KUALA LUMPUR: The present challenges faced by residents of the People's Housing Programme (PPR) stem from longstanding policy shortcomings that have marginalised them from broader economic and social inclusion.
According to economists, the current government's subsidies can help ease the setbacks.
Economist Dr. Geoffrey Williams highlighted that the Unity Government has implemented improved policies, like the Central Database Hub (Padu), which aims to identify those requiring assistance and provide them with the support they require.
"This is almost always best achieved by cash transfers and we need to see whether the targeted subsidies will be in the form of cash transfers or not," he told the New Straits Times.
Furthermore, Williams emphasised that the economic and social consequences experienced by PPR residents are largely confined to their communities, where they face isolation and exclusion from broader economic and social participation due to financial constraints.
He noted that this cycle results in persistent poverty passing from one generation to the next.
Williams said this when asked to comment on a study conducted by the United Nations Children's Fund (Unicef) that revealed that a significant portion of low-income households in the city prioritise increased wages over fuel subsidies as a means to alleviate the burden of rising living expenses.
The study, titled "Living on the Edge", surveyed 755 low-income households residing in 16 public housing projects in Kuala Lumpur, where only seven per cent expressed a preference for fuel subsidies.
Higher wages emerged as the most favoured intervention to address the challenges of escalating living costs, alongside initiatives such as cash assistance and price regulations on essential food items.
Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid said subsidy rationalisation is the right thing to do as the qualified recipient of financial aid from the government prefers direct cash payments over subsidies.
However, he recommended that the government strategise its communication approach regarding subsidy rationalisation.
"By leveraging on such findings in order to gain confidence and credibility, Malaysian citizens would understand the need for such a move," he added.
Afzanizam said reorganising the subsidies into cash aid would be more effective and targeted, and potentially lead to massive savings which can be used to improve the country's productivity.
"This would mean there will be more resources that can be used on education, healthcare and infrastructure. In a grand scheme of things, we should aspire towards a market-based economy, one that is fair, transparent and efficient," he emphasised.
Singapore Institute of International Affairs senior fellow Dr Oh Ei Sun noted that on a long-term basis, cash is usually preferred due to its versatility.
"People can utilise cash to address their immediate and prioritised needs, bypassing potential delays or misjudgments by government authorities or agencies.
"Based on my experience working with various international organisations, this principle applies universally. Those directly affected by a disaster are best equipped to determine their own needs," he said.
Meanwhile, Williams noted that while increasing the minimum wage is a useful tool in addressing poverty among various low-income groups, it should be accompanied by additional measures as it alone may not suffice.
"For the economy as a whole, there is a wider problem of low-incomes above the minimum wage and also relative poverty with half of people in private sector jobs earning less than RM2,600 .
"This is holding back economic growth and social development and this affects people who earn more than the minimum and also needs to be tackled.
"There are many causes of the worsening financial situation including the rising cost of living which affects everyone but the main causes of the problems for PPR residents and hardcore poor groups is ineffective government policy over many decades," he noted.
Williams suggested the implementation of a new Universal Basic Income or Guaranteed Basic Income, ensuring that no individual falls below a designated threshold, even if they are employed.
This threshold could be determined by various indicators such as the poverty-level income calculated by the Department of Statistics Malaysia, the living wage defined by Bank Negara Malaysia, the expenditure estimates provided by the Employees' Provident Fund's Belanjawanku, or even the median wage in the private sector of RM2,600.
"Anyone below this level should receive a cash payment to top-up their income to this threshold, even those working on minimum wage or low wages. This is sometimes called a reverse income tax, negative income tax or cash transfer.
"This is well-known and widely accepted in economics as the best solution. The new Padu database can be used to identify individuals below the threshold to target the assistance to them in cash directly," he added.