Malaysia’s PADU Central Data Hub: Reduced Targets, Raised Stakes

At the 2 January 2024 launch of PADU (Pangkalan Data Utama), Malaysia’s central data hub, the government trumpeted an audacious goal of getting 29 million Malaysians to voluntarily register by a 31 March deadline. The Statistics Department under the Ministry of Economy administers PADU, which would ideally collect detailed income data of all Malaysians to enable the precise targeting of government subsidies, an urgent priority of Anwar Ibrahim’s administration.

Malaysia’s poor subsidy targeting is an enduring problem. Higher income households, which tend to own bigger cars, disproportionately benefit from the existing fuel subsidy. Social assistance also suffers from misallocation. A World Bank investigation on 2016 income data found that around 85 per cent of Malaysian households beneath median household income ⸺ that is, the poorer half of the population ⸺ were receiving the cash transfers meant for them. However, 40 per cent of Malaysian households above the median and one-fifth of the richest 10 per cent were also accessing the benefit.

Phasing out blanket subsidies, especially for fuel, and enhancing the efficacy of social assistance are warranted and urgent actions. For 2023, the government initially allocated RM64 billion for these purposes but eventually spent over RM80 billion. The Anwar administration has signalled its intent to reduce Budget 2024’s subsidy and assistance allocation to RM58 billion. The government could cut subsidies for higher income households or provide cash for lower income households to cushion the effects of general subsidy reductions. Whatever the shape of reform, PADU would theoretically supply the needed data.

PADU’s capacity to facilitate more targeted assistance and reduced subsidy expenditures rides on its data’s coverage, veracity, and security. In PADU, the government aspires towards the breadth of a census, seeks truthful self-reporting of personal information, and assures Malaysians that their data will be kept safe. Any Malaysian adult (aged 18 years old and above) with an identity card, mobile number, and internet access can open a PADU account. Each user fills in family, educational, occupational data and most importantly for PADU to work, reports their net income.

People are more likely to opt in to PADU and volunteer their data if they trust the process, know how to navigate the declaration forms, and feel that there is a benefit to their participation. Malaysia’s existing data resources include income tax returns, which are granular but too sensitive to be shared across government agencies. Returns are also limited to the tax-filing population (just 5.7 million out of 16 million employed persons in 2022). Social programmes, such as Sumbangan Rahmah Tunai (SRT, literally “Mercy Cash Contribution”) cash assistance for low-income households, record basic income status of a large swathe of Malaysia but their databases are not extensive or updated enough for the government to effectively target subsidies.

PADU has limited alternatives to voluntary self-reporting on an online platform but the ambitious project would need to surmount the problems of users’ lack of access, ability, or incentive (to fill in their data). There are potential security concerns, including the alleged possibility of identity theft. However, public fears about inadequate protection from hackers and prevention of the misuse of data appear to derive more from Malaysians’ general distrust of government than concrete proof of system vulnerabilities.

Malaysia’s Chief Statistician indicated that a preliminary account could be released by mid-April. The government need not rush but should take time to allay persistent distrust by demonstrating transparency and honesty.

The roll-out was a mixed bag. The original goal of getting 29 million users by 31 March required over two million new sign-ups per week but the first week saw 800,000 registrations and momentum did not pick up. The weekly average dropped to 460,000 in the subsequent ten weeks.

The coalition government also failed to rally around PADU. Economy Minister Rafizi Ramli was asked to clarify the teething issues to Cabinet only in late March, after the Sarawak and Sabah governments, citing security concerns, discouraged their residents from registering.

Nonetheless, the second half of March saw a remarkable surge following a publicity drive with manual registration counters set up around the country. According to PADU’s disclosures, 2.3 million users registered in the penultimate week of March, bringing the total from 5.4 million on 17 March to 7.7 million on 24 March. These figures apparently referred to the adult (18+) population of 22 million but the government’s communications omitted this specification and gave the impression that the country was chasing the PADU registration target of 29 million citizens (of all ages).

With the deadline looming, the government lowered its target to 11 million (50 per cent of Malaysia’s adult population). A boost of another 3.85 million sign-ups in the final week, including one million on the last day, finally raised the tally to 11.55 million, hitting the downsized target. PADU’s total enrolment, including children, is 17.65 million.

What’s next? PADU’s sign-up target was reduced but the stakes have risen.

The endeavour must keep abiding by the key elements of data coverage, veracity, and security. The government must fully disclose and rigorously analyse PADU’s outcomes and determinants.

Malaysia’s Chief Statistician indicated that a preliminary account could be released by mid-April. The government need not rush but should allay persistent distrust by demonstrating transparency and honesty. Beyond the mere quantity of registrations, Economy Minister Rafizi should perhaps commission an independent audit to examine PADU’s data quality.

Malaysians would be interested to know whether PADU has made a difference by reaching Malaysians who were previously excluded from or not listed in government registries such as SRT. Providing information instead of chastising non-registrants would be a more constructive way to induce their participation and would legitimise PADU’s launch.

A more reasonable target could be set, referencing only the adult population rather than the total population. Many Malaysians, regarding themselves as ineligible for subsidies, have withheld participation in PADU. Various parties including parliamentarians within the ruling coalition have questioned the rationale for participation.

The government might want to pick its battles and avoid stoking these fires while continuing to prioritise low-income individuals, especially elderly citizens and special needs households. If physical registration counters contributed to increased participation, perhaps the government could consider a further round of this service. The mechanism and frequency for updating PADU accounts also demand attention. On data security, any serious breach will be catastrophic; verbal assurances must be backed by utmost vigilance and prevention.

PADU has cleared its inception but the government must answer crucial questions convincingly. Now truly begins the effort to make PADU trustworthy and workable.

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