Budget 2019 supports B40 but is it sustainable?


Budget 2019, while continuing to address the high cost of living particularly suffered by the bottom 40% (B40) group, needs more than just cash-based assistance to remain sustainable.

Malaysian Institute of Economic Research senior research fellow Dr Zulkiply Omar told The Malaysian Reserve that the budget seems to have less focus on increasing the productivity of the people as the “cash transfer” mechanism is still dominant.

“I was hoping for a different mechanism of financial aids such as through an in-kind help that increases the productivity rather than goodies or cash transfer,” Zulkiply said.

The Pakatan Harapan government, it seems, has tweaked and introduced several subsidies that directly impact the B40 group, including the “Bantuan Sara Hidup” cash grants, targeted fuel subsidy and public transport pass.

For example, Zulkiply said, a fisherman’s income is affected during the monsoon season and perhaps the government could think of a way to offset such circumstances with an in-kind assistance through other economic activities or programmes.

He said productivity improvement is key to alleviate the economic level of the rakyat in a more sustainable way.   

In the budget, every household with a monthly income of RM2,000 and below will receive RM1,000 beginning next year.

Households with a monthly income between RM2,001 and RM3,000 will receive RM750, while those earning between RM3,001 and RM4,000 monthly will receive RM500.

Additionally, every child 18 years old and below or is disabled in the family will get an additional RM120 per child of up to a maximum of four children.

Overall, the government estimated that 4.1 million households would benefit from the cash grants totalling RM5 billion.

“Half of the population are under welfare and that is not healthy or progressive,” he added.

On the minimum wage front, the economist said it is an inevitable move and productivity level will still be the anchor for a higher salary payment. 

Putrajaya has proposed to raise the minimum wage to RM1,100 per month, or an additional RM50 from the previous level.

The purchasing power is also expected to improve indirectly via a proposed expansion of fuel subsidy for vehicle owners of 1,500cc and below.

Each car and motorcycle owner get up to 100 litres and 40 litres of RON95 petrol per month with a subsidy of at least 30 sen per litre, depending on the market price of petrol.

The government further supports the B40 group through a RM100 unlimited public transport pass for the RapidKL rail and bus networks starting next year, as well as RM50 monthly pass available just for RapidKL buses only.

Overall, Dzulkiply said Budget 2019 is an acceptable budget as the first budget of the new government on the back of multiple constraints, including lower revenue and slower global economic growth projected next year.