KUALA LUMPUR, Oct 13 — There is a crucial need for the government to relook, reform and redesign the delivery of social assistance, particularly cash transfers, to ensure inclusive and equitable protection.
According to Economic Outlook 2024 released by the Ministry of Finance today, this includes introducing an overarching Act of Parliament to oversee social protection as a whole for social assistance, social insurance and labour market intervention.
Without this Act, accountability of social assistance programmes, mainly, will remain ambiguous, thus impacting effective implementation, including cash transfer programmes.
“An analysis of Malaysia’s social assistance programmes has demonstrated several gaps stemming from two issues. The first is due to the fragmented nature of social assistance programmes involving 167 schemes currently implemented by 17 ministries and agencies. This fragmentation has led to overlapping programmes, causing both inclusion and exclusion errors.
“Second, Malaysia’s social assistance programmes do not have legal commitments nor are backed by strong financial resources, resulting in the programmes being less sustainable in the long term,” it said.
Apart from the Rahmah Cash Aid (STR), most social assistance programmes only target the hardcore poor who are eligible based on the poverty line index. This may lead to some vulnerable households in the B40 groups being left behind.
For 2023, RM63.8 billion or approximately three per cent of Gross Domestic Product (GDP), was allocated for subsidies and social assistance.
“Although spending on subsidies and social assistance increases yearly, its share of the GDP for 2020 to 2022 is small, with an average of 2.2 per cent. This figure is significantly smaller compared to OECD nations which typically spend 10 per cent of GDP in 2022 (OECD, 2022) on cash benefits only,” it said.
According to the report, Malaysia must transition from narrowly targeted and stigmatising approaches to a more comprehensive developmental programme.
“In other words, instead of explicitly targeting poverty, the focus will be addressing underlying vulnerabilities. In this regard, risks associated with the life cycle, like childhood, maternity and old age; coupled with the risks of disability, can be targeted with a more holistic cash transfer programme.
Moving forward, a potential developmental model comprising a combination of income-tested and categorical base programmes can be an optimal solution in addressing vulnerable groups.
“The shift into this developmental model can help reduce exclusion errors associated with poverty targeting whilst allowing for administrative simplicity and efficiency.
“The developmental model can also improve social contracts as the government can uphold its responsibility to safeguard the wellbeing and security of citizens since anyone can become vulnerable at any point of their life,” it said.
The implementation of cash transfer programmes can be centralised under a single existing agency to address fragmentation issues, reduce implementation costs, and standardise eligibility criteria for income-tested aid.
The proposed agency can also act as the primary access point to social assistance services where potential beneficiaries can apply via a simplified application process.
To ensure its successful implementation, an autonomous data management approach is needed to automate, consolidate and integrate a data management task, which can reduce inadvertent errors.
“This necessitates the establishment of data classification framework to safeguard privacy within data sharing arrangements as well as to ensure data integrity and adherence to standard data formats,” the report said.
Malaysia’s current cash transfer programme focuses more on charity-based models, which can leave certain population segments without adequate coverage.
“For instance, although Malaysia provides child and elderly allowances, it only targets the hardcore poor population,” it said.
— Bernama
