BR1M needs fine tuning, say economists and analysts

While the payment quantum for the 1Malaysia People's Aid (BR1M) has been increased from RM500 to RM650 this year, economists and activists feel the BR1M handout should be fine tuned to ensure it meets the objective of cushioning the impact from the rising cost of living.

Since it would be an annual affair and the payout amount would increase over the next few years, it was only appropriate that the government refined the method employed, said Socio-Economic Development and Research Institute (SEDAR Institute) executive director Ivanpal S. Grewal.

"Perhaps they can look at periodical payment, for example every three of four months," he told Bernama.

Citing an example, if the BR1M is increased to RM1,200 per year in the future, it would mean a payout of RM100 every month per eligible household.

Therefore, he said, it is only wise for such payments to be divided and given three or four times a year.

Ivanpal also opined that perhaps, not all assistance be given in the form of cash as the aid could also be a mix of cash and kind, including utilities rebate vouchers or even food stamps.

He explained that many countries implemented the conditional cash transfer where such transfer is tied to the children's education as well as in reducing infant mortality rates.

However, for Malaysia, he said the situation is different as it deals with the rising cost of living as well as the need to rationalise subsidies. Hence, the BR1M should be tied to the effort of cushioning the increasing cost of food, utilities and transport.

Perhaps, he said, Malaysia can learn from Singapore's Public Assistance Scheme where they split the direct cash transfer with a mix of monthly cash between S$100 and S$250, medisave top-ups (medical insurance) and utilities rebate.

To enable BR1M to meet its goals, RAM Holdings Bhd group chief economist Dr Yeah Kim Leng suggested that some of the assistance had to be given out in a more direct manner such as voucher for school fees, food, transport and basic necessities instead of providing cash.

"What we need is the combination of direct and indirect assistance to help the lower income group effectively in a more innovative way," he said, adding that the government could look into providing medical vouchers or tax rebate incentive to the employer who provides transportation to their employees.

However, some think tank cautioned the government that expanding the BR1M or any social safety net might not be sustainable in the long run.

"There is a need for the government to be realistic and stringent with the current model. Regardless whether it is in the form of BR1M or anything else, the government must have a clear idea on the number of people to be helped.

"The basic principle is that as the years go by, there should be fewer and fewer people depending on it. If their number increases every year, it would reflect badly on the government," said the Institute for Democracy and Economic Affairs (IDEAS) chief executive officer Wan Saiful Wan Jan.

The money for BR1M, first started in 2012 with one-off cash payment of RM500 to households with an income of less than RM3,000 a month, comes from savings made by reducing subsidies.

This initiative is undertaken by the government to alleviate the burden on low-income earners caused by the rising cost of living.

For 2014, about RM4.6 billion would be disbursed under BR1M from February onwards after the registration process closes on January 30. Seven million people stand to benefit from BR1M this year, an increase from last year's 6.8 million.

Households earning less than RM3,000 per month stand to receive RM650, while RM450 will be given to households with income between RM3,000 and RM4,000 a month. And individuals who met the criteria too could receive RM300.

SOURCE:   http://www.themalaysianinsider.com/malaysia/article/br1m-needs-fine-tuning-say-economists-and-analysts-bernama

 

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