Come 2016, BR1M only for essential goods, says Treasury

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(October 13): The 1Malaysia People’s Aid scheme (BR1M) will be restructured so that from 2016, it will only be given to low-income families to buy essential goods, a Finance Ministry top official said today, as Putrajaya seeks ways to prevent its abuse.

Finance Ministry secretary-general Tan Sri Mohd Irwan Serigar Abdullah said this would maximise the scheme's efficacy and prevent it from being misused to buy luxuries or things like cigarettes.

The food stamp system used in the United States, whereby cash vouchers are issued to deserving individuals, may be adopted.

Currently, BR1M, which is to help households earning below RM4,000 a month, is given out in the form of cash and mostly deposited directly into recipients' bank accounts. Next year, it will be given out in three installments, in January, May and September respectively.

The stamps or voucher system in the US is used by recipients to buy groceries.

Another way, said Mohd Irwan, would be to parcel out the aid on a monthly basis and credit the amount to recipients’ MyKads for them to use at supermarkets.

The amount of aid is likely to be the same but instead of getting cash which can be freely spent on anything, recipients would be restricted to using it only on food, household goods and other necessities.

“We are looking at a replacement for BR1M so that the aid is more targeted,” Mohd Irwan Serigar told reporters after a post-Budget 2015 dialogue at the Security Commission headquarters.

"We are studying to implement it in 2016 and we may use the MyKad to distribute it on a monthly basis.”

In the recently announced 2015 Budget, Putrajaya increased BR1M payments by RM300.

Households earning below RM3,000 are expected to receive RM950, up from RM650, while those earning between RM3,000 to RM4,000 will get RM750.

The government has said BR1M was a more efficient method of helping low income households compared to blanket fuel subsidies.

Critics however have pointed out that it breeds another form of dependence subsidy among low income earners on the government.