Instead, the government was urged to provide support by getting people in the M1 group back to work and ensure they have well-paid, fulfilling employment opportunities.

Geoffrey Williams, an economist with Malaysia University of Science and Technology, said Bantuan Keluarga Malaysia handouts are badly designed because the recipients will spend the badly-needed money immediately and the aid package will have little benefit on long-term income.

The government should have a long-term financial solution because monetary aid is not enough to make a significant impact, he said in response to news that people with household incomes below RM5,000 a month would be eligible for the cash aid.

Williams said a thorough review of the social protection system was required.

“However, the biggest reform must address in-work poverty and remove welfare altogether,” he said. “The Malaysian welfare system is too complex, bureaucratic and inefficient. Many people fall through the net.”

The most straightforward scheme was a universal tax credit or negative income tax. Those earning more than the basic wage threshold would be taxed as usual and those earning less would be given a tax credit.

He said it would cost RM5.1 billion to provide the aid to the bottom 10% (those with household incomes below RM2,500 a month).

The tax credit could be funded by a new National Social Assistance Fund, which would need only RM100 billion to fund RM5.1 billion per year, which is easy to establish,” he said.

Another economist, Benedict Weerasena of independent research institute Bait Al-Amanah said cash handouts were essential for temporary support in times of trouble but they should be based on the most recent household income data and a revised poverty line.

About 600,000 middle-income households are believed to have dropped into the B40 (bottom 40% category) because of the pandemic.

He said the government needs an exit or graduation policy from cash handouts so that resources can be targeted at those who are truly in need.