Good initiatives for B40 but make sure they hit bullseye, says economist

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PETALING JAYA: An economist has welcomed the government’s initiatives to eradicate poverty in next year’s budget but worries that some of the plans may not impact targeted beneficiaries at the grassroots level.

Sulochana Nair, the founding director of the Centre for Poverty and Development Studies at Universiti Malaya, said the Bantuan Sara Hidup (BSH) programme, like its predecessor the 1Malaysia People’s Aid (BR1M) scheme, could end up being abused or misused.

“While it is laudable that the new government wants to help B40 (bottom 40) households, a review of BR1M has shown that much of the assistance received was not used for productive purposes. Many times, it was also abused,” she said.

She noted that BSH, which is aggregated based on income groups, was a step forward from BR1M. Under BSH, she said, a household earning RM2,000 with four children would receive RM1,480 – more than the RM1,200 given under BR1M.

However, she said, the government should have considered implementing conditional cash transfers (CCTs), which she believed would be more effective in eradicating poverty.

CCTs are cash transfers targeted at the poor and given to households which meet certain criteria. Such programmes have been implemented in countries such as the US and neighbouring Indonesia.

Sulochana said a CCT initiative would not only reduce poverty but break the cycle for future generations by developing human capital.

“CCTs can have a significant impact on poverty reduction provided that the transfer is sufficient and well targeted and the poor do not depend on them as their only source of income but are encouraged to undertake additional measures to overcome their poverty.”

CCTs could also help the poor withstand the aftermath of catastrophes such as natural disasters, illnesses and loss of income or employment.

Sulochana also welcomed Putrajaya’s RM10 million allocation to identify and collaborate with NGOs which assist the B40 and marginalised groups, saying the government alone should not be responsible for eradicating poverty.

She said many NGOs had an in-depth understanding of the B40 groups with which they work and had already established effective delivery mechanisms to reach those most in need of aid.

“The government can leverage on this,” she said, calling for the creation of a national database of these organisations as well as their work and the communities with which they are involved.

“This will help the government channel development input to deserving communities, reduce the cost of delivery and increase the impact of government efforts.”

She said tax exemption for companies that contribute to social enterprises would help finance the organisations as well as encourage the growth and expansion of social entrepreneurship.

However, she urged the government to carefully monitor such enterprises to ensure that they do not deviate from the purpose of helping the B40 group.

On the government’s RM80 million allocation to increase subsidies for electricity bills for low-income households registered under the eKasih system, Sulochana recommended a review of the database to ensure that only the deserving poor are on the list.

“It is also important to ensure that the poor and hardcore poor in the interior of Sabah and Sarawak have access to electricity. Otherwise, these subsidies will be meaningless for them.”

In his budget speech in the Dewan Rakyat last Friday, Finance Minister Lim Guan Eng announced that the government would continue and improve on the BSH programme to provide targeted financial assistance based on household income.

Households earning RM2,000 and below will be entitled to RM1,000; households earning between RM2,001 and RM3,000 will be entitled to RM750; and households earning between RM3,001 and RM4,000 will be entitled to RM500.

Qualified households will also be entitled to an additional RM120 for every child under 18, with a limit of four children except if there are children with disabilities.

The government will also allocate RM10 million to identify and collaborate with existing NGOs and social enterprises who work with the B40 and marginalised groups.

Companies meanwhile will enjoy tax exemptions for contributions to social enterprises, with a limit of 10% of the aggregated income for companies and 7% of that for individuals. - FMT