Understanding the Formulation of the Revised Poverty Line in Malaysia

The method of calculating the Poverty Line (PL) used to estimate the Malaysian poverty incidence up to the Eighth Malaysia Plan 2001-2005 has a number of “flaws”. In order to improve the accuracy of identifying the poor households, the Malaysian Government has revised the method of calculating the PL for the Ninth Malaysia Plan 2006-2010. This article attempts to explain the basic ingredients in determining an acceptable PL as the method of determining the PL can greatly influence poverty profiles, which are the key to the formulation of poverty reduction policies. It will explain in general how the revised PL was formulated.