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Reclassification of Household Income

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The Malaysia government should subdivide the current household income classification as soon as possible. The country can only achieve a better result in resolving poverty by clearer subdivision of household income classification.

In fact, the current T20, M40 and B40 classification is too general and cannot reflect the actual income of Malaysians effectively. This has caused the poverty alleviation policy set by the government did not achieve full efficiency.

Prime Minister Tan Sri Muhyiddin Yassin delivers his speech during the opening of the Malaysia Urban Forum 2020 on September 28.

Despite many policies and programme implemented previously, Muhyiddin stressed that poverty remains the main concern in Malaysia.

“With the recent revision of the National Poverty Line Income (PLI) from RM980 to RM2,208, more than 400,000 households or 5.6 per cent of Malaysians have fallen within this,” Muhyiddin said.

Regarding the household classification, the government is currently studying the recommendations of the Department of Statistic Malaysia.

Reclassification of Household Income In The 12th Malaysia Plan (2021-2025)

The Department of Statistics Malaysia has developed more detailed household classification under its Household Income and Basic Amenities Survey 2019. This is to enable focused planning and monitoring for closing the income gap between households.

Based on the Household Income and Basic Amenities Survey 2019, the current classification of B40, M40 and T20 households could be broken down further into 10 different categories according to the household income.

The B40 group could be broken into:

B1 (household income below RM 2,500)

B2 (RM 2,501 – RM 3,169)

B3 (RM 3,170 – RM 3,969)

B4 (RM 3,970 – RM 4,849)

The M40 group could be broken into :

M1 (RM 4,850 – RM 5,879)

M2 (RM 5,880 – RM 7,099)

M3 (RM 7,110 – RM 8,699)

M4 (RM 8,700 – RM 10,959)

The T20 group could be classified into :

T1 (households earning RM 10,961 – RM 15,039)

T2 (RM 15,040 and above)

The government will consider whether to include this in the 12th Malaysia Plan (2021-2025) after a careful study on the reclassification of household income groups. The study will also cover the needs of all income groups. It can assist the government in identifying and providing assistance based on income groups.

Previously, some economy experts suggested that the government should adjust the classification of income groups to B20, M60 and T20.

However, the Minister in Prime Minister’s Department for Economic Affairs, Dato’ Sri Mustapa bin Mohamed said that government currently has no intention to modify the B40, M40 and T20 household classifications.

Despite that, it is still in consideration to subdivide the classification of household income under The 12th Malaysia Plan.

Minister in the Prime Minister’s Department Datuk Seri Mustapa Mohamed.

The government also promised to focus on assisting the B1 group, which is families with a monthly household income less than RM2,500 in The 12th Malaysia plan.

However, the 12th Malaysia Plan, which is scheduled to be tabled on Aug 6, has been postponed to January 2021. This postpone is to enable the government to undertake a review following the impacts on the global economy caused by Covid-19 pandemic.

 

More Information About:

Content Sources:

  1. PM reaffirms govt commitment to eradicating income inequality
  2. Department of Statistics Malaysia Official Portal
  3. B40, M40 and T20 households classified into 10 categories
  4. Government to review 12th Malaysia Plan, to be tabled in January: Mustapa

Prepared by: Keanwah Goh

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