Social Assistance in Malaysia: Who Benefits, and Who Misses Out

This paper presents an in-depth analysis of who benefits and who misses out on social assistance transfers in Malaysia. As the first in a two-part series on social assistance, the paper uses data from the Household Income Survey (HIS) of 2019 and 2022 to assess targeting outcomes and the adequacy of benefits received by those in need. In doing so, the paper profiles B40 households who are excluded from such programs, despite being in need and eligible, and offers recommendations to improve the effectiveness of social assistance spending.

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KEY FINDINGS

• Malaysia is committed to ensuring "social protection for all", which is an ambitious long-term goal. Fiscal constraints and trade-offs in the meantime require prioritization of social assistance towards those most in need - noting that social assistance transfers are a particularly important means to support poor and vulnerable households.

• In 2024, there are 189 social assistance programs in Malaysia, delivered by 26 ministries and agencies, with majority of spending and programs concentrated in three main groups: Sumbangan Tunai Rahmah (STR) cash transfers, welfare programs, and education assistance. This fragmentation causes inefficiencies in planning, coordination, and delivery, duplicates resources, and makes the system difficult for target populations to navigate.

• There is high social assistance coverage in Malaysia, and majority of its benefits go to the B40 group. However, the adequacy of benefits remains low when compared to other upper middle- and high-income countries.

• The STR program had the broadest coverage of any SA program, but adequacy is low. In 2022, STR reached 83.9% of B40 households, 56.6% of M40 households, and 19.9% of T20 households, thereby covering 56.2% of all households in Malaysia.

• Welfare programs, despite having low coverage, have the highest adequacy rate among all other social assistance programs, with the share of benefits primarily going to the B20 group which is the intended population.

• Overall, Malaysia's social assistance programs are pro-poor and have good coverage. Achieving the goal of "social protection for all" requires improvements to adequacy and targeting, by:

• Enhancing interoperability of databases to the social registry to improve targeting accuracy.

• Considering household size as part of the targeting mechanism.

• Consolidating smaller programs into larger ones and eliminating duplication of target groups, thus enabling increase in adequacy.

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