Will disposable income replace B40 and M40 soon?

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Government Reviewing Shift to Disposable Income for Aid Distribution

The government is currently reviewing its methods for identifying target groups for social assistance and subsidies, with disposable income being considered as a potential alternative to the existing B40, M40, and T20 classifications. However, this review process will require substantial time and careful study before any implementation can occur, indicating that a change is not imminent.
Consideration of Disposable Income for Target Group Identification

Malaysia's government is exploring new methods for disaggregating target groups, with disposable income emerging as a key area of consideration. This initiative aims to refine how social assistance and subsidies are allocated, moving beyond current income classifications. The process is acknowledged to necessitate a period of time and thorough investigation to ensure its effectiveness and accuracy.
Current Income Classifications and Future Improvements

Currently, the government operates with income classifications categorised as B40 (bottom 40 per cent), M40 (middle 40 per cent), and T20 (top 20 per cent). As outlined in the 13th Malaysia Plan, there is a commitment to enhance the determination of these target groups for the distribution of social aid and subsidies. This suggests a framework for future refinements to the existing system.
Basis of Current Social Assistance and Subsidies

Presently, social assistance and subsidies are generally determined based on the poverty line income threshold. This threshold takes into account the basic needs of households, encompassing both food and non-food expenditures such as health and education. This approach focuses on ensuring essential requirements are met for eligible recipients.
Recent Income Trends Across Different Groups

Recent data indicates an increase in median incomes across all three major income groups. The median income for the B40 group rose by an average of 5.2 per cent, from RM3,440 in 2022 to RM3,815 in 2024. Similarly, the M40 group experienced an average increase of 5.6 per cent, with their median income climbing from RM7,694 in 2022 to RM8,999 in 2024. The T20 group saw a more modest average increase of two per cent, from RM15,867 in 2022 to RM16,517 in 2024. These income growths are attributed to salary earnings, self-employment, returns from property and investments, and current transfers.

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Will disposable income replace B40 and M40 soon?

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