Third-poorest in Southeast Asia?

From 2005 to 2010, the Philippines went from fifth-poorest to third-poorest country in Southeast Asia, as estimated by the Asian Development Bank (ADB) with a new “Asian regional poverty line” of $1.51/person/day (ppp, 2005 prices), as published in its August 2014 special report, “Poverty in Asia: A Deeper Look.”

In 2005, the five poorest countries, per the ADB report, were: 1. Lao People’s Democratic Republic (54.1 percent of the population poor), 2. Cambodia (45.5 percent), 3. Vietnam (35.6 percent), 4. Indonesia (32.9 percent), and 5. the Philippines (30.9 percent).  Then came 6. Thailand (2.5 percent) and 7. Malaysia (0.9 percent).  The report includes only seven Southeast Asian countries.

In 2010, on the other hand, the poorest country was Lao PDR (38.1 percent poor), followed by Indonesia (28.0 percent) and the Philippines (25.9 percent).  Thus, both Vietnam and Cambodia overtook the Philippines in poverty reduction.

Here is the full ADB table of poverty estimates for Southeast Asia:

Percent of population poor in Southeast Asia, at an “Asian poverty line” of $1.51/person/day (ppp, 2005 prices)

2005    2008    2010

Southeast Asia                        27.9     26.0     22.0

Cambodia                                45.5     34.4     25.4

Indonesia                                32.9     34.6     28.0

Lao PDR                                 54.1     46.7     38.1

Malaysia                                  0.9       0.4       0.4

Philippines                               30.9     27.9     26.9

Thailand                                  2.5       1.2       1.1

Vietnam                                  35.6     25.7     22.4

Source: ADB, Key indicators for Asia and the Pacific 2014, Table 2.2, p. 11

In all countries, the table shows the poverty rate lower in 2010 than in 2005.  There was an intermediate drop in poverty from 2005 to 2008 in all countries, except Indonesia.

But the total 2005-2010 drop in the Philippines was only 4.0 points, or much less than the drops of 20.1 points in Cambodia and 13.2 points in Vietnam.  Hence, Cambodia and Vietnam overtook the Philippines.

My earlier piece, “ADB on Asian poverty” (Opinion, 8/30/2014), discussed the ADB’s proposed Asian regional poverty line of $1.51/person/day, to replace the $1.25/person/day conventionally used in global poverty analysis.  (The dollar amounts are in terms of purchasing power parity [ppp] as of 2005.  One ppp dollar is worth what one dollar could buy in the United States in the base year.)

Changing from African to Asian standards. The ADB reasoned that the conventional $1.25 had come from official poverty lines of the 15 world’s poorest countries, 13 of which are African.  To create an Asian poverty line of $1.51, it used the official lines of the nine least developed Asian countries, namely Afghanistan, Bangladesh, Bhutan, Cambodia, Lao PDR, Nepal, Pakistan, the Solomon Islands, and Tajikistan—though I wonder why it excluded the lines of India (55.8 percent poor, based on $1.51) and Papua New Guinea (55.3 percent).

The ADB says: “Altering the poverty line did not change poverty trends for the region or individual countries, nor did it signify any change in people’s actual living standards. It just raises recognition of how many people in the region remain impoverished.”

Yet the ADB’s altering of the cross-country poverty line did change the picture very much with respect to the Philippines relative to its neighbors.  It made the Philippines look like Juan Tamad in terms of reducing poverty.

In 2005, the poverty distance from Lao PDR to the Philippines was 23.2 points (54.1 minus 30.9).  By 2010 this distance was cut to only 11.2 points (38.1 minus 26.9).  At this pace, Lao PDR will catch up with the Philippines by 2015.

In 2005, the poverty distance from Indonesia to the Philippines was 2.0 points (32.9 minus 30.9).  By 2010 this distance was only 1.2 points (28.0 minus 26.9).  At this pace, Indonesia will also catch up with the Philippines by 2015, and there will be a triple tie with Lao PDR for the tag of poorest country of Southeast Asia.

Other poverty line adjustments. The ADB also made poverty lines adjusted for: (a) food insecurity, due to high fluctuations of food prices, and (b) vulnerability of the poor to shocks like natural disasters, climate change, illness and economic crises.  (These are separate from the adjustment from the “African” $1.25 to the “Asian” $1.51.)  The results for the Philippines are:

Percent of population poor in the Philippines at other poverty lines

                                                       2005    2008    2010

Food-insecurity-adjusted                               22.2     20.9     20.3

Vulnerability-adjusted                                 30.0     27.0     26.4

Source: ADB, Key indicators for Asia and the Pacific 2014, pages 18 and 30.

With the food-security-adjusted line alone, the Philippines is the fourth-poorest in Southeast Asia, in both 2005 and 2010—with Indonesia fifth-poorest in 2005, and Vietnam third-poorest in 2010.  With the vulnerability-adjusted line alone, it is fourth-poorest in 2005 (with Vietnam fifth-poorest), and third-poorest in 2010.

Should we compete with other countries’ poverty figures? To me, it is valuable to observe other countries’ poverty rates over time.  Why are some improving faster than we are?  Let us learn from the successes and failures of our neighbors.

But comparing countries at a single point in time is something else.  I think that the people—who are distinct from the government—of every country have their own minimum living standards.  No people in Asia need to subscribe to an “Asian standard.”  For instance, I do not take too literally the statistical absence of poverty in Thailand or Malaysia, per the ADB report.  It is for Filipinos, Thais and Malaysians to assess the realism of external reports on poverty in their countries.

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