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Malaysia’s Income Classifications: What’s B40, M40 & T20?

Updated 09 Aug 2022 – By Team Loanstreet

Team Loanstreet



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*This article was translated by Farhana Adli from Camne K’jaan Buat Pengelasan Isi Rumah (B40, B50, M40 & T20)?

 

We’ve always heard of these terms, Bottom 40 (B40), Middle 40 (M40), and Top 20 (T20) —  especially when the gahmen or our Prime Minister made official regulations regarding financial assistance. 

Yet, how many of us actually know the real meaning behind B40, M40, and T20? Most importantly, do you know which income classification you belong to? Well, worry not. Let’s scroll down for a more detailed explanation.


First, let's understand what Household Income Classification is ...

FYI, every household in Malaysia will be grouped in B40, M40 or T20 depending on their monthly income. Why? This is so that the gahmen can monitor, create a financial assistance plan, and carry on the subsidy and initiative to help out the rakyat like Bantuan Prihatin Rakyat (BPR), Bantuan Kewangan COVID-19 (BKC), and more. 

Here’s a simple explanation regarding the household income classification: 

HOUSEHOLD INCOME CLASSIFICATION EXPLANATION MONTHLY HOUSEHOLD GROSS INCOME
B40 Lower-income group. Represents 40% of Malaysians. RM1 - RM4,850
M40 Middle-income group. Represents 40% of Malaysians. RM4,851 - RM10,970
T20

Upper group. Represents the top 20% of Malaysians.

More than RM10,970 and above

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

Will the Household Income Classification change from time to time? 

YES, IT WILL. From 2016 until 2020, gahmen has updated the household income classification twice. As we mentioned earlier, gahmen needs to revise the household income classification as a lot of changes can happen over the years. it. 

As for the recent changes, gahmen has made another revision and widened the classifications for the household income by 10 sub-categories. Chief Statistician Malaysia, Dr Mohd Uzir Mahidin, said that the detailed classification was made to focus on planning and monitoring so that the targeted program can be implemented to lessen the gap in each household’s gross income. Refer to the table below: 
 

HOUSEHOLD INCOME CLASSIFICATION 2016 2019 2020 (Current Classification)
B40 RM1 - RM4,360 RM1 - RM4,850 B10 Less than RM2,500
B20 RM2,500 - RM3,169
B30 RM3,170 - RM3,969
B40 RM3,700 - RM4,849
M40 RM4,361 - RM9,619 RM4,851 - RM10,970 M10 RM4,850 - RM5,879
M20 RM5,880 - RM7,099
M30 RM7,110 - RM8,699
M40 RM8,700 - RM10,969
T20

RM9,619 and above 

RM10,970 and above T10 RM10,970 - RM15,039
T20 More than RM15,039

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


You must be wondering, what are the metrics used by the gahmen to classify the household incomes? 

The gahmen, isn't just looking at your income, but they also look at your median household income because the experts said it's a more accurate measure for summarising income at the geographic level.
 

Median household income refers to the income level earned by a given household where half of the households in the geographic area of interest earn more and half earn less.  The median household income is calculated by rank ordering all households by ascending income and then identifying the income of the most middle household.

 
HOUSEHOLD INCOME CLASSIFICATION SUB-CATEGORY INCOME THRESHOLD MEDIAN HOUSEHOLD INCOME
B40 B10 Less than RM2,500 RM1,929
B20 RM2,500 - RM3,169 RM2,786
B30 RM3,170 - RM3,969 RM3,556
B40 RM7,000 - RM4,849 RM4,387
M40 M10 RM4,850 - RM5,879 RM5,336
M20 RM5,880 - RM7,099 RM6,471
M30 RM7,110 - RM8,699 RM7,828
M40 RM8,700 - RM10,959 RM9,695
T20 T10 RM10,960 - RM15,039 RM12,586
T20 RM15,039 and above RM19,781

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

If you guys want to know which classification you actually belong to and the accurate number, do the maths and see the median (take the middle number).

Another thing that you should know is that there’s a limit to the median household income of every state in Malaysia as the living cost differs from one place to another. You can refer to the below image.


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


If you're interested to know more about this, do refer to the website for more information.

 

“Okay, I heard something about B50. What's that about?” 

YES - our former PM had made an official statement saying that most of the M40 will be moved to B40, hence, the existence of Bottom 50 (B50). *Bruh, what on earth is this?

Okay, in case you didn't know, at least 600,000 M40 households have fallen into the B40 group due to the impact of Covid-19 on the economy. This would mean that there’s a possibility for people in the B40 to fall even deeper than what has already been set as a low-income group. Hence, the B50.
 

You’re not alone, peeps. This koala is clueless as well. 
 

But, fret not. The gahmen has yet made an official announcement regarding this B50 thing — so sip your coffee first ya. However, should the B50 group be officialised, here’s what the new household income classification would look like: 

CATEGORY

HOUSEHOLD INCOME CLASSIFICATION 

(BEFORE COVID-19)

HOUSEHOLD INCOME CLASSIFICATION 

(AFTER COVID-19)

1 B40 B50 (increase)
2 M40 M30 (lessen)
3 T20 T20 (maintain)


If it does happen, then unfortunately the classification data can’t be referred to for financial assistance anymore. This is because only the B40 received the financial aid before while missing out on the M40 who needed a leg up as well.

One thing for sure is that the affordability of one’s household expenditure can’t be solely measured by their income. Assuming - if there are two kids in a house, then surely, the monthly expenses aren't as much as a house with six kids. If we plus-minus their commitments, there’ll only be little monies left. 

So, we gotta look beyond the household gross income as it doesn’t determine anything and hope that a thorough study of the low and mid-income group (B40 & M40) will be done by the gahmen. Only then everyone can benefit from financial assistance.  


*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.


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