Malaysia’s Targeted Fuel Subsidy Overhaul Would Use MyKad Biometric ID

Malaysia’s government is proposing a significant overhaul of its fuel subsidy system using MyKad, the national biometric identity card that has been in use since 2001. The proposal, announced by Economy Minister Rafizi Ramli, aims to implement a targeted subsidy mechanism using biometric verification at fuel pumps.

The system would leverage MyKad’s existing biometric infrastructure, developed by Datasonic Group, which currently provides identity verification for border control and financial services. Under the proposed system, drivers would need to authenticate their identity at fuel pumps to receive subsidized RON95 petrol rates. This initiative builds on Malaysia’s broader digital identity strategy, which recently made MyDigital ID mandatory for driver services through the MyJPJ app.

The fuel subsidy proposal, representing the next phase in the government’s digitalization of public services, faces several technical and practical challenges. The system would need to process high transaction volumes while preventing fraud through borrowed or duplicated credentials. Additionally, the Road Transport Department and Inland Revenue Board maintain separate databases for vehicle ownership and income verification, raising significant questions about data integration and privacy protection.

Central to the implementation is the PADU (Pangkalan Data Utama) central database, intended to serve as the foundation for targeted subsidies. However, it has encountered difficulties in achieving comprehensive coverage through its voluntary registration system. Critics argue that existing government databases could provide more reliable data for determining eligibility.

The reform comes in the context of broader subsidy adjustments, including increased electricity tariffs in January 2023 and reduced diesel subsidies for private vehicles in June 2024. The government’s Budget 2025 proposes maintaining fuel subsidies for most citizens while removing them for the top 15 percent of income earners (T15).

Economic analysts suggest that alternative approaches, such as adjusting income tax rates for high earners, could achieve similar objectives with less complex implementation. Nevertheless, the government maintains that the MyKad-based system offers the most precise method for targeting subsidies.

The Ministry of Economy has yet to announce an implementation timeline or specific technical requirements for fuel retailers. The proposal remains under review as stakeholders evaluate its feasibility and potential impact on Malaysia’s broader subsidy rationalization program.

Source: Motorist

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November 7, 2024 – by the ID Tech Editorial Team