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BN’s basic income offer will help B40 but concerns raised on implementation

By April 6, 2023November 1st, 2023No Comments

Among BN’s promises in their GE15 manifesto is to eradicate absolute poverty by 2025 through an assistive basic income, which will see households earning below RM2,208 a month receive an income top-up.

During the launch of the manifesto last night, BN chairperson Ahmad Zahid Hamidi said this initiative is meant to ensure all households in the country have a guaranteed income of at least RM2,208 a month.

It sounds like BN is promising to introduce a basic income, said Shankaran Nambiar, a senior fellow at the Malaysian Institute of Economic Research.

“As described, it is a direct transfer and does away with the administrative difficulties of making claims or having to go to the post office or certain centres and produce identification.

“It is also efficient in so far as it can replace the other cash stimulus schemes. The good thing is that it does not have to be an ad hoc process introduced every time there is a crisis, be it a natural calamity like a flood or pandemic or economic crisis.

“When those in the B40 have a guaranteed minimum income, they can plan their expenditure accordingly. The poor will then not be deprived of education, nutrition and a place to stay,” Nambiar told Malaysiakini.

A basic income is different from a universal basic income (UBI) in that the former only offers cash aid to targeted groups based on certain criteria, while the latter involves giving a basic income to the whole population.

Recent years have seen an increasing number of countries warm up to the idea of a form of guaranteed basic income, with some having run pilot programs to test it, such as Canada, Brazil, Iran, Kenya and India, among others.

While some of these pilot projects are government-funded, others are funded by private organisations. The purpose of such a programme is to test the effects of providing a basic income to a group of people before its implementation is expanded.

Former Democratic presidential candidate in the US, Andrew Yang had also promised something similar as part of his manifesto back in 2020, called the Freedom Dividend.

In Malaysia, there was also Umno information chief Shahril Hamdan who last year said the government should consider giving RM1,000 per month for three months to each household in the B40 and M40 income group to ride out the Covid-19 pandemic.

‘Debug’ distribution system

However, the idea of a basic income is a contentious one. Despite proponents saying this is an effective way to end poverty, critics are concerned that it will reduce productivity and that it is not fiscally feasible for governments.

The pilot projects around the world have mostly brought forth positive results, with research suggesting that such programmes do not affect labour supply in any way.

Nambiar also believes that a basic income would benefit the B40 income group in Malaysia.

“When those in the B40 have a guaranteed minimum income, they can plan their expenditure accordingly. The poor will then not be deprived of education, nutrition and a place to stay,” he said.

He also does not believe it would be such a big financial burden on the government, because the government has already, from time to time, been involved in various ad hoc schemes that have required cash transfers.

“The assistive basic income will also avoid such problems as pension deprivation arising from forced Employees’ Provident Fund (EPF) withdrawals even when they have less than RM10,000,” he said.

However, Nambiar acknowledged that the distribution system will have to be “debugged” in order for a smooth implementation of the assistive basic income.

Pointing to the GST fiasco several years ago, he said the whole taxation system was removed due to poor implementation, instead of improving the implementation.

“Similarly, the government delivery system will have to be worked upon to correct the flaws,” he said.

Poor track record

Former Suhakam commissioner Jerald Joseph also raised concerns about the implementation of the assistive basic income, due to the country’s poor track record in distributing welfare aid.

While he said a basic income would be a good effort to ensure no one lives below the poverty line, he said past efforts have not shown good results in identifying the poor nor enabling them easy access to aid.

“Too many layers in the civil service bureaucracy have rendered often-heard promises to fall between the cracks.

“There is racism present in outreach, and there are political affiliations that make it easier or harder for such assistance, so how will it be different this time?” Joseph said.

Questioning whether this is just another empty election promise to get the vote from the poor, Joseph said it would be best to enact a law for an assistive basic income.

“Then, no party can play politics with it,” he said.