M50, not M40? Why those sandwiched between the haves and have-nots aren't actually the middle-class in Malaysia

• The Khazanah Research Institute (KRI) has proposed revising Malaysia's household income classification to B20, M50, and T30, pointing out differences in spending habits and economic weaknesses.
• The M50 group is perceived as middle-class, but their economic stability is still a concern, as they tend to spend more in line with people from the B20 demographic, rather than those from the affluent T30.
• The T30 group exhibits varied "middle-class" spending habits on high-end goods, personal wellness services, and recreational activities, indicative of a more stable financial situation and better living standards.

KUALA LUMPUR, Jan 1 — Could the era of categorising households in Malaysia according to their income be coming to a close, marking the end of the classification of the bottom 40 per cent (B40), middle 40 per cent, (M40) and top 20 per cent (T20) brackets?

Menyebarkan populasi ke dalam B20, M50, dan T30.

In its working paper dubbed "Searching for the 'Poor' and the 'Middle-Class' in Malaysia", KRI revealed that it employed a specific model to identify the impoverished and middle-class households in the country, focusing on various aspects including the goods and services consumed by the households and their spending patterns, ranging from necessities to luxury items.

According to the research outcomes over the past decade, the three categories that can be distinguished are:

• Centred on meeting essential requirements like food, shelter, and attire
• Seperti mereka yang menjalani kebanyakan upaya untuk keluarga mereka tetapi merasa perlu pecah belah untuk memenuhi kebutuhan kostum dan barang mewah
• exhibit middle-class spending patterns

Is the M40 or M50 really considered the "middle-class economy" in Malaysia?

KRI argued that, although the group falls between the B20 and T30 categories, they do not demonstrate the same spending habits as a middle-income group.

Besides their social issues, they also struggle financially.

According to KRI, the "middle class" should be households that have purchasing power for essential needs, show a desire for non-essential products and services, and possess financial security.

Despite having more spending on non-essential items, members of the M50 group were still sacrificing on well-being and living standards.

Consumption tendencies between the M50 and B20 cohorts are often surprisingly similar.

One notable distinction was the rising ability of M50 households to allocate their finances towards educational expenses, such as tuition classes, as well as purchasing products for the enhancement of their living quarters, including home furnishings.

According to the report, most of the B20 mainly allocated their funds to essential items like groceries, clothing, rent, and other necessities.

The research discovered that the B20 could only manage to afford basic needs such as food, clothing, and accommodation costs.

Who exactly makes up the population of the middle class that economists and policymakers are always referring to?

Instead, KRI claimed that those who can afford what the report called "middle class" expenses mainly belong to the top 30%.

The T30 group had diversified spending - a significant portion of their budget went towards household items and household assistance, encompassing products such as air conditioners, washing machines, furniture and furnishings, and the hiring of domestic helpers.

The T30 also used air travel in addition to cars.

Noted by the institute is that the T30 group's increase in healthcare expenditure was due to their ability to afford dental care, pharmaceuticals or medical products, private healthcare services, and paramedical services.

Eating out, items such as jewellery and accessories, and investments in insurance and protection plans are also important parts of their expenditure habits, reflecting their desire for a well-rounded and secure life.

These families always want better and more high-end products and services, showing they have more spending power and a desire for a more comfortable life.

"In fact, these households showed a noticeable drop in their food expenses, but their spending on clothes remained relatively low. They often relied on outsourcing their laundry and even rented clothing to save costs," the report stated.

The report also discovered that the T30 group can afford expenses such as entertainment, watching television, camera equipment, musical instruments, sports equipment, gardening, cultural activities, betting, and organised tours.

Economy Minister Rafizi Ramli stated that the revisions to proposals for the T15 income classification definition are currently under consideration and are expected to be finalised by the Cabinet soon.

This comes after Prime Minister Datuk Seri Anwar Ibrahim announced in Budget 2025 that fuel, education, and healthcare subsidies for the B40 group would be phased out.

the Cost of Living Indicators report for 2023 has been launched, offering insights into the minimum expenses required to achieve a modest quality of life.

The report comprises the Cost of Living Index and a new Basic Expenditure of Decent Living (PAKW) calculation, which is conducted using demographic data such as family type, home size and location.

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