However, during the 1991-1995 period, while the economy was growing at a higher average growth rate of 8.7 per annum, the reduction in absolute poverty was no longer accompanied by the narrowing of income inequalities. Instead, due to differential rate of income growth, income inequalities increase with the Gini ratio rises from 0.445 in 1990 to 0.456 in 1993 and 0.464 in 1995. This development seems to be consistent with new evidence of rising income disparities in other countries in Asia including Thailand and China. It is most likely that the growing overall inequality in Malaysia is attributed to the growing gap between urban and rural household incomes, as shown by rising rural-urban disparity ratio from 1:1.70 in 1990 to 1:1.75 in 1993 and 1:2.04 in 1995. This adverse development in income distribution in Malaysia may be related to the liberalisation and deregulation measures undertaken by the government since mid-1980S.
Sources of Data on Income Distribution and Poverty
The primary income data sources in Malaysia are the Household Income Survey (HIS), which has been conducted every three years since 1974 with the latest being in 1995. Income data for 1970 was derived from the Post Enumeration Survey, 1970 (PES 1970). All these surveys were conducted by the Department of Statistics (DOS), Malaysia.
The main objective of the HIS is to provide data on income distribution and the extent and magnitude of poverty for use in policy formulation. The surveys, covering a representative sample of all private households in both the urban and rural areas in Malaysia, are comprehensive and identical. The definition of income used in the HIS covered both money and income in kind and also receipts which are of a recurring nature and accrue to the household or to the members of the household regularly at annual or at more frequent intervals. In terms of reliability, the overwhelming result from cross-checks of the data shows that that the HIS "have been extremely well conducted and it is likely that they are amongst the most reliable of the survey conducted in the developing world." It is also generally agreed that the income surveys for the various years are broadly comparable.
