“Examining the wealth gap, poverty measurement, and policy reforms towards prosperity”
WHILE Sarawak boasts of being a resource-rich state and has utilised this advantage to promote economic growth, a significant issue that persists is poverty itself.
According to a 2019 survey conducted by the Department of Statistics Malaysia (DOSM), several districts in the state rank among the poorest in the country.
Despite the state leaders’ questioning of the accuracy of the information and the methodology of data collection, analysts firmly assert that a wealth gap cannot be denied.
Under the guidance of Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg, the Sarawak government aims to conduct its own comprehensive study to determine the poverty level among Sarawakians. This study intends to formulate improved policies aimed at assisting the impoverished population.
The rationale for conducting a separate study lies in the Federal Government survey’s failure to consider various factors, including fixed assets and income generated from agricultural activities, which enable residents to make significant cash purchases.
Analysts familiar with rural issues support this viewpoint and emphasise the need for a clear measurement of the poverty line. They also propose reforms to existing policies to effectively address the wealth gap.
Addressing wealth inequality in Sarawak
Universiti Malaysia Sarawak (UNIMAS) political analyst and researcher, Dick Lembang Dugun, emphasised the need for the state government to address the perception of inequitable wealth distribution as it aims to develop the state. He expressed concern that the narrative of a rich state and poor people holds true due to the lack of clear measurement of the poverty line. Dugun urged the government to examine the indicators used to determine poverty levels and distinguish between the rich and the poor. He also stressed the importance of studying the methodology for classifying income groups such as the B40, M40, and T20, while considering their expenditures. According to Dugun, the government must devise a new mechanism to tackle this issue and ensure that the implemented initiatives reach the intended target group; otherwise, there will be a loophole.
In the long term, another analyst, Universiti Malaysia Sabah (UMS) Social Science senior lecturer Assoc Prof Dr Lee Kuok Tiung, believes that the solution lies in prioritising education and human capital development. Lee emphasises that education and literacy play a crucial role in fostering a mindset change within society. Recognising the wealth gap between the rich and the poor, Lee commends the Sarawak government’s focus on education and human capital development, as they strive to improve educational facilities.
Lee also highlights the dissatisfaction expressed by Sarawak leaders regarding the federal government’s allocation of funds for repairing dilapidated schools in the state. Education falls under federal purview, leading to disagreements. Nevertheless, Sarawak has taken independent initiatives to strengthen its education system. Notably, Sarawak is the only government that recognises the Unified Examinations Certificate (UEC). Lee mentions that the UEC qualification is accepted for admission to the Sarawak government civil service, and the Sarawak education excellence award includes a category for UEC. Such recognition of UEC is unique to Sarawak.
Addressing poverty and ensuring prosperity
While much has been said about the state government’s economic policies, ensuring their proper implementation is a separate matter altogether. This necessitates the political will of Sarawak leaders to ensure that the benefits derived from the substantial revenue collected are experienced by all.
According to Associate Professor Dr Awang Azman Awang Pawi, a senior lecturer and socio-political analyst at Universiti Malaya, the challenge faced by Sarawak leaders lies in ensuring that the impoverished are able to break free from poverty entirely. He emphasises the importance of providing assistance and increasing incomes, particularly for those who are recipients of e-Kasih, as Sarawak has one of the highest poverty rates in the country.
“There must be a political will to reform economic policies in order to reduce the income gap, where the rich become excessively wealthy and the poor remain extremely impoverished. Additionally, we need to address the implementation of a minimum wage for workers in the state,” he stated.
“This measure can help individuals in poverty surpass the poverty line and eliminate the perception of a ‘rich state, poor people.’ Economic policies should primarily focus on uplifting the low-income group.”
Simultaneously, he believes that more can be done in the field of education to provide a pathway out of poverty for the low-income group.
“How does the increased state revenue benefit them? Is it by offering free tertiary education, considering that the current assistance provided only consists of study loans? This is one aspect that needs attention,” he expressed.
Sarawak’s Digital Economy Transformation
In 2017, just months after assuming the state leadership, Abang Johari introduced the Sarawak Digital Economy Strategy (SDES) 2018-2022. This five-year plan aimed to accelerate the state’s economic growth, reduce socio-economic divide, and increase youth employment.
The strategy involved exploring new sectors of information, communication, and technology (ICT) development, including data, infrastructure, software, designs, and gaming. It also aimed to stimulate global marketing and sales through e-commerce and tourism, as well as raise productivity growth in agriculture, manufacturing, service, and government sectors.
The effectiveness and impact of this policy were tested during the COVID-19 pandemic, which began in early 2020. With the improved digital infrastructure being rolled out, there was an increase in digital adoption for services. E-hailing services, such as food delivery, experienced a surge, along with e-commerce and marketing, as people embraced online shopping.
The strategy was followed by the Post COVID-19 Development Strategy (PCDS 2030), launched in 2021, which aimed to grow the Sarawak economy and increase household income. PCDS 2030 focused on six economic sectors as the main engines of growth: manufacturing, commercial agriculture, tourism, forestry, mining, and social services.
The continuation of SDES 2018-2022 and the foundations of PCDS 2030 are known as the Sarawak’s Digital Economy Blueprint (SDEB), which serves as a roadmap for the state to secure its future as a modern and leading digital economy and society by 2030. It is expected to contribute around 20 per cent of the state’s gross domestic product (GDP) of RM56.4 billion in 2030, creating over 45,000 new high-paying jobs, with 80 per cent of micro, small, and medium enterprises (MSMEs) in the state adopting digitalization.
The three-phase blueprint aims to strengthen the state’s digital readiness by 2025, accelerate digital transformation by 2027, and achieve a digitally developed Sarawak by 2030.
Dr Jerome Kueh, a senior lecturer and economist at UNIMAS, believes that both policies play significant roles in the economic growth of Sarawak.
He states, “The initiatives under the SDEB aim to transform Sarawak from a conventional resource-based economy to an environmentally sustainable technology-driven economy. The strategic development path in PCDS 2030 aligns and integrates all the stakeholders and resources in the ecosystem.”
Dr Kueh highlights that digital adoption, particularly in Micro, Small, and Medium Enterprises (MSMEs), contributes to the efficiency of business operations and the creation of job opportunities. He also mentions the expansion of digitalisation initiatives to other sectors such as manufacturing and agriculture, including robotic and smart farming. He concludes that PCDS 2030 serves as the fundamental framework for all the development policies, resulting in more organised planning.
Meanwhile, Dr Nor Afiza Abu Bakar, a senior lecturer at UNIMAS Faculty of Economics and Business, believes that the digital economy transformation has been well-received and has delivered the desired impact.
She states, “The blueprint’s emphasis on accelerating digital adoption, empowering local businesses, and building digital skills has stimulated growth in the tech sector and spurred a wave of entrepreneurship in Sarawak.”
Nor Afiza further explains that the push towards digitalisation has not only created a new sector of digital services and industries but has also revolutionised traditional sectors. She points out improvements in the agriculture sector, including increased yields and efficiency.
Regarding PCDS 2030, Nor Afiza states that while doubling the size of the economy is ambitious, it is achievable. She mentions that the strategy has bolstered investor confidence in Sarawak, leading to increased domestic and foreign investments, especially in sectors identified as growth drivers, such as green energy, bio-industries, and tourism.
Nor Afiza observes that with new industries emerging and existing ones being modernised, there is a growing demand for both highly skilled tech professionals and upskilled traditional industry workers. She concludes that although it is still early days, the steps taken under these strategies have positioned Sarawak on a promising path towards achieving its goal of becoming a developed state by 2030. The continued commitment to these strategies will play a crucial role in shaping Sarawak’s economic future.
Sarawak’s Digital Economy Shift
There is no escaping the trend of technological shift and its implications for the economy. One must either embrace it or be left behind. This holds true for Sarawak.
With its abundance of resources such as oil and gas, agriculture, and timber, it is only logical that new economic policies leverage these existing strengths.
Datuk Jonathan Chai Voon Tok, the Secretary-General of the Sarawak Business Federation (SBF), believes that Abang Johari has charted a new direction for the development of Sarawak’s economy. Specifically, the aim is to transform it into a digital economy, moving away from the traditional subsistence economy.
Digital technology is being utilised to enhance the resource-based sectors, resulting in higher yields and increased efficiency for high-value commodities like palm oil. Precision farming techniques are also being introduced to maximize the potential of the agricultural sector.
Chai mentioned that Sarawak recognises the importance of digital technology and has allocated a significant budget for the establishment of the Sarawak Digital Economic Corporation (SDEC) and the Centre of Technical Excellence (CENTEXS).
“These initiatives aim to enhance the local start-up ecosystem through innovation, entrepreneurship education, and acceleration programs in the Digital Innovation Hubs and Digital Village,” said Chai.
While Sarawak aims to double the size of its economy by 2030 under the PCDS 2030 plan, the pandemic has hindered progress, requiring the state to achieve an annual Gross Domestic Product (GDP) growth of 8 per cent.
“The pandemic has effectively derailed the anticipated progress that the government had planned for Sarawak,” added Chai.
“Nevertheless, I still believe that this goal is achievable if the government remains committed to implementing and executing the policies, and if the private sector, as the engine of growth, remains resilient and actively participates in all the development projects and initiatives introduced by the government,” he concluded.
In the next part of this series, the writer explores the world economic trend, Sarawak’s recognition as an economic powerhouse as well as the challenges in transforming the economy.
