This article first appeared in The Edge Financial Daily on December 15, 2017

KUALA LUMPUR: The 1Malaysia People’s Aid (BR1M) programme has an underlying bias against urban households, with no distinction between high-cost and low-cost areas, says the World Bank.

BR1M also does not take into account income eligibility thresholds or benefit levels, the World Bank said in the December update of its Malaysian economic monitor.

“There remains scope to improve the redistributive efficiency of the BR1M programme,” the report said.

Compared to other countries in the region, Malaysia has done a relatively good job of reducing income inequality, although there is “always room to do better”, said Dr Ulrich Zachau, World Bank director for Malaysia, Thailand and regional partnerships.

“It is important that all groups in society benefit from growing economic prosperity, especially in the bottom 40%,” Zachau said.

The World Bank recommends measures such as adjusting the value of benefits received based on price levels, since urban households are subjected to greater inflation of food prices and housing compared to their rural counterparts.

“The design of the scheme could also be improved to better account for household size and composition,” the report said.