A new study by the Khazanah Research Institute (KRI) challenges the traditional categorization of income groups in Malaysia, arguing that the current B40, M40, and T20 classifications do not accurately reflect spending patterns and economic vulnerability.
Kuala Lumpur: Khazanah Research Institute's (KRI) latest study reveals that the current classification of the Bottom 40 (B40), Middle 40 (M40), and Top 20 (T20) income groups does not accurately reflect the true economic stratification of Malaysian households.
Instead, the findings indicate that only the Top 30 per cent (T30) income earners exhibit middle-class spending patterns, while the Middle 50 per cent (M50)-the group between the B20 and the T30-remains economically vulnerable, experiencing trade-offs between essential and aspirational expenditures. 'The findings raise an important question about the validity of the current household demarcation of B40, M40, and T20 adopted by the government of Malaysia,' KRI said in a statement today regarding its latest working paper titled'Searching for the ‘Poor’ and ‘Middle Class’ in Malaysia,” published on Dec 30, 2024. According to KRI, Malaysia has consistently followed the World Bank’s demarcation of B40/M40/T20 from the Ninth Malaysia Plan to the Eleventh Malaysia Plan for almost 15 years, from 2006 to 2020.'These demarcations may not be entirely accurate since the households within these ranges do not exhibit similar consumption characteristics,' it said. For instance, it noted that the consumption pattern of the group between the B20 and the T30, referred to as the M50, appears relatively homogeneous in that these households are still experiencing trade-offs between necessities and more aspirational products. 'These households demonstrate only minor differences from the B20 group. Some households may eat out, send their children to tuition classes, or spend more on household furniture.KRI pointed out that, consequently, it would be more accurate to assert that only the Top 30 per cent of households are in the middle-class or aspirational class, rather than the previously assumed 60 per cen
ECONOMICS MALAYSIA INCOME CLASSIFICATION HOUSEHOLDS
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