The annual increase of cash handouts to Malaysians under the government’s 1Malaysia People’s Aid (BR1M) scheme risks becoming a permanent entitlement, a think tank said today.
The Institute for Democracy and Economic Affairs (IDEAS) praised Prime Minister Datuk Seri Najib Razak’s administration for moving away from blanket subsidies and its commitment to using targeted welfare programmes like BR1M to help Malaysians, but said the government should reduce the public’s dependence on such aid.
“However, we are astonished that the government appears to be proud that increasingly more people are depending on and in need of such welfare assistance.
“Success should be measured not in there being more people being on the programme but fewer and decreasing recipients each year to the point that we no longer need it,” IDEAS CEO Wan Saiful Wan Jan said in a statement.
“We should be concerned that there is a need to increase this allocation each year. BR1M is at risk of becoming a permanent entitlement,” he added.
In Budget 2017 tabled today by Najib, the government increased its allocation for BR1M to RM6.8 billion, which it expects to benefit seven million recipients. For 2016, the government disbursed RM5.4 billion to 7.3 million recipients — including 4.2 million households and 3.1 million unmarried individuals.
Today, Najib announced an all-round increase for all BR1M recipients next year, with low-income households earning below RM3,000 monthly to get a one-off RM1,200. Households earning between RM3,000 and RM4,000 monthly will get a one-off RM900, while single individuals will get a one-off RM450.
Wan Saiful added that Najib’s predecessors had, in the past, introduced blanket subsidies measures that benefited all regardless of income, which were well-intended then but had outlasted their suitability.
Noting that such blanket subsidies caused “long-term problems of affordability and sustainability”, he praised Najib for leaving aside such measures but said the prime minister must cut down Malaysians’ reliance on debt.
“If Najib wants to leave a positive legacy as a responsible prime minister, he must move beyond the reliance on debt to solve problems. The relaxation of debt ceilings for civil servants, for example, will only increase household debt,” he said.
Wan Saiful highlighted that Malaysia has one of the highest household debts in the region, with the country’s household debt-to-gross domestic product (GDP) ratio having increased from 86.8 per cent in 2014 to 89.1 per cent in 2015.
Najib today announced nine measures and initiatives for civil servants, including increasing their motorcycle loan limit from RM5,000 to RM10,000 and their housing loan eligibility from between RM120,000 and RM600,000 to between RM200,000 and RM750,000.
It is unknown how long the BR1M policy introduced in 2012 would continue on, as the Barisan Nasional’s election manifesto in 2013 had only set targets for the handout amount until 2018.
In an interview published in newspaper Mingguan Malaysia on November 23, 2014, Najib reportedly indicated then that Malaysians would one day no longer need BR1M when their income levels have increased.
Source : The Malay Mail Online