JANUARY 5 — The government’s announcement of its Central Database Hub (Padu) is a significant landmark for social protection and welfare policy in the country.

Economy Minister Rafizi Ramli said the digital database aims to provide a more targeted and accurate socioeconomic measurement for determining eligibility and distribution of aid and subsidies.

At first blush, the announcement of Padu appears to introduce a single registry into Malaysia’s social protection framework.

Single registries are not only warehouses of information, but also function as a nexus of information for the various databases of multiple national welfare programmes.

By integrating and linking together a range of national databases, the single registry can act as a pathway of information that facilitates processes such as the application and registration process for aid and subsidies, and the monitoring and evaluation of these schemes. This would be a significant improvement to Malaysia’s current patchwork configuration of social and welfare aid.

Initial inspection of the newly launched Padu registration process on its website however does not appear to match the government’s official pronouncements of the new database.

Critically, it does not appear that the different government databases have been linked, which is unsurprising considering the various pre-existing legislative and regulatory barriers that prevent such data sharing in the first place.

Instead, there appears to be a heavy emphasis on self-reporting by the user. This can be potentially problematic, especially for highly critical information such as income that would determine aid eligibility.

There would be a very high incentive for individuals and households to falsify information in order to receive benefits, especially given how easily this can be done on Padu’s registration portal.

Despite the government’s statements that data on income from EPF, IRB and Socso are linked, this does not appear to be the case on the portal.

Consequently, individuals who lie to appear poorer in order to receive more assistance will be rewarded for doing so, while those who are truthful will be punished by being excluded from assistance.

Without this crucial linking of existing national databases, it would defeat the very purpose of Padu in ensuring assistance is channelled to the right places.

This is concerning. It means that Padu may not function as a single registry, but would instead perform a much more limited function as a social registry, which is essentially a poverty-targeting database that generates lists of households ranked according to their wellbeing for targeting purposes. (For a more detailed technical explanation on the differences between single and social registries, refer to this paper by Chirchir and Farooq.)

Why is this distinction crucial and highly concerning for Padu? Simply because social registries and poverty-targeting databases have been described as “an abject failure” by subject matter experts in the field.

A social registry should ideally cover all households within countries — the lower the coverage of households by a social registry, the higher the likelihood of households being incorrectly excluded from poverty programmes.

However, looking at global data of 52 national social registries from across the world, Kidd et al (2021) concludes that “all social registries have failed abysmally in achieving their core purpose of accurately identifying the beneficiaries of social programmes”.

Of the 52 countries examined, 43 countries have coverage below 50 per cent while 26 have coverage below 20 per cent — highly significant exclusion errors.

Social registries have been vaunted as the solution to prevent the “undeserving” from receiving government assistance, but the evidence shows that they instead exclude large segments of the population who are both in need and deserving of aid, since many of the excluded households are almost certainly among the poorest households nationally.

The poorest members of a country would then be at risk of being excluded from multiple social schemes if the same targeting methodology is used in a blanket manner. This would again defeat the very purpose of building such a database in the first place.

Crucially, social registries and other poverty-targeting mechanisms are built on a false premise: that one can correctly, accurately and easily identify who the “poor” and “deserving” are.

This assumes that the “poor” are a static and fixed category of the population. In reality, incomes are highly volatile due to economic shocks or even positive financial opportunities, especially at the poorest segments of society.

How then do we ensure we can correctly target and identify the “poor”? This is especially true for a country like Malaysia where many households are highly vulnerable to poverty if income shocks such as job losses occur, despite not being officially classified as “poor”.

In 2021, Khazanah Research Institute calculated that if the then poverty line of RM2,208 is raised to the relative poverty line by only RM728, poverty would jump up from 5.6 per cent to 16.9 per cent (400 thousand to 1.2 million households), implying that around 800,000 households that live just above the PLI are prone to poverty.

The implication of this not only means that targeting the “poor” becomes very difficult, but also that a larger majority of Malaysians would benefit from social protection and welfare schemes.

The main concern is that Padu’s reason for existence is predicated on this false premise of poverty targeting. One may argue that the use of technology via digital and data innovations mooted by the government can improve targeting, but evidence from countries with highly advanced social registries show that errors are still persistently high despite these technological improvements.

In the words of the late Martin Ravallion, former visiting chair at Universiti Malaya’s Ungku Aziz Centre for Development Studies, it is crucial that we do not fall into the fetish of targeting where there is too much focus on ensuring that the wrong people do not receive assistance, but not enough focus on ensuring that the right people do.

In fact, Padu’s heavy focus on technology may even risk excluding the “right people” who are on the wrong side of the digital divide.

Indeed, Malaysia needs to move from this outmoded model of social protection that is obsessed with targeting, to enacting a universal social protection floor that is rights-based, lifecycle-driven, and inclusive. That should be the focus of the Malaysian government: to improve wellbeing, not improve targeting.

* Derek Kok is Senior Research Analyst at the Jeffrey Cheah Institute on South-east Asia, Sunway University. His research focuses on social protection policies. 

https://www.malaymail.com/news/what-you-think/2024/01/05/padu-not-so-progressive-derek-kok/110848