The following summary is based on the Aiming High: Navigating the Next Stage of Malaysia’s Development report by the World Bank, published in 2021.
No matter where you live in Malaysia, there are incidences of poverty. High-income states do not equal to high-income households. As we see, the B40s residing in Sabah and Sarawak account for 12.3% and 11.7% of the nation’s low-income families. However, Selangor and Johor also show similar numbers (13.1% and 9.7%).
Whilst the Bumiputera community indeed dominates both poor and rich demographics, however, the B40s also includes high populations of Chinese and Indian Malaysians. Similarly, whilst many believe that the B40 live in rural areas, most of the B40 population are found in urban domains. With those experiencing poverty being in such diverse groups, how does Malaysia protect its vulnerable?
A study by the World Bank identified the necessary steps that need to be taken in order to improve Malaysia’s current economic situation and. The study also points out various gaps within existing financial aid schemes commonly used in Malaysia, as well as just how adequate social protection programmes are in protecting the vulnerable.
Here are ten things you should know about BSH, BR1M and other financial aids for the B40s.
- Malaysia implements two types of social protection programmes. The first being non-contributory social assistance, where stakeholders provide cash handouts, targeted feeding programmes are held, etc. The second is contributory social insurance programs. This is where contributions made by employees determine their entitlement. Programmes such as old-age and disability pensions as well as unemployment insurance.
- Not every worker is covered by social assistance. According to 2016 data, Malaysia’s social assistance reaches only 67% of Malaysian citizens, but barely 50% are covered by social insurance (e.g., SOCSO).
- 98.2% of Malaysia’s B20 community are covered by only 7.8% of the country’s allocated social assistance programs. Only a small fraction of the country’s post-transfer income is widely distributed among a large population. With a high coverage but low adequacy rate, Malaysians are faced with more limited programmes but are more widely distributed.
- The Bantuan Sara Hidup (BSH), formerly known as Bantuan Rakyat 1Malaysia (BR1M) (established in 2013), are both cash transfer programs that have the potential to actively facilitate human capital development, leverage higher old age savings, as well as provide access to formal jobs.
- Every One in Eight B40 households did not receive BR1M benefits. Whilst 93.7% of the B1 census received BR1M, only 80.9% of B4 received theirs. The World Bank predicts that BSH has a similar trend. Overall, nearly half of Malaysia’s social assistance is given to M40 and T20 communities. The World Bank states that 53.2% of social assistance goes to B40, 37.2% to M40, 9.5% to T20.
- Financial Aid is being leaked between income groups. Overall, 63.3% of all households in Malaysia were reported to receiving financial aid from BR1M. This means that even though the B40s received a larger share, higher-income groups that were not meant to receive the assistance are first in line to accept the payout. Further research could be done to assess the flaw in this system.
- B40s are not getting financial protection because they are unaware of the benefits and find the process to be bothersome. UNICEF’s study mentions that the B40s that are not covered by social protection programmes are most likely due to a lack of awareness of the programmes and many perceiving the sign-up process to be burdensome.
- The Department of Social Welfare (JKM) implements ten programmes for vulnerable groups in Malaysia that target the elderly, children, people with disabilities, and the chronically ill. All together, JKM had almost 500,000 beneficiaries in 2017. Despite this, roughly RM1.5 billion was allocated for all ten programmes, which is only 22.9% of the allocation of BR1M.
- JKM social assistance benefits and welfare services had a low budget allocation. Despite the programmes being a step in the right direction and acting as an additional aid to BSH, it had very limited funding and very low coverage. In 2016, only 10.1% of B40 were covered due to a small budget. The average beneficiary would receive RM263/month from JKM.
- An existing gap in Malaysia’s social protection schemes. With such a high number of recipients and not even a third of BR1M’s funding, the vulnerable communities are not given enough to last via JKM’s social protection & BR1M/BSH programmes. Although BR1M/BSH schemes had a higher budget allocation, the system was not refined enough for the aid to be dedicated to solely B40 recipients, leading to even members of T20 households receiving aid.
Explore Our Sources
- World Bank (2021) ‘Aiming High – Navigating the Next Stage of Malaysia’s Development,’ Country Economic Memorandum, Washington, DC: The World Bank. Link
