As a German, this whole discussion is really funny to me. Germany has been having an id-Card and a national database like almost forever and you concerns make me giggle. I'm not worried about misuse of data in the national database, because we have very strict laws against that. Only the government has access and the majority of government outfits have to apply for a permission for each single request to get nationally at information which is contained in phonebooks.
As a government official I'm dealing with the national database every day, and as a law-abiding citizen I'm grateful for it. One of its uses is to track down people who have applied for social wellfare in multiple towns, getting the dole double. People who owe back money and taxes can't simply disappear from the face of the earth by moving in the middle of the night, because they are required by law to register with the local authorities within two weeks. Since it also registers all births and deaths, criminals can't walk onto a cemetry and steal an identity in Germany.
I got my ID-card when I was sixteen and my passport when I was eighteen. The passport you leave at home and only break it out when you are going outside the country. The ID you carry with you at all times, because unlike the NHS card it has been issued by the government. If you have a driver's licence with a photo, you can leave you ID-card at home.
One of the nicest things about an ID-card IMHO is that you can use it for travelling. For all countries within the Schengen Treaty and a few more you only need an ID-card to travel there. My mother is as travel-happy as I am, but since she stays within Europe, she hasn't needed a passport in ages.
If you have had an id card all your life you might find it hard to understand the difference. We have never been compelled to have one, and this is a sence of freedom that a lot of countries enjoy.
However, once you are told that you HAVE to have one, and all the data regarding every detail of your public record life will be embedded into this card along with your biometric data. This is no longer can be regarded as being a member of a free society.
All Malaysians, Singaporeans, and Hong Kong citizens over a certain age (12 years old for Malaysians) are required by law to carry an Identity Card (better known as IC here) whenever they're out of their own homes, to identify themselves to the authorities or anybody who doubts your identity. Guess who introduced this law? Yes, it's the British back when we were colonised. We're not complaining though. We're actually thankful for that. If not for the IC, we would not have known whether they really are who they claimed to be, or if they really are the citizen of the country or an illegal immigrant.
And we have never see our freedom taken away from us either. Yes, it's easier for the government to track and trace us because all official transactions requires our identity cards. But what is there to worry about if I am not doing anything illegal or against the law? Do I have something that the goverment is against me? The only people who should really worry about it are the ones who intend to do unlawful actions. I'm more worried about criminals/terrorists that are amongst us than the so-called freedom that's apparently taken away from me.
FYI, in the latest version of the Malaysian IC, the embedded electronic chip contains my name, the unique IC number that stays with me and identifies me for the rest of my life, contact address, photo, both my thumbprints, general health information (alergy, blood type, etc), and passport information. It is also my driving licence. If I want to, I can also load money into the card and use it as a debit card (optional) or link it to my bank account to be used an ATM card (optional too) so that I don't have to carry so many cards in my wallet.
Just like the Germans who can travel within most of Europe with just their ID Card, Malaysia, Singapore, Thailand and Brunei are currently discussing the possibility of using our ICs as a valid travel document.
I am still undecided on whether I think it is a good idea, but I just want to know what happens when/if these cards are stolen/lost? Someone is able to know everything about you and if it contains banking information, they can take your money as well as your identity!
There will be a good chance that you will be liable for any fraud caused by your id card, just like the banks now hold you responsibl;e for any fraud pertaining to the use of the chip and pin credit/debit cards if the pin number is used.
For Malaysian Identity Cards, there are security features that one can use to check the authenticity of the card. One of them is the hologram image of your photo (apart from the one already printed) that can be viewed under a UV light (those you use to check the authenticity of a banknote). You can see an outline of a smaller version of the exact photo of yours printed on the card, and some other details. Actually, I don't really need the UV light. I just have to tilt the card to a certain angle and I'm able to see the hologram printing that's embossed very lightly on the card.
The chip content is divided into two sections. One section is secured can not be tampered, i.e. my IC number, my name, my thumbprints, and my photo. The other section allows it's data to be modified/updated, i.e. my address, passport information, driving licence information (classes of vehicles you're permitted to drive and expiry date).
The police and enforcers from other related departments (road transport and immigration) will always carry a card reader that can read the chip content to check the card information in the chip and to compare with the details printed on it. I work in the security line and I've been told by a sea port operator (where their staff use their ICs to check in/out at work) that they managed to detect illegal immigrants holding valid ICs with their names and faces printed on the card. But the moment the card is inserted into a reader, the truth was revealed. The detected illegal immigrants were later handed over to the police to be deported back to their home countries.
Because of its importance, one is required to report to the police immediately in the event that the IC is lost or stolen, so as to disclaim any legal implications that may be caused after that, in the event that other people used the IC for illegal activities. But there are many good samaritans out there who will contact you (if you lost your entire wallet/purse and it contains your contact info) to return the IC, or they'll just send it back to the address printed on it, or surrender it to the police.
As for banking, I don't have to worry more than if I lost my regular ATM card. Just like any regular ATM card, the bank only links the card production serial number of the IC (not the government issued IC no.) to my account so that when I insert the card into the ATM and the ATM reads the serial number, the banking system is able to identify that it is me. So in this sense there's no difference between losing an ATM card and my IC, because when I lose one, I'd most probably lose the other as well since all are in my wallet. All I have to do when I lose my card is to call the bank to cancel my ATM facility, just like how I'd do if I lose my regular ATM card.
For fraud transactions, too bad if I lose my PIN as well with the card. The same thing could happen to a regular ATM card. And for the debit card that I mentioned, it's actually an electronic cash card for small purchases (<500). If you lose the card, you also lose the cash inside (which is why this feature is not popular at all to Malaysians - virtually nobody uses it). That's all and nothing further. Just make a police report immediately and apply for a replacement card.