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  • Writer's pictureBait Al-Amanah

Inisiatif Pendapatan Rakyat: a step in the right direction

By Benedict Weerasena, Research Director, Bait Al Amanah and Carmelo Ferlito, CEO, Center for Market Education

Kudos to the Government for delving into a new paradigm in hardcore poverty alleviation through the People’s Income Initiative (Inisiatif Pendapatan Rakyat (IPR)) in the new Budget 2023. This programme with an RM750 million allocation seeks to empower the hardcore poor to increase their earning potential through the purchase of equipment or employment subsidies.

In the past, poverty alleviation efforts revolved around cash handout programmes, focused on stop-gap measures which provided temporary relief. However, these programmes were ineffective in the long term to empower hardcore poor households to break out from the cycle of poverty. Also, cash handouts tend to foster an unhealthy culture of prolonged dependency.

As such, the IPR programme which is focused on long-term empowerment is a good first move in the right direction. This new program promotes income generation as a means to break out of the poverty trap. With steady income generation, households have improved access to basic necessities and can improve their standard of living. They also can learn new skills or improve existing skills through the training provided, which can help them secure better-paying jobs. A steady income can empower households to access opportunities that were previously unavailable to them, which will then help them and future generations break out of the poverty trap. Thus, it is certainly a more sustainable model for encouraging self-sufficiency and promoting upward social mobility.

However, several reforms are still necessary to ensure this IPR programme is more impactful than the previous cash handout programmes. First, the programme should be carried out with constant engagement with the target groups and community workers, instead of a top-down ‘one-size-fits-all’ approach. Respect is fundamental, whereby policy-makers and programme implementers need to be willing to consult and hear the views of the hardcore poor, instead of speaking down and speaking at them. This is because the grassroots know the best solution and the best implementation process needed – and it’s all about multi-stakeholder partnerships to ensure the success of the programme.

Second, the approach must be holistic and comprehensive – one that includes confidence and capacity building, beyond just the provision of monetary resources. It is important to nurture the entrepreneurial spirit, beyond a few training sessions; the risk, otherwise, is to get people to attend training just for the sake of the monetary support (and therefore going back to square one). Entrepreneurship is a basic feature of human nature, but it needs to be “discovered” and nurtured: IPR can be successful if not conceived in isolation; it needs to be accompanied, over time, but an adequate education reform and by the right institutional framework.

Third, there needs to be a clear graduation mechanism incorporated into this programme. In other words, the IPR implementers should monitor participants’ progress in increasing their income potential and identify when they can generate income independently. This indicates that they have successfully graduated from the program and no longer need to be beneficiaries of the programme. This will also ensure that resources can be reallocated to those who need the assistance the most.

Fourth, complicated bureaucratic procedures and processes which require excessive documentation to qualify for this programme should be simplified to overcome exclusion errors. At this regard, the implementation part needs to be entrusted to local governments and the civil society, for a more effective outreach.

Finally, a multidimensional issue requires multidimensional solutions. This includes enhancing the coverage of social protection schemes, expanding opportunities for quality education, ensuring access to affordable housing and addressing institutional barriers. It’s not just about providing the hardcore poor with the resources they do not have, but promoting reforms that can place them in improved conditions to earn the resources they believe they need; which is a key message in our book “Assessing and Addressing Urban Poverty in Malaysia – Social Mobility Through Entrepreneurship (Monolateral, 2022)”.

* This article has been published in Free Malaysia Today

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