KUALA LUMPUR: As financial pressures mount and the cost of living continues to rise, universal basic income (UBI) is fast gaining momentum, emerging as a serious policy consideration across the globe.
While critics often question the sustainability of “giving out free money,” economist Geoffrey Williams argues that a stable, guaranteed income can lead to greater personal empowerment and improved economic outcomes.
UBI is a policy proposal, where the government provides all individuals with a regular, unconditional sum of money, regardless of employment or income status.
“When people can rely on a consistent source of income, the uncertainty they face is reduced – allowing them to make long-term decisions.
“From that, you can actually see an increase in productivity as people shift their focus from short-term survival to long-term planning,” Williams said during a session on Malaysia and Public Policy at the UBI: Insights and Possibilities training workshop held last Friday.
He added that increased consumption driven by UBI could encourage businesses to boost supply, spurring investments and further generating broader economic benefits.
However, the age-old question arises: Is the government going to afford it?
“The answer is yes – it is affordable both from the current income sources that the government has, as well as introducing an alternative or new source of income,” he added.
Based on existing revenue streams including Sumbangan Tunai Rahmah and savings from the rationalisation of subsidies for diesel, RON95 petrol and electricity, he said the government already has the fiscal capacity to provide a UBI of RM100 per month to Malaysians.
He noted with the introduction of new revenue sources such as a 1% electronic payment tax (EPT) and the consolidation of several government-linked investment companies into a single super fund, the government could move closer to delivering RM300 per month to every citizen.
EPT is a tax on transactions, which is collected at the point of sale.
Last year, Malaysia recorded an increase in online transactions to 409 transactions per capita.
By implementing 1% tax per transaction, he estimated that this could raise approximately RM28.8bil annually.
On concerns over potential inflation, Williams clarified that increased money supply from UBI does not necessarily lead to price hikes.
“The full macroeconomic impact would need to be carefully evaluated, but in principle, transferring money from the government to the people doesn’t automatically create inflation.
“Whether the money is spent by the government or directly by individuals, the overall spending remains – it’s just a matter of distribution. What matters is how quickly or gradually it’s implemented,” he added.
Complementing Williams’ perspective, Basic Income Earth Network executive committee member Lee Seng Kiat highlighted the broader social benefits of UBI.
“From a societal standpoint, UBI has the potential to significantly improve the quality of life.
“Over time, we could see a decline in crime rates, reduced public spending on policing, and even a rise in entrepreneurship. The wider community gains from such a policy are evident based on pilot programmes elsewhere,” Lee said.
He said concerns around inflation were often overstated, adding that the stabilising effects of UBI could contribute to a more resilient social and economic environment.
