KUALA LUMPUR (July 14): The government is considering the use of net disposable income as a more equitable and inclusive method for determining social assistance targeting.
Use of the metric — gross income minus statutory deductions and essential expenditure — still requires further study, as well as a review of the availability of comprehensive household data to ensure its effective implementation, according to Economy Minister Akmal Nasrullah Mohd Nasir.
The concept could serve as a basis for determining eligibility for assistance while reducing exclusion risk, and to be fairer by accounting for cost of “reasonable” standard of living as well as differences in locations and household demographics, he said in a written parliamentary reply dated July 13.
“This approach would complement income group classification by reflecting not only gross income, but also the actual financial burden faced by households due to differences in locality, demographics, expenditure patterns and the cost of living,” he said.
The Economy Ministry is currently in talks with relevant ministries and agencies to explore suitable pilot projects, Akmal noted.
Malaysia currently uses three main income group classifications — B40, M40 and T20 — for assistance distribution and socioeconomic statistical analysis based on the Household Income and Expenditure Survey conducted bi-annually.
B40 is defined as the bottom 40% with gross monthly income below RM5,858 while T20 is for the top 20% of earners with income above RM12,680. The M40 represents Malaysia’s middle-class households with income between B40 and T20.
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