STR, Sara should remain short term to help with rising living costs

Dr Mohd Afzanizam Abdul Rashid, the chief economist of Bank Muamalat Malaysia Bhd, has warned that the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (Sara) assistance programmes should remain short-term measures rather than permanent features. These programmes are designed to help households manage rising living costs and maintain their purchasing power, but their long-term effectiveness may be undermined if they become the primary solution for social mobility.

Mohd Afzanizam emphasized that the government should focus on improving recipients' economic status and living standards through education, healthcare, and cultivating a culture of self-improvement. He stressed that continued reliance on such assistance could amplify income and wealth inequality, which could undermine social cohesion in the economy.

To phase out STR and Sara without putting vulnerable households at risk, the government should monitor household income levels and ensure that families continue to send their children to school and maintain their health. If there is any indication of income improvement, cash assistance can be gradually withdrawn. However, this transition may be challenging as families become accustomed to receiving aid.

Engaging with communities and explaining the temporary nature of the assistance is crucial, along with encouraging households to take advantage of government education and training programmes to enhance their living standards. The main concern is moral hazard, as households may become overly dependent on cash transfer programmes without making sufficient efforts to upgrade their skills and incomes.