A welcome measure

29 December 2016 @ 11:13 AM

REFLECTING on how average Malaysian families fared in 2016 is likely to be a disheartening exercise. The escalating cost of living and benefit cuts, among other things, conspire to make 2016 a dismal year. Next year looks set to be no better, according to informed commentators. The consensus appears to be that the Malaysian economy will probably face several more lean years ahead, given the uncertainty of the global situation. Many Malaysian households continue to be vulnerable to reduced circumstances as a result of job loss, changes in interest rates or financial markets, as well as physical impairment, death and divorce. A study on the financial fragility of urban households in Malaysia revealed that only 10.8 per cent would be resilient to financial shocks. The same study, as highlighted in the recently published State of Households II report by Khazanah Research Institute (KRI), showed that more than 50 per cent of the country’s urban households did not have any savings, and 20 per cent would only be able to survive for less than three months if their incomes were cut off.

Many are struggling to keep their head above water, as the phrase goes. Malaysian households spend most of their income on housing, transport and food — prices of which are all going up. Rises in the prices of food have been weighing heavily on household budgets. The low-income group remains worse off. The KRI study indicated that the richest households need only allocate 9.9 per cent of their monthly expenditure on food, while the poorest households, which earn less than RM2,000, have to spend 30.4 per cent on food.

Hence, the 1Malaysia People’s Aid (BR1M) programme, introduced by the government to address such shortcomings, is a welcome measure, a form of financial assistance for low-income households to tide over such trying times. Recipients of the handout have acknowledged its benefits and appreciate the monetary assistance. They reject criticisms, including Tun Dr Mahathir Mohamad’s claim that BR1M is a bribe offered in exchange for votes. Recipients see it as a measure that allows them to plan their expenditure, secure in the knowledge that there would be a little something in their bank accounts three to four times a year. Political leaders from both sides of the divide are united in their praise of BR1M, saying that low-income households deserve all the help they can get in these challenging times. Significantly, the government will raise the quantum of aid under the programme next year for the various categories eligible for the assistance. Households in the e-Kasih database with a monthly income below RM3,000 will receive RM1,200, from RM1,050 and RM1,000 previously. For households earning between RM3,000 and RM4,000, the amount due to them will go up from RM800 to RM900. Single individuals earning below RM2,000 monthly will enjoy an increase in assistance from RM400 to RM450.

Poverty will probably always be with us, but history will judge societies on how they help helpless members cope with difficult times. BR1M, like other initiatives to help disadvantaged groups, is a major step in the right direction.