IS BR1M a waste of the country’s money since cases of abuses have been reported? Can we afford it?

Idris: BR1M is a constructive fiscal initiative that directly transfers money into the hands of the deserving, unlike subsidies that enrich those who do not need it. It is meant to provide essential financial aid to segments who are least able to absorb the impact of the rising cost of living.

As we transition into a high-income economy, no group should be left behind and it is especially important to focus on financial safety nets for the bottom 40%.

With the implementation of GST and subsidy rationalisation releasing additional revenue to government coffers, we can be more effective in aiding low-income households. BR1M as a cash handout is a powerful mechanism to alleviate pressures without taking away from existing areas of government spending.

We still see poverty in the country, even as we talk of becoming a developed nation, and we are not doing enough for the bottom 40%.

Idris: Every country has a bottom 40% and most struggle to deal with poverty. No matter what you do to address it, there will always be room for improvement.

There is also always a disconnect between data and sentiment, yet the tough demands of policy-making require us to study data to design appropriate solutions.

The Department of Statistics Malaysia’s (DOSM) survey on a sample size of 81,634 households shares the preliminary data that only one per cent of households were living under the Poverty Line Index (PLI) in 2014. Also, the overall income inequality was narrowed by the reduction of the Gini coefficient from 0.441 in 2009 to 0.401 in 2014.

For better understanding of income levels, the preliminary 2014 Household Income Survey by DOSM shows that in 2014, both average and median household income grew by 8% and 8.5% respectively, outpacing inflation at 2.3% (see chart 5).

The situation with the bottom 40% offers even more hope – income has risen higher than the overall average at 12% (see chart 6). 

Clearly, economic transformation is gradually reaching the masses. Initiatives such as Minimum Wage and BR1M, as well as income-generating programmes like 1AZAM help raise income levels and create additional opportunities. But certainly, we cannot just stop at those.

There has to be greater focus on alleviating the burden of the B40, which is why the 11th Malaysia Plan emphasises initiatives designed to elevate B40 households towards becoming a middle-class society.

A distinguishing feature of a middle-class society is where a large proportion has tertiary education and high-paying jobs. Under the Plan, the targets to be achieved are:

> Increasing the size of middle-class society to 45%;

> Doubling the mean monthly income of B40 households from RM2,537 in 2014 to RM5,270 in 2020 and the median monthly income from RM2,629 in 2014 to RM5,701 in 2020;

> Increasing the percentage of B40 households with tertiary educational attainment from 9% in 2014 to 20% in 2020; and

> Increasing income share of the B40 to national household income from 16.5% in 2014 to 20% in 2020.