Leave the BR1M to live the dream
Handouts put cash in the pockets, but education provides real empowerment.
AFRIEND of mine recounted a colleague of his had been showing off his gleaming new branded sports watch. Knowing that his colleague was not very well-to-do, my friend asked him, when did you get that? The answer was, “When I got my BR1M money”.
When my friend protested and said that the cash from the Bantuan Rakyat 1Malaysia program (BR1M) was meant to help with essential goods, the answer was, “It’s my money, I can do whatever I like with it”.
Of course, it would be fair to point out that this is only one anecdote from one unverified source about a programme designed to help 7.9 million Malaysians, and if one of them wants to fulfil a lifelong ambition to own a snazzy timepiece, who am I to argue? But as a taxpayer who doesn’t qualify for BR1M (and thus am helping fund it) I am concerned that the money is spent in a useful way.
The rationale of the policy is to provide temporary aid to the Malaysians who may be significantly impacted by the recent increases in the cost of living. The Government has rationalised that the money for BR1M comes from savings made by reducing subsidies.
Instead of every citizen benefiting from subsidised goods, now only those below a certain income level will benefit (arguably, the richer tend to benefit more from broadbased subsidies, e.g. larger, more expensive cars are less fuel efficient than smaller ones, and use up more of the subsidised petrol).
The numbers do seem to kind of balance out. As a comparison, given that the price of petrol has gone up by 20 sen since the introduction of BR1M in 2011, RM650 (the most a household would get under BR1M) represents the increase in price of more than 3,250 litres of petrol, or a subsidy for about a tank and a half of petrol every week for a year.
Yet it feels very much like it is a program that moves money from the pocket of subsidies to one of direct cash gifts. The only overall benefit seems to be that the end-recipient can spend his money on anything he wants (good if you want a new watch, bad if you want to make ends meet responsibly). On top of that, BR1M is a big black hole that the Government has poured money into for three years now, with no end in sight.
As my friend pointed out, it brings to mind that age-old adage paraphrased as, free fish is for today but a rod and a reel and the knowledge of how to use it is for a lifetime, and may bring many other opportunities as well.
What if we look at it in a different way? What if, instead of giving RM4.6bil away in 2014 as free money, we put a programme in place to help people learn how to manage their finances better?
BR1M comes to about RM1.80 per eligible household per day. If we could teach families how they could save an extra RM2 per day, we would be ahead – and it would benefit all families, not just the ones that qualify for BR1M.
The obvious place to start would be to reduce waste and cut unnecessary expenditure. Earlier this year, it was reported that Malaysians waste enough food to feed 7.5 million people. I’m sure every household could learn how to save a few ringgit each time they go out and buy groceries.
Another example would be to buy fewer cigarettes. An estimated 40% of Malaysian adults are smokers, with the average spending almost RM6 a day on their habit, at about 60 sen per stick. Additionally, those with lower incomes are more likely to be smokers, making potential savings even better.
And given that much of the current difficulties are attributed to increases in petrol prices, note that car pooling or walking to nearby destinations can save you money. And by making sure your tyres are pumped at the right pressure, you can improve gas mileage by up to 3.3% – and save about RM150 per year.
These are just examples of saving money by reducing waste and expenditure. We haven’t even discussed how incomes could be supplemented or debts reduced (it was recently reported that the household debt in Malaysia is at a high 83% of GDP). It is clear that if you could educate the public how to better manage their money, you could see benefits within a very short time.
In fact, management is more about planning and budgeting – fundamentals that I suspect many households don’t do at a conscious level. It is clear that if you could educate the public how to better manage their money, you could see benefits within a very short time.
Unlike one-off grants, these lessons will serve families for a lifetime. The Government would not have to fork out a few billion each year just to top up what the rakyat is perceived to need. Instead the rakyat will learn how to be better citizens, and perhaps even be more productive.
Admittedly, there are issues about how a programme like this would work with the 5% of households in the country who earn less than RM1,000 a month. The problem faced by those in that segment is that they are unable for one reason or another to generate a good income.
Education is clearly still key, as it can help someone get a better job or put them on the path to becoming a successful entrepreneur (which is something the Government’s 1Azam program aims to do).
Perhaps education programmes are not seen to be “sexy” enough, or maybe cash disbursements are easier to implement. But I believe the public can be persuaded that if they can learn to manage their money better, they will be in better control of achieving their dreams.
At the very least they could get a new sports watch every year instead of just once.
Money management: Instead of br1m handouts to help poorer people deal with inflation, the columnist suggests teaching people how to save more money.