GIVE a man a fish and you feed him for a day, teach a man to fish and you feed him for a lifetime.  These are wise words for everyone but the starving man, who first needs to be fed before being taught to fish.

Would helping a 1Malaysia People’s Aid (BR1M) recipient own a Proton Iriz (costing RM40,000 to RM45,000) so that he can earn income as a ride-sharing Uber driver count as “teaching him to fish”?

The government is negotiating with Proton, Uber and Bank Simpanan Nasional to finalise details for the scheme, Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah told reporters last Thursday, adding that Proton will provide a RM4,000 discount to the recipients sometime this year. The idea was first mentioned in Budget 2017.

Is that a viable and sustainable way to help more Malaysians move up the income ladder so that more money can be shared with the orphans, the disabled and the aged who have no savings or income?

Most BR1M recipients are presumably not going hungry, given that the number of hardcore poor Malaysians is low. But many who receive BR1M are likely to be affected by the rising cost of living, especially those with fixed income, zero savings and who live in highly urbanised cities, where food inflation is above that of the national average. Even non-BR1M recipients in the middle-income group are feeling the heat as salaries are not keeping up with the rising cost of living.

Based on Budget 2017, the highest-earning BR1M recipients are currently households with a RM3,000-to-RM4,000 monthly income, who will be given RM900 BR1M this year. Households with monthly income of RM3,000 and below get RM1,200 this year, while individuals earning below RM2,000 a month will get RM450.

According to Mohd Irwan, a part-time Uber driver can earn RM4,000 to RM7,000 a month — income that would help BR1M recipients move out of the bottom 40% (B40) income group into the middle 40% (M40) income group.

The figure tallies with the calculation by former minister in the prime minister’s department Tan Sri Abdul Wahid Omar, who tried his hand at Uber after his term as senator ended last June.

He earned RM150 working 11 hours for three days in June (after deducting RM10 for toll and RM50 to Uber from the RM200 he collected).

“Had I been more diligent and drove or remained ‘online’ continually in blocks of four hours, I believe I would have been able to generate income of about RM300 per 10-hour driving day. That means about RM4,000 to RM6,000 net income per 25-day month. This is consistent with feedback from many Uber-Grab drivers,” said Wahid in a statement on July 30. He is currently Permodalan Nasional Bhd chairman.

By definition, M40 households are those with RM3,860 to RM8,319 monthly income, which implies that anything below RM3,860 is considered B40, while anything above RM8,319 is considered Top 20 (T20).

The average monthly income for M40 was RM5,662 in 2014 (median RM5,465), while the national average income was RM6,141. Comparatively, those in the B40 group earned an average of RM2,537 a month in 2014 (median RM2,629), according to data from the Statistics Department. There are about 3.77 million B40 households, with total Malaysian households at seven million.

RHB Research Institute executive chairman and chief economist Lim Chee Sing sees the proposal to make BR1M recipients Uber-drivers as “a good starting point — a helping hand for low-income earners who wish to acquire a new skill to improve their earnings capability”.

“It is better than spending the extra money and asking for more subsequently. Incurring more debt to acquire a new skill and improve earnings capability should be viewed as an investment,” Lim adds, referring to the loan to a would-be Uber driver for a new car (ride-sharing cars cannot be more than 10 years old).

According to Proton Edar’s website, a 1.3L Standard MT Proton Iriz sells at RM41,520 in Peninsular Malaysia and RM43,660 in East Malaysia. If the RM4,000 discount is considered a down payment, add the 3% interest rate and five-year repayment period, and the monthly instalment adds up to RM719 (RM760 in East Malaysia). The total interest incurred for the car loan is about RM5,600 — not too bad if, indeed, someone in the B40 category can now earn at least RM4,000 a month.

Dr Yeah Kim Leng, economics professor at Sunway University Business School, gives the move the benefit of the doubt, but says there are potential obstacles to making ride-share driving a primary or supplementary source of income.

“Depending on individual circumstances, there will be some who will benefit from BRIM to kick-start the Uber opportunity. However, as in all businesses, it is local demand-and-supply forces as well as competition that will determine its lucrativeness and sustainability for the individual concerned.

“Given Uber’s flexibility as a service provider, it could be an attractive alternative as a supplementary source of income until a better opportunity comes along. However, with the entry [of more BR1M recipients as Uber drivers], strong competitive pressures will drive profit margin to a ‘normal’ level that may not be enough for many breadwinners in high cost, urban areas,” Yeah says.

There is also another limitation: Uber is only available in Ipoh, Johor Baru, Kota Kinabalu, Kuala Lumpur, Kuching, Melaka, Penang and Seremban, according to its website at the time of writing.

Lim only expects “those who want to acquire a new skill to improve his  earnings capability and find it feasible [in areas where demand is sufficient and has not been fully met]” to sign up as a ride-share driver.

He adds, though, that the proposal “is just a starting point. More needs to be done to help the low- to middle-income earners acquire new skills to improve their earnings capacity.  There is no short-cut — education and nurturing skills are passports to better living standards”.

Already, some parties have raised questions on the sustainability of Uber driving as a long-term career. Others, however, point out that the flexible hours allow drivers to take additional courses to acquire other skills to boost their marketability.

If the proposal successfully helps more people in the B40 group earn additional income, it would also reduce their vulnerability to economic shocks as research shows that 64.7% of B40 households depend on a single-income source.

It does not help that B40 households are inclined to take personal loans to support daily expenses. As at 2014, households earning RM3,000 a month and below owe seven times their annual household income, while those earning RM5,000 a month and below had an indebtedness level of three to four times, according to official data.

Official studies have also found that low educational attainment has hampered the ability of the B40 households to secure high-paying jobs or venture into business activities, with 89.9% household heads employed in low- and semi-skilled occupations.

Allocation for BR1M has been increased to RM6.8 billion for 2017, up from RM5.4 billion for 2016. There were 7.4 million BR1M recipients in 2015, each receivied an average of RM719, according to the Economic Report 2016/2017. According to Mohd Irwan, BR1M this year will be paid in January, June and August.

“A more considered approach to BR1M and broader social protection programmes is needed to improve the consistency of objectives, programme targeting and the overall impact on reducing disadvantage,” the Organisation for Economic Co-operation and Development (OECD) said in a report last November when assessing Malaysia’s economy.

“Into its fifth year, the BR1M programme remains ad hoc and irregular in its payment arrangements, providing little financial certainty for low-income households while jarring with the employment emphasis of other programmes,” the OECD said, noting that while the BR1M cash payments to ease cost-of-living pressures had increased each year since 2012, the allocation was smaller than the value of discontinued fuel and food subsidies.

Improvements to social protection programmes are being worked on, under the 11th Malaysia Plan, which mentions the formulation of the National Social Protection Strategy to rationalise social protection programmes and coordinate their implementation to optimise resources.

While cash transfers and other financial support for the elderly and disabled will continue, other non-productive grants will be reduced, if not eliminated, the 11MP says.

If lower-income earners can successfully move up the income ladder and no longer need BR1M, those with real need will have a larger share of limited resources.

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