RM100 e-wallet aid largely to push digital economy, say economists
Published on: Saturday, December 02, 2023
By:
Mikha Chan, FMT
Yeah Kim Leng says the aid will provide a short-term boost to digital spending, especially for those yet unfamiliar with e-wallets and online shopping. (Bernama pic)
The purpose of the government’s initiative to disburse RM100 in e-wallet credit is not to substantially boost consumer spending in the short-term, as much as it is to widen national e-wallet adoption to transform the economy, say economists.
Responding to criticism that the aid merely boosts e-wallet commercial providers and risks inflation, economist Yeah Kim Leng said the initiative would accelerate the adoption of digital wallets and cashless payments as part of the digital economy initiatives.
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“In terms of supporting income and consumer spending, the RM1 billion allocation to provide RM100 in e-wallet credit to 10 million individuals would only move the needle in decimal places.
“This is evident from the size of private consumption, which amounted to RM1,032 billion or 57.6% of GDP in current prices last year,” the Sunway University professor told FMT, adding that the projected impact on consumer inflation would similarly be immaterial.
Yeah said that more importantly, the aid fulfils the government’s promise to provide e-wallet credit, announced during the launch of the Madani Economy framework on July 27 by Prime Minister Anwar Ibrahim.
He said the aid would undoubtedly provide a short-term boost to digital spending, especially for those yet unfamiliar with e-wallets and online shopping.
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“Widening e-wallet adoption is one of the financial innovations that will transform the economy,” he said.
Meanwhile, economist Lai Wei Sieng disagreed with suggestions that the government instead disburse the money via MyKad instead of e-wallets, saying that e-wallets trump identity cards in terms of convenience.
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“People tend to keep their MyKad without taking them out. Disbursing money through e-wallets makes it easier for people to spend their money, and encourages people to install e-wallet apps,” Lai told FMT.
The senior economics lecturer at Universiti Kebangsaan Malaysia said the RM100 aid would also definitely help low-income citizens buy necessities, as even night market traders now use e-wallets for purchases.
On Thursday, New Straits Times reported economist Geoffrey Williams as questioning the government’s RM1 billion allocation to promote commercial e-wallets, saying that the government could disburse public funds through MyKad instead.
“Most people already have wallets, so why give everyone RM100? This is to encourage the final groups to sign-up and to promote preferred vendors.
“If this was purely driven by consumer preference, there would be no need for intervention.
“There is virtually no economic or social benefit in this project; it is purely to promote e-wallets through preferred commercial providers,” he said.
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