Income Classification in Malaysia: What is B40, M40, and T20

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Malaysians are classified into three different income tiers – the B40, M40 and T20.

B40 M40 and T20 income classification in Malaysia

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The Malaysian population is estimated to be around 32.7 million people. This is based on the Demographic Statistics First Quarter 2021 (Malaysia) that was released by the Department of Statistics Malaysia (DOSM). With so many people living in this country, how do we know if our assistance programmes are targeted to the right group? What about you, which income bracket are you at? 

We hear it all the time – B40, M40, T20. However, who exactly are these people? As the COVID-19 pandemic brought the country to its knees, there are a lot of families and single individuals struggling with financial insecurity, especially those in major cities where the cost of living is high.  While we are all categorised by the income classification, it is also important to understand where we fall in these B40, M40, and T20 categories.

What is the average income in Malaysia

Source: Household Income and Basic Survey Amenities Report 2019, DOSM.

How is household income defined

According to the DOSM, household income refers to total incomes received (accumulated) by members of households, both in cash or in kinds that occur repeatedly within the reference period (within a year, or more frequently) household income.

What is the average income in Malaysia

As of 2019, the average income in Malaysia is RM7,901.

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What is B40, M40, and T20

B40, M40, and T20 Malaysia refer to the household income classification in Malaysia. B40 represents the Bottom 40%, M40 represents the middle 40%, whereas T20 represents the top 20% of Malaysian household income.

Income classification Definition

Details

 B40  

Bottom 40%

  • Lower-income group
  • Household income is below RM4,850 per month
 M40  

Middle 40%

  • Middle-income group
  • Household income between RM4,851 per to RM10,970 per month
 T20  

Top 20%

  • Upper class
  • Household income exceeds RM10,971 a month

Source: Household Income and Basic Survey Amenities Report 2019, DOSM.

Income Classification in Malaysia 2020

This is the latest household income classification in Malaysia based on DOSM 2020.

 Group Median Household Income (RM) Average Household Income (RM) Income Threshold (RM)
B40 B1 1,929 1,849 Less than 2,500
B2 2,786 2,803 2,501 – 3,170
B3 3,566 3,561 3,171 – 3,970
B4 4,387 4,395 3,970 – 4,850
M40 M1 5,336 5,346 4,851 – 5,880
M2 6,421 6,477 5,881 – 7,100
M3 7,828 7,841 7,101 – 8,700
M4 9,695 9,730 8,701 – 10,970
T20 T1 12,586 12,720 10,971 – 15,040
T2 19,781 24,293 More than 15,041

Source: Department of Statistics Malaysia (DOSM), 2020.

How is B40 defined

B40 is the Bottom 40%  of the Malaysian household income. They earn less than RM4,850 per month. The COVID-19 pandemic also has pushed many Malaysians to lower-income categories due to income reduction and loss of employment. The B40 group is eligible for the Bantuan Sara Hidup (BSH) or Bantuan Prihatin Rakyat (BPR). There are also government housing schemes especially for B40 groups such as the Program Perumahan Rakyat (PPR) and Program Perumahan Rakyat Termiskin (PPRT) for the hardcore poor. Also, the B40 group is automatically eligible for PeKa B40

 Group Median Household Income (RM) Average Household Income (RM) Income Threshold (RM)
B40 B1 1,929 1,849 Less than 2,500
B2 2,786 2,803 2,501 – 3,170
B3 3,566 3,561 3,171 – 3,970
B4 4,387 4,395 3,970 – 4,850

Source: Department of Statistics Malaysia (DOSM), 2020.

How many B40 households are there in Malaysia

Based on the Household Income and Basic Survey Amenities Report 2019, the B40 group in 2019 comprised 2.91 million households. In terms of the income distribution, the B40 only constituted only 16% of total household income.

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What is considered middle class in Malaysia

The middle class in Malaysia is the M40 or Middle 40% group. Based on the Household Income and Basic Amenities Survey 2019, the middle class in Malaysia earn between RM4,851 to RM10,970 per month. Also, the M40 group covered 37.2% of the total household income in 2019. 

Group Median Household Income (RM) Average Household Income (RM) Income Threshold (RM)
M40 M1 5,336 5,346 4,851 – 5,880
M2 6,421 6,477 5,881 – 7,100
M3 7,828 7,841 7,101 – 8,700
M4 9,695 9,730 8,701 – 10,970

Source: Department of Statistics Malaysia (DOSM), 2020.

Like B40 households, M40 households can apply for BSR (for those earning below RM5,000). There are also a few government aids, schemes, and facilities that M40 can leverage, such as government housing schemes, moratorium, and other MCO assistance under the PRIHATIN, PENJANA PEMERKASA, and PEMULIH Packages.

How can you tell the difference between M40 and B40

The B40 and M40 groups differ in income tier, aids, and assistance that they are eligible to apply for.

Who is considered T20 in Malaysia

The T20 group is the Top 20% of Malaysian household income. They are considered to be high-income earners, exceeding RM10,971 a month. According to Household Income and Basic Amenities Survey 2019, there were 1.49 million households in the T20 Malaysia group and they constituted 46.8% of the total household income. 

Group Median Household Income (RM) Average Household Income (RM) Income Threshold (RM)
T20 T1 12,586 12,720 10,971 – 15,040
T2 19,781 24,293 More than 15,041

Source: Department of Statistics Malaysia (DOSM), 2020.

How much money do you need to live comfortably in Malaysia

According to The Living Wage: Beyond Making Ends Meet that was published in 2018 by Bank Negara Malaysia (BNM) Monetary Policy Department, the provisional estimates of a living wage in Kuala Lumpur range between RM2,700 and RM6,500 per month. This provisional estimate was made by BNM using data from Household Expenditure Surveys 2014 and 2016, the Ministry of Domestic Trade, Co-operatives and Consumerism, and the National Property Information Centre (NAPIC). A single individual should be earning a living wage of at least RM2,700 per month, couples without children must be earning RM4,500. In contrast, couples with two children should be earning no less than RM6,500 to live comfortably in Malaysia. 

As Malaysia is likely to transition to a high-income nation status between 2024 and 2028, it is hoped that all segments of its citizens’ well-being aren’t neglected. Perhaps, a living wage that’s in tandem with the rise of living costs.

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