One of the challenges for poverty reduction in Malaysia is migrant worker’s issue. The current development policies of Malaysia are influenced by globalisation and liberalization which leads to the implications on activities related to poverty. The decrease in employment opportunities affects the urban poor and migrant workers. The demand for skilled human resources in capital intensive activities are huge since Malaysia is restructuring its economy. An increase in the number of overseas employees has caused a bad effect towards the IOP in the post world repercussion of 2008. The contribution of overseas employees for local economy, remittance for their country origin, expected competition in the local labor market between local and migrant workers and the potential of massive amount of overseas labours contribute to major concerns about the issue.
Ethnic issues would be the second challenge for poverty reduction in Malaysia due to the educational and achievements of Bumiputera students in major disciplines of the economy are lower than the non Bumiputera students. This led to an academic lacuna between the two sectors. Turmoil between ethnic groups would become worse if the policy makers refuse to create promising agreements. Therefore, the expected gap between poor and non poor will be widened. The Malays are dominant in the rural poverty which reminded the policy makers to figure out the national level concept of poverty. NEP 2010 poverty eradication is mainly focused on Malay rural population.
The third challenge of poverty reduction in Malaysia is rural and urban poor with more than half of the family units are poor, rural and urban poor poverty have constantly been identified as a problem confined to rural. The effects of poverty are devastating among urban communities as most of the new poor family units are settled in urban areas. Innovative strategies and policies should be implemented with strong responsibility in programs planning and inner city development expenses allocation are required.