One-size-fits-all policy-making will fail: Khazanah Research Institute

KUALA LUMPUR: Wide disparity in income of households in different states means that one-size-fits-all policy-making without local context will fail to perform, said Khazanah Research Institute (KRI) director of research Dr Suraya Ismail.
KRI's "The State of Households 2018: Different Realities" report, launched today, showed that there is significant geographical diversity in household incomes across Malaysia whereby a top 20% (T20) household in Kelantan, Perlis or Pahang may have income similar to a bottom 40% (B40) household in Kuala Lumpur.
The report noted that between the different states in the country, degrees of urbanisation are most associated with income disparities while within the states, it is education levels that are most associated with income disparities.
"This is the big issue about policy-making in Malaysia. If you don't root policies in the context of what the street is experiencing, then definitely, for example affordable housing, we will miss the target," Suraya said at the launch of the report.
Therefore, a one-size-fits-all threshold for public policy outcomes will lead to gross generalisation and, thus, policies around welfare, housing and education must consider threshold differences across states during implementation.
Quoting affordable housing as an example, Suraya said having one price as the threshold is not right because different states have different income levels. For example, if affordable houses were priced at RM180,000 in Selangor, it would already be considered mid-range or unaffordable for people in Kelantan.
"But this somehow or rather does not resonate in some policy-making. We tend to think that everybody lives in the same reality and have one benchmark or one number to then say this is affordable housing. Or even have one number for income eligibility for social housing. These are some things that we need to really iron out," she added.
In order to come up with proper targeted policies, she said policy-makers must understand the realities at state level, or even at district level, and all works on policies must be specific to the conditions of society.
Suraya said if this can be done, policy-makers can come up with proper policies that are targeted and useful.
"Secondly, we keep on thinking that international benchmarks are great but we have to understand our baseline. Can we actually do this? Can our supply side, our firms especially for housing, bring down the cost of building homes, for us to reach the target of more affordable homes?" she asked.
Suraya said policy-makers must understand both the baseline of households and of firms, and understand their capabilities. They must have evidence and data to support targets.
"Don't ask questions only ... you have to give actionable solutions which take into account the capabilities of all the agencies. You can't just thrust in policies but you don't see the limitation of execution. People say 'wonderful policies, bad execution' but I disagree. It's not a good policy because you didn't take into account the limits of execution, limits of institutional strength," she said.