KUALA LUMPUR: Khazanah Research Institute (KRI) is challenging Malaysia's household classification, arguing that only the top 30 per cent of households are truly middle-income or aspirational.

KRI's findings contrast with the government's view that the top 60 per cent, made up of Middle 40 (M40) and Top 20 (T20) groups, are middle class.

Malaysia has consistently followed the World Bank's demarcation of Bottom 40 (B40)/M40/T20 from the Ninth Malaysia Plan (9MP) to the Eleventh Malaysia Plan (11MP) for almost 15 years from 2006-2020.

"Our findings challenge the existing B40, M40 and T20 classification that reveals discrepancies between income demarcations and actual expenditure patterns," it said in a report entitled "Searching for the 'Poor' and the 'Middle-Class' in Malaysia" released today.

KRI instead classifies households as Bottom 20 per cent (B20),  Middle 50 per cent (M50) and Top 30 per cent (T30).

KRI said B20 households are focused on meeting basic needs such as food, housing and clothing; M50  are economically unstable households navigating trade-offs between essential and aspirational goods while T20 are households demonstrating aspirational consumption patterns indicative of the middle class, but not necessarily "wealthy" by global standards.

KRI said the M50 group still face trade-offs between basic needs and more aspirational products, with only small differences from the B20 group. Some can afford dining out, send children to tuition, or buy more furniture.

However, the M50 is not considered middle class and remains vulnerable.

The KRI report comes amid the Economy Ministry's efforts to define and classify the top 15 income group, which will see a reduction in  government subsidies.

https://www.nst.com.my/business/economy/2024/12/1154750/khazanah-research-institute-challenges-governments-household