Budget 2023: Improve delivery system, ensure only targeted groups get aid

02 Mar 2023 08:47am
For illustration purpose
For illustration purpose
KUALA LUMPUR - The unity government’s revised Budget 2023 tabled in Parliament last Friday has proposed, among other things, various forms of aid to assist needy groups to face the challenges posed by the rising cost of living.

Themed Developing Malaysia Madani, Budget 2023 is the largest national budget to date with an allocation of RM388.1 billion comprising RM289.1 billion for operating expenditure and RM99 billion for development expenditure including RM2 billion for contingencies.

The proposed aid packages cut across all segments of society with the bulk targeted at the B40 and hardcore poor groups in the form of Rahmah cash contributions (Sumbangan Tunai Rahmah or STR) and food baskets.

Not to be left behind are padi farmers and rubber smallholders who are expected to enjoy various subsidies and cash contributions.

The disabled community, former convicts and the homeless and unemployed are set to receive up to RM600 a month for a period of three months.

While the budget goodies are bound to bring a smile to the faces of most people in the vulnerable groups, some of them are dreading the bureaucratic red tape that is still plaguing the nation’s delivery system and which has in the past resulted in many deserving cases denied of aid.


Acknowledging the shortcomings, Universiti Putra Malaysia School of Business and Economics lecturer Prof Ts Dr Anuar Shah Bali Mahomed said the authorities must take immediate steps to improve the existing delivery system if they want to ensure the aid reaches the targeted groups.

"I think the best way to reduce bureaucracy is through the use of an improved system equipped with data which is constantly updated, that is, at the level of real-time data. This will prevent deserving persons from (inadvertently) ‘dropping out’ of any aid scheme due to incomplete information on households in the database of the agency concerned,” he said when contacted by Bernama.
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He said government agencies can take their cue from the Inland Revenue Board of Malaysia, which is one of the most efficient and proactive agencies in the nation in terms of having an updated database.

He said in the current economic situation, people are looking to government aid as a lifeline to help them cope with the rising prices of goods and services.

"The availability of real-time data will enable agencies to identify (aid) recipients who are in dire need of assistance,” he said.

Anuar Shah also urged the federal government to work closely with the states including those led by opposition parties so that all aid packages are rightfully channeled to the targeted groups.

"The federal government must take into account the spirit of federalism and work with all state governments. This will require strategic collaboration between the federal and state governments to ensure that the aid distribution is well managed,” he added.


Economist Jason Loh Seong Wei, who is head of Social, Legal and Human Rights at EMIR Research, suggested that the government channel the allocations under Budget 2023 in accordance with the requirements of each state government through the establishment of a special fund.

This is because each state has its own needs, he said, adding that the current practice of distributing allocations based on the state’s per capita requirements is seen to have several weaknesses.

"Take for example Sarawak and Terengganu... they are both petroleum producers so their needs won’t be the same as Perlis, for instance.

"We can’t set each state’s budget allocation based on population size,” he said.

Loh said for his suggestion to become a reality, there must be strategic cooperation between the federal government and the state government concerned, with the latter having to identify its needs in order to fully utilise the allocation given to the state.

And, to ensure that aid meant for the needy reaches the targeted groups, Loh proposed that the federal government channel the allocations concerned to the various state assemblymen.

"The current practice is to channel such allocations to the Members of Parliament. We must remember that not everyone has easy access to their MP and most people are more comfortable requesting aid from their assemblyman,” he said.


Loh also pointed out that extending cash aid continuously is not a sustainable move.

He explained that under the prevailing "input and output concept”, aid is being channeled to the targeted groups without a long-term plan in place to free them from the clutches of poverty.

He said the government should instead provide facilities that can empower the needy and make them financially independent through the implementation of the Input, Output, Outcome and Impact (I.O.O.I) formula.

"The government’s STR initiative comprising cash handouts without any condition to those earning less than RM2,500 (a month) can be further improved if the government considers other financial initiatives such as providing them with upskilling and reskilling courses to enhance their skills.

"When STR recipients participate in such courses, they will acquire the necessary expertise and qualification to get jobs that pay them better than what they get by working in the gig economy as e-hailing drivers for instance.

"Only then will we be able to see the effects of the Outcome and Impact formula. This way, we can reduce their dependence on the ‘fish’ handed out to them by the government as they have already learned to catch fish with their own fishing rod, namely the skills they have been taught,” he said, adding that STR should be credited directly into the recipients’ accounts to avoid any leakage.


Loh, meanwhile, described Putrajaya’s decision to slash the development allocation for MPs from RM3.8 million to RM1.3 million as untimely.

"I’m of the opinion that we cannot have a budget that’s too austere although our nation is facing financial constraints. This is because our country is on the ideal track for economic recovery.

"Of course, we need to have measures to address leakages and wastage but not to the extent of tightening the purse strings as the people still need help to cope with the rising cost of living,” he said, adding that reducing the allocation for MPs will have an impact on development in each state, notably in rural areas.

"Sabah and Sarawak (MPs), for example, are greatly in need of this development allocation to provide and maintain various infrastructure in their constituencies.”

According to Loh, there are other approaches that can be taken by the government to improve the nation’s financial capacity, including empowering state governments to expand their fiscal space through their local councils.

"Take Negeri Sembilan as an example. It is part of Malaysia’s Vision Valley 2.0 plan and is known to be an industrialised state. It also has conurbations together with the Klang Valley.

"Apart from collecting basic taxes such as quit rent and assessment fees, the state has a bigger fiscal space now as it can collect corporate taxes as well which previously was only collected by the federal government. This has enabled the state to implement development without depending on federal allocations,” he added. - BERNAMA