Malaysia’s social aid programmes need to be better targeted, says report

 

The OECD said social assistance and subsidy programmes in Malaysia were fragmented and managed by multiple agencies, leading to inefficiencies like benefit duplication.

PETALING JAYA: 

Current social assistance programmes, particularly government subsidies, need to be better targeted to truly benefit vulnerable households, according to the Organisation for Economic Cooperation and Development (OECD).

It said existing cash transfer programmes were fragmented and managed by multiple agencies, leading to inefficiencies like benefit duplication and overlaps.

Citing various data, the OECD said the Sumbangan Tunai Rahmah (STR), formerly known as Bantuan Sara Hidup, Bantuan Prihatin Rakyat and BR1M, was an example of a government flagship programme that fell short in both benefit adequacy and targeting.

Benefit levels are largely determined by household income and do not take full account of the household size, which diverges from common practice in other countries, and could be fully refocused on household income per capita instead,

 the organisation said in its latest economic survey of Malaysia, launched today.

Although the official objective of the programme is to support the bottom 40% of the income distribution, this population segment received only 12% of the total allocation in 2019.

To improve targeting and reduce fragmentation, the OECD said consolidating existing social registries into a single, comprehensive database like Padu could be beneficial.

Building a single registry for social benefit delivery on the basis of Padu would be a promising way to improve targeting,

 it said.

The organisation also suggested introducing conditional cash transfers that linked poverty relief to investments in human capital, such as school attendance or healthcare, to improve long-term outcomes.

Malaysia could consider introducing such conditionalities, and also reach out to STR beneficiaries offering training or employment counselling services,

 it said.

Pension coverage is narrow, inadequate

Meanwhile, the OECD also said pension coverage should be expanded to support the elderly and prepare for population ageing.

It said pension coverage was currently limited, with only about one-third of the working-age population covered by mandatory schemes, 

substantially lower than other countries

.

The organisation said retirees were expected to face insufficient pension savings, with many EPF contributors projected to receive pension benefits below the poverty line.

As such, the OECD also recommended limiting early withdrawals, raising the withdrawal age and potentially transitioning civil servants to the EPF to improve pension sustainability and coverage. - FMT