BR1M 2014: Facts That You Need To Know

By Thursday February 27th, 2014 No Comments

The purpose of 1Malaysia People’s Aid (BR1M) – since the year of its inception – is to provide direct assistance to the rakyat to help them cope with the rising cost of living. Now, just two months into the new year, we have fulfilled the promise of BR1M 2014.

The fulfilment becomes even more meaningful when you reflect upon the honesty of over 17,000 recipients of the previous BR1M. These individuals have voluntarily informed the government that they have surpassed the required income range to qualify for assistance.

One of these individuals is Nurikram Bahari, from Parit Buntar, Perak. He was a recipient of BR1M since 2011, back when he was single. Now Nurikram has settled down, and his household has a combined monthly income of more than RM4,000 (the limit to be BR1M’s recipient). Therefore, Nurikram felt strongly that the aid should be given to those who truly needed it.

I appreciate the veracity shown by Nurikram and 17,000 others, and hope that more people will follow suit, so the reach of the aid becomes more targeted and precise.

To certain groups, I admit that the BR1M amount is insufficient. However, for Foo Kok Lim from Taman Maluri, one of the BR1M recipients in Kampung Pandan last Saturday, the money helps immensely. More so for those who do not have a fixed or stable source of income.

Nonetheless, the economic prosperity that we enjoy today stems from the combined efforts of the government, private sector and all Malaysians. Our economic performance last year matched expectations – in some areas, even exceeded them. Our Gross Domestic Product (GDP) in 2013 saw a growth of 4.7 percent. The fiscal deficit also shrank from 6.7 percent in 2009 to 3.9 percent last year.

Inflation is at a manageable level of 2.1 percent. Private investments have doubled since 2009 – totalling RM161.1 billion in 2013. We have also set a new record last year: Foreign Direct Investment (FDI) saw its highest numbers in five years, totalling RM38.7 billion. We must sustain this momentum.

While the government is serious about maintaining the auspicious state of the economy, the people’s welfare remains a priority. BR1M is given out in the spirit of assisting the rakyat to cope more effectively with the rising cost of living. It not only helps the targeted population, it also contributes to the country’s economic growth as a whole. The network of grocery stores in rural areas reaps the spillover benefits of this monetary aid. In fact, the private sector saw a growth of 7.7 and 7.6 percent in 2012 and 2013 respectively.

Those were last year’s achievements. This year, we continue to improve on the delivery and effectiveness of BR1M. We have simplified the disbursement mechanism as BR1M is now deposited directly into the recipient’s account. We have also enhanced payouts with a RM50 insurance contribution for household recipients.

BR1M 2014 is insured by the Takaful Kumpulan Insurans Rakyat 1Malaysia scheme (i-BR1M) that provides a minimum protection of RM1,000 for death by natural causes and a maximum of RM30,000 for fatal accidents or permanent disability. This scheme is bound to protect more than 5.9 million BR1M recipients throughout the country.

The insurance coverage is added value, meant to cushion the burden of recipients when faced with unforeseen circumstances – simultaneously providing a financial safety net.

Without doubt, BR1M and the ongoing subsidy rationalisation measures will be beneficial for the low-income groups.

The government’s move to reduce petrol subsidy has produced positive effects for the country, contrary to claims by the opposition. For instance, the international credit ratings firm, Moody’s Ratings, propelled Malaysia’s status to positive in early February, as a result of the savings made from reducing petrol subsidy.

In 2013, we spent RM24.8 billion in petrol subsidies alone. This is a form of bulk subsidy – it benefits the rakyat regardless of the income level or social status. The reality is that bulk subsidies stimulate leakage and wastage.

Let’s compare the benefits of subsidised RON95 petrol enjoyed by a budget car owner to a luxury car owner. Assume that an owner of a Kancil travels 50 kilometres daily, or 350 kilometres a week. The owner will use up 30 litres of petrol a week or 120 litres a month. At a subsidised rate of 63 cents per litre, the owner will enjoy a total petrol subsidy of RM19 a week, RM76 a month or RM900 a year.

On the other hand, an owner of a luxury car with a 2,500 cc engine capacity will use up at least 80 litres of petrol a week, or 320 litres a month to travel the same distance. The luxury car owner enjoys a total subsidy of RM50 a week, or RM200 a month. In a year, the luxury car owner would have enjoyed petrol subsidy totalling RM2,400, significantly higher than the Kancil owner, who should rightfully receive more.

Clearly, the existing subsidy structure unfairly benefits groups that are financially sound, including foreign tourists and foreigners. Hence, the government is undertaking the right measures to ensure that subsidies given would effectively reach the targeted groups instead.

The government will take proactive steps to ensure that the rakyat will enjoy the economic prosperity on equal grounds. As a result of the saving from subsidy reduction, the government is now able to increase the BR1M value. Insya-Allah, the BR1M payment will be increased up to RM1,200 within the next five years.

We will continue to find the best formula to ensure that the country’s economy remains resilient amidst global economic uncertainty. At the same time, the well-being of the rakyat – especially groups that are truly in need – will remain a priority by the Barisan Nasional government.

This does not mean that the government is neglecting the middle-income group. A portion of the measures that I tabled in Budget 2014 last October are aimed to benefit the middle-income group. These include tax adjustments and reliefs, rebates, personal home ownership initiatives, a review of the Real Property Gains Tax and many more. Insya-Allah, I shall reiterate these initiatives in a coming blog post.

A country’s sterling economic performance is neither achieved nor maintained by a single individual. Your help and support in the government’s efforts are a crucial element in our journey to achieve the status of a developed, high-income nation by 2020.

Leave a Reply