Did the Anwar govt get ‘Sumbangan Tunai Rahmah’ wrong? Here’s what policy analysts think

(MMO) – Public policy researchers said the new federal government’s decision to re-brand the Bantuan Sara Hidup cash aid scheme as Sumbangan Tunai Rahmah (STR) risks complicating its own effort to communicate sensitive policies effectively, with effects that could have ramifications on Prime Minister Datuk Seri Anwar Ibrahim’s plan to rationalise subsidies.

Anwar announced four days ago that STR, which literally translates to “compassionate cash donation” or “contribution”, will replace the more generic name of an existing direct cash transfer programme for low-income households and singles first introduced in 2012 by the Najib administration.

The cash transfers, first called Bantuan Rakyat 1Malaysia or BR1M, have undergone several name changes since but this is the first administration to call it a donation. Rebranding government initiatives has become a sort of convention, often carried out by succeeding prime ministers immediately after a leadership change.

Policies that are popular are retained but rebranded to reflect the overarching vision of the new leadership, although analysts believe the exercise is mostly for political expediency

Still, policy designers have called for caution when choosing terminologies to define government programmes. Hafiz Noor Shams, a visiting fellow at the think tank Research for Social Advancement (Refsa), said the wrong wording could confuse the public about a policy, and potentially make it less effective.

“Ideally, the term used should make everybody understand the policy plainly. And the policy is cash transfer, which is designed to mitigate the effects of rising living costs. More specifically, it’s meant to be a better alternative to subsidies or any kind of voucher system,” he said.

“The naming matters, because it tells the public the purpose of the policy. If the term doesn’t do that, then there’s a risk the public and even lawmakers will misunderstand the purpose of the policy, which has been the case for some time now,” he added.

“Here, ‘sumbangan’ suggests the cash is a present, a gift or some act of philanthropy. That divorces the policy from its original purposes in the public mind and in the mind of some lawmakers.”

Gift or aid?

In the past, politicians from the ruling parties were known to dangle government aid and programmes as a “gift” to solicit support, practice policy researchers and advocates have widely criticised as exploitative.

Cash transfers, based on the idea of redistributive fairness, are considered one of the most effective methods to reduce poverty. The World Bank said small, frequent, and reliable cash payments to poor households have been shown to improve per capita consumption, savings, nutrition, mental health, teen pregnancies, child marriages, and intimate partner violence.

Malaysia only adopted the approach in 2012, starting with a pilot one-off RM500 cash payment to low income households that earned below RM3,000. The programme eventually continued with the amount of payment raised over the years. The first BR1M cash transfers amounted to RM2.6 billion. Five years later, it rose to RM26.2 billion.

Yearly subsidy bills have staggered to billions of ringgit over the years and can account for up to a fifth of the government’s operating expenditures. Anwar said his government plans to scale back on the government’s subsidy spending and replace it with targeted assistance. The transition would take place once the Anwar administration decides on a delivery mechanism.

Public policy analysts like Hafiz have argued for cash transfers based on evidence that suggests the method to be the most efficient for targeted subsidies. But recipients of the transfers must be made to understand that the new sum they receive would also cover expenses for goods that were previously subsidised.

“When they don’t understand the purpose, they risk running and demanding policies that are contradictory to each other, like having vouchers, subsidies and cash transfer all at once,” he said.

The renaming could also yield unintended consequences that could hurt the policy’s intended beneficiaries. Edwin Goh, a researcher with a think tank called The Centre, said terming the assistance as donation could worsen the stigma linked to poverty which were found to have deterred application.

“What should be known as a cash transfer scheme is projected as a charitable act for the people. It worsens the stigma associated with poverty, confusing people about the true purpose of cash transfer: helping people to rebuild livelihoods with dignity,” he said.

This makes effective policy communication paramount, making the name a crucial signifier, he added. Despite widespread publicity given to the government’s cash transfer programme, researchers found that many of its intended recipients had been left out because of poor access to official information.

“The name is only one component of the overall communication strategy. It is more than simply naming a scheme to convey a political slogan,” he said.

“Our welfare schemes should be delivered in a way that affirms the dignity of the targeted audience, brings their attention to the benefits, communicates in their language, delivers through accessible channels, and educates them on the concept of redistribution fairness.”

Stigmatisation and wealth gap

Inequality in Malaysia is considered low relative to its regional peers. The Southeast Asian nation scored 58.9 in the World Bank’s Gini Coefficient index last measured in 2015, putting it somewhere in the middle. Also known as the Gini index, the coefficient measures income or wealth inequality within a nation.

But over the years more economists have become more critical of the ranking system, saying it may be based on opaque data and that the wealth gap may actually be bigger.

Total subsidies amounted to over RM80 billion last year alone, then finance minister Datuk Seri Tengku Zafrul Abdul Aziz revealed, prompting warnings about its potential impact on the government’s finances.

Despite repeated pledges to cut subsidy spending, political leaders often backpedal to avoid backlash.

Renowned economist and former lawmaker Nungsari Ahmad Radhi said the prospect of making STR a mechanism for targeted subsidies is a positive step, but joined critics in questioning the name.

“I like the idea of cash transfers to targeted groups to augment their income due to loss or reduction of income and purchasing power due to inflation. Much more efficient than price subsidies,” he said.

“So, cash transfers in lieu of increasing overall price subsidies. It is conceptually aid, and from the government. ‘Sumbangan’ seems more appropriate for when you or me or a company does it. Donation.

“Good economics. Not so appropriate name?” he suggested.

A total of RM1.67 billion would be disbursed under the STR programme, with RM1.2 billion directed towards some 400 households in payments of RM300, Anwar announced earlier this month.

The rest will be divided between RM100 handouts for 1.2 million single senior citizens and RM100 handouts for 3.5 million single individuals.