Plugging Padu loopholes

Once the government rectifies flaws in the database hub, billions of ringgit in subsidy leakages can be channeled to the right groups

“IN a progressive country, change is constant ... change is inevitable.”

Those words by 19th-century British Prime Minister Benjamin Disraeli still rings true today.

But it’s also safe to say that many people are afraid of change. Witness the absurdly over-the-top reaction to Putrajaya’s newly developed Central Database Hub (Padu).

Some of the criticisms towards Padu are justified. The website crashed soon after the launch because of the overwhelming number of people going into the system. And there are legitimate concerns regarding the safety of the information stored in the system.

Let’s call a spade a spade. Yes, Padu started on a sour note, and its launch could have been done in a more efficient manner. But these operational flaws can and will be rectified. We need to start looking at the bigger picture.

This digital database is going to be the keystone of the government’s subsidy rationalisation plan.

Subsidies have plagued our country for way too long. There are subsidies for sugar, oil, rice –you name it, we have it. The government could potentially save RM80bil (the amount spent on subsidies in 2022). This is a huge sum that could be used to help Malaysians who are struggling with the high cost of living.

There is a significant number of Malaysians who can afford to pay for petrol and electricity at normal rates, and they are getting away with subsidies.

I don’t think many people will argue against the government going after the super-rich who have no business enjoying subsidies that should only go to lower-income households.

When it removed electricity subsidies to corporations, the government was able to save RM4bil between January and July last year.

Malaysians can now look forward to a fairer distribution of aid and a more effective rationalisation of subsidies with the implementation of Padu. And if it goes as planned, the government will be able to hit its 12th Malaysia Plan mid-term review target of narrowing its fiscal deficit to 3%-3.5% of the gross domestic product (GDP) by 2025, according to Economy Minister Rafizi Ramli.

The database, which took six months to build, will feature near real-time data that allows for more accurate data analysis.

Padu will be able to assist in addressing leakages in the provision of assistance and subsidies after it identifies monthly household incomes, expenses and living costs according to locations in detail, instead of the previous metric based on gross incomes and the B40, M40 and T20 classification.

“With Padu, the data will be focused on the net disposable income (per household). We will have a clearer picture of comparable net disposable income (among) households, and that will allow the government to define our programmes and target subsidies accordingly,” Rafizi explained.

The two key things for me are that apart from Putrajaya saving billions, the government will now have surplus cash for better roads, infrastructure, healthcare, et cetera.

Secondly, individuals from the B40 category, some M40, the poor and the deserving will now be able to get assistance directly via this database.

How can this not be a good thing? The government should accept constructive criticism when it comes to rectifying flaws in the system and plugging the loopholes, but once this is done, acceptance of Padu should be widespread.

In the face of disinformation and negativity on social media, Putrajaya should counter this by initiating an educational campaign to get people to register on the website.

With the spike in scammers out there, people are naturally wary of disclosing personal data, especially bank account details, and these fears should be allayed.

The process of registration is a lengthy one: users will have to update 39 different personal details, including identification, number of household members, and their address.

Data breaches are a genuine concern for these sensitive data, so security barriers should be strengthened to ensure that only the individual concerned will be able to access his or her account.

In Budget 2024, the government announced that among others, it would implement targeted subsidies for diesel and RON95 petrol, with this to be enjoyed only by selected consumers, such as those in the lower income bracket and cargo transport companies.

It was reported that diesel subsidies will be rationalised in phases, while a targeted RON95 subsidy will be introduced in the second half of 2024.

The implementation of targeted fuel subsidies is the last piece in the jigsaw and will probably be the most painful subsidy rationalisation, but potentially one that will yield the most savings.

For instance, the government currently pays RM1.60 per litre of diesel to cap the price at RM2.15 per litre. It is still unclear how the Padu mechanism will allow those in the B40 category to be given subsidised fuel.

Ultimately, the effectiveness of the implementation of fuel subsidies will be called into question if enforcement is compromised.