KUALA LUMPUR: Pilot projects are being explored to test a new way of classifying household income, including Net Disposable Income (NDI), as part of efforts to better target social assistance, says the Economy Minister.
The Economy Minister said the proposed review of income classification requires further study and comprehensive household data to ensure it can be effectively implemented in determining eligibility for social assistance.
"However, reviewing this income classification requires further study and comprehensive household data to ensure effective implementation under the 13th Malaysia Plan (RMK13), 2026–2030.
"At present, the Economy Ministry is in discussions with relevant ministries and agencies to explore suitable pilot projects," he said in a parliamentary written reply in response to a question from Riduan Rubin (Independent-Tenom).
Riduan had asked the Economy Ministry to state whether the government intends to replace the traditional B40, M40 and T20 classification with a more targeted new mechanism, such as Net Disposable Income, location of residence, number of household dependents, and local cost of living, to ensure that subsidies truly reach those in need.
Akmal Nasrullah Mohd Nasir said the current social assistance and poverty support programmes are currently based on the national Poverty Line Income (PLI), which is RM2,705 in 2024.
"The PLI already takes into account basic household needs covering food and non-food items, including housing, health and education. Assistance is also targeted at the B40 group based on income eligibility thresholds, which are determined by gross household income," he said.
The government, he added, is currently studying several more appropriate measurement methods to determine target groups, including the use of Net Disposable Income (NDI).
"This concept may serve as a basis for determining assistance eligibility to reduce exclusion errors and ensure greater fairness, taking into account the concept of a decent standard of living, which varies according to location and household demographics," he explained.
In principle, Net Disposable Income (NDI) is calculated in two parts, said the Economy Minister.
"First, gross income is deducted by statutory contributions such as EPF, SOCSO, income tax and zakat to arrive at disposable income.
"This figure is then further reduced by basic living expenses needed for a decent standard of living. The resulting NDI reflects the actual income available to a household for savings or other spending," he said.
