Using SmartCards In A Smart Way: MyKad for Petrol Subsidies

The Malaysian government’s recent announcement to use the MyKad for implementing targeted RON 95 petrol subsidies marks a significant shift in subsidy distribution.

While the specifics are still being worked out, this initiative aims to ensure that fuel subsidies benefit those who need them most, addressing longstanding issues of inefficiencies and leakages.

However, the success of this approach depends on how the MyKad system is implemented. If we truly want an effective and practical solution, a consumption-based approach using MyKad itself – rather than a complex income-based verification system – would be the better way forward.

The Case for Using MyKad: A Proven Tool for Targeted Aid

The idea of leveraging MyKad for petrol subsidy management is not new. In 2012, while working at the Malaysia Digital Economy Corporation (MDEC), I led a team exploring ways to integrate MyKad into a petrol subsidy mechanism. We engaged with the Petrol Dealers Association of Malaysia (PDAM) and began discussions with Shell Malaysia’s downstream business representatives.

Our idea was simple: instead of basing subsidies on income levels – which fluctuate and require constant verification – we proposed a consumption-based subsidy system that could be managed directly on the MyKad chip.

Over the years, MyKad has been successfully used for government aid programs such as MyKasih (since 2009) and more recently the Sumbangan Asas Rahmah (Sara) assistance program, which grew from 700,000 to 5.4 million recipients.

This proves that MyKad can efficiently manage targeted financial aid without the need for an expensive, real-time network infrastructure.

Why an Income-Based Subsidy is Problematic

Image: Malay Mail

If the government chooses to qualify RON 95 petrol subsidies based on income groups, several challenges will arise:

1. Fluctuating Income Data – People’s financial situations change over time due to promotions, job losses, or other factors. Keeping this data updated in real time requires continuous verification, which is costly and difficult.
2. Network Infrastructure Costs – Every petrol station and pump would need to be connected to a real-time database to verify a person’s income status before each transaction. This adds significant infrastructure and maintenance costs.
3. Administrative Complexity – Managing and updating a national database of millions of individuals’ income statuses introduces unnecessary bureaucracy and potential errors in classification.

A Simpler and Smarter Solution: Consumption-Based Subsidy on MyKad

Image: PropSocial

The solution I proposed over a decade ago is still the most practical: instead of linking petrol subsidies to income, set a fixed subsidised fuel quota per MyKad holder per month. This method is simpler, more transparent, and easier to implement. Here’s how it would work:

Everybody gets the first, say 100, litres subsidised every month. The counter is in the MyKad chip. It goes down with every litre you fill up. On the first day of each month (or the first time you use it in a new month), the counter is reset on the card back to 100.

So, those who use motorbikes or small-engine cars and commute to a workplace regularly may never use up the entire 100 litres in a month.

For those who use a 5.0-litre Porsche Cayenne, well.. you can try your best not to use it all up within a week. Because once you get past the 100L mark, you pay full price for all the petrol you purchase in the rest of the month.

Side effect: You may never leave your home without your MyKad.

This method ensures that everyone gets an equitable share of subsidies while discouraging excessive fuel consumption. Motorcyclists, small car owners, and those with efficient driving habits will benefit the most, while those who drive fuel-hungry luxury vehicles will naturally pay more.

Minimal Infrastructure Upgrades Required

Image: Malay Mail

Unlike an income-based system that demands a constantly updated central database and cloud connectivity at every petrol station, the consumption-based subsidy model only requires two things:

1. A simple software update on MyKad to include the usage counter – This can be done without replacing existing MyKad cards.
2. Wireless reader-writer equipment at petrol pumps – Petrol stations need to upgrade their pumps to allow MyKad contactless transactions.

While the cost of upgrading petrol pumps is a factor, it is a one-time investment. With more than 1,000 Petronas stations alone and an average of six pumps per station, this means upgrading at least 6,000 pumps nationwide. However, this is far cheaper and more sustainable than maintaining an income-linked subsidy database.

The Benefits of the Consumption-Based MyKad System

• No Income Verification Hassles – Eliminates the need for a real-time database, reducing administrative burden and errors.
• Lower Infrastructure Costs – No cloud computing or continuous network connection required at petrol stations.
• Fairer and More Transparent – Ensures that subsidies benefit all Malaysians fairly while preventing overuse by wealthier vehicle owners.
• Encourages Fuel Conservation – People will be more mindful of their fuel consumption, reducing waste and emissions.

Conclusion: A Smartcard Used in a Smart Way

As Malaysia moves towards rationalising fuel subsidies, we must adopt a system that is efficient, cost-effective, and practical. MyKad is already a powerful tool, and using it for a consumption-based fuel subsidy is a natural extension of its capabilities.

Instead of overcomplicating the system with income verification, we should leverage MyKad’s existing chip storage and contactless functionality to manage fuel subsidies in a simple and effective way.

If implemented correctly, this approach will reduce government spending, ensure fair distribution, and promote responsible fuel usage, all while minimising unnecessary infrastructure costs.

It’s time to use our smartcard in a smart way.

About the Author

Saifol Bahri Mohd Shamlan is a technology and digital transformation specialist with extensive experience in Malaysia’s digital economy initiatives. During his time as a senior executive at MDEC, he led the Government Multi-Purpose Card (GMPC) initiative, which contributed to the development of MyKad’s multi-application capabilities. He continues to advocate for practical, technology-driven solutions to improve public services and digital governance.