IT makes no sense for Putrajaya to introduce a unit trust scheme for Indians when their wages are low and they have no savings, a lawmaker said today.

The scheme, announced by MIC president Dr S Subramaniam yesterday, proposes to offer two billion unit trusts, possibly at subsidised rates, for Indians in the country within the next five years.

Aimed at raising the Indian community’s socio-economic status, the scheme will be available through Permodalan Nasional Bhd (PNB) in two categories – one for B40 low-income households and the other for all Indians.

Klang MP Charles Santiago, however, pointed out that those whom Putrajaya was targeting did not earn much in the first place, with a large part of them holding semi-skilled jobs, such as factory and industrial work.

Santiago said it was clear that the unit trusts would only benefit the middle class and the rich as they had the savings for investment.

“The government says it is looking at interest-free loans (for the unit trusts), but the point is, they will still have to put in the principal amount. 

“Where are they going to get the money? The government just does not understand that this community does not have the money to buy the unit trusts,” Santiago said.

Santiago said there were still many Indians who were unemployed and Indian households living on a single income because only one spouse was working.

According to a report by the Malaysian Action Plan for the Indian Community (MIB), there are 57,624 households with a below RM2,000 monthly income; 71,148 households with between RM2,000 and RM 3,000 monthly income; and 112,896 households with between RM3,000 and RM4,000 monthly income.

The report estimates that 3,528 households are living below the poverty line.

“The report also states that these people have no savings at all. And this is the community the government is asking to buy the unit trusts.” 

Universiti Kebangsaan Malaysia’s (UKM) Dr Denison Jayasooria said that while the scheme for B40 Indian household was a good initiative, the benefits would only be seen in 10 years.

“Fostering a saving culture is good but the scheme cannot improve their socio-economic position overnight.

“That requires new skills, maybe micro loans for micro businesses or better jobs,” he said.

Denison added that while the scheme was needed, it was more urgent to foster a culture of self-help and self-reliance among the Indians.

The unit trust scheme is under discussion between PNB and the Socio-Economic Development Plan of the Indian Community (Sedic).

Among the perks proposed for the B40 group are a 20% subsidy and interest-free loans for the purchase of the unit trusts.

Santiago said Sedic would do better to focus on ensuring that this category of Indians receive skills development and better wages. 

“What the Indians need are higher wages. The focus should be on youth development and not through some overnight seminars either. 

There must be a systematic plan to ensure they get the skills needed to improve,” Santiago added. – September 13, 2017.