The official campaign period for the fifteenth general election (GE15) is in its final days. On Saturday, Malaysians head to the ballot box to decide who will govern the country for the next five years. Over the last couple of weeks, parties and candidates have employed various strategies to reach out to voters, from different social media engagement methods to the good old ceramah rallies.
Public discourse has shifted significantly this time around compared to GE14. While the mood in 2018 was defined by the anger over 1MDB and the desire to get to the bottom of the scandal, GE15 is an arena in which the political and policy needs are to address the lingering health and economic effects of COVID-19 as well as the rapidly emerging global problem of inflation and climate change.
In that spirit, in the earlier days of the campaigning period, candidates focused on offering solutions to the current everyday problems faced by Malaysians. In addition to reminding their constituencies of promises made by party/coalition manifestos, most, if not all candidates, parliament or DUN, designed pledges that are specific to the communities they wish to serve, with promises ranging from rejuvenating local economies to providing local job opportunities to directly assisting disadvantaged groups in their constituencies.
This manifesto-focused campaigning strategy is a positive development towards strengthening a policy-driven political environment in the country. However, as the campaign period gathered momentum, it has been overshadowed by an increasing focus on the identity of Malaysia’s next prime minister. And as we now prepare to draw the curtains on the campaigns, it has pretty much become the centre-stage issue, used by party leaders to galvanise their support bases and court the votes of fence-sitters.
This is not unexpected given the high stakes involved in the election. But it would be better if the candidates accompanied this with clear vision and solutions for the country for the coming challenging years ahead.
Why? Because what the country needs to avoid, after all the political, health, and economic upheavals that it has gone through in the last few years, is a dearth in leadership. Whoever wins the election will be presiding over difficult social and economic environments, addressing which requires not only immediate measures, but also ideas to mitigate their effects in the long term.
We have of course witnessed the emergence of a number of different ‘visions’ before, the brainchilds of respective former leaders who coined them. But the visions also died along with the departure of those personalities from the country’s political arena. What we will need after GE15 are visions that are translated into concrete action plans as well as implemented programmes – and visions that will survive the political careers of prime ministers or any politicians.
The leadership and the ideas need not only be visionary but also pragmatic and are translatable into concrete actions plans as well as implemented programmes. And given the fragmented nature of Malaysian politics, they will need to survive the personal careers of the leaders, which means having input and buy-in from all sides of the country’s political divide. We therefore need leadership that is visionary, pragmatic, and conciliatory.
For us to achieve that, we need to end the “it’s my turn” narrative for the candidacy of the country’s leadership. It should always be the country’s turn, and as Malaysia emerges from the pandemic’s aftermath, the next generation of leaders have to be allowed to come through to help shape the country’s future. Malaysians should be able to look forward to future GEs where the rallying cry is not who shouldn’t be prime minister, but who are the crop of leaders with the best ideas and working style.
* This article first appeared in the Malay Mail on 17 November 2022.
The recently tabled Budget 2023 is now put on hold following the dissolution of parliament as the country gears up for the 15th General Election (GE15). But the RM372.3 billion budget provides us with a glimpse into the state of social protection spending by the government. Slightly more than 10% of the budget (approximately RM42 billion) was proposed for subsidies and social assistance, with the bulk allocated to blanket subsidies for fuels, cooking oils, and other essential goods.
The government is under increasing fiscal pressure to rethink its social protection strategy. Alternative policy measures suggested by experts include better-targeted subsidies, increased cash transfer amounts, and a universal basic income scheme. A few months before Budget tabling, Caretaker Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz had indicated that the government plans to shift from blanket assistance to targeted schemes. And Budget 2023 did see some increase in the quantum of targeted assistance for vulnerable groups such as low-income families, unemployed youths, farmers, fishermen, and gig workers.
Going by the pronouncements and the proposed Budget by the current government, there appears to be a shift in policy direction towards more targeted assistance though no clear steps towards removing blanket subsidies as yet. Will this direction also be taken up by other parties in their GE15 manifestos? What should be the policy direction on social protection moving forward?
Based on our analysis of social protection spending, there are three directions that aspiring policymakers and those who seek public office should offer to improve our social protection strategy.
Direction 1: Prioritise effectiveness
The government’s spending on subsidies and social assistance has almost doubled from RM23 billion in 2013 to RM42 billion in 2023. However, a significant proportion of this spending has gone to blanket fuel subsidies which disproportionately benefit the wealthy. Caretaker finance Minister Tengku Datuk Seri Zafrul Abdul Aziz previously told the Parliament that for every RM1 of fuel subsidy, 53 cents benefited the T20 – hardly effective nor efficient as a form of social assistance for low-income group.
By focusing on improving the effectiveness of assistance-related allocations, the country’s social protection strategy would gradually wean off blanket subsidies. Based on 2022 data, moving from blanket fuel to targeted fuel subsidies could save up to RM20 billion or 53% of RM37.7 billion which was spent on fuel subsidies benefiting T20 households. The savings could increase the fiscal opportunities to implement more direct policy measures for social protection such as cash transfers.
There is a growing body of literature showing that cash transfers are a more scalable and effective poverty alleviation strategy than daily essentials subsidies for developing countries like Malaysia. Contrary to popular belief, direct cash transfers do not make people spend more on temptation goods like alcohol and cigarettes nor change whether or how they work. Instead, numerous studies have consistently shown the positive impacts of cash transfers on recipients’ education, health, income and more.
Direction 2: From fragmentation to integration
The billions of ringgits pumped into consumption subsidies, social assistance and many more are part of a massive and complicated social protection system. As of October 2022, there are 17 ministries and agencies overseeing 167 social assistance schemes compared to 95 initiatives in 2012. The same problem is also observed in Malaysia’s skills development system, where skills courses and targeted schemes are spread across multiple ministries, agencies, and state governments.
This fragmented social protection system has caused a two-fold impact. Firstly, this incurs additional costs for managing multiple databases, targeting beneficiaries, and operating and maintaining different schemes. Secondly, it also restricts policymakers from having a cohesive view of all recipients to calibrate with each other in analysing programme effectiveness, identifying coverage gaps, and improving the protection for recipients.
Currently, the government is working to address this by forming the Social Protection Council (MySPC). Early this year, MySPC launched the Social Protection Database (PDPS) compiling recipient profiles from all federal government social protection schemes in March this year.
While we commend the effort to centralise different databases into a primary reference for social protection, we should also improve the service delivery of our social protection system by creating a single national social protection institution and a unified registry. It will allow for a clear and strong policy mandate to the national social protection institution to improve our welfare policies’ coordination, design and alignment. This has been proposed by Bank Negara Malaysia (BNM), as well as eminent sociologist, Emeritus Professor Abdul Rahman Embong.
An option is to have the Social Security Organisation (SOCSO) be transformed into a national social protection institution that acts as a custodian to a unified social protection registry. Having a one-stop centre, where everyone can check their eligibility, register, and apply for a leaner set of social protection programmes using a single ID (linked to the Tax Identification Number proposed in Budget 2023) will facilitate access to existing and new schemes.
Direction 3: Social protection as a human right, not charity
Pandemic, floods and inflation have highlighted the increasing inadequacy of our social protection system. The current ‘charity’ model for social protection, i.e. targeting the poor and the vulnerable, leaves many Malaysians ill-prepared to anticipate life-cycle risks, income shocks, and major crises.
After four rounds of EPF withdrawals, Malaysia – soon to be an ageing society by 2030 – is facing a retirement crisis lurking on the horizon. At the time of writing, the Department of Statistics Malaysia (DOSM) just reported that Malaysia’s birth rate has hit a 10-year low in 2021, underscoring the need to be prepared for changing demographic needs. We are sorely in need of a new narrative to guide and drive policy reforms in ensuring adequate social protection for all Malaysians as we become an ageing society.
As established by the International Labour Organisation (ILO), policymakers and future legislators should view social protection as a human right and ensure a safety net that catches every Malaysian whenever they fall into poverty and hardships at any point in life. Ultimately, this policy paradigm shift calls for a life-cycle approach to social protection, which had been advocated continuously by BNM, KRI and Social Wellbeing Research Centre (SWRC) in the past. Any election manifesto should combine and strengthen measures on maternity and childcare support, employment protections, career transition programmes, healthcare contributions, and old-age pensions for every major shock from cradle to grave.
As we transition to an ageing nation and in the run-up to GE15, we hope that political parties can move away from exchanging political rhetorics to debating policy ideas that urgently matter. Showcasing an in-depth understanding of, and promoting the ways to reform, our social protection system in their election manifesto will make a compelling case to increase support and confidence in political parties and coalitions who vie to govern Malaysia for, arguably, the next five years in a time riddled with instability and uncertainty.
* This article first appeared in the Malay Mail on 31 October 2022.
Earlier this month, Dato Sri Dr Wan Junaidi Tuanku Jaafar tabled a series of bills to effectively abolish the mandatory death penalty in Malaysia as part of the government’s effort to reform the criminal justice system. This move came after a long history of public debate regarding its necessity, alongside a substantial list of varying ministerial decisions about its abolition. The abolition seemed to be on track, as the bills reportedly garnered support from prominent stakeholders such as the Home Ministry, the Attorney General Chambers, and the Prison Department.
A proposed amendment among the series of bills is to implement discretionary death penalty with an option of natural life imprisonment, where a person would be subjected to be imprisoned till death for certain offences, including the offence of discharging firearms, offences against the Yang di-Pertuan Agong, offences of terrorism, as well as murder. Notably, an optional punishment for other, relatively less heinous offences such as drug trafficking and attempted murder is life imprisonment instead.
A Life Sentence Prisoner(Banduan Seumur Hidup) is someone who is sentenced to imprisonment for 20 or 30 years. A Natural Life Sentence Prisoner(Banduan Seumur Hayat) is someone who is sentenced to imprisonment with no stipulated release date.
Having natural life imprisonment as a punishment option for heinous crimes, such as murder, may seem reasonable as the next most proportionate measure after abolishing the mandatory death penalty. In fact, for the case of a domestic abuse victim found guilty of murdering her husband in our 2020 study, there was more support for the life sentence (34%) than the discretionary death penalty (23%) among our nationally-represenative sample of respondents. The punishment has also been deliberated by the government since 2018. In the Pakatan Harapan government’s first attempt at abolishing the death penalty, then Law Minister the late Datuk Liew Vui Keong was reported as saying that serious offenders “will not be allowed parole and they will never be able to mingle with the rest of us again.”
Many disagree with that notion on two main fronts: the impact of natural life imprisonment on those receiving it, as well as the purpose of the criminal justice system itself. Research has shown that imprisonment without the prospect of release subjects prisoners convicted of serious crimes to harsher treatments (e.g. solitary confinement) than those who were convicted for less, but at the same time there is a lack of evidence regarding the possibility of socially reforming those under life imprisonment. This view is echoed by the European Court of Human Rights: in a 2013 ruling, the Court recognised that natural life imprisonment violates human dignity by denying inmates “a faint hope of release.” It would seem that natural life sentences send the message that there is no possibility for an inmate to learn something from his punishment between the time he was sentenced to his eventual death.
Introducing natural life imprisonment to more offences may also open the door to an increase in prison population. There is, therefore, the question of its impact on not only overcrowding, already a problem afflicting Malaysia’s prisons currently, but also the maintenance of prison conditions. Firstly, the move seems to contradict the government’s recent efforts to ease prison overcrowding; the Offenders Compulsory Attendance (Amendment) Act, for example, was approved earlier this month to allow first-time offenders and those with short-term sentences to serve their punishment through community work and other rehabilitative initiatives such as weekly upskilling programs. Secondly, the move would further strain an ongoing lack of budget allocation for improving living conditions within prisons.
Beyond these contentions, natural life sentences may exacerbate what some have argued to be a general preference for retribution rather than rehabilitation in sentencing offenders in Malaysia. Local human rights organisation SUARAM noted in their report on prison conditions earlier this year that Malaysia’s criminal justice system continues to prioritise using imprisonment as a primary measure of deterring crime due to a lack of alternative punishment methods. To illustrate this: in the event the tabled bills were to be passed in the past parliamentary sitting, those in vulnerable socioeconomic circumstances, such as the recent case of a teenage girl facing murder charges in Johor after allegedly defending herself against sex without consent, could possibly escape the gallows, but still be faced with a ‘slow death’ from natural life imprisonment.
Could the proposed bills be reconsidered? It seems like a possibility with the Malaysian public. In the same case of the domestic abuse victim convicted of murder in our study, there was more support for jail term as a proportionate punishment (39%) compared to life sentence (34% as mentioned above). It could also be a possibility with policymakers, as there is intention to form Malaysia’s very own Sentencing Council in the interest of restorative justice and improving consistency in sentencing offences.
With the 15th General Election looming, we call on those seeking to govern the country to consider this question: are natural life sentences the best way forward in a country without the mandatory death penalty? There should be a conversation on the policy consequences and human toll of the proposed bills, as natural life sentences, alongside the discretionary death penalty, may only widen the gap between the public’s collective sense of justice and current sentencing practices at best, and further perpetuate the prevalence of a poor and vulnerable population in Malaysia’s prisons and on death row at worst.
This article was published in the Malay Mail on 28 October 2022.
Seperti mana di negara-negara lain, kerajaan Malaysia telah bertungkus-lumus untuk bertindak bagi menangani kegawatan ekonomi yang berpunca daripada penularan wabak COVID-19. Selain daripada beberapa pusingan bantuan tunai langsung dan program-program insentif kewangan, pengeluaran KWSP, yang pada mulanya dilihat sebagai respons sekali sahaja untuk membantu orang ramai mendepani masalah aliran tunai, telah menjadi langkah integral untuk menangani krisis ekonomi tersebut.
Secara keseluruhan, empat pusingan pengeluaran KWSP telah dilaksanakan. Pada setiap pusingan, pakar-pakar – dan juga pihak KWSP sendiri – telah memberi amaran bahawa langkah ini boleh mempercepatkan krisis persaraan di Malaysia. Kebimbangan ini diburukkan lagi oleh kelemahan kerangka keselamatan sosial semasa yang tidak mampu untuk menampung keperluan populasi Malaysia, yang dijangka akan menjadi negara tua dalam masa kurang daripada 9 tahun.
Persoalannya, apakah cadangan yang boleh pengundi harapkan daripada mereka yang berhasrat untuk mewakili suara rakyat dalam Pilihan Raya Umum Ke-15 yang akan datang untuk menangani krisis tersebut? Apakah idea dasar yang boleh orang ramai jangkakan dalam manifesto parti ataupun calon yang bertanding dalam PRU15 yang dapat menjamin alam persaraan bagi jutaan rakyat Malaysia yang telah kehabisan simpanan hari tua mereka?
Kos Pengeluaran KWSP
Pengeluaran KWSP telah menjadi talian hayat bagi ramai rakyat yang telah mengalami masalah aliran tunai. Namun, langkah untuk membenarkan pengeluaran tersebut merupakan keputusan yang belum pernah berlaku sebelum ini. Ini akan mencetuskan pelbagai kesan jangka panjang. Bagi tiga pusingan pengeluaran yang pertama, Kementerian Kewangan telah melaporkan bahawa separuh (58%) daripada ahli KWSP di bawah umur 55 tahun telah mengeluarkan wang mereka, yang keseluruhannya berjumlah RM101 billion. Kementerian Kewangan juga mendedahkan bahawa 70% ahli KWSP yang berumur 55 dan ke bawah tidak mempunyai dana yang mencukupi untuk bersara di atas garis kemiskinan. Angka-angka tersebut sudah pasti telah menjadi semakin teruk selepas pelaksanaan pengeluaran pusingan keempat.
Pada peringkat individu, kami menganggarkan bahawa seorang ahli biasa KWSP yang telah mengeluarkan simpanannya pada setiap pusingan (dengan andaian mereka mengeluarkan jumlah maksimum yang dibenarkan pada setiap pusingan) secara kumulatifnya sudah pun mengeluarkan antara RM31,000 ke RM81,000 daripada simpanan mereka (lihat Jadual 1).
Jadual 1: Anggaran pengeluaran KWSP kumulatif setiap ahli
Untuk perspektif, sehingga Disember 2020, simpanan median ahli-ahli KWSP bawah 55 tahun adalah RM18,785, manakala bagi yang berada di ambang persaraan (kumpulan umur 50-54 tahun), simpanan median mereka adalah RM39,585. Jika kita mengambil anggaran konservatif sekalipun (RM31,000) untuk pengeluaran kumulatif, empat pusingan pengeluaran tersebut telah menghapuskan sekurang-kurangnya 77% simpanan seorang ahli biasa KWSP.
Jika kita andaikan bahawa seorang ahli KWSP memperoleh pendapatan median nasional sebanyak RM2,062 dan menyimpan 10% pendapatan bulanannya, masa yang akan diambil untuk ahli tersebut mengisi kembali simpanan persaraannya ke paras sebelum 2020 adalah 13 tahun. Bagi pekerja yang berpendapatan gaji minimum (RM1,500), masa yang akan diambil adalah 17 tahun. Inilah sebabnya mereka yang berpendapatan rendah adalah golongan yang paling terjejas: lebih kecil pendapatan, lebih lama anda harus bekerja untuk menambah semula jumlah simpanan yang telah dikeluarkan.
Kekusutan dasar yang serupa juga dialami oleh negara lain
Dasar pengaksesan awal kepada simpanan persaraan untuk menangani kesan COVID bukanlah unik kepada Malaysia sahaja. Beberapa negara lain juga telah melaksanakannya untuk mengatasi kejutan ekonomi yang berpunca daripada pandemik tersebut, termasuklah Australia, Amerika Syarikat, Chile, Peru, Afrika Selatan, dan Portugal.
Meskipun terdapat kelainan dari segi penggubalan dasar pengeluaran awal wang persaraan negara-negara tersebut, kesan buruk akibat langkah tersebut telah diamarankan oleh pengkritik. Kesan-kesan tersebut termasuklah kekurangan jaminan hari tua, penurunan faedah bagi anuiti daripada pelaburan yang dilakukan melalui dana persaraan, dan ketidaksamaan persaraan. Kajian yang telah dijalankan pada 1-2 tahun yang lalu di beberapa negara tersebut, yang menjelaskan akibat daripada pengurangan pramatang simpanan persaraan orang ramai, boleh dijadikan petunjuk bagi isu-isu yang bakal mendatang di Malaysia jika langkah-langkah yang sesuai tidak diambil untuk membendung impak pengeluaran KWSP.
Di Australia, di mana dua pusingan pengeluaran tabung pengambilan (superannuation) sehingga AUS20,000 telah diluluskan oleh Kerajaan Persekutuan pada 2020, sebuah kajian mendapati bahawa pengeluar mengambil masa kurang daripada seminggu untuk mempertimbangkan keputusan mereka dan tidak faham sepenuhnya kesan jangka panjang pilihan mereka. Kesalahannya terletak pada proses pengeluaran yang mudah (sama seperti di Malaysia) yang telah meringankan beban fizikal dan mental dalam membuat keputusan, yang membawa kepada anjakan minda yang besar dari segi pengertian orang ramai tentang akses awal kepada simpanan hari tua – apa yang hampir mustahil sebelum ini sekarang dilihat mendapat restu kerajaan. Jika gelagat pemimpin politik yang telah menggesa dan seterusnya mengambil kredit bagi kelulusan untuk pusingan keempat pengeluaran KWSP yang lalu diambil sebagai kayu pengukur sentimen semasa, para pembuat dasar berdepan dengan cabaran yang besar untuk menangani tanda-tanda penormalan pengeluaran pramatang simpanan hari tua untuk menghadapi krisis ekonomi pada masa hadapan.
Sementara itu, di Chile, di mana tiga pusingan pengeluaran awal wang pencen telah dibenarkan oleh kerajaan, penyelidik menganggarkan bahawa bagi satu keluaran sebanyak 10%, setiap dolar yang dikeluarkan secara pramatang membawa kepada kerugian sebanyak 1.59 dolar dalam bentuk simpanan persaraan masa depan dan mengurangkan faedah pencen bulanan sebanyak 7.26%. Mereka berhujah bahawa akses awal kepada simpanan persaraan meningkatkan ketidakcukupan pendapatan serta ketidaksamaan dalam persaraan, dan bahawa perbelanjaan kerajaan akan perlu ditingkatkan untuk mengatasi kesan-kesan tersebut ke atas para pesara. Di Malaysia, kebimbangan yang serupa juga timbul, bilamana kumpulan B40 dan M40 telah mencatatkan tahap pengeluaran yang lebih tinggi berbanding kumpulan T20. Ini menunjukkan bahawa kesejahteraan kewangan pasca persaraaan kumpulan B40 dan M40 adalah lebih berisiko daripada kumpulan T20.
Keperluan menjangka dan memitigasi krisis persaraan
Melalui iktibar daripada negara-negara lain, kami telah membincangkan di atas beberapa akibat pengeluaran awal KWSP yang mungkin berlaku di Malaysia. Tentu sekali ada lebih banyak, dan kerana itulah kami percaya bahawa sudah tiba masanya untuk suatu perbincangan yang serius diadakan tentang langkah-langkah yang boleh diambil untuk memitigasikan akibat-akibat tersebut. Memandangkan PRU15 sudah hampir tiba, perbincangan ini haruslah dipacu oleh mereka yang berhasrat untuk mentadbir negara ini.
Bagi menyumbang kepada (dan mungkin juga membantu memulakan) wacana ini, kami tawarkan lima cadangan yang luas sebagai santapan fikiran mereka:
Cadangan 1: Penyesuaian kepada tenaga kerja yang semakin tua
Memandangkan kita sedang beralih ke arah menjadi negara tua, pertimbangkan cara yang sesuai untuk menyokong dan memberi insentif kepada pekerja untuk memanjangkan kehidupan bekerja mereka. Antara langkah yang boleh dipertimbangkan termasuklah pengaturan persaraan berperingkat, persaraan fleksibel berbanding persaraan secara kronologikal semata-mata, dan juga kerangka bagi laluan sihat ke arah persaraan. Instrumen-instrumen dasar sebegini bukan hanya perlu memudahkan kehidupan bekerja yang lebih panjang, tetapi harus juga memberi faedah kepada kehidupan persaraan bila tiba masanya.
Cadangan 2: Kukuhkan kerangka perlindungan sosial
Bagi memastikan semua rakyat akan dilindungi daripada kejutan ekonomi di masa hadapan, parti-parti politik perlu mencadangkan langkah-langkah untuk meluaskan perlindungan sosial di Malaysia. Ini memerlukan pelaburan dan perbelanjaan dalam infrastruktur dan perkhidmatan sosial, termasuk khidmat penjagaan, perumahan warga emas, kesihatan, dan sokongan kerjaya untuk membentuk masyarakat mesra usia. Kita juga perlu meluaskan sistem perlindungan bagi mereka yang bekerja sendiri dan dalam kerjaya tidak formal.
Cadangan 3: Pantau impak pengeluaran awal dengan dekat
Parti-parti politik harus mencadangkan mekanisme untuk memantau dan meneliti impak jangka panjang pengurangan simpanan persaraan. Sebagai contoh, kajian tentang sama ada mereka yang mengeluarkan simpanan telah mula untuk mengisi semula akaun persaraan mereka dan pemantauan longitudinal kesejahteraan kewangan ahli-ahli KWSP di bawah jumlah minimum simpanan tertentu patut dijalankan. Kerajaan, melalui Majlis Perlindungan Sosial Malaysia (MySPC), boleh juga berkolaborasi dengan ahli-ahli akademik, badan-badan pemikir, dan golongan penyelidik untuk menjalankan kajian tentang hal ini. Peruntukan dana, geran, dan akses kepada pangkalan data seperti PDPS dan maklumat tentang keahlian KWSP amatlah dialu-alukan untuk mencapai objektif ini.
Cadangan 4: Galakkan agihan simpanan persaraan secara berperingkat
Seiring dengan melindungi simpanan orang ramai daripada digunakan untuk tujuan selain persaraan, parti-parti politik boleh juga mempertimbangkan untuk menyokong agihan simpanan persaraan secara berperingkat. Namun begitu, mekanisme langkah ini haruslah adil kepada semua ahli KWSP. Memandangkan 71% ahli KWSP yang berumur 55-60 tahun telah memilih pengeluaran secara sekaligus ataupun lump-sum setelah bersara dan 50% telah menghabiskan simpanan mereka dalam masa lima tahun, masanya mungkin sudah sesuai untuk menginsentifkan pengeluaran berperingkat.
Cadangan 5: Sokong sistem pencen sosial untuk golongan yang memerlukan
Berbanding KWSP yang merupakan skim simpanan persaraan persendirian yang berasaskan caruman yang ditentukan, pencen sosial adalah faedah kadar rata (sama ada bersasar atau universal) yang dibiayai melalui pendapatan awam. Parti-parti politik boleh menggunakan instrumen ini untuk mengurangkan kadar kemiskinan dan menjamin pendapatan minimum bagi golongan warga emas. Satu cara untuk melaksanakan idea ini di Malaysia adalah melalui perluasan liputan perlindungan skim Bantuan Warga Emas, yang menyediakan bayaran bulanan sebanyak RM500 kepada warga emas yang hidup di bawah garis kemiskinan. Keberkesanan sistem pencen sosial dalam mengurangkan kadar kemiskinan dan meningkatkan tahap kesihatan warga emas dapat dilihat di China, Vietnam, dan Filipina.
Kesimpulan
Menurut KWSP, hanya 3% ahlinya mampu untuk bersara. Oleh itu, buat masa ini terdapat banyak ketidaktentuan tentang jaminan kewangan jangka panjang alam persaraan rakyat Malaysia. Kefahaman tentang punca-punca asas jurang antara simpanan persaraan dan jaminan persaraan adalah penting untuk menggubal dasar bagi masa hadapan. Kami percaya kefahaman tersebut dan cadangan dasar jangka panjang akan melonjakkan mereka yang bercita-cita untuk dipilih dalam pilihan raya ke barisan hadapan wacana politik Malaysia, di ketika kita membuat persediaan ke arah PRU15.
* Versi asal artikel ini telah diterbitkan dalam Bahasa Inggeris dalam edisi 18 – 24 Julai 2022 The Edge Malaysia Weekly.
Emel pandangan atau cadangan anda ke editorial@centre.my.
In December 2021, The Centre started a research series to explore the experiences, challenges and aspirations of renter-households.
In Part 1 of this research series, we highlighted the prevalence of renting among B40 and M40 households in the Klang Valley region. Despite Malaysia’s relatively high home ownership rate at 76.9% (2019), only 45% and 53% of B40 households in Kuala Lumpur and Selangor, respectively, own their homes.1 Among M40 households in Kuala Lumpur and Selangor, 51% and 65% respectively, own their homes.2 The sizable numbers of such “hidden” renter-households, particularly among lower income households in urban areas, necessitates greater policy attention to their plight and anxieties.
In Part 2, based on a study of global practices, we highlighted three main approaches that can be taken by the government to improve the rental market. The three policy tenets that we recommend, based on pro-renting policies implemented in other countries, are strengthening tenant protection, incentivising greater supply of rental units and adopting rent stabilisation measures.
In this final instalment, we present findings from our survey aimed at gathering and recording renters’ experiences, insecurities and housing aspirations. While a small majority of our survey respondents wish to own their own homes, there is a significant portion who want to either rent long-term or remain undecided.
Location emerges as a crucial factor in a respondent’s decision to rent or buy a house. Even amongst low-income groups, location appears as important as affordability-related factors such as long-term job security, ability to pay the down payment and housing loan eligibility. This finding raises the question of whether the government’s strategy to facilitate home ownership via easy financing schemes, as well as construction of low and medium-cost housing in less strategic locations, needs to be supplemented with measures that increase supply of affordable rental units in targeted locations.
These are some key findings, among many others, from our survey which is further detailed below.
About the survey
The study was conducted online using a convenience sampling method. The questionnaire was written in Malay, English and Mandarin and was made available from 10 May to 7 June 2022.
Owing to resource limitations, responses to this study do not represent a nationally stratified sample. Hence, we advise readers to interpret the results with this limitation in mind.Our intention in conducting the survey was to develop an initial picture of Malaysian renters’ situation and aspirations, which are currently unavailable due to the serious lack of data on the rental market.
A total of 232 respondents comprising 173 current renters and 59 former renters completed the survey. Our survey responses are skewed towards Klang Valley residents (83%), and towards young Malaysians below 40 years old (74%).
Malay Bumiputera forms the majority of respondents (68%), followed by Chinese (12%), Indians (8%), Non-Malay Bumiputera (5%), Others (4%), and Non-Malaysians (3%).
Households earning RM5,000 or less a month make up about half (51%) of the respondents – a category which is considered below the B40 income level when adjusted to Kuala Lumpur and Selangor thresholds. This is followed by households earning between RM5,001-RM11,000 (29%), RM11,001-RM15,000 (10%) and more than RM15,000 (11%).
The respondents are quite evenly distributed in terms of sex – female (55%) and male (45%). In terms of relationship status, half of respondents are married (50%), followed by single (45%), divorced (4%) and widowed (1%).
Demographics of Survey Respondents
Why rent? Answers differ by income
The survey reveals that location is the top factor for a respondent in their decision to rent a house. Just over half (53%) of respondents say that they chose to rent their home due to its strategic location and connectivity – close to the workplace, public transportation system, or family members.
A breakdown of responses according to income level reveals that while location is a major factor across all groups, it varies in priority depending on income. Among households earning less than RM2,700 a month, the top three reasons to rent are ineligibility to qualify for a housing loan (21%), strategic location (20%) and unaffordable downpayment (19%). For households earning between RM2,700 and RM5,000, their top three reasons are unaffordable downpayment (19%), strategic location (18%), and uncertain job security (15%). For these two income groups, the decision to rent is a combination of both affordability factors and location.
In contrast to their lower income peers, respondents from upper income groups tend to prioritise flexibility alongside location. Predictably, financial factors are ranked lower in their decision to rent a house.
Among households earning between RM5,001 and RM11,000, the top three reasons to rent are strategic location (22%), flexibility (19%) and preference to not acquire long-term debt (15%). For households earning between RM11,001 and RM15,000, the top two reasons are strategic location (28%), flexibility (22%) while tied at third place are down payment unaffordability (12%) and neighbourhood amenities (12%).
For respondents with household income exceeding RM15,000, the top three reasons are strategic location (24%), flexibility (22%) and preference to not acquire long-term debt (17%).
Figure 2: Top 3 Reasons Why Respondents Rent
Cost burden of renting
Cost-burdened renters are defined as those who spend more than 30 percent of their incomes on rent and utilities each month.3 Positively, many of the renters surveyed do not fall into that category. A large majority (84%) of our respondents pay 30% or less of their income on rent.
We observed that rent as a percentage of income decreases as income rises, and vice-versa. Although the number of renters who pay more than 30% of their income on rent is small, a large portion of them comprises low-income households. The majority of tenants who pay more than 30% of their income on rent – considered as cost-burdened renters – are households who earn RM5,000 or less a month. Most concerning is that among those earning less than RM2,700, 42% are cost-burdened (Figure 2).
Related to the theme of cost burden, a large majority of respondents (79%) say they have never missed paying their rent on time. Only 13% say they miss their rent payment one to two times a year while 7% miss it three to five times a year. A very small proportion 1% miss it more than five times a year.
A breakdown by income reveals, unsurprisingly, that low-income groups face greater difficulties in making their rent payments on time, particularly for those earning less than RM2,700 a month. 48% among this group reported missing their rent payment, which is two times higher than those earning between RM2,700 to RM5,000, and three times higher than those earning between RM5,001 to RM11,000.
A relatively high percentage of low-income respondents live with 5 or more co-residents. 38% of respondents who earn less than RM2,700 a month, and 32% of respondents who earn between RM2,700 and RM5,000 a month, live with 5 or more people in the same rented residence. In contrast, among respondents earning more than RM5,000 a month, the percentage falls to between 8% to 13%.
Experience with landlords
90% of survey respondents reported mostly positive experiences with their landlords, which were indicated by landlords giving fair treatment, taking responsibility over major repairs, or willing to accommodate requests regarding minor modifications or rental negotiations.
Most respondents to our survey also have not experienced unjust or harsh treatment by their landlords, namely getting evicted without valid reason, having security deposit deducted unfairly, being locked out of the unit, facing drastic rent increases, or being asked to pay for major repairs.
Slightly more than two-third of respondents (70%) reported that they have not, as far as they know, experienced discrimination in their rental application. For those that have experienced discrimination, ethnicity appears is the most frequent reason (perceived by the respondent) compared to other factors such as gender, occupation or nationality.
This is most prominent among Indian respondents with 61% (almost two out of every three Indian tenants) answering they have faced such discrimination before. Note also that Indians are the only group where respondents who have faced ethnic discrimination outnumber those that have never experienced discrimination.
Awareness of tenancy rights
Generally, our survey respondents demonstrate high awareness of their rights as tenants. 91% correctly answered that the landlord is responsible for servicing maintenance fees, quit rent and other property-related charges; 81% affirmed that a landlord may not enter the rented premise as they please; 76% thought that landlords have the right to reject a rental application.
Nonetheless, in some scenarios, respondents are more split. For example, 48% felt that the landlord is allowed to sell the property being rented by a tenant while 35% answered negatively. Currently, in the absence of a tenancy protection law, tenants in Malaysia must vacate the unit if/when the landlord sells the property.
32% answered that the landlord has the right to take a tenant’s security deposit for any reason while 59% answered that the landlord does not have this right. Until and unless there is a legislation regulating or prohibiting otherwise, landlords have the final say on deduction of their tenant’s security deposit.
A sizable 26% of respondents believed that landlords are entitled to evict tenants without a reason while the majority (65%) answered the contrary and 9% unsure. In Malaysia, landlords do have the ability to evict tenants but they are required under Section 7(2) of the Special Relief Act to obtain a court order before they can remove an existing tenant.
Home ownership remains an aspiration for many
Owning a home is still a long-term aspiration for nearly two-thirds (65%) of respondents. When broken down by income, the highest percentage of respondents who plan to buy a house come from households earning RM11,001-RM15,000 monthly (82%), followed by RM2,700-RM5,000 (68%), RM5,001-RM11,000 (64%), more than RM15,000 (62%) and less than RM2,700 (58%).
Curiously, a substantial 26% of respondents are undecided on whether to buy a house or not in the future. Nearly one out of three respondents in the lowest income group (households making less than RM 2,700 monthly) are unsure about their plan to buy a house, arguably due to it being a greater financial undertaking for them.
Although a majority of renters surveyed indicated that they plan to buy a house in the future, 68% say they plan to continue renting until they feel prepared to settle down in a particular location. Planning to rent until the right location for home ownership presents itself is the top reason across all income groups except the lowest income group who plans to continue renting more for affordability and job security reasons.
23% of respondents – not a small number – plan to rent long-term instead of buying a house. Interestingly, respondents appear to be more open to long-term renting as their income rises. Only 18% and 17% of respondents who earn less than RM2,700 and between RM2,700 and RM5,000 respectively say they plan to rent long-term. In contrast, the percentage of respondents who plan to rent long-term ranges and who earn more than RM5,000 a month ranges from 23% to 30%. Renting long-term rather than owning one’s home may be comparatively more attractive for higher-income earners rather than lower-income earners due to the range of rental units available in higher brackets as well as the range of other assets and investments for those with more capital.
What renters want: Preferences and policies
We asked respondents what factors would increase the likelihood of them renting long-term instead of buying a house to live in. Interestingly, the top two factors cited by respondents are ‘pull’ factors. 77% of respondents say they would consider renting long-term if there were more protective regulations for tenants such as anti-discrimination laws, safe guarantee of security deposits and clearly-defined tenant rights. 73% of respondents say they would consider long-term renting if there were more affordable renting programmes, for example more units of public rental housing, provision of rental subsidy or rent stabilisation measures.
The third most-cited factor, on the other hand, is a ‘push’ factor. 65% of respondents say they are more likely to rent if buying a property at their preferred location becomes too expensive. It is noteworthy that these three factors were cited as the topmost factors across all income groups.
We also asked respondents what policy ideas should be prioritised by the government to improve the rental market. Most respondents prioritise affordability-related schemes.
The top three policy actions chosen by the respondents are stabilisation of rental rates (51%), building of more public housing or social housing for rent (50%) and rental subsidy for B40 and M40 households (41%). Preventing discrimination in rental applications is also important, chosen by 38% of respondents.
Somewhat to our surprise, only 16% of respondents prioritise the creation of a third-party body to manage tenants’ security deposit, which is among the most contentious suggestions in the proposed Residential Tenancy Act by the Ministry of Housing and Local Government (KPKT).
Implications for policymakers
The key findings of this survey highlight several important points. Firstly, location plays a highly important role in one’s decision to buy or to continue renting a house. Numerous affordable housing schemes may have overlooked, or at least underestimated the importance of this consideration compared to affordability.
In terms of policy, affordability-centric diagnoses can overprescribe the expansion of easy access to financing to solve the housing predicament. If location matters – as underscored by this survey’s respondents – then more easy financing schemes alone will not be effective in increasing the take-up rate of newly-built houses. This could explain the initial low take-up rate of PR1MA homes which were largely built in remote and non-strategic locations as well as the general overhang in the ‘affordable’ housing price range in the housing market today.
Secondly, while home ownership is still a popular aspiration, there appears to be some appetite for long-term renting provided that certain policies and schemes are in place. Renting as an option to meet housing needs can grow in appeal if tenants receive greater protection particularly in terms of rental affordability, stability and security. Also important is to enact measures to curb discriminatory practices in rental application processes. The establishment of a character database which rates for trustworthiness and fairplay could discourage landlords from discriminating (and other bad behaviour) as well as incentivise renters to be dependable tenants.
Thirdly, attention must be directed towards alleviating cost-burdened renter households, which are largely made up of those earning below RM5,000 monthly. Perhaps owing to financial constraint, this group also appears to face relatively higher living density in their homes as many of them reside with at least 5 other co-residents. Greater policy attention must be oriented towards increasing the supply of affordable rental housing and designing them in accordance with decent urban liveability.
Finally, the rights of tenants as well as mechanisms to resolve landlord-tenant disputes need to be clearly spelled out in a comprehensive legislation. We recommend that such legislation i.e. the proposed Residential Tenancy Act will focus on clarifying existing ambiguities surrounding tenant rights to minimise landlord-tenant disputes, exploitation or discrimination. This is particularly true for two matters: whether a landlord can deduct or withhold security deposits for any reason, and safeguards for current tenants when a landlord chooses to sell the house which is being rented out. Elucidation of these rights will provide greater financial and tenure security for tenants.
Conclusion
This article concludes the three-part Room for Rent series. In part one, we began the series by outlining Malaysia’s longstanding, single-minded policy focus on home ownership as well as conducting a preliminary survey to explore housing modes and aspirations among Malaysians. In part two, we explored three key approaches that the government can emulate to empower the Malaysian rental market. In part three, we probe renters’ views and preferences to better understand renting norms, insecurities and perceptions among current and former tenants.
We believe that it is timely for policymakers to shift greater attention to renter-households and the rental market. Renter-households make up approximately half of B40 households in Klang Valley and they receive little policy attention. This is in contrast to the many government programmes which seek to boost home ownership. Pro-renting policies and home ownership policies is not a zero-sum question; both need to receive due consideration for as long as home ownership remains out of reach due to affordability reasons or renting remains the only feasible option for households who live in strategic, central locations.
It is our hope that this topic receives greater deliberation among policymakers, researchers and the public alike. While the proposed Residential Tenancy Act is an encouraging step, the lack of clarity and certainty with regards to its contents and implementation timeline is disconcerting at a time when local rental demand is surging and other countries are reporting record-breaking rent hikes.
Therefore, we hope the government maintains its commitment to table this much-needed act as soon as possible, with appropriate consultations with stakeholders and policy experts, for the sake of many tenants who are facing a rising cost of living. The introduction of new policies and schemes to protect renter-households and strengthen the rental market is timely and appropriate to address the circumstances of our times.
Household Income & Basic Amenities Survey 2019, Department of Statistics Malaysia
Household Income & Basic Amenities Survey 2019, Department of Statistics Malaysia
The percentage of income for cost-burdened renters increases to 45% when transportation costs are included.
In early August, a number of delivery riders under the banner of Food Delivery Blackout gathered at Grab headquarters to submit a memorandum demanding better compensation and working conditions. At around the same time, Capital A (the parent company of AirAsia Super App and AirAsia Food) announced that it will offer formal jobs to an unspecified number of its delivery riders with a minimum of RM3,000 monthly salary and full-time benefits. A few days later, the Transport Minister remarked on mandatory licensing for delivery riders, drawing vehement criticism from delivery rider group Penghantar for potential over-regulation.
The plight of delivery riders has gained much more exposure in recent years, a reflection of their role and importance in urban Malaysian life today. In tandem, the plight of delivery riders is also becoming increasingly important to political parties, with various representative groups attracting cross-partisan interest from UMNO and PKR. Perhaps, as a result, the government via the Transport Ministry is giving representative groups space to share their concerns on delivery fares and social protection.
All this attention is to the good. Nevertheless, the policy analysis and responses that have been proposed so far have been, in our view, rather disappointing. As pointed out in a recent article, there is no clear consensus amongst delivery riders themselves whether they want to be considered as formal employees – one of the ‘solutions’ that have been proposed. The bigger picture currently not being addressed, in our view, is the nature of gig work itself and how our policies on employment classifications and benefits need to evolve accordingly.
Tackling the root problem
Globally, gig workers are increasingly dissatisfied with their end of the bargain. And countries across the globe have taken differing policy approaches in attempting to provide some measure of labour protection and to ensure fairer labour terms.
It is increasingly evident that there is no way to ensure decent work for gig workers without clarifying their employment classification. If Malaysia intends to maintain the status quo of keeping them as independent contractors, a comprehensive universal safety net would be required to ensure adequate social protection for gig workers (and indeed, all workers). Without a universal safety net, labour laws and benefits that are designed with full-time formal employment in mind will exclude gig workers who do not meet the employment definition.
Why not reclassify gig workers as formal employees with full-time benefits? This approach would be viable only if all gig workers work full–time with one particular gig platform. However, this is hardly the reality. Not all gig workers are the same. Our 2019 study found that gig workers were almost evenly distributed between full-timers and part-timers, and both types of gig workers view gig work as an important income source. Perhaps more importantly, the majority of gig workers according to our study have a strong preference for job flexibility.
Reclassifying all gig workers as formal employees risks curtailing their job flexibility and may produce unintended consequences. As seen in Germany, Spain and most recently the Netherlands, some gig platforms have ceased country operations entirely after formal employment classification was imposed, rendering their business models unsustainable.
The all-or-nothing approach of classifying gig workers either as independent contractors or formal employees carries risks from two extreme ends: on the one hand, classifying as independent contractors means leaving gig workers vulnerable to algorithms and working conditions that are highly influenced by gig platforms’ practices. On the other hand, classifying gig workers as formal employees would increase the cost of doing business without necessarily improving their working conditions or preserving their jobs.
Policymakers need to develop a new employment classification. Our cross-country comparison of gig worker policies shows a few country experiences we can learn from and to this end, we suggest a new worker category known as a dependent contractor to capture the unique nature of gig work. This new classification would allow the government to prescribe labour provisions for gig workers based on the labour power dynamics inherent in gig platforms.
Note: More on this, and on worker benefits in our current age of job informalisation, can be read in our Fair Work Act proposal.
Regulatory sandbox needed to facilitate regulatory innovation
We’ve seen what happens when significant policy decisions – such as imposing blanket full-time employment classification – are meted out on gig ecosystems. Customisation and evolution from our current policy paradigms is required to balance job flexibility with worker protection.
Therefore, for a feasible duration, we fully support a policy environment of trialling and flexibility for regulators in developing a better employment classification for gig workers. As a way of navigating this uncharted policy territory, we propose the creation of a regulatory sandbox to negotiate and formalise the structure, scope and terms for a proposed National Employment Status Test, which would ultimately lead to an employment classification for gig workers that is fit for purpose.
What is a regulatory sandbox? A regulatory sandbox refers to a controlled environment under regulatory supervision which is typically used for testing new products, services, business models and delivery mechanisms in the financial sector.
We have seen similar initiatives undertaken in other countries to spur regulatory innovation for protecting gig workers. In Denmark, a gig platform Hilfr and Danish union 3F collaborated to test a new classification method that automatically recategorises qualified gig workers as employees with some employment benefits, and an opt-out option to remain self-employed. And in mid-2022, Uber and the Transport Workers Union signed a joint Statement of Principles to call for legislating an independent body for studying and reforming the rights and conditions of gig workers in the transportation and food delivery sectors. A local example would be the regulatory sandbox to provide a regulatory environment for financial technology established by Bank Negara Malaysia in 2016.
We believe that the Ministry of Human Resources (MOHR) is well positioned to set up a regulatory sandbox for re-classifying gig workers, where novel regulatory approaches like the National Employment Status Test can be developed and tested. The government can spearhead the regulatory sandbox with the participation of key stakeholders to conduct studies and policy experiments within a set time.
The shift away from formal full-time employment to flexible hour gig work marks a significant, perhaps enduring, change in contemporary work culture. Emerging labour trends, including flexible work, remote working and digital nomadism, are creating new challenges for labour laws that were formulated in the past prior to its existence.
We have arrived at a policy juncture where the government must decide between two policy approaches: a wait-and-see strategy with incremental policy shifts, or a structured trial-and-error approach to seeking new regulatory innovations. We believe that the latter is a more progressive, forward-looking policy approach in embracing the future of work to ensure decent work for all.
* This article first appeared in the Malay Mail on 29 August 2022.
Email us your views or suggestions at editorial@centre.my
The importance of a skilled workforce has been well established and every year, the government sets aside substantial investments to fund a range of training programmes and institutions, as covered in our primer. But this supply-driven approach needs to be complemented by an understanding of barriers faced by low-income workers and school leavers in accessing these opportunities. This editorial looks at Malaysia’s skills development policies and suggests the need for a new policy direction.
Current approach and policy gap
Traditionally, the government plays the role of training provider in the skills development system e.g. they build infrastructures and invest public funds to expand the range of course programmes and training institutions. There were 662 public training institutions in Malaysia recorded in December 2020, including 22 state-administered institutions.
Despite heavy investments on infrastructure and funds to accelerate skills development, the returns have been less than satisfactory. Accessibility remains an issue faced by those who want to reskill and upskill. Our 2020 survey on non-graduate delivery riders revealed that more than half of those interested in reskilling do not know where or how to access the training courses. Respondents also reported facing a lack of support to identify skills courses best suited to their needs and preferences. They would like to receive career advice and guidance, but there are few offerings on the ground.
Simply adding more programmes and institutions does not help workers to overcome access barriers. What they need are tools to support and facilitate their ability to plan their careers and navigate the skills development system.
From training provider to career facilitator
Making skills development accessible goes beyond providing training programmes. What we have found in our research, which is echoed by a report from Brookfield Institute, is that workers require support for job transitions. In contemporary society where jobs are becoming more precarious, rapid and frequent career transition can be expected to be increasingly common.
Is there a significant difference between a training provider and a career facilitator? We argue that they emphasize distinct policy goals: the former seeks to ensure adequate supply of training avenues and resources, while the latter focuses on helping workers to identify appropriate opportunities and provide the necessary support to assist them in realizing those opportunities.
As a career facilitator, the government can implement measures such as information organisation, course curation, simpler financial aid options, and career counseling and guidance. This shift in policy perspective helps workers overcome access barriers at two levels: firstly, by helping them to identify career or job transition opportunities relevant to their interests, needs and preferences. Secondly, by enhancing their chances to realize those opportunities via recommending appropriate reskilling or apprenticeship programs, together with supportive measures such as income replacement stipends.
Countries such as Singapore, Canada, the United Kingdom, Sri Lanka, and the United States have implemented examples of such policy measures. The figure below describes a few policy interventions that could be game-changers for Malaysia’s workers, especially workers from lower-income bands (Figure 1).
Figure 1: Facilitative Skills Development Policy Interventions
Conclusion
Frequent and rapid job transition is expected to be more common in contemporary Malaysian society. Providing reskilling courses is only one aspect of skills development, and the government can help workers overcome accessibility barriers through policy innovations such as those outlined above.
At the time of writing, skill-related underemployment has become a looming labour market concern in Malaysia. The Department of Statistics Malaysia (DOSM) reported that more than one-third of tertiary-educated employed persons work in semi-skilled and low-skilled jobs in the first quarter of 2022, as they lack the skills needed to fill the high-skilled positions. Many non-graduates, (and graduates too) have turned to informal gig work for livelihood, as the formal jobs available do not pay enough to make ends meet.
To ensure social mobility for all in this era, policymakers must go above and beyond to support everyone to access available reskilling opportunities, particularly those from less privileged backgrounds. We call on policymakers to begin addressing accessibility barriers by embracing the role of career facilitators for workers in need.
Like others across the world, the Malaysian government scrambled to put together a response to the economic fallout brought about by the spread of COVID-19. In addition to a series of direct cash transfers and financial incentive programmes, EPF withdrawals, initially seen as a one-off response to help people deal with cash flow problems, became an integral measure to deal with the economic crisis.
In total, the country has seen four rounds of withdrawals. And during each round, experts – as well as the EPF itself – warned that the measure could accelerate a retirement crisis in Malaysia. Such concern is compounded by the fact that the current social security framework is unable to support the needs of the Malaysian population, which is predicted to become an ageing society in less than 9 years.
What then, we ask, are those who will be vying for public office in the coming 15th General Election planning to do to mitigate the impending crisis? What policy ideas, if any, can we expect in their manifestos to support the life in retirement of millions of Malaysians who have depleted their savings?
The cost of EPF withdrawals
While the EPF withdrawals have been a lifeline for some citizens running short on cash, they were unprecedented measures with long-term implications. For the first three rounds of withdrawals, the Ministry of Finance (MoF) reported that more than half (58%) of EPF members under the age of 55 years old withdrew their money, amounting to RM 101 billion.1 MoF also revealed that 70% of EPF members aged 55 and below do not have sufficient funds to retire above the poverty level. These figures are likely to have worsened after the fourth withdrawal.
On an individual level, we estimate that an average EPF member who fully utilised all four withdrawal opportunities (assuming that they withdrew the maximum amount allowed in each round) had cumulatively withdrawn anywhere between RM 31,000 to RM 81,000 of their retirement savings (see table 1).
Table 1: Estimate of cumulative EPF withdrawals per person
To put these numbers into perspective, as of December 2020, the median savings of EPF members under 55 years old is RM 18,785 while for those on the cusp of retirement (age group 50-54 years old), the median savings is RM 39,585. Even when we take the conservative estimate (RM 31,000) for cumulative withdrawal, the four withdrawals have wiped out at least 77% of an average EPF member’s savings.
Assuming that the average EPF member earns the national median salary of RM2,062, saves 10% of her monthly salary and receives employers’ contribution of 12-13%, it would take approximately 6 years to replenish her retirement savings back to pre-2020 levels. For workers earning the minimum wage (RM1,500), it would take 8 years. It would take even longer to replenish that savings for those who are self-employed, informal workers, and other groups who are not receiving, or will no longer receive, employers’ contribution. That is precisely why withdrawals hit those earning low pay the most : the less you earn, the longer you have to work to make up for the depleted amounts.
1 In a written reply in the Dewan Rakyat, the Ministry of Finance also said that out of the total members under the age of 55, as at December 31, 2021, some 6.1 million members or 48% have savings balance of less than RM10,000 in their EPF accounts, which equivalent to a retirement income of less than RM42 a month for 20 years.
For others who also allowed early pension withdrawals, similar policy dilemmas
Early access to retirement savings to deal with COVID is not a unique occurrence to Malaysia. A number of countries have done it to cope with the economic shock brought about by the pandemic, including Australia, the United States, Chile, Peru, South Africa, and Portugal.
While there are variations in how the countries designed their withdrawal policies, the adverse impacts of their implementation were well forewarned by their critics; including, among others, the lack of security in old age, reduced returns from annuities from investment of the retirement funds, as well as retirement inequality. Studies in some of those countries conducted in the past 1-2 years, explaining the consequences of depleting people’s retirement savings prematurely, can serve as an indication of things to come in Malaysia, if appropriate measures are not taken to mitigate the impact of the EPF withdrawals.
In Australia, where two rounds of superannuation withdrawals of up to AUD20,000 were approved by the Federal Government in 2020, a study found that most withdrawers thought about the decision for less than a week and did not fully understand the long-term consequences of their choice. The fault lies in a very low-friction withdrawal process (similar to Malaysia’s) which reduced the physical and mental load of making an application, leading to a massive shift in people’s mindset regarding access to their retirement savings – what used to be almost unthinkable now enjoys the government’s endorsement. If scenes of political leaders pushing and claiming credit for the approval of the latest round of the EPF withdrawal in Malaysia were anything to go by, the country’s policymakers have their work cut out to address any signs of the normalisation of dipping into retirement funds to deal with future crises.
Meanwhile, in Chile, where three early pension withdrawals have been allowed by the government, researchers estimate that for a 10% release, each dollar prematurely withdrawn brings losses of 1.59 dollars in future retirement savings and reduces monthly pension benefits by 7.26%. They argue that early access raises income inadequacy and inequality in retirement, and that government expenditure will have to be increased to counteract these effects for retirees. In Malaysia, similar concerns arise as B40 and M40 groups have a higher rate of withdrawals compared to the T20 group, which means that the former’s post-retirement financial wellbeing is at a greater risk than the latter’s.
Time to anticipate and mitigate
We have discussed above, drawing lessons from elsewhere, some of the potential consequences of the early EPF withdrawals to Malaysia. There will no doubt be more, and so we believe that now is the time to convene a serious conversation about what measures can be taken to mitigate them. And we believe that since GE15 is just around the corner, the conversation should be driven by those who will be seeking to govern the country.
To contribute to (and perhaps to help kickstart) their deliberation, we offer five broad recommendations as food for thought:
Recommendation 1: Adapting to an ageing workforce
As we transition to become an ageing society, consider ways to incentivise and support workers to extend their working lives. This may include phased retirement arrangements, flexible retirement rather than a strictly chronological one, and a framework for healthy pathways to retirement (HPTR). It is crucial that these policy instruments not only facilitate longer working lives, but also benefit people’s life in retirement when it eventually comes.
Recommendation 2: Strengthening the country’s social protection framework
To ensure that all Malaysians will be protected from future economic shocks, political parties ought to work towards proposing measures to expand social protection in the country. This means investment in social infrastructure and services including care services, elderly housing, healthcare, and career support to create age-friendly societies. We also need to broaden coverage to those who are self-employed and in informal work.
Recommendation 3: Close monitoring of impact of early withdrawals
Political parties ought to propose mechanisms to monitor and assess the long-term impacts of retirement savings’ depletion. For example, there should be studies on whether participants who withdrew their savings have subsequently begun to replenish their retirement accounts, and longitudinal monitoring of the financial wellbeing of EPF members below a certain minimum amount of savings. The government through the Social Protection Council (MySPC) would be wise to collaborate with academics, think tanks, and researchers to conduct a series of studies on this. Funding, grants, and access to databases such as PDPS and EPF memberships would be welcome to meet this objective.
Recommendation 4: Incentivising gradual disbursement of retirement savings
Alongside safeguarding the people’s savings from being further used for purposes other than their retirement, parties can consider advocating for a more gradual disbursement of retirement savings, though its mechanism needs to be fair to the EPF members. Given that 71% of members aged 55–60 opt for lump-sum withdrawals of their pension savings upon retirement and 50% exhaust their savings within five years, it might be timely to incentivise staggered withdrawals.
Recommendation 5: Promoting social pension for those most in need
In contrast to EPF which is a private retirement scheme based on defined-contribution, social pensions are flat rate benefits (which can be targeted or universal) financed out of general revenues. Parties can use this instrument to reduce poverty and secure a minimum income for the elderly. One way to do this in Malaysia is to greatly expand the coverage of the existing Bantuan Warga Emas which provides a monthly cash payment of RM500 to the elderly who are living below the poverty line. Social pensions have been demonstrated to be effective in reducing poverty and improving health among older people in China, Vietnam and the Philippines.
Concluding thoughts
As only 3% of its members can afford to retire according to EPF, there is a great deal of uncertainty affecting the long-run financial security of Malaysians in retirement. Understanding the root causes of disparities in retirement savings and retirement security is important in order to design policies for the future. We believe that demonstrating such understanding and offering such policy ideas will propel those aspiring to get elected to the forefront of the country’s political discourse in the runup to GE15.
Kemampuan pemilikan rumah merupakan sebuah isu yang sentiasa dihadapi warga Malaysia, terutamanya golongan belia. Permasalahan ini telah kerap dibincangkan, antaranya dalam sebuah primer terbitan The Centre tahun lepas. Satu fakta penting yang patut diulangi di sini ialah peningkatan jurang antara harga rumah median dan pendapatan tahunan median isi rumah – yang telah mengganda sebanyak hampir tiga kali dari tahun 2002 hingga 2019.
Namun begitu, kerajaan Malaysia alih-alih terus menggalakkan pemilikan rumah. Kebanyakan dasar berkaitan perumahan – daripada subsidi pinjaman rumah kepada projek berskala besar biayaan kerajaan seperti PR1MA – bertindak meningkatkan penawaran rumah untuk dijual dan memudahkan pemilikannya, lebih-lebih lagi bagi generasi muda.
Walaupun begitu, dengan masalah gaji stagnan yang berleluasa dan paras hutang isi rumah yang telah meningkat, wajarkah pemilikan rumah masih dijadikan tumpuan utama dasar perumahan kerajaan? Atau haruskah lebih banyak tumpuan dasar diberikan kepada golongan yang tidak mampu membeli rumah (mereka yang hanya mampu menyewa) seperti Akta Sewaan Kediaman yang telah dicadangkan beberapa tahun ini? Dan mungkinkah terdapat peralihan dalam aspirasi perumahan ke arah menyewa secara jangka panjang terutamanya dalam kalangan belia sekiranya lebih banyak insentif dan perlindungan penyewaan diperkenalkan?
Persoalan-persoalan inilah yang tersemat dalam fikiran kami sewaktu kami memulakan siri kajian baharu ini untuk mendalami aspirasi perumahan anak muda Malaysia. Kami ingin memahami faktor penolak dan penarik yang berkait dengan penyewaan dan pemilikan rumah. Kami juga berhasrat untuk mengesyorkan dasar-dasar yang sepadan dengan pembentukan sebuah masyarakat adil merangkumi kedua-dua golongan penyewa dan pemilik rumah.
Dalam keluaran pertama siri kajian ini, kami meneliti perbezaan lanskap antara pemilikan dan penyewaan rumah di Malaysia, dan membentangkan dapatan daripada sebuah tinjauan awal berkenaan aspirasi perumahan.
Pemilikan rumah dan dasar perumahan di Malaysia
Pemilikan rumah merupakan mod lazim perumahan di Malaysia dan juga di banyak negara lain. Survei Pendapatan Isi Rumah dan Kemudahan Asas 2019 menunjukkan bahawa kadar pemilikan rumah di Malaysia agak tinggi, secara relatif, dan telah meningkat, meskipun secara perlahan, dari 72.5% pada 2010 ke 76.3% pada 2016, dan 76.9% pada 2019.
Dalam konteks Asia Tenggara, kadar pemilikan rumah di Malaysia bukanlah sesuatu yang aneh; hanya Filipina mempunyai kadar pemilikan yang lebih rendah iaitu 64.1% (2019). Jiran-jiran ASEAN yang lain seterusnya mempunyai kadar yang lebih tinggi seperti Thailand (77.4%, 2010), Indonesia (81.1%, 2021), Myanmar (85.5%, 2014), Vietnam (88.1%, 2019) dan Singapore (88.9%, 2020).
Kadar pemilikan rumah di Malaysia dan negara-negara ASEAN boleh dianggap tinggi berbanding negara-negara maju seperti Amerika Syarikat (65.5%, 2021), United Kingdom (65.2%, 2018), Jepun (61.2%, 2018), Jerman (50.4%, 2020), dan Perancis (64.0%, 2020). Di Switzerland, kadar pemilikan rumah hanyalah 42.3% pada tahun 2020!
Sejak tahun 1960-an, kerajaan telah menumpukan perhatian ke arah menyediakan tempat tinggal bagi isi rumah berpendapatan rendah terutamanya yang menetap di kawasan bandar. Perumahan kos rendah biayaan awam seperti Projek Perumahan Rakyat (PPR) membenarkan isi rumah-isi rumah berpendapatan rendah untuk menyewa atau membeli rumah pada harga yang disubsidikan.
Setelah Dasar Ekonomi Baru dilaksanakan pada tahun 1970, kuota 30% Bumiputera bagi jualan stok perumahan baharu, dan diskaun 5 peratus Bumiputera, telah diperkenalkan untuk menggalakkan penghijrahan bandar dan pemilikan rumah dalam kalangan komuniti tersebut.
Dengan pertumbuhan kelas menengah yang pesat di Malaysia, semakin bertambah permintaan terhadap rumah mampu milik, yang didorong juga oleh persekitaran harga rumah tinggi dan kos sara hidup yang makin meningkat. Lantaran itu, dasar kerajaan mulai beralih sepanjang dua dekad yang lepas – meningkatkan penawaran dan pemilikan rumah mampu milik dalam kalangan keluarga berpendapatan menengah, bukan sahaja isi rumah yang berpendapatan rendah.
Selain meningkatkan penawaran rumah ‘mampu milik’ melalui program-program baharu seperti PR1MA, pelbagai insentif pembiayaan juga diperkenalkan untuk menggalakkan pemilikan seperti Skim Rumah Pertamaku, Skim Perumahan Belia, Kempen Pemilikan Rumah, MyHome dan MyDeposit.
Namun begitu, paras hutang isi rumah didapati telah melonjak tinggi, dari 47% KDNK pada 2000 hingga 93% pada 2020. Berlandaskan paras hutang yang tinggi ini – yang barangkali lebih rendah daripada paras sebenar – kita patut bertanya sama ada penggalakan pemilikan rumah melalui pemudahcaraan pembiayaan masih kekal sebagai suatu ide yang munasabah.
Isi rumah-penyewa ‘tersembunyi’
Kadar pemilikan rumah yang agak tinggi di Malaysia mengaburi suatu fakta penting: sebenarnya terdapat ramai isi rumah yang tidak memiliki rumah di Lembah Klang. Kadar pemilikan rumah di Selangor dan Kuala Lumpur hanyalah 69.7% dan 63.3%, lebih rendah berbanding kadar purata kebangsaan 76.9% (Rajah 1).
Gambaran ini bertambah serius apabila data dipecahkan menurut pendapatan isi rumah. Hanya 52.5% dan 45.3% isi rumah B40 di Selangor dan Kuala Lumpur memiliki rumah mereka, berbanding 73.1% isi rumah B40 di peringkat kebangsaan (Rajah 2).
Situasi tampak serupa bagi isi rumah M40 di Lembah Klang; hanya 65.4% dan 51.2% isi rumah M40 di Selangor dan Kuala Lumpur yang memiliki rumah. Sebaliknya, kadar pemilikan rumah M40 di seluruh negara adalah 75.5%.
Jurang pemilikan rumah antara isi rumah di Lembah Klang dan isi rumah di seluruh Malaysia mulai merapat pada lapisan pendapatan tinggi. 87.0% isi rumah T20 di Malaysia memiliki rumah, tidak jauh beza daripada 86.6% isi rumah T20 di Selangor dan 77.9% di Kuala Lumpur.
Justeru, data menunjukkan sebilangan besar isi rumah B40 dan M40 di Lembah Klang yang menyewa berbanding di seluruh negara. Barangkali ramai yang menyewa disebabkan ketidakmampuan untuk membeli rumah di lokasi-lokasi yang diinginkan. Namun, adakah kemungkinan terdapat juga faktor-faktor lain?
Demi mendapatkan gambaran lebih lengkap tentang corak-corak penyewaan dan penentu-penentunya, kami telah bekerjasama dengan syarikat penyelidikan pasaran Dattel untuk menjalankan sebuah tinjauan pendek pada Januari 2022 yang merangkumi 809 responden dari kawasan-kawasan bandar di seluruh negara.
Siapa yang menyewa?
Geografi
Tinjauan pendek kami pada Januari 2022 mendapati corak yang serupa dengan data pemilikan rumah DOSM 2019, walaupun kurang memaparkan perbezaan ketara antara wilayah disebabkan ukuran sampel kami yang tertumpu pada pusat-pusat bandar.
Hasil tinjauan menunjukkan bahawa lebih ramai yang menyewa di Lembah Klang (41.0%), negeri-negeri Selatan Semenanjung (38.4%) dan Malaysia Timur (35.1%). Ini diikuti oleh mereka di negeri-negeri Timur Semenanjung (27.3%) dan Utara Semenanjung (26.6%). Di semua wilayah kecuali Utara Semenanjung dan Timur Semenanjung, peratus responden yang menyewa adalah lebih tinggi daripada peratus responden yang menetap di rumah milik sendiri.
Dari segi pemilikan rumah, peratus tertinggi yang memiliki rumah dilihat dalam kalangan responden Utara Semenanjung iaitu 37.3%, diekori oleh Timur Semenanjung (34.9%), Selatan Semenanjung (31.7%), Lembah Klang (29.3%) dan Malaysia Timur (24.0%).
Responden yang tinggal bersama ibu bapa atau keluarga berjumlah agak besar di semua wilayah, dari 26.3% di Selatan Semenanjung hingga ke 36.6% di Malaysia Timur.
Umur
Tidak mengejutkan bahawa lebih ramai golongan muda yang menyewa berbanding golongan yang lebih tua. 38.9% responden berumur 20-29 tahun sedang menyewa, disusuli dengan golongan berumur 30-39 tahun (35.4%) (Rajah 4).
Suatu lagi pemerhatian menarik adalah terdapat sejumlah golongan tua, yang berumur antara 40 hingga 59 tahun, yang sedang menyewa. Tinjauan ini mendapati 34.1% dan 25.9% responden berumur 40-49 dan 50-59 tahun yang sedang menyewa buat masa ini, satu angka yang agak signifikan.
Sebilangan besar responden muda pula tinggal bersama keluarga atau ibu bapa mereka. Golongan ini merangkumi 45.8% dan 31.2% responden berumur 20-29 dan 30-39 tahun, berbanding 20.2% dan 5.8% daripada responden berumur 40-49 dan 50-59 tahun. Ramai juga golongan warga emas yang berumur 60-69 tahun yang tinggal bersama ahli keluarga mereka (18.6%), mungkin atas faktor usia lanjut dan penjagaan.
Kadar pemilikan rumah didapati meningkat bersama usia, sesuatu yang dijangka. Peratus responden yang tinggal di dalam kediaman milik sendiri adalah 42.8% bagi kumpulan umur 40-49 tahun, 60.7% bagi 50-59 tahun, dan 67.6% bagi 60-69 tahun, berbanding 12.2% dan 30.5% bagi golongan 20-29 dan 30-39 tahun.
Sebab-Sebab Utama Menyewa
Sebab terutama bagi seseorang untuk menyewa adalah ketidakmampuan membayar kos pendahuluan, meliputi 44.5% responden penyewa (Rajah 5). Namun begitu, ramai juga yang menyatakan lokasi sebagai faktor utama menyewa, iaitu 23.9% daripada kumpulan responden penyewa.
17.2% pula memilih sebab ketidaklayakan untuk mendapatkan pinjaman perumahan manakala 7.2% responden penyewa menyatakan bahawa mereka memilih untuk menyewa atas sebab fleksibiliti.
Ketidakmampuan membayar bayaran muka merupakan sebab terjelas merentasi kumpulan umur, kecuali kumpulan 40-49 tahun (Rajah 6). Faktor lokasi pula menjadi faktor besar bagi kumpulan umur 30-39 dan 40-49 tahun berbanding kumpulan-kumpulan yang lain.
Ketidaklayakan mendapatkan pinjaman perumahan bukanlah sebab utama bagi semua golongan lalu mempersoalkan kewajaran pengenalan dasar-dasar yang meringankan syarat kelayakan pinjaman perumahan. Fleksibiliti pula merupakan sebab tersorot bagi semua kumpulan umur walaupun ia agak penting bagi kumpulan umur 50-59 tahun (ini mungkin disebabkan oleh ukuran sampel penyewa yang kecil dalam kumpulan umur ini).
Sementara ketidakmampuan membayar bayaran muka adalah sebab yang paling sering dipetik di semua wilayah (36.2% hingga 48.4%), faktor lokasi juga memainkan peranan penting bagi keputusan untuk menyewa di Lembah Klang (30.7%) dan Malaysia Timur (25.1%) (Rajah 7). Ketidaklayakan mendapatkan pinjaman perumahan juga menjadi faktor signifikan di Selatan Semenanjung (25.2%) dan Timur Semenanjung (28.5%), berbanding wilayah-wilayah lain.
Agak menarik bahawa fleksibiliti merupakan sebab ketara untuk menyewa di Utara Semenanjung (14.2%) dan Malaysia Timur (14.1%). Salah satu kemungkinan adalah responden-responden dari wilayah-wilayah ini tidak berhasrat untuk menetap secara jangka panjang di situ dan berniat untuk berpindah ke kawasan lain, barangkali kawasan bandar yang lebih maju, pada masa hadapan.
Aspirasi Perumahan Masa Hadapan
Secara keseluruhan, 44.3% responden mempunyai aspirasi untuk membeli rumah masing-masing manakala 27.4% berhasrat untuk terus menetap dalam rumah yang sudah dimiliki. 12.7% responden pula merancang untuk terus tinggal bersama ibu bapa atau keluarga mereka manakala 12.0% ingin menyewa secara jangka masa panjang.
Aspirasi untuk memiliki rumah sendiri adalah lebih tinggi dalam kalangan responden muda iaitu 59.7% dan 46.0% dalam kalangan 20-29 tahun dan 30-39 tahun, disusuli oleh 40-49 tahun (38.0%) (Rajah 8). Kadar ini mulai turun bagi responden berumur 50 tahun dan ke atas, iaitu 13.5% dan 8.3% bagi 50-59 tahun dan 60-69 tahun – ini tidak mengejutkan memandangkan terdapat kadar pemilikan rumah lebih tinggi dalam kalangan golongan lebih berumur.
Justeru, tidak mengejutkan bahawa peratus responden yang ingin terus tinggal di rumah sendiri adalah lebih tinggi dalam kalangan kumpulan yang lebih berumur iaitu 70.6% dan 65.6% bagi responden berumur 60-69 dan 50-59 tahun. Kadar ini jatuh kepada 38.5% bagi responden 40-49 tahun, diikuti oleh 30-39 tahun (24.8%) dan 20-29 tahun (6.7%).
Menyewa secara jangka panjang bukanlah pilihan popular dalam kalangan responden muda berbanding responden lebih tua, sesuatu yang kami anggap mengejutkan. Pilihan ini hanya dipilih oleh 12.4% dan 13.7% responden berumur 20-29 dan 30-39 tahun. Sekumpulan besar responden berumur 50-59 tahun juga berhasrat untuk menyewa secara tetap (18.3%).
Kami melihat bahawa kecenderungan untuk memiliki rumah sendiri juga terlihat di semua wilayah. Para responden yang mempunyai rancangan untuk membeli rumah atau sambung menetap di rumah sendiri berkadar 69.1% hingga 78.2% merentasi semua wilayah (Rajah 9).
Trend yang lebih kurang sama juga diperhatikan mengikut kategori jantina. Namun, suatu pemerhatian yang menarik adalah peratus responden lelaki yang berniat untuk menyewa secara jangka panjang adalah lebih tinggi (14.9%) berbanding responden wanita (9.0%) (Rajah 10).
Penutup
Kewujudan dasar-dasar yang mengutamakan pemilikan rumah adalah suatu perkara yang lazim, terutamanya di negara-negara Asia. Salah satu sebab adalah kebarangkalian peningkatan harga rumah jangka panjang, yang dikenali sebagai kesan kekayaan ketara (tangible wealth effect). Masyarakat-masyarakat Asia juga secara tradisinya melihat pemilikan rumah sebagai sebuah barang kedudukan (positional good), iaitu sesuatu yang menawarkan kedudukan sosial tinggi kepada pihak pemilik. Dari sudut pandang pembuat dasar, pemilikan rumah juga menyumbang kepada kestabilan sosial dan pertapakandi sesebuah negara atau negeri.
Namun begitu, dasar yang menitikberatkan pemilikan rumah selama ini juga mengandungi beberapa masalah. Tekanan dari masyarakat terhadap pemilikan rumah, di kala harga rumah tinggi dan gaji stagnan, berkemungkinan besar akan meningkatkan paras hutang isi rumah dan stres secara tidak mampan. Kecenderungan ini juga boleh dikatakan mengabaikan dasar-dasar untuk mewujudkan kadar sewa yang mampu dan adil.
Berdasarkan data DOSM dan tinjauan kami, terdapat sebilangan kecil warga Malaysia yang tidak memiliki rumah, mungkin atas sebab kehendak atau keperluan terdesak. Keterujaan menggalakkan pemilikan rumah yang tidak terkawal akan mengabaikan keperluan mereka yang sedang menyewa, dan mungkin mengetepikan perubahan nilai-nilai berkaitan penyewaan jangka panjang di masa hadapan.
Perhatian dasar tidak patut diterhadkan kepada hanya “menaiktaraf” golongan penyewa menjadi pemilik rumah, terutamanya apabila penyewaan rumah melibatkan lebih ramai keluarga berpendapatan rendah di bandar berbanding kumpulan lain; separuh daripada isi rumah B40 di Lembah Klang sedang menyewa, dan mungkin akan terus menyewa, lalu memerlukan perlindungan sewaan yang lebih kuat. Perhatian juga harus diacukan terhadap memperkasakan kerangka undang-undang dan institusi pasaran rumah sewa – satu keperluan yang telah pun dibangkitkan oleh Bank Negara Malaysia pada tahun 2017.
Kerajaan sudah mula menjadikan hal ini suatu keutamaan. Kementerian Perumahan dan Kerajaan Tempatan telah mencadangkan penggubalan sebuah Akta Sewaan Kediaman untuk mewujudkan undang-undang yang dapat melindungi hak penyewa dan tuan rumah, menyediakan templat sekata perjanjian rumah sewa, dan menyelesaikan pertikaian yang bangkit antara pihak penyewa dan tuan rumah.
Juga menarik bahawa terdapat cadangan untuk menubuhkan suatu badan kerajaan untuk memegang dan menguruskan deposit keselamatan penyewa. Walaupun rang undang-undang ini masih berada di peringkat rundingan (dan telah menerima tentangan hebat daripada pihak pemaju dan sebahagian pemilik rumah antaranya), sudah tiba masanya pihak kerajaan mencampur tangan dalam bidang yang sudah lama diabaikan ini.
Dalam Bahagian 2 siri kajian ini, kami akan merujuk kepada dasar-dasar yang diperkenalkan untuk memudahcara penyewaan rumah sebagai amalan jangka panjang oleh negara-negara lain. Nantikan keluaran seterusnya.
Perlu dinyatakan bahawa kadar pemilikan rumah rasmi di Malaysia meliputi rumah tidak formal, iaitu rumah yang dibina tanpa perintah pembangunan (spt. Rumah-rumah bukan atas tanah milik sendiri atau atas rizab sungai, atau rumah “kampung” dibina masyarakat setempat.) Rumah-rumah seperti ini kerap dilihat di kawasan luar bandar, dan dibina secara tak teratur tanpa mematuhi piawaian dan peraturan perumahan sedia ada. Namun begitu, mereka masih dimasukkan ke dalam data rasmi pemilikan rumah. Hal ini mungkin berbeza di negara lain.
Sumber: Angka 2010, Khazanah Research Institute (2015); Angka 2016, Survei Pendapatan Isi Rumah dan Kemudahan Asas 2016 Jabatan Statistik Negara.
Sumber: Jabatan statistik negara masing-masing.
Sumber: Trading Economics.
Unit Projek Perumahan Rakyat (PPR) boleh disewakan pada RM128 sebulan, atau dibeli pada RM35,000 di Semenanjung Malaysia dan RM42,000 di Malaysia Timur. Calon penyewa atau pembeli perlu memenuhi syarat-syarat kelayakan seperti pendapatan isi rumah tidak melebihi RM3,000 sebulan.
Skim Rumah Pertamaku, diperkenalkan semasa Belanjawan 2011, membenarkan pembeli kali pertama untuk memperoleh pinjaman sebanyak 110% harga rumah tanpa membayar sebarang bayaran muka. Skim ini dijamin oleh Perbadanan Cagaran Malaysia (Cagamas).
Kempen Pemilikan Rumah (HOC), diperkenalkan pada tahun 2019 dan kemudian dilanjutkan ke Disember 2021, bertujuan menggalakkan pemilikan rumah dengan merendahkan kos pembelian rumah. Pemohon yang layak akan menikmati pengecualian duti setem sehingga RM1 juta, pengecualian separa sehingga RM2.5 juta, dan pengecualian Surat Perjanjian Pinjaman bagi hartanah bernilai sehingga RM2.5 juta. Selain itu, pembeli juga boleh menikmati 10% diskaun bagi rumah-rumah tertentu.
Di bawah Skim MyHome, diperkenalkan semasa Belanjawan 2014 dan ditamatkan pada November 2020, kerajaan akan membiayai bayaran muka rumah bagi pihak pembeli yang layak. Skim MyDeposit, berlangsung dari 2016 hingga Oktober 2021, menawarkan rebat 10% harga rumah atau RM30,000, mana yang lebih rendah, kepada pembeli rumah kali pertama bagi rumah bernilai RM500,000 dan ke bawah.
Skim ‘beli dahulu bayar kemudian’ masih belum dikategorikan sebagai pinjaman dan tidak dimasukkan ke dalam statistik hutang isi rumah.
B40, M40 dan T20 merujuk kepada klasifikasi pendapatan isi rumah di Malaysia. B40 mewakili kumpulan 40% terbawah, M40 mewakili kumpulan tengah 40%, manakala T20 mewakili kumpulan 20% teratas.
Renting has been the only viable housing option for many young and lower-income Malaysians but the Malaysian rental market is plagued with a lack of transparency and protection. We take a look at global policy approaches that could make renting better for Malaysians.
In Part 1 of this research series, we highlighted Malaysia’s longstanding policy focus on home ownership against the backdrop of a still significant proportion of ‘hidden renter-households’, or households that do not own their homes, particularly in the Klang Valley region.
The proportion of renter-households may rise in the near future. A recent survey by PropertyGuru found that there is a substantial increase in the Rental Demand Index, suggesting that many home seekers are now opting to rent.
Despite the growing demand for rental units, the Malaysian government has continued to prioritise policies to promote home ownership, including the recent “One Family One House” pledge by the Prime Minister. He has also urged Bank Negara Malaysia to review financing models to ease home ownership among B40 and M40 households.
Compared to home ownership, there is a lack of policy attention on regulating the rental market and encouraging renting as a viable and attractive option.
In this instalment of our research series, we examine pro-renting policies implemented in other countries to see what options Malaysia may consider to strengthen and enhance the rental market. In our assessment, three broad policy tenets or pillars should be undertaken: enacting stronger tenant protection, incentivising rental supply expansion, and adopting rent stabilisation.
Pillar 1: Strengthen tenant protection
The first policy tenet is to strengthen tenant protection. Today, there is inadequate protection for tenants in Malaysia, especially on two major issues.
The first issue is tenure security. Currently, security of tenure in Malaysia lasts only throughout the tenancy duration, which commonly extends to two or three years at most. Upon the tenancy’s expiration, the landlord has the right not to renew the agreement regardless of the tenant’s situation or intention.
In renter-friendly countries such as France, tenants enjoy greater security of tenure. Tenancy agreements last for a longer period – at least three years for individual-owned and six years for institution-owned unfurnished properties. Short agreements are only allowed if the owner has due personal cause to reoccupy the house (for retirement, housing a family member, etc.) While furnished property can be rented out in a one-year contract, the agreement is automatically renewed unless either party gives a termination notice.
Tenants in Malaysia are also exposed to eviction risk in the event of change in ownership of the rented property. If the new owner refuses to honour the tenancy agreement, then the tenant may be forced to evict the property.
While there are a few regulations to protect tenants from unfair eviction – such as Section 7(2) of the Special Relief Act which requires a court order to be obtained before a landlord can remove an existing tenant – tenure security in Malaysia still falls short of the standards in some developed countries.
Landlords in France are only permitted to evict tenants under specific circumstances such as if the tenant abuses their rights or if the landlord wishes to physically reside in the property – even then, the landlord must provide six months’ notice before moving in. Unlike in Malaysia, ownership transfer is not a sufficient reason for landlords in France to evict tenants.
Even in the event that the landlord or owner wants to sell their property, tenants in France still enjoy a decent level of protection. If the owner wishes to sell the property, a right-to-buy priority must first be extended to the tenant. He must also provide a minimum of six-months’ notice to the tenant.
The general process of terminating a tenancy is also highly restrictive. In most cases, tenancy termination requires a minimum of six months’ notice, and only takes effect after the contract expiry. A two-month termination notice period clause may be included in the contract but may only be executed if the tenant fails to pay rent, or fails to obtain a home insurance. Furthermore, under the la trêve hivernale (the winter truce) rule, eviction is forbidden during the winter months.
Germany similarly provides a greater degree of tenure security compared to Malaysia. Landlords in Germany may only provide a termination notice under strict conditions such as if there is a manifest breach of contract, if the landlord wants to occupy the premise, or if the landlord has justified reason to make better economic use of the premise. Even so, tenants are empowered to object to a termination notice if the termination causes hardship to the tenant or his family. The notice must also be given three to nine months in advance depending on the tenant’s total tenancy period.
The second issue is the handling of security deposits, which in Malaysia is typically paid upfront by the tenant and held by the landlord until the end of the tenancy. Security deposits are intended to serve as a guarantee that the tenant will preserve and maintain the rented property’s condition. Failure to do so enables the landlord to deduct or withhold the deposit for reparation work.
However, there is a risk of dispute where tenants claim that their security deposit is unfairly deducted or withheld by the landlord. When such a tenant-landlord conflict arises over security deposits, there is no mechanism to resolve the dispute except by going to court, which can be a costly process to both landlords and tenants.1
There is a better way to resolve this tenant-landlord conflict. The state of Victoria in Australia has created an institutionalised mediation process in the case of tenant-landlord conflict regarding tenancy matters such as eviction and security deposit claims. The Victorian Civil and Administrative Tribunal (VCAT) also allows for faster adjudication of disputes between landlord and tenant compared to formal courts enabling tenants to seek immediate legal protection in case of unjust treatment by their landlords.
They also formed a neutral third-party body, the Rental Tenancies Bond Authority (RTBA), to take over the responsibility of managing tenants’ security deposits from the landlords. RTBA would receive the deposit at the beginning of a tenancy, and return the full amount to the tenant at the end of the tenancy. If the landlord wishes to dispute the amount returned – perhaps due to damages caused by the tenant – he or she can file a petition to VCAT.
There is now realisation that legislation on renting is sorely needed. Early this year, the Ministry of Housing and Local Government announced its commitment to table a Residential Tenancy Act (RTA) sometime in 2022. Initial documents shown during the public consultation stage indicated that the proposed RTA will contain provisions for stronger tenant protection.
Following the announcement, the Real Estate and Housing Developers’ Association (REHDA) pushed back against the proposed RTA and instead argued that its application should be limited to rentals below RM750 monthly.
We at The Centre acknowledge the concerns posed by REHDA which champions private landlords’ right, and preference, to manage their rented properties without government interference. However, limiting the RTA’s application to rentals below RM 750 monthly will reduce the RTA’s coverage and effectiveness. We believe that a clear legal framework to regulate tenancy rights should exist and be applicable across the rental market.
Having an RTA will facilitate a clearer tenant-landlord dispute resolution process on both issues of security of tenure and security deposits. We also recommend that the RTA further enhance tenancy protection by creating a tenant/landlord database. Potential tenants may be alerted to problematic landlords prior to finalising a rental agreement. This may include landlords who have abused their rights such as practicing discrimination or unfairly deducting their tenant’s security deposit.
Similarly, landlords may also utilise the database to filter “bad tenants” i.e. those who consistently missed rental payments, have caused considerable property damage or have committed criminal acts in their rental units. Having such a database provides greater protection for both tenants and landlords, which would enhance the local rental market.
Pillar 2: Expand rental supply
The second tenet is to enhance the rental market by incentivising increases in rental housing supply.
The Malaysian government has been providing tax incentives as a measure to encourage the private rental market though the incentives have mainly targeted individual landlords. For instance, landlords in Malaysia may deduct rental-related costs from their taxable rental income. These include mortgage interest on loan, maintenance/reparation costs, fire/burglary insurance, assessment tax and quit rent, rent collection fees, and new tenant search expenses. In 2018, landlords were even entitled to 50% tax exemption on their rental income.
To significantly increase the supply of rental units, there is room for innovation here. Consider, for example, tax incentives for institutional owners of rental properties such as private corporations, social enterprises, housing associations and real estate trusts.
The US government has encouraged the development of affordable rental housing by private entities for almost 40 years through a scheme known as Low-Income Housing Tax Credit (LIHTC). Under this scheme, the federal government grants tax credits to developers or investors to construct affordable rental housing projects catered to low-income and middle-income tenants. In order to qualify for the credit, the rental rate must be below an “affordable” threshold2, and a certain percentage of the housing project must be affordable.
LIHTC is estimated to have supported the construction or rehabilitation of 3 million units of rental housing since its inception, and is the largest source of affordable housing financing in the US.
Apart from private firms, tax incentives can be extended to social housing providers to cater to disadvantaged or special interest groups such as low-income families, minorities, elders, and students. Housing associations have built a quarter of England’s new homes and are estimated to house six million people. As they contribute considerably to the provision of affordable rental housing3, these associations and their subsidiaries are exempted from the residential property developer tax which was introduced in the UK last year.4
These aforementioned tax incentives can be taken as a guideline to spur various entities in Malaysia to provide more rental housing units at scale, entities such as government-linked companies, private firms, social enterprises, religion-based waqf and zakat authorities to name a few.
Alternatively, these entities may also be encouraged to convert existing vacant and unsold premises into rental homes. The conversion of vacant premises into rental homes is becoming a trend in the US due to increased popularity of remote and hybrid working in the wake of the Covid-19 pandemic.5 This solution may be useful in Malaysia where decreased occupancy rates in office and retail spaces have been reported. Occupancy rates in both categories dropped from 83.3% and 81.3% in 2017 to 78.3% and 76.3% in 2021.
Incentivising conversions into residential rental units not only increases rental home supply, but also reduces the quantity of unsold and vacant units in Malaysia’s property market. While tax incentives can be a good facilitator, other factors too need to come into play for this conversion strategy to work, such as easier access to up-front financing, favourable rezoning laws, attractive location and floor plan.
Pillar 3: Adopt rent stabilisation
The third tenet involves stabilising rental rate increases to provide some degree of certainty for long-term tenants and to reduce the risk of hardship from sudden significant rent hikes.
Global data indicate that rental rates have risen rapidly especially after the Covid-19 pandemic. Cities across the US have reported drastic rise in rental rates with some – such as New York, Austin, and Miami – exceeding 30% in a year. The trend is observed closer to home too in Singapore where rental rates have similarly spiked, reaching a seven-year high in 2022.
The government may intervene in the rental market without necessarily resorting to rent control, which is still controversial.6 Rather, another way to provide for rent stability and moderate increases is via benchmarking or pegging.
Some European countries have such policies in place. Landlords in Germany, for example, are not allowed to raise rent during the first 12 months of a tenancy, and are permitted to raise rates to a maximum of 15%-20% within a three-year period.
Furthermore, landlords are legally restricted from arbitrarily raising rents. If a tenant feels that the rent increase is unjustifiable, then he may dispute it by referring to the local renting association, which can provide assistance in the form of legal fees and rental statistics. If the landlord fails to justify the increase, then the tenant is entitled to refuse the new rate.
Alternatively, the government can peg the increase in rental rates to relevant benchmarks, such as the consumer price index (CPI). This is observed in France where any rental increase must be referred to the Rent Reference Index (IRL). IRL is calculated every quarter based on year-on-year changes in consumer prices (excluding tobacco and rent), and provides some degree of predictability to tenants as well as landlords.
French landlords may raise rents only once a year, and only if such a clause is included in the tenancy agreement. If it is not included, then any rent increase must wait until the tenancy expiry.
The requisite condition for a rental stabilisation mechanism to work, however, is rental data transparency and availability, which is currently lacking in Malaysia. We urge the government to publish a rental index that tracks the historical movement of rental rates based on location and type of residence, which is available in certain countries such as Singapore.
The city-state, via its rental index, has seen its private rental rates reaching a new all-time high in May 2022 following 16 months of consecutive increase. Through such an index, the Malaysian government will be able to identify areas with a red-hot rental market and implement cooling off measures or rental assistance programmes to assist financially-burdened tenants.
Conclusion
As household debt increases and home prices remain unaffordable to many Malaysians, demand for rental units has surged in recent years and merits policy attention. This is especially pertinent for lower-income households in urban areas for whom renting is a more practical option, if not the only possible one, perhaps for an extended period of time.
While the government continues to promote home ownership, it should also enhance the rental market and make renting better for Malaysians. In this instalment, we advocated for three policy tenets towards addressing existing concerns plaguing the rental market: legislate stronger tenant protection, provide incentives to increase supply of rental units at scale and introduce a rental rate stabilisation mechanism.
In part three of this series, we will present the findings of a comprehensive survey on rental norms, risks and perceptions in order to better understand the concerns faced by tenants. Stay tuned.
Any tenancy-related dispute is currently adjudicated in court according to the Contracts Act 1950, Civil Law Act 1956, Distress Act 1951, Specific Relief Act 1950 and the Common Law.
Under the LIHTC, a unit is deemed affordable if the tenant spends not more than 30 percent of their monthly adjusted gross income on housing costs i.e. rental plus utilities.
Affordable rented homes are usually rented out at 80% of the local market rent while social rented homes at 50% of the local market rent.
Housing associations have built a quarter of England’s new homes and are estimated to house six million people. In the past, these associations relied largely on public funding to build social homes – 419,000 new homes were built from 1990 to 2010. After public funding was significantly reduced in 2010, these associations sustained themselves by developing homes for sale and market rent, and reinvesting the proceeds into building more social homes. Through this strategy, 20,000 social rental homes and 77,000 affordable rental homes were constructed from 2015 to 2019.
In 2021 alone, RentCafe calculated that a record 20,100 units have been converted into apartments, double the previous year, with about 52,000 conversions already planned for 2022 and beyond. Most of the converted units were originally office buildings.
Rent control has been largely frowned upon in the US. 37 of the country’s states have laws that preempt local governments from adopting rent control such as the Illinois’ 1997 Rent Control Preemption Act. Notwithstanding this context, tenants’ drastic rise in rental burden has generated stronger pressure for local governments to intervene in the rental market. Regulations are now being proposed throughout the country to cap monthly rental increases by 2% to 10%.
