The government is moving towards a broader way of measuring poverty, shifting beyond income-based definitions to reflect the wider challenges faced by households.

Economy Minister Datuk Seri Akmal Nasrullah Mohd Nasir said poverty should not be assessed solely based on how much money a household earns or spends. Instead, it should account for non-cash factors that affect quality of life.

He made these remarks during his winding-up speech on the motion of thanks for the Royal Address in the Dewan Rakyat, in response to a supplementary question from Dr Halimah Ali regarding the definitions of absolute and hardcore poverty.

Multidimensional Poverty Index Expands How Hardship Is Measured

Akmal said he prefers assessing poverty using the Multidimensional Poverty Index, or MPI, because poverty involves more than income levels.

The MPI is an international measure of acute poverty that identifies overlapping deprivations at the household level. It examines three main dimensions: health, education, and standard of living.

Unlike traditional income measurements, the MPI also considers factors such as housing conditions, access to essential services, education attainment, and other indicators that influence daily living standards.

According to Akmal, concerns raised in Parliament frequently extend beyond income figures and include whether families have access to decent housing, reliable utilities, healthcare, and other necessities.

He said these realities are not always fully reflected in conventional income statistics.

Absolute And Hardcore Poverty Rates Remain In Force

While the government is expanding its measurement tools, official poverty classifications based on income remain in use.

Data from the Household Income and Expenditure Survey shows that the national incidence of absolute poverty stands at 5.1%, involving approximately 416,000 households.

Urban poverty declined to 3.7% in 2024 from 4.5% in 2022. Rural poverty fell to 9.9% from 12% over the same period.

Hardcore poverty currently stands at 0.09%, involving about 7,200 households.

Akmal noted that both absolute and hardcore poverty categories are dynamic, as households may move in and out of poverty depending on economic conditions and personal circumstances.

Multiple Indicators Used To Assess Wellbeing

The Economy Ministry is currently using several indicators to better understand socio-economic conditions.

These include the Malaysian Wellbeing Index, the Multidimensional Poverty Index, Sustainable Development Goals indicators, and food self-sufficiency levels.

Akmal said the objective of using these frameworks is to ensure that economic growth translates into improved quality of life, social justice, and overall wellbeing.

He added that moving towards a multidimensional assessment would require engagement with stakeholders, as poverty figures may differ from those traditionally reported under income-based methods.

How Broader Poverty Measures Could Affect Government Aid

A shift towards the Multidimensional Poverty Index could influence how government assistance programmes are structured and targeted in the future.

Income-based poverty measurements focus on whether a household falls below a defined earnings threshold. A multidimensional framework examines whether households face overlapping disadvantages, such as inadequate housing, limited access to healthcare, lower educational attainment, or gaps in essential services.

If incorporated more formally into policy design, this broader assessment could affect how beneficiaries are identified. Households that do not fall below income poverty lines may still qualify for support if they experience multiple non-income deprivations.

This approach may lead to adjustments in eligibility criteria for certain assistance schemes, depending on future policy decisions and budget allocations. It could also influence how resources are prioritised between urban and rural communities, where access to services and living conditions vary.

At present, absolute poverty and hardcore poverty definitions remain in force, and no legislative changes have been announced. Official statistics continue to rely on existing income thresholds.

However, the expanded use of multidimensional indicators signals a policy direction that places greater emphasis on quality-of-life factors. Over time, this could shape the design of subsidies, social protection measures, and development planning to better reflect the full range of challenges faced by vulnerable households.

For households, this shift recognises that financial vulnerability is not determined solely by monthly income, but also by access to essential services that support long-term stability.

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