BR1M promotes consumer-related industries’ growth

THE 1Malaysia People’s Aid (BR1M) indirectly promoted the growth of consumer goods industries, as reflected in the increase in output in the residential, food and beverages, motor vehicles, ownership of dwellings, accommodation, electricity and gas as well as finance and insurance sectors.

The immediate impact of BR1M cash transfers was also reflected in the increase in disposable income of the Bottom 40 per cent households (B40), said the Economic Report 2016/2017.

This had translated into higher purchase of essential items such as food and housing, which could indirectly spur domestic economic activities through an increase in production of consumer goods.

The implementation of BR1M also partly contributed to the reduction in the share of households with low income.

In 2014, the share of households earning below RM3,000 nearly halved to 24.3 per cent, compared with 52.7 per cent in 2009, while households earning between RM3,000 and RM5,000 had increased significantly to 30.6 per cent, compared with 23.2 per cent in 2009.

With the rising household income, incidence of poverty was reduced to 0.6 in 2014, while Gini Coefficient improved further to 0.401, indicating the narrowing of income inequality.

This is in line with the nation’s socio-economic development agenda to enhance inclusivity.

Household disposable income is the main determinant of private consumption, accounting for an average of 67.4 per cent of growth in private consumption.

The increase in earnings of the lower-income households will likely contribute to the growth in private consumption as they have a higher marginal propensity to consume.

Between 2012 and 2015, BR1M resulted in an increase in private consumption by 7.1 per cent on average, compared with 6.8 per cent without the cash transfer.