Subsidy delivery in the digital era: Malaysia’s hybrid distribution mechanisms

Malaysia has long relied on subsidy programmes to alleviate the rising cost of living and protect households affected by the current economic situation. Historically, subsidies were largely universal and implemented through price controls on essential goods and fuel. However, mounting fiscal pressures and concerns over leakage and exclusion of intended beneficiaries have prompted the government to shift toward targeted subsidy mechanisms supported by digital and systematic administrative systems (Ministry of Finance Malaysia [MOF], 2023). In recent years, Malaysia has adopted a hybrid subsidy distribution system that combines bankingbased transfers with non-banking delivery mechanisms, including MyKad-linked verification and authorised retailers. This hybrid model seeks to enhance efficiency while maintaining broad coverage. Nevertheless, the coexistence of regulated financial institutions and non-bank service providers introduces new challenges related to governance, accessibility, and inclusivity considerations.