Leave the BR1M to live the dream

Hand­outs put cash in the pock­ets, but ed­u­ca­tion pro­vides real em­pow­er­ment.

The Star Malaysia - Star2 - - INBOX - Con­tra­dic­the­ory DZOf AZMI Logic is the an­tithe­sis of emo­tion but math­e­ma­ti­cian-turned-scriptwriter Dzof Azmi’s the­ory is that peo­ple need both to make sense of life’s va­garies and con­tra­dic­tions. Speak to him at star2@thes­tar.com.my.

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.

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