PADU ENHANCES GOVT UNDERSTANDING OF HOUSEHOLD WELL-BEING - MIDF RESEARCH

The collection of data via the Central Database Hub (PADU) will help the government to improve its understanding of household well-being, even though the priority is to identify the eligible recipients of assistance programmes as part of the initiative to move away from blanket support.

According to MIDF Research, the PADU database will be used to create a new source of reference for the household balance sheet, based on the declared income and expenses.

It said the eligibility criteria can also be refined by considering other information such as the size of the household and the existing financial commitment and burden such as mortgages, personal loans, education loans, and monthly expenses for children's education.

"The tabulation of households based on localities and jobs will also provide a better understanding of the stress level according to income level as well as areas (with differing costs of living and basic amenities).

"PADU will also help the government to identify areas or jobs that have been underserved but require urgent attention,” MIDF Research said in its Thematic Report.

Despite some quarters raising concerns about information security, the research firm believes there is room for improvement in terms of the depth and scope of data collection.

It said in terms of expenses, more data can be collected such as the estimated spending on fuel and transport services.

Although the home-office distance may determine the fuel cost for travelling, the actual spending may vary depending on the mode of travel, frequency and nature of jobs.

"In terms of income, we opine that the combined rental income from houses and cars can be segregated. The segregation will be useful to learn whether the assets are generating positive or negative rental returns," it said.

On the targeted-fuel subsidy measures, MIDF Research foresees several scenarios, firstly, for RON95 to remain status quo; or increase by five cents each month starting June 2024; or to increase by one-off 35 cents in June 2024; or set at market price in June 2024.

From 2017 to early 2018, the government implemented a managed-float fuel price mechanism in which the prices were set every week. 

"It is our opinion that the government may consider the post-2010 historical fuel price trends in determining the best mechanism for the second half of 2024,” it said.

MIDF Research said although the subsidy rationalisation is intended to improve the government's fiscal position, it believes the government will remain cautious in its approach to adjusting the subsidy allocation as well as raising the domestic fuel prices.

It said ultimately, the government will continue to ensure more support is provided to the rakyat who are in need.

"The rationalisation of the subsidy spending is not intended to reduce support for the rakyat but to move away from blanket support which previously was also enjoyed by the high-income groups," it added.