B40, M40 labels no longer relevant, says economist

 

As the country struggles with the Covid-19 pandemic, economist Prof Barjoyai Bardai said the government should not be using income classifications such as B40 and M40 (bottom 40 percent and middle 40 percent of income earners).

“As I said earlier, like B40, M40 is no longer relevant now.

“It should be based on each person’s take-home income. Only then can we determine who is worthy of receiving aid,” he said when contacted by Malaysiakini.

Commenting on the Permerkasa Plus announcement by Prime Minister Muhyiddin Yassin on Monday (May 31), Barjoyai - who teaches at Universiti Tun Abdul Razak - said aid granted to the B40 group should be extended to the M40.

Although he believed giving out cash aid to those who have not lost their jobs would be difficult to execute, he believed it is not impossible to give some flexibility in the form of loan moratoriums.

For example, Berjoyai suggested that the choice between a full moratorium or a 50 percent reduction in monthly repayment also be extended to those in M40 who have jobs but are struggling with debt.

Muhyiddin's announcement was too general and did not address any group, said Berjoyai.

More aid expected

However, the economist expects there will be another announcement of aid schemes.

“Perhaps after this, they will relook the situation and they will announce additional (aid) because this movement control order (MCO) will not end after two weeks.

“It will probably carry on for at least six to eight weeks,” he said.

Economist Prof Barjoyai Bardai

Loan moratoriums under Permerkasa Plus are automatically given to the B40.

In addition, those who have lost their jobs - including those from M40 and T20 (top 20 percent income earner) groups - will also qualify for loan moratoriums.

Meanwhile, small and medium enterprises (SMEs) that are not allowed to operate during the full MCO are also eligible for a moratorium on their loans.

Those who are eligible may choose between a full moratorium for up to three months or have their monthly repayments reduced by 50 percent for six months.

However, critics have questioned why the government has not introduced a “total” loan moratorium for all.

Prof Shazali Abu Mansor from Universiti Malaysia Sarawak said giving everyone a loan moratorium might be impossible to implement but some exceptions should be considered.

He said the public has to consider the government’s ability to provide aid throughout the duration of the MCO.

“Among the initiatives that can be done is to postpone pay cuts for Employees Provident Fund (EPF) and Inland Revenue Board (IRB) contributions, a moratorium for bank payments, road tax exemptions, internet, and discounted electricity and water bills,” he said.

On June 1, Finance Minister Tengku Zafrul Abdul Aziz said the government is unable to force banks to grant loan moratoriums to everyone.

“You have to understand that the government does not control or own banks,” he said in response to critics.

“This is a discussion between Bank Negara and other banks.

“We have no legal ability to force banks to do (what we want),” said Zafrul. - Mkini

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