At Saluran Betul, we strongly believe that a robust social safety network is essential for Malaysians to be able to fully reach their potential and lead healthy, meaningful lives. Almost daily, we see reports of cases of extreme poverty in mainstream and social media, and while it would be easy to dismiss these as sensationalist clickbait, we cannot deny the findings of Khazanah Research Institute’s latest State of The Households Report which was released just over a month ago.
One of the key findings of the report is that households earning below RM2,000 a month spend around 95% of their income on consumption items like food and necessities. The fact that these same households have only RM 76 left after their necessary spending has also raised many voices of concern and consternation across the country.
So yes, there is a serious problem in this country. While some commentators will be quick to point out that the private sector too can contribute via CSR initiatives (and many often do), Saluran Betul feels that this remains within the government’s domain. Specifically, a government with a focused aim of providing the aforementioned social safety net for the underprivileged and underserved via policymaking and unavoidably, welfare spending.
It is impossible to discuss this without bringing in the massive expenditures on subsidies the administration has undertaken in past years. The Saluran Betul team generally agrees with the popular sentiment that these are often overlapping, conflicting, and prone to abuse. While the previous administration under Najib Razak did commit to subsidy reform, it never took off properly due to the sensitivity of this issue to the majority of the voter base. This is a complex topic on its own that perhaps merits an article of its own in the future.
For today, we intend to take a quick look at our love affair with vouchers.
On paper (haha) it sounds simple: create a voucher or card system that would allow the poor to purchase subsidized necessities at designated partner shops. These vouchers would be traceable and only valid for a subset of approved products which have been vetted, and more importantly, recipients would also be means-tested for qualification, to avoid leakage and abuse. Sounds great, no doubt.
Indeed it sounds so great, that some members of the new administration have been quick to suggest “new” voucher/card systems to distribute aid which was formerly done via cash. The Education Minister, in his wisdom, has pushed for the continuation of the Book Voucher program, claiming the PM himself supports it (which doesn’t surprise us at all). This has also been echoed by the Ministry of Finance. At least one book publisher stated its public support for the voucher program to be continued, citing (and you will see this is a common refrain) that this “avoids leakages“.
But no, it doesn’t stop at books.
The multitasking, self-appointed hero team representing Muslim consumers, Persatuan Pengguna Islam Malaysia, has also recommended multiple types of vouchers to replace the Cash Aid Formerly Known as BR1M, again expressing concern that recipients will spend the money on “unnecessary items.” A well-meaning academic has also recommended vouchers for pregnant mothers to be able to supplement their diets. Last but not least, a prominent PH politician suggested that cash aid for fishermen should be converted to a “smart card system”, which is just a voucher you need a computer for.
Saluran Betul is alarmed at this insistence and enthusiasm on voucher-fying everything.
In fact, one of the best rebuttals on this issue comes from an unlikely source: Utusan Malaysia. Not only is it unexpected, the flaws in the proposal are so obvious even to the struggling team at that much-sued rag.
We could inundate the reader (if you have made it this far down the page) with links and screenshots and copious materials arguing our position with regard to the disadvantages of these voucher and card systems. However, we believe one of the best arguments can be found within a UK-based study conducted on recipients of their Healthy Start targeted food subsidy program, which sums up very neatly the potential pitfalls of these initiatives.
The study found that while many mothers who participated in the program agreed it was beneficial and allowed their families access to nutritionally better meals, key issues were discovered, which quite probably, can be easily mirrored here. The full article goes on in detail, but let’s unpack the paragraph into the following, web-friendly list:
- Complex eligibility criteria:
It’s no secret that the various assistance and subsidy programs often have contradictory and obtuse requirements, requiring copious form-filling, queue-lining, and worst of all, pleading your case to a local notary. This can present a formidable psychological barrier, not to mention the administrative complexity of managing, rolling out, and monitoring recipients.
- Barriers to entry for people with low literacy or engaged in variable income work: the targeted demographics are often busy with precarious, day-wage or seasonal jobs, which sometimes prevent them from being aware of aid programs to begin with.
- Rising cost of food relative to voucher value: the rising cost of living means that the value of a voucher can diminish very quickly. Monitoring this will require administrative infrastructure set up, which again might even cost as much as the actual subsidy.
- Access to participating retailers limited in rural areas: As we have seen with the drastic failure of Mydin, the designated partner for the ill-fated KR1M project under the BN government, the cost for logistics needed to create a comprehensive network of shops that carry subsidised items is immense, not to mention the supply chain requirements. It might be easy for people in Subang Jaya to access a 99 Speedmart, but not in Bunut Susu.
- Smaller shops and markets not taking part: Incentivising smaller mini markets to take part, and then equipping them with the infrastructure and know-how necessary to process voucher trade-ins is no small task. Even large hypermarkets face difficulty in rolling out basic discount or trade-in promotions in large towns, hence our argument again that the cost of rolling out these vouchers may exceed the cost of the subsidy itself.
At Saluran Betul, we are huge fans of cash transfers in place of complicated systems involving means-testing, monitoring, and logistics.
We understand that to many Malaysians the concept of “just giving cash” is still taboo, even after the results from BR1M and similar initiatives around the world have been met with promising results.
We believe that it is impossible to adequately account for every kind of eventuality a deserving recipient might encounter: months of heavy rain might mean farmers lose income, and a voucher purely for farming supplies will be useless when faced with agonising hunger or an empty motorbike fuel tank. We’ve already seen university students sell book vouchers for cash, because let’s face it, that Accounting textbook won’t magically turn into a roti canai.
These examples continue to underline our stand that the voucher-as-aid plan, quite simply, should be torn up and ideally, sent to the recycle heap.