Calvin Cheng was quoted in Het Financieele Dagblad (FD).
by Ate Hoekstra, 9 September 2021
Southeast Asia has been prospering economically for the past two decades. But the tide has turned because of corona. According to the Asian Development Bank (ADB), the pandemic is believed to have pushed between 75 million and 80 million Asians into extreme poverty.
• Southeast Asia is one of the regions hardest hit by the corona crisis.
• Millions of Asians have ended up in extreme poverty as a result.
• Growing poverty has far-reaching consequences, such as malnutrition and health problems.
Cambodian Buth Sreyneng’s restaurant was doing so well. She was able to pay her daughters’ bills, salaries and school without any problems. At the end of the month, she usually also had some money left over to save. But the corona pandemic has changed everything. The restaurant had to close for weeks due to a lockdown, and when it reopened many customers stayed away.
Sreyneng has now run out of savings and had to ask her sister-in-law to pay for her oldest daughter’s school. ‘I have lost 70% of my income in the past year. I had to sell my family’s gold jewelry to pay the bills,” she says.
The restaurant owner in Phnom Penh is certainly not alone. According to the Asian Development Bank (ADB), the pandemic is believed to have pushed between 75 million and 80 million Asians into extreme poverty. They have an income of less than $1.90 per day. The group above — Asians earning between $1.90 and $3.20 a day — has also grown by tens of millions of people because of the pandemic, according to a recent report from the ADB.
Southeast Asia is one of the regions hardest hit by the corona crisis. Alarming messages are coming from almost all countries. In Indonesia, Malaysia, Thailand, the Philippines and Vietnam, among others, poverty has increased over the past year and a half.
The region has performed very well in the past two decades. Many countries had annual economic growth of between 4% and 8%. As a result, the number of poor families decreased rapidly. According to the ADB, Asian developing countries, including countries outside Southeast Asia, had 1.5 billion people living in extreme poverty in 1990. In 2015, there were 273 million. Without the pandemic, that figure would likely have fallen to 104 million by 2020, ADB estimates.
The American development organization Asia Foundation recently conducted research into poverty in Cambodia. The organization, which has been active in Asia since the 1950s, found, among other things, that the number of Cambodian households that the government considers poor has grown by roughly 25% since June 2020 to 694,000. The organization warns that the pandemic could push even more Cambodians into poverty and exacerbate existing income inequalities.
It is also going downhill in Malaysia, which still recorded 4.3% economic growth in 2019. The crisis has already cost more than 240,000 jobs. The number of Malaysian families living in poverty increased from 5.6% in 2019 to 8.4% last year. The group of Malaysians living in extreme poverty has doubled.
Like many countries in the region, the Malaysian government is providing support to those most affected. According to Calvin Cheng, an economic analyst at the Malaysia- based Institute of Strategic and International Studies, that helps, but much more can be done. ‘The simple fact that the poverty rate has increased by almost 3% in 2020 shows that. Increasing the financial allowance for the poor and expanding existing social safety nets already help poor families better.’
Growing poverty has far-reaching consequences. The ADB warns of increasing malnutrition. According to the development bank, the financial problems of ‘a substantial number of households’ in Asian developing countries are so great that they eat less or skip meals. In addition, it can lead to, for example, more health problems, more child labor and greater school dropout.
Roland Rajay, a macro-economist and Asia expert at the Australian think tank Lowy Institute, says many of those impacts could last long after the crisis. ‘Children may not go back to school, or they may have trouble making up for themselves. Health problems can also last longer, and people can get stuck in poverty.’
Moreover, a full recovery of the Southeast Asian economies is not yet in sight. The pandemic rages on with thousands of new infections in many places every day. Manufacturing and tourism — two of Southeast Asia’s top employers — are being hit hard. “It is a great shock compared to the past twenty years of constant progress in reducing poverty and rapidly improving living standards,” said Rajay. “Unfortunately, the recovery will probably take longer rather than quickly.”
This article first appeared in Het Financieele Dagblad (FD) on 9 September 2021.