More cash aid needed for urban poor

An increasing number of households have no savings, rising to 68% in September compared to 63% in December last year


MORE meaningful government aid is needed to help vulnerable households in Kuala Lumpur (KL) cope with the impact of the pandemic as many are still struggling to meet basic needs, said economist Dr Muhammed Abdul Khalid (picture).

Muhammed — whose research outfit DM Analytics had recently published a study with the United Nations Children’s Fund and the UN Population Fund on 500 families living in low-cost flats in KL — said the current cash assistance given to families in need were too limited to make an impact.

The second instalment of the “Families on the Edge” study showed that more than half (58%) of the households surveyed said the cash aid from Bantuan Sara Hidup and Bantuan Prihatin Nasional (BPN) were the most useful. To compare, just 1% of households said that the PTPTN (National Higher Education Fund Corp) loan deferment was useful to them, while only 6% said the bank moratorium had helped their families.

“I’ll give an example. The government gave a RM500 one-off payment to M40 (middle 40%) households under the recent BPN scheme. The average household income for M40 households in Malaysia is RM7,000, which means the amount given is not even 10% and that is one-off.

“Now, assuming it’s three months, that is about 1%-2% per month. So, it is too small to make an impact,” he told The Malaysian Reserve in a recent interview.

Muhammed said this meant that the bulk of the RM305 billion stimulus that the government has announced so far does not affect them.

“We should not be calculative in helping vulnerable groups because this money would go back to the economy, and it’s their money anyway, they pay taxes. They don’t pay income tax, but they pay in direct tax,” he said.

Meanwhile, the report also found that an increasing number of households surveyed had no savings, rising to 68% in September compared to 63% in December last year. Those who still had savings have seen the average figure drop by 35%.

The situation is worse for female-headed households and heads of households with disabilities, where average savings are at RM342 and RM74 respectively. This comes at a time when the economy is expected to bounce back as businesses spring back to life.

Recent estimates in a Bloomberg survey of economists suggest that Malaysia’s third-quarter (3Q) GDP will rebound at -4.3% from the steep -17.1% contraction in 2Q. The study, however, found that a so-called V-shaped recovery was far from truth for poor urban families in KL.

The report, released last Friday, underscored that the economic recovery has largely failed to reach the urban poor, particularly female heads of households and heads of families with disabilities.

“The government and policymakers should not be side-tracked by claims that we are recovering. We are not recovering. As of now, we are worse off than last year, especially this vulnerable group,” Muhammed said.

“We are only lying to ourselves if we say we are recovering and it will impact the way we solve problems.”

Muhammed said the full impact of the pandemic is still unfolding, with the reintroduction of the Conditional Movement Control Order last month expected to worsen the situation for the country’s most vulnerable communities.