

44 This can be translated literally as Malaysian nationality. However, the creation of a Bangsa Malaysia means that various ethnic groups accept a primary Malaysian, rather than ethnic identity.

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technology but also a contributor to the scientific and technological civilization of the future.

“The seventh challenge is the challenge of establishing a fully caring society and a caring culture, a social system in which society will come before self, in which the welfare of the people will revolve not around the state or the individual but around a strong and resilient family system.

“The eighth is the challenge of ensuring an economically just society. This is a society in which there is a fair and equitable distribution of the wealth of the nation, in which there is full partnership in economic progress. Such a society cannot be in place so long as there is the identification of race with economic function, and the identification of economic backwardness with race.

“The ninth challenge is the challenge of establishing a prosperous society, with an economy that is fully competitive, dynamic, robust and resilient.”

Annex III

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NATIONAL DEVELOPMENT POLICY45

NDP formed the basis of OPP II, 1991-2000. The aim of NDP was to accelerate the process of eradicating poverty and restructuring society to correct social and economic imbalances.

NDP encompassed the idea that national unity is the ultimate goal of socio-economic development, based on the fact that a united society is fundamental to the promotion of social and political stability and sustained development. Development policies and strategies pertaining to NDP have also taken into account the ethnic, linguistic, cultural and religious diversities of Malaysia. In addition to socio-political and cultural considerations, continued social and political stability and the efficient management of the economy were crucial to the realization of the goals and objectives of NDP.

The aim of NDP was to enable Malaysia to become a fully developed nation by 2020, economically and otherwise.

While NDP maintained the basic strategies of NEP, it also aimed to achieve the following:

(a) Shift the focus of the anti-poverty strategy towards eradication of hardcore poverty while simultaneously reducing relative poverty;

(b) Focus on employment and the rapid development of an active Bumiputera Commercial and Industrial Community (BCIC) as a more effective strategy to increase the meaningful participation of Bumiputera in the modern sectors of the economy;

(c) Increase the participation of the private sector with regard to the restructuring objective by creating greater opportunities for its growth;

(d) Focus on the development of human resources as a fundamental requirement for achieving the objectives of growth and distribution.

The objective of NDP during OPP II was to attain a balanced development, with the aim of establishing a more united and just society. More specifically, NDP aimed to do the following:

(a) Strike on optimum balance between the goals of economic growth and equity;

45 This has been adapted from: Government of Malaysia, Second Outline Perspective Plan, 1991-2000 (Kuala Lumpur, National Printing Department, 1991), pp. 3-6. National Development Policy was initially known as the New Development Policy.

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(b) Ensure the balanced development of the major sectors of the economy;

(c) Reduce and ultimately eliminate social and economic inequalities to ensure that all Malaysians have access to a more equitable share of the benefits of economic growth;

(d) Promote and strengthen national integration by reducing the wide disparities in economic development among states and between urban and rural areas;

(e) Develop a progressive society in which all citizens enjoy greater material, spiritual and social welfare;

(f) Promote the development of human resources;

(g) Ensure that science and technology are an integral component of socio-economic planning and development strategies;

(h) Ensure that adequate attention is afforded to the protection of the environment and ecology with the aim of maintaining the long-term sustainability of the development of the country.

The development strategy was premised on the following considerations:

(a) The principle of growth with equity is fundamental to the realization of a fair and equitable distribution of national wealth;

(b) Balanced societal development is conducive to the maintenance of social and political stability;

(c) High moral values and ethics in addition to positive attitudes are fundamental with regard to the creation of a responsible, resilient, progressive and caring society;

(d) Prudent management of the environment ensures sustainable development for present and future generations;

(e) The balanced development of the economy ensures stable growth, minimizes social conflicts, promotes racial harmony and enhances national unity.

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Annex IV

NATIONAL VISION POLICY46

NVP combines the critical concepts of previous development policies, namely, NEP and NDP with the primary objective of national unity. The aims of NVP include the eradication of poverty irrespective of race, the restructuring of society and balanced development. Furthermore, NVP is guided by the strategic challenges of Vision 2020.

In essence, NVP represents the consolidation of past development efforts and is aimed at establishing a united, progressive and prosperous country. The goals of NVP also include the desire to build a resilient, competitive nation and an equitable society, thereby ensuring unity and social stability. With this in mind, NVP aims to do the following:

(a) Build a resilient nation by fostering unity, instilling the spirit of patriotism, nurturing political maturity, cultivating a more tolerant and caring society with positive values, improving quality of life and increasing economic resilience;

(b) Promote an equitable society by eradicating poverty and reducing imbalance among and within ethnic groups and regions;

(c) Sustain high economic growth by strengthening financial and corporate institutions;

(d) Meet the challenges of globalization and trade liberalization;

(e) Develop a knowledge-based economy;

(f) Strengthen the development of human resources to produce a more competent workforce;

(g) Pursue environmentally sustainable development policies with the aim of reinforcing long-term growth.

Policies and strategies during the period of the Eighth Malaysia Plan, 2001-2005, are focused on the goal of achieving sustainable growth. The goal of the Plan is to shift the impetus of the strategy of growth, from input-driven to knowledge-driven. The purpose of this transformation is to enhance the potential growth of output, accelerate structural transformation within the manufacturing and services sectors, revitalize the agriculture sector and strengthen socio-economic stability. The Plan

46 This has been adapted from Government of Malaysia, Eighth Malaysia Plan, 2001-2005 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 2001), pp. 4-6.

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places a greater emphasis on private sector initiatives. These are to be supported by the public sector. The plan also aims to increase productivity and efficiency by developing human resources, encouraging research and development activities and utilizing the latest technologies, in particular ICT.

The Plan aims to do the following:

(a) Pursue sound macroeconomic management and prudent fiscal and monetary policies in addition to enhancing efforts to develop a knowledge-based economy;

(b) Strengthen and streamline distributional programmes to ensure balanced participation among and within ethnic and income groups in addition to regions;

(c) Enhance the growth of productivity by improving the knowledge, skills and expertise of workers and upgrading research and development and science and technology activities;

(d) Increase competitiveness and economic resilience by encouraging key economic sectors to ensure more efficient production processes and high value-added activities;

(e) Expand the use of ICT within and across sectors to accelerate the growth process;

(f) Strengthen human resources to ensure the availability of manpower with higher levels of knowledge, technical and thinking skills;

(g) Adopt an integrated and holistic approach with regard to environmental issues with the aim of attaining sustainable development;

(h) Enhance quality of life by improving access to social services;

(i) Promote the importance of positive values through the education system, social and religious organizations and the media.

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Annex V

CONCEPT AND MEASUREMENTS OF POVERTY47

An important component or prerequisite of the fight against poverty is agreement on the definition and measurement of poverty. According to the Government of Malaysia poverty can be divided into three categories: absolute poverty, hardcore poverty and relative poverty. These are reviewed as follows:

(a) Absolute poverty

This can be defined as a condition in which the gross monthly income of a household is insufficient to purchase certain minimum necessities of life. These necessities include a minimum amount of food to maintain household members in good nutritional health and other basic needs, namely, clothing, footwear, rent, fuel and power, transportation and communication, health care, education and recreation.

The measurement of this condition has been facilitated by the creation of a measurement known as the poverty line income (PLI). This is based on the basic costs of the items mentioned above. Furthermore, PLI is linked to the consumer price index (CPI), and therefore it has been periodically revised in line with movements in CPI. Furthermore, based on the fact that the cost of living and household size varies in different parts of Malaysia, alternative PLIs and household sizes are used. However, there is no differentiation with regard to urban and rural PLIs and household sizes.

(b) Hardcore poverty

This has been defined as a condition in which the gross monthly income of a household is less than half of PLI. This definition was introduced in 1988 to improve the focus of projects for the hardcore poor.

(c) Relative poverty

This is related to the notion of income inequality between groups. Therefore, a group whose mean income is less than another has been defined as being in relative poverty. According to this definition, it is possible to define a group, for example rural dwellers, as being in relative poverty to another group, namely, urban dwellers, despite the fact that their mean income exceeds PLI.

In Malaysia, relative poverty has been measured by using income disparity ratios of income groups, ethnic groups and urban and rural dwellers. In addition, the Gini Coefficient and several other measures have been used.

47 This has been adapted from Government of Malaysia, PMD, EPU, Malaysia: National Report: World Summit for Social Development Copenhagen, 1995: Poverty Eradication, Expansion of Productive Employment and Social Integration in Malaysia, 1971-1994 (Kuala Lumpur, Percetakan Nasional Malaysia Berhad, 1995), pp. 15-16.

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