Data shows BR1M has helped nar­row in­come in­equal­ity

The Sun (Malaysia) - - SUNBIZ -

THE im­ple­men­ta­tion of 1Malaysia Peo­ple’s Aid Pro­gramme (BR1M) has partly con­trib­uted to a re­duc­tion in the share of house­holds with low in­come.

In 2014, the share of house­holds earn­ing be­low RM3,000 nearly halved to 24.3% (2009: 52.7%), while house­holds earn­ing be­tween RM3,000 and RM5,000 has in­creased sig­nif­i­cantly to 30.6% (2009: 23.1%).

With the ris­ing house­hold in­come, the in­ci­dence of poverty had been re­duced to 0.6 in 2014, while the Gini Co­ef­fi­cient im­proved to 0.401 dur­ing the same pe­riod, in­di­cat­ing a nar­row­ing of in­come in­equal­ity. The in­ci­dence of poverty and the Gini Co­ef­fi­cient were 3.8 and 0.441 re­spec­tively in 2009.

In­tro­duced in 2012, BR1M is a form of con­di­tional cash trans­fer whereby pay­ment is pro­vided to house­holds earn­ing monthly in­come be­low RM3,000 and in­di­vid­u­als earn­ing monthly in­come be­low RM2,000.

In 2014, BR1M as­sis­tance was ex­tended to house­holds with a monthly in­come be­tween RM3,000 and RM4,000.

BR1M aims to ease the bur­den of ris­ing cost of liv­ing by of­fer­ing as­sis­tance to house­holds in the low-in­come group. The di­rect im­pact of BR1M is the in­crease in house­hold dis­pos­able in­come, which is the main de­ter­mi­nant of pri­vate con­sump­tion.

Be­tween 2012 and 2015, BR1M re­sulted in an in­crease in pri­vate con­sump­tion by 7.1% on av­er­age com­pared with 6.8% with­out the cash trans­fer. In ad­di­tion to the spillover ef­fect on pri­vate con­sump­tion, BR1M also in­di­rectly pro­motes the growth of in­dus­tries that pro­duce con­sumer goods.

Fi­nance Min­istry data show that the out­put of in­dus­tries such as res­i­den­tial, food and bev­er­ages, mo­tor ve­hi­cles, own­er­ship of dwellings, ac­com­mo­da­tion, elec­tric­ity and gas as well as fi­nance and in­sur­ance be­tween 2012 and 2015 was higher with BR1M than with­out BR1M.

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