Social protection programmes key to poverty reduction

By Suhaiza Hanim Mohamad Zailani 

Malaysia has stepped up efforts to reduce poverty in recent years through targeted social protection programmes, particularly those aimed at the bottom 40% of households.

However, the effectiveness and breadth of these programmes have been called into question as rising living costs have strained all income levels, including the middle 40%.

Lower-income social protection

Targeted assistance for the bottom 40% income group is the central tenet of Malaysia’s approach to reducing poverty.

Programmes like Bantuan Sara Hidup, Bantuan Prihatin Rakyat and more recent measures unveiled in Budget 2025 aim to help low-income households cope with rising living costs. These initiatives provide low-income families with short-term financial relief through subsidies, housing assistance and cash transfers.

Statistics from Malaysia’s Department of Statistics (DoS), however, show that although these programmes provide short-term respite, they cannot significantly improve families’ long-term economic standing.

A recent report from the DoS states that the average income of the bottom 40% has increased by only 1.5% per year. This rate is not enough to keep up with inflation. As a result, many people still have limited purchasing power, given the sharp increase in housing and food costs.

Prime Minister Anwar Ibrahim has underlined the government’s commitment to addressing these problems. He has promised to lower costs and increase accessibility to necessities to ease financial burdens.

Critics contend that monetary transfers will not ease underlying economic inequalities despite these commitments. “Malaysia’s B40 will continue to face an uphill struggle against poverty without structural reforms in education, employment and wage policies,” one economist noted.

Global social protection models

Various social protection systems worldwide have successfully reduced poverty, particularly when multifaceted and sustainable approaches are used.

One programme commended for reducing severe poverty is Brazil’s Bolsa Família. The programme goes beyond cash transfers by requiring families to comply with health and education standards. This strategy has broken the cycle of intergenerational poverty and has had a profoundly positive effect.

Another effective example is the Basic Livelihood Security Program (BLSP) in South Korea, which combines financial help with housing assistance, skills development and job support. By linking financial aid to social services and job training, the BLSP has reduced poverty rates. It has also enhanced recipients’ capacity to find steady work, encouraging long-term independence.

South Korea’s strategy shows the need for a comprehensive social safety net that fosters employment and skills development.

Similarly, the EU’s “Active Inclusion” approach supports beneficiaries by combining labour market reforms with social protection, offering financial assistance and work placements.

Going beyond financial aid

Malaysia’s initiatives for the bottom 40% offer much-needed financial assistance. But they do not have the same coherent structure as initiatives in Brazil and South Korea. Without a multifaceted strategy, low-income beneficiaries’ ability to achieve economic independence is restricted.

According to a local economist, “Despite its usefulness, monetary aid frequently results in dependency if employment-based and educational initiatives do not accompany it.”

As well as providing support, we must empower beneficiaries.

The main drawback is that Malaysia’s social protection system primarily uses short-term financial aid to combat poverty, rather than focusing on long-term empowerment initiatives.

Effective schemes, such as the BLSP in South Korea, place strong emphasis on developing human capital, providing work opportunities and skills training to recipients as part of their social benefits.

Another gap is the availability of affordable housing. Admittedly, Malaysian authorities have started projects to provide inexpensive housing. But these are usually concentrated in urban areas where demand outpaces supply. Rural and peri-urban locations are underserved.

Towards a comprehensive social safety net

Drawing inspiration from South Korea’s BLSP and Brazil’s Bolsa Família, Malaysia might benefit from implementing a more comprehensive strategy that incorporates job assistance and skills development to improve the effectiveness of social protection.  

Working with social services and career development programmes might help the lower-income group to become resilient and financially independent.

Prioritising accessible education and universal healthcare will ensure that fundamental needs are met. This will reduce the financial burden on low-income households.

These steps would align with international best practices, requiring governments to establish safety nets that do more than ease immediate hardship.

Expanding social protection in disadvantaged regions might improve living conditions for low-income people in rural and urban areas, addressing regional disparities.

As Malaysia prepares for Budget 2025, adding these components might transform the support system for the bottom 40% into a cornerstone for long-term, sustainable poverty alleviation.

Holistic reform to close the gap

A move towards a more integrated strategy might enhance outcomes for the bottom 40% and beyond as Malaysia’s social protection programmes continue to develop.

As demonstrated by international examples, providing pathways to education, employment and self-sufficiency is necessary to reduce poverty effectively.

If these all-inclusive models are emulated, more people in Malaysia might benefit from the country’s progress, which could help Malaysia close the gap in economic inequality.

Datin Sri Prof Suhaiza Hanim Mohamad Zailani is the director of the Ungku Aziz Centre for Development Studies at the University of Malaya.

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