PM Launches PADU Database

• We attended the launch of the Central Database Hub (PADU) yesterday at Putrajaya, officiated by Prime Minister Datuk Seri Anwar Ibrahim. With the implementation of PADU, the government aims for a more focused distribution of subsidies and partly moving away from the general income categories such as B40, M40 or T20, which does not give a true picture of household disposable income. 

• For record, PADU is fully developed by the Ministry of Economy, Department of Statistics Malaysia and the Malaysian Administrative Modernisation and Management Planning Unit (MAMPU), as well as all other agencies. It did not rely on external contractors or consultants, hence, the development cost was small at RM2mn for a start (more towards server and bandwidth). 

• All Malaysians aged 18 and above are encouraged to register and update their personal information into the PADU system, which can be done online at padu.gov.my or at the State Operations Office of the Department of Statistics and the Digital Economy Centre (PEDi). There will be offline methods for updating details in the database, primarily for those in rural areas and those without internet access. In such cases, registering and updating of details can be done at district offices, village community management councils (MPKK) and with local authorities. 

• Public will be given a three-month period until 31 March 2024 to update and verify their information. Since this is not compulsory, no action will be taken against those who do not update their information in the database system. 

• However, there is a catch. Those who did not register would be at risk of being excluded from receiving targeted subsidies. We are made to understand that the risk of exclusion may occur as the government will use existing information and information updated in PADU to determine the household profile and eligibility for those who qualify for targeted subsidies or otherwise. 

• There are 39 variables (refer Figure 1) that public need to self-update in the system. The idea is to ensure authenticity of data information, thus portraying own financial / household status. Based on the PADU website, the needed database contains basic demographic information, address, education, household, occupation, income, financial commitments and assistance received. 

• While we applaud the idea and agree with fairer subsidy distribution, we find the self-update information system is a little bit tedious. As the information is not automatically updated, we believe it may attract less attention (especially from the senior citizen or those from the rural areas). No doubt these people will get assistance from the respective agencies, but the process can be delayed beyond the mentioned due date. 

• The credibility of the updated data should be manageable. Managed by the Department of Statistics Malaysia (DOSM), we believe the given information will be cross-checked and verified by the related government agencies. For record, PADU covers 270 types of data under the federal government from various agencies. Data from state and local governments will be gradually included. This process should happen in the second phase, probably in April – June 2024, just in time for the subsidy rationalisation plan to take place in the second half of the year.

• Our banking data will not be included in PADU database as the Banking and Financial Institutions Act 1989 (BAFIA) does not permit the use of such data by anyone. All data remains governed by the existing acts of the respective government departments or agencies. 

• During the forum session, Economy Ministry secretary-general Datuk Nor Azmie mentioned that the Omnibus Act is expected to be enacted this year to allow data sharing and cloud storage among government agencies. He reassured that data and cybersecurity aspects are also given serious attention through the strengthening of system development as well as strategic cooperation with all relevant parties. Legal action would be taken under the related acts against any party misusing the data. 

• Expect to government to really educate the people on PADU in order to make sure the subsidy rationalisation plan is on track within the time frame. During Budget 2024, the implementation of targeted subsidies is expected to help the government achieve its target of reducing the fiscal deficit to between 3% and 3.5% of GDP by 2025. To recap, the government has allocated RM52.8bn for subsidies this year. It is projected to decrease by 17.9% compared to an estimated RM64.2bn in 2023, primarily due to the gradual implementation of subsidy rationalisation programmes. With the government’s new centralised database hub going live, the implementation of targeted subsidy measures is expected to save USD1bn to USD2bn a year, according to previous indications by the Economy Minister, Rafizi Ramli.

Source: TA Research - 3 Jan 2024