Is Malaysia’s RM100m Mitra allocation missing the point on Indian poverty?

There appears to be quite some angst among Indian NGOs and politicians about how the Malaysian Indian Transformation Unit (Mitra) fund of about RM100m per year has or has not been disbursed.

But we need to also ask ourselves whether the Mitra allocation is addressing the problems faced by the poorest 20% of the ethnic Indian community in Malaysia.

What then are the main problems faced by the bottom 20% of the Indians? Let me list a few.

Low and unstable income

Many of the bottom 20% of Indians work in the informal sector – daily paid contract workers in construction and in the services sector – often with wages far below the official minimum wage.

The wage floor for this category of workers has been depressed by the large number of undocumented migrant workers in the country. Incidentally, the bottom 20% of the ethnic Malays face an identical problem – difficulty in finding steady work, low wages and a poor bargaining position with their employers.

Lack of affordable housing

The ongoing clearance of urban pioneer (‘squatter’) settlements in towns all over the country is steadily reducing the stock of cheap housing in urban areas.

In Sungai Siput, for example, old wooden houses can be rented for as low as RM100 per month. Many of them leak. The zinc roofing makes them quite uncomfortable during the day. The surroundings become waterlogged and muddy when it rains. But still, they are the homes that poorest 20% of Indians can afford.

An urban renewal programme that fails to expand the stock of affordable rental housing in the form of PPR (People’s Housing Programme) flats or terrace houses, creates enormous financial problems for the bottom 20% Indians as well as the bottom 20% of other ethnic groups in urban areas.

Old age poverty

In Malaysia, living long can be a curse, especially if one is in the bottom half of the population.

Over 50% of the bottom 40% of all ethnic groups do not have Employees Provident Fund retirement savings to start with. They were in the informal sector and never contributed to the EPF. Former factory workers who had EPF savings usually finish off these savings within five years of retirement. Given their low wages, their EPF savings usually weren’t much to start with.

Elderly bottom 20% Indians are in this unfortunate group. More often than not, their children are struggling to keep their own families afloat. There isn’t much left to provide for the senior members of the family.

Actual cause of poverty

The real problems facing the bottom 20% Indians have been listed above. Are they ethnic in origin? The bottom 20% of other ethnic groups also suffer the same problems.

So can anyone expect the paltry RM100m Mitra allocation to resolve these problems that have structural causes?

Malaysia is a rich country. According to the 13th Malaysia Plan data, our per capita gross national income was RM 54,793 in 2024. That would work out to RM18,264 per month for a household of four, if national income were to be distributed equally to all Malaysians.

But the actual household income of the bottom 20% of all ethnic groups is below RM3,166 per month.

There is massive wage suppression in countries like Malaysia. Our workers receive wages that are one-eighth the sum received by workers doing exactly the same job in the ‘advanced’ countries.

This is due to the way our economy is integrated into the global economy. We rely on low wages and low costs of production to attract foreign investors to set up factories and other businesses. Intense competition for foreign direct investment with other countries in Asean and elsewhere in the Global South severely limits our capacity to increase wages for our workers.

It should be clear – the main cause of poverty in Malaysia is not ethnic. It is socioeconomic – the fact that this nation does not pay its workers a decent wage.

Yet, many groups – ethnic Indian, Malay and others – attempt to take an ethnic approach to solve socioeconomic problems that affect all the working people in this country irrespective of their ethnicity.

We really need to be clear on this issue. If we do not get the analysis right, then we are going to keep focusing on and arguing about less consequential issues. Issues such as the fact that a significant portion of the Mitra allocation wasn’t distributed. And we will fail to form the coalitions we need to tackle the problem of the poor distribution of the national income.

Why Sedic/Mitra?

Can I be candid here? Why, in the first place, did former Prime Minister Najib Razak introduce Mitra (as the Socio-Economic Development of Indian Community Unit or Sedic) about 10 years ago?

In my opinion, it was a clever move to wean Indian activists and NGOs away from Hindraf and anchor them to the ruling government by periodically offering them funds. It never was meant to uplift the bottom 20% Indian population. It was a political ploy to win over a section of active Indian youth and to reduce dissent. NGOs have to be careful about criticising the government if they are thinking of applying for RM50,000 or RM100,000 annually!

Do you believe that the political purpose of the Mitra allocation has changed now that it is offered by the ‘Madani’ (civil and compassionate) government?

While some of the programmes run on Mitra funds are genuinely useful, there are many which are much more beneficial to the organising NGOs than to the ‘masses’ these projects are purported to help.

Poverty aggravated by ethnic issues

I mentioned above that the main cause of the poverty of bottom 20% Indians is socioeconomic and not ethnic. This is true, but needs to be clarified.

A more accurate statement would be to say that roughly 80% of the cause of poverty of the bottom 20% Indians is socioeconomic. The remaining 20% has ethnic discrimination as a contributory factor.

An example of ethnicity causing or aggravating the economic problems of the bottom 20% Indians is the fairly high incidence of statelessness among them. This is higher than most other communities except for the Sulu and some other ethnic groups in Sabah.

Despite being born in the country, of parents who themselves were born in Malaya and later Malaysia, there are several thousand Indians who do not have birth certificates and identity cards. Carelessness, ignorance and apathy on the part of their parents is often the cause of this, and it devastates their lives.

Education is affected. They cannot work in the formal sector. Healthcare is more difficult to access. And their children have a high risk of becoming stateless too.

Unfortunately, the National Registration Department is often unnecessarily rigid and creates almost insurmountable barriers to obtaining proper documents.

The stateless need help to deal with the over-strict Registration Department. Perhaps some Mitra funds could be used to train and support more activists and NGOs to handle birth certificate and identity card issues. They could also sponsor DNA tests and procure legal assistance to file judicial review claims.

Another ethnic-related issues aggravating bottom 20% Indian poverty is the difficulty that they now face in getting government jobs. Fairer access to government jobs wouldn’t completely solve their underemployment problem, as government jobs make up only about 10% of all the jobs in the economy.

However, it would help if Indians obtained their fair share of government jobs. It would be reasonable, I think, to request that the intake of Indians to government jobs should follow the population ratio of Indians in the nation, state or municipality, as the case may be.

About 16% of intakes to government jobs in Perak, for example, should be for Indians, as that is the population ratio of Indians in this state.

Yet another example of ethnicity aggravating bottom 20% Indian poverty is the reluctance of the government to include students from poor Indian families in educational programmes such as residential schools, junior colleges, scholarships and other affirmative action programmes that have been set up for bumiputra students.

Hijacking of opportunities

However, as should be the case for all affirmative action based on ethnic criteria, sufficient care must be taken to ensure that the bottom 20% Indians get at least 20% of the government jobs and educational opportunities offered to Indians.

What often happens is that ethnic quotas won on the basis of poverty in a particular ethnic group are often enjoyed by the more affluent members of that ethnic group. This tendency isn’t confined to the Indian community alone. Bumiputra communities are also badly affected by this social malady.

This tendency needs to be looked at and minimised. It would be good if Mitra could fund an ongoing effort to monitor job intakes at various levels of government. This would ensure that especially the bottom 40% Indians are adequately represented. 

Shouldn’t we be working together?

If we are seriously concerned about the plight of the bottom 20% Indians, shouldn’t we be partnering with activists of other ethnicities and NGOs who are concerned about poverty among the bottom 20% of their own ethnic groups?

We should be working together to jointly address unjust socioeconomic structures. These socioeconomic structures primarily benefit some very powerful people – the top 5% of society.

It is therefore imperative to work with people of other ethnicities to create the multiethnic people’s power required to restructure our economy. We need to restructure it so that the wealth created in this country is shared a little more equitably.

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