Economic Outlook 2024: Need for review, reform and redesign of social assistance delivery
13 Oct 2023 04:44pm
Prime Minister Datuk Seri Anwar Ibrahim - BERNAMA FILE PIX
According to Economic Outlook 2024 released by the Ministry of Finance today, this includes introducing an overarching Act of Parliament to oversee social protection as a whole for social assistance, social insurance and labour market intervention.
Without this Act, accountability of social assistance programmes, in particular, will continue to remain ambiguous thus impacting effective implementation, including cash transfer programmes.
"An analysis of Malaysia's social assistance programmes has demonstrated several gaps that stem from two issues. The first is due to the fragmented nature of social assistance programmes involving 167 schemes that are currently being implemented by 17 ministries and agencies. This fragmentation has led to overlapping programmes causing both inclusion and exclusion errors.
"Second, Malaysia's social assistance programmes do not have legal commitments nor are backed by strong financial resources resulting in the programmes being less sustainable in the long term,” it said.
The report said apart from the Rahmah Cash Aid (STR), most of the social assistance programmes are only targeted at the hardcore poor who are considered eligible based on the poverty line index and this may lead to some vulnerable households in the B40 groups being left behind.
For the year 2023, a total of RM63.8 billion, or approximately three per cent of Gross Domestic Product (GDP) is allocated for subsidies and social assistance.
"Although spending on subsidies and social assistance increases every year, its share to GDP for the period 2020 to 2022 is small, with an average of 2.2 per cent. This figure is significantly smaller compared to OECD nations which typically spend 10 per cent of GDP in 2022 (OECD, 2022) on cash benefits only,” it said.
According to the report, it is imperative for Malaysia to transition from narrowly targeted and stigmatising approaches to a more comprehensive developmental programme.
"In other words, instead of explicitly targeting poverty, the focus will be given to addressing underlying vulnerabilities. In this regard, risks associated with the life cycle such as childhood, maternity and old age; coupled with the risks of disability can be targeted with a more holistic cash transfer programme.
Moving forward, a potential developmental model comprising a combination of income-tested as well as categorical base programmes can be an optimal solution in addressing vulnerable groups.
"The shift into this developmental model can help reduce exclusion errors associated with poverty targeting whilst allowing for administrative simplicity and efficiency.
"The developmental model can also improve social contracts as the government can uphold its responsibility to safeguard the wellbeing and security of citizens since anyone can become vulnerable at any point of their life,” it said.
The implementation of cash transfer programmes can be centralised under a single existing agency to address fragmentation issues, reduce implementation costs and standardise eligibility criteria for income-tested aid.
The proposed agency can also act as the primary access point to social assistance services where potential beneficiaries can apply via a simplified application process.
To ensure successful implementation, an autonomous data management approach is needed to automate, consolidate and integrate a data management task, which can reduce inadvertent errors.
"This necessitates the establishment of data classification framework to safeguard privacy within data sharing arrangements as well as to ensure data integrity and adherence to standard data formats,” the report said.
Malaysia's current cash transfer programme is focused more on charity-based models which can leave certain segments of the population without adequate coverage.
"For instance, although Malaysia provides child and elderly allowances, it only targets the hardcore poor population,” it said. - BERNAMA
