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MIER: BR1M not solution, will only fuel inflation….Did you hear that PM Najib?!

April 24, 2014

The Malaysian Institute of Economic Research (MIER) has urged the government to stop handing out money as a measure to narrow the gap between rich and poor.

MIER executive director Zakariah Abdul Rashid said with Bantuan Rakyat 1Malaysia (BR1M) rising to record levels, it will only fuel inflation and do nothing for productivity.

“Our income does not grow fast enough, our productivity is rising… this creates a mismatch,” the MIER economist said at the institute’s quarterly briefing today.

“That’s why BR1M is only an ad hoc measure and not a solution,” Zakariah (left) said, adding that Malaysian workers were in a precarious spot, not able to climb up the value chain.

He said that on paper, Malaysia looks like a roaring economy, with only 3.3 percent unemployment but a closer look reveals serious structural problems.

Foreign workers, who unofficially accounted for up to a third of the national workforce, kept wages tied down, but contribute to most of the new productivity.

In his report, Zakariah said, with more and more Malaysians receiving the BR1M payment, this populist measure would just be like a “helicopter rain of money”.

The BN government has been handing out BR1M for three years since 2012.

RM3.37 billion handed out  last month

Under the latest instalment handed out  last month, a total of 6.48 million individuals received a total of  RM3.37 billion, the government said.

Dubbed BR1M 3.0, it was extended to those with a monthly household income of between RM3,000 and RM4,000.

More BR1M money is slated to be given out next year as compensation for the implementation of the goods and services tax (GST).

Elaborating on his criticism of BR1M, Zakariah pointed out that the real problem was that Malaysians now expected welfare because they could not earn more.

They generally earned more than the highest pay for the cheapest foreign worker, but could not match the lowest pay for the highly-paid foreign worker, he said.

“Reform needs to be done to increase the productivity for the lower income group (based on studies) but there is a political side to this as the move may not be popular for some… but the message is that the government have to be serious about this,” Zakariah said.

At the same time, he also noted that Malaysia could not simply chase foreign workers away as they made up more than 90 percent of the construction and plantation workers in the country.

“Without them, nobody will harvest the fruits,” he said.

MIER cited a Bank Negara Malaysia report that showed inflation has been “persistently rising” since August last year and in March this year, the Consumer Price Index (CPI) grew at 3.5 percent. For 2012, it was mostly below two percent.

“Most worrying, these direct cash transfers come from federal coffers, obtained from taxpayers’ money…

“They provide minimal economic multiplier effects on the real side of the economy, except pushing consumer prices to higher levels,” Zakariah said, in an executive summary of MIER’s quarterly economic outlook that was presented at the Park Royal Hotel in Kuala Lumpur today.

Other than a dozen reporters, about 20 people attended the talk that they had to pay for – mostly economists, academicians and government officers.

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One Comment leave one →
  1. najib manaukau permalink
    April 25, 2014 5:05 am

    This is exactly what a quack will come up with as a prescription for his patients just the way Najib is doing. What does he know about running a country, he does not know how and has never worked a single day nor has he ever earned a cent through hard work in his life time.
    As such how can a schmuck like him run a country or schmucks from Umno perform the same task. Now you know why the country is in such a bloody shamble and remains in the third world or should I say it is going backwards into the ‘fourth world.
    These Umno schmucks can only enrich themselves and in the process they can’t think of ideas of how to teach the Malaysians to earn a decent cent themselves. You can;t expect them to do what they don’t know themselves !
    How many of their supporters are aware Malaysia is now living on borrowed money and very soon when the black gold runs dry, it has to the black gold cannot keep coming out. And then all the civil servants will not be paid, just like Greece your money in the bank, a certain percentage, will be compulsorily deducted.
    Greece has the EU countries to fall on and who can Malaysia depend on ? Indonesia or Pakistan ? Where can Malaysia find even the money to keep the 11 Sultans and their Palaces and their household bills going not to mention the more than the one million civil servants being paid, The infrastructures will no doubt be in a chaos. So wake up Malaysia especially the civil servants who are keeping the Umno schmucks in Putrajaya !

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