Relief To Reform: Moving Beyond Cash Aid In Malaysia

Prepared by Sara Rizal

20 February 2026

While the date of the next General Elections has yet to be announced, the implementation of certain policies has stirred public discourse that is sure to intensify in the lead-up to the election cycle. Under the spotlight is Sumbangan Asas Rahmah (SARA), a cash assistance scheme for selected goods that is credited via myKad to those most impacted by the high cost of living[1]. 

Cash assistance was first launched in 2012 under the Bantuan Rakyat 1Malaysia (BR1M) scheme to offset the impact of the then-proposed Goods and Services Tax (GST), eventually growing in cost from RM2.6 billion in 2012 to RM6.3 billion in 2017, and to a further RM8 billion after its transformation to Sumbangan Tunai Rahmah (STR) in 2023[2]. Now, with the inclusion of SARA, which also extends one-off RM100 payments to Malaysian citizens aged 18 and above, the government in 2026 has allocated RM15 billion in expenditure[2]. 

While there is no denying that cash assistance provides short-term relief to lower-income households and vulnerable communities, concerns remain about its reactive nature and long-term sustainability. This expanding reliance on cash transfers is also indicative that deeper structural drivers of poverty are not being sufficiently addressed. Poverty is not just a lack of monetary income; it is multidimensional: across health, education and living standards. 

Readjusting The Criteria for Poverty 

Recently, the government has adjusted the poverty line income (PLI) to reflect actual costs of living and has incorporated the Multidimensional Poverty Index (MPI) to record non-income factors of poverty. While these two tools complement each other greatly, targeted solutions require more effective measurements.

This is achievable by raising the poverty benchmarks within the non-monetary indicators of MPI. Under the education dimension, a household is not considered deprived if at least one household member completes primary school. This is a relatively low bar, making it a passable criterion for most households and thus not reflective of actual education circumstances [3]. In this context, the deprivation criteria can be raised to all household members aged 13-60 with less than 6 years of education, rather than just any member of that age group. 

Alternatively, new indicators can be introduced to better reflect current living standards. For example, the basic communication tools indicator under the standard of living dimension is “does not have a consistent fixed line phone or mobile phone”. A more appropriate indicator of access to communication tools could be based on access to stable broadband Internet services, as almost everyone has a mobile phone but not reliable broadband connectivity[3]. Both suggestions will help reveal greater disparities between households by identifying clearer distinctions between the poor and extremely poor, and subsequently, more targeted solutions.

Using Spatial Area for Deeper Insights 

In collecting and examining data on poverty levels, the intersection between spatial area and non-income indicators of poverty remains relatively untapped. Malaysia’s Department of Statistics (DOSM) uses the Household Income Survey (HIS) to measure income distribution patterns and provides base data for calculating the Poverty Line Income (PLI) and inequality levels. In addition to examining the absolute poverty rate at the national level, DOSM has produced disaggregated data that allows for district-level analysis of absolute poverty within households[4]. The same principle should apply when using the MPI. For instance, the frequency and deprivation intensity of households in multidimensional poverty are higher in rural than in urban areas, highlighting the spatial disparities of poverty in Malaysia[4]. We must examine district-level patterns to identify which non-income factors are driving these inequalities, and what consequent actions must be taken.

The Role of Local Councils

Crucially, local councils (municipal, city, and district councils) must be more involved in the daily operations to ensure their impoverished communities are not neglected.  As the first point of contact between the government and the Rakyat, they must ensure these voices are heard clearly in policy research. This includes working with local leaders and relevant institutions as on-ground front-line coordinators to ensure poor households are registered under the eKasih National Poverty Database. 

While they do not set national poverty policy, local councils can proactively use district-level poverty data to plan basic services and determine localised needs in underserved areas. According to a study, eKasih is useful for identifying target groups, distributing allocations at the state and district levels, and constructing programs based on target groups’ needs analyses[6]. Training and upskilling can be provided to educate local councils on how to leverage this information and identify targeted aid and support for their communities. 

Local councils can also increase civic participation by forming resident representative councils in local government decision-making. Through Local Agenda 21 (LA21), local authorities collaborate with their communities to identify local issues, formulate and implement action plans[5]. This practice must be enforced to ensure programs and infrastructure improvements are appropriately funded and continuously refined to meet ever-changing demands. 

Systematically Addressing The Structural Root Causes In A Digitalised Society 

Ultimately, sustaining poverty alleviation efforts requires a streamlined system that translates policy into effective and coordinated action. However, Malaysia’s current welfare ecosystem is fragmented, which risks administrative inefficiencies[7]. Welfare support and cash assistance are overseen by various groups, including Jabatan Kebajikan Masyarakat (JKM), eKasih, MyKasih, and the National Cost of Living Action Council (NACCOL). Such fragmented systems create unnecessary bureaucracy, with more money and effort spent on multiple information websites, overhead, planning and coordination. 

We must also acknowledge the government’s commitment to adopting AI and digitalisation as a core instrument of governance, and how this will affect lower-income households. The government must build public trust and improve digital literacy if it wants to introduce AI-driven welfare and governance decisions[7]. Digital inequality is a crucial barrier. Over 80% of households had mobile broadband in 2022, while connectivity gaps continue to persist in states like Kelantan, Kedah and Sabah[8]. Neglecting these disparities will risk further marginalising lower-income households. Bridging the digital gap is crucial for inclusive AI and digital-driven governance, which must run in tandem with refining and integrating the social protection registry, delivery mechanisms, and the central information site to improve transparency, coordination, and equitable access.

Overall, the targeted distribution of Sumbangan Asas Rahmah (SARA) ensures a more equitable reach among low-income households, but it does not adequately address the systemic barriers that keep them in poverty. Malaysia’s recognition of multidimensional poverty and the revised poverty line income is a step in the right direction. However, current MPI indicators in measuring non-income aspects of poverty, such as education and digital connectivity, must be improved to better reflect inequalities. Assessing multidimensional poverty at the district level to better identify highly deprived areas is also critical. The MADANI government’s own mission about raising the living standards of the Rakyat[9], must be grounded in good policy and governance, and driven by competent, principled leaders to ensure no one is left behind. 

Poverty is not just material deprivation; it undermines human dignity. An inclusive nation ensures those in need are provided with basic services and meaningful opportunities so they can participate fully in society and live dignified, purposeful lives.

References :

[1]  Sumbangan Asas Rahmah (SARA) (2026). https://www.sara.gov.my/

[2] Noor, M (2026) “Cash Aid Programmes: Addressing The Rakyat’s Pain Once and For All”, Free Malaysia Today. https://www.freemalaysiatoday.com/category/opinion/2026/01/19/cash-aid-programmes-addressing-the-rakyats-pain-once-and-for-all

[3] World Bank (2021) “Multidimensional Poverty in Malaysia: Improving Measurement and Policies in the 2020s”, Washington, DC: The World Bank.

[4] Wan Usamah, A. (2024) “Deepening Malaysia’s Understanding of Poverty”, Khazanah Research Institute. https://www.krinstitute.org/publications/deepening-malaysia-understanding-of-poverty

[5] The Local Government System in Malaysia (n.d.). https://www.clgf.org.uk/regions/clgf-asia/malaysia/

[6] Rahman, S. & Rahman, A. (2023) “eKasih System as a Medium to Implement Malaysia's Policy of Poverty Eradication”, International Journal of Academic Research in Business and Social Sciences. 

[7] Dr. Liew Yit Wey, Goh, A., Joseph, J., and Dr. Bawani Lelchumanan (2025). “An Independent Analysis of the 13th Malaysia Plan”, The ASEAN Research Center (ARC), Kuala Lumpur: Asia School of Business.

[8] Khoo, W.Y. (2024) “What Household Connectivity Gaps Mean for a Digital Future”, Khazanah Research Institute.

[9] (2025) “Thirteenth Malaysia Plan 2026-2030 Melakar Semula Pembangunan”, Ministry of Economy