Can Malaysia realistically reach RM10,000 average household income by 2025?

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Reaching RM10,000 Average Household Income by 2025 Faces Realistic Challenges

Experts express significant doubts about Malaysia's ability to realistically achieve the RM10,000 average monthly household income target by 2025, as outlined in the 12th Malaysia Plan (12MP). The current economic climate and historical growth rates suggest this goal is exceedingly optimistic, with concerns raised that the average income metric itself may not accurately reflect the well-being of the majority of Malaysian families.
Doubts on the RM10,000 Target's Feasibility

The RM10,000 average household income target for 2025 is viewed by some economists as highly optimistic and potentially unrealistic given the present economic circumstances. To achieve this from the 2019 average of RM7,901, average household income would need to grow by approximately 8.2% annually. This rate is higher than the average annual growth of about 7% observed between 2009 and 2019, indicating a steeper growth trajectory is required.
Limitations of Average Household Income as an Indicator

The focus on average household income is critiqued for not being a good measure of Malaysian families' overall well-being. High earners' incomes can significantly skew this average, presenting a distorted picture that does not represent the financial reality for a larger segment of the population. In 2019, the median household income was RM5,873, considerably lower than the average of RM7,901, illustrating this disparity.
Current Economic Realities and Minimum Wage Concerns

The current economic situation, exacerbated by the pandemic, further complicates the path to higher incomes. As of February last year, the minimum wage in Malaysia stood at RM1,200 for 56 major towns and cities. This figure is below the national Poverty Line Income for households, which is set at RM2,208 per month, highlighting the challenges faced by lower-income households in reaching the targeted average.
Alternative Metrics and Policy Focus

Experts suggest that focusing on the median household income would provide a more realistic view of the economic standing of most families, as it is less influenced by extreme high earners. Additionally, there is a call for the government to prioritise objectives that are more inclusive of low-wage earners, such as increasing the minimum wage. The 12MP's broader aspirations for GDP growth between 4.5% and 5.5% per annum between 2021 and 2025 are also part of the plan, alongside efforts to reduce income disparities between Peninsular Malaysia and the East Malaysian states.

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Can Malaysia realistically reach RM10,000 average household income by 2025?

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