KUALA LUMPUR: The government's Central Database Hub (Padu), the largest data system developed for the public sector in the country, needs to clearly interpret net disposable income for all segments of the population, including the self-employed.
Economists opined that a clear interpretation is crucial in determining the delivery of assistance, including targeted subsidies, as well as the formulation of more effective and equitable policies.
Moreover, they also suggested that the upcoming Padu system, to be launched tomorrow, is no longer suitable for measuring gross income based on household classification; namely B40, M40, and T20, as the cost of living varies depending on the locality of the population.
Universiti Kebangsaan Malaysia Malaysian Inclusive Development and Advancement Institute (MINDA-UKM) director Prof Tan Sri Dr Noor Azlan Ghazali said he is still studying the extent to which net disposable income can be accurately and fairly obtained through the Padu system.
"The interpretation of net disposable income must be clear to everyone, it must be announced. How are the groups that are not employed or are self-employed going to report their income and expenditures?
"For those with registered employers, their incomes can be verified. (But) how do we then determine 'fixed commitments'?," he questioned in a statement on his Facebook page yesterday.
He stated that 39 pieces of information need to be updated in the Padu portal, therefore the relevant ministries need to publicise all the required information needed to facilitate the registration process and data entry.
For this purpose, he said it is highly likely that all financial information and relevant documents need to be prepared in advance.
"Is verification needed for each entered piece of information? Who will be responsible for the verification," he said.
Azlan said it was envisioned that there would be only one channel for government aid.
"Does this mean that all other channels used to disburse assistance from various ministries will be discontinued, or at least only Padu data will be used by all ministries? Please share what's next after Padu is launched," he said.
He added that Economy Minister Rafizi Ramli mentioned the transition from the classification of T20, M40, and B40, which has confused the matter.
"The existing classification is only a classification of income relative to each other. It can be continued if this classification needs to be maintained, however, it is only based on net disposable income.
"The classification refers to the class of net disposable income. Any breakdown is possible, be it T20, M20, B20, or L40– as long as the total is 100.
"Any letters can be used and there should be no issues about it."
Azlan also questioned whether there would be a new classification based on net disposable income from Padu.
"I am somewhat concerned here because the 'fixed commitments' vary, according to income classes. For example, housing loans are usually considered 'fixed commitments,' and income affects the loan size.
"Does this mean that the higher the income, the greater the 'deduction' one is eligible for? It seems to go back to the same problem; the motor fuel subsidy (B40) vs the luxury car fuel subsidy (T20). The wealthy benefit more," he said.
For Universiti Kuala Lumpur Business School economic analyst, Associate Professor Aimi Zulhazmi Abdul Rashid acknowledged that there is a need for updates to be made, to accurately determine household expenditures.
This, he said, as the existing classification was based solely on gross income without considering the actual net income.
"Furthermore, the location needs to be taken into account, whether in urban or rural areas.