Akmal: It’s a fairer and more inclusive way of identifying target groups
KUALA LUMPUR: Net disposable income (NDI) may be used as a method to determine target groups that require assistance.
Economy Minister Akmal Nasrullah Mohd Nasir (pic), who disclosed this, said the government continued to maintain the B40, M40 and T20 income classifications for the purpose of providing assistance and conducting socio-economic analysis.
“At the same time, the government is considering more inclusive and equitable methods of determining target groups, including the use of NDI,” he said in a written parliamentary reply.
He said the NDI concept could serve as a basis for determining eligibility for assistance.
Akmal Nasrullah said this approach could reduce the risk of exclusion.
He said it was also seen as a fairer approach by taking into account the cost of a decent standard of living, which varies according to household location and demographic characteristics.
Akmal Nasrullah added that the NDI approach complemented the existing income classification – reflecting households’ actual financial situations influenced by factors such as the differences in locality, demographics, spending patterns and the cost of living, rather than relying solely on gross income.
“In principle, NDI is calculated in two stages.
“First, gross income (GI) is reduced by statutory deductions such as EPF contributions, PERKESO, income tax and zakat to derive disposable income (DI),” said Akmal Nasrullah.
Secondly, he said, DI was further reduced by essential expenditure required to maintain a decent standard of living.
“The resulting NDI represents the actual income available to households for savings or other discretionary expenditure,” he explained.
However, the minister said that any review of the income classification framework would require further study and availability of comprehensive household data to ensure its effective implementation under the 13th Malaysia Plan.
“The ministry is currently engaging the relevant ministries and agencies to explore the potential for suitable pilot projects,” he said.
The country’s income classification is based on the findings of the Household Income and Expenditure Survey (HIES), which is conducted twice every five years.
The latest HIES was conducted in 2024 and published by the Statistics Department on Oct 8, 2025.
Malaysian households are generally classified into three main income groups, namely B40, M40 and T20.
Based on the HIES 2024 findings, the income threshold for the T20 group increased to RM12,680 and above in 2024, compared with RM11,820 and above in 2022.
Meanwhile, the income threshold for the top one percent (T1) group was found to exceed RM40,195.
This group includes households with monthly incomes of RM100,000 and above.
