Malaysia will introduce the Net Disposable Income approach in 2027 to assess aid eligibility based on income, living costs and household liabilities
KUALA LUMPUR: The government will implement the Net Disposable Income (NDI) approach in 2027 to ensure that the assessment of eligibility for aid takes into account demographic factors and liabilities, in addition to income.
Deputy Economy Minister Datuk Seri Mohd Shahar Abdullah said this approach is more equitable, as it considers basic expenditures and sociodemographic factors when evaluating a household’s financial standing.
“The government will ensure that everything we implement takes into account not only the lower-income group but also encompasses the entire spectrum of Malaysian society,” he said during a question-and-answer session in the Dewan Rakyat today in reply to a supplementary question from Datuk Seri Jalaluddin Alias (BN-Jelebu) on whether the government intends to implement a specific action plan to strengthen the economic position of the middle class, covering income growth, the alleviation of financial pressure from basic commitments, and the expansion of social protection.
Earlier, in response to Jalaluddin’s question regarding the government’s assessment of the true status of the middle class, Mohd Shahar said policy-making cannot rely solely on gross income estimates.
“The Economy Ministry is currently in discussions with relevant agencies to implement a pilot project aimed at understanding the impact of adopting the NDI approach on the nation’s fiscal position,” he added.
He noted that based on the 2024 Household Income Survey conducted by the Department of Statistics Malaysia (DOSM), the M40 group has a monthly gross income ranging from RM5,860 to RM12,679, with an average of RM8,744 per month.
Meanwhile, regarding expenditure, he noted that data from the DOSM indicates that nearly 70 per cent of the M40 group’s income is spent on basic costs comprising 22.7 per cent for housing and utilities, 34.1 per cent for food, and 10.6 per cent for transportation.
“After accounting for medical protection commitments, the remaining income at the end of the month is very little,” he said.
While awaiting the finalisation of the new measurement methodology, Mohd Shahar said the government, through Budget 2027, has introduced measures to alleviate the burden on the public, including the middle class, covering areas such as housing, education, healthcare, taxation and wages.
He said some government aid has begun shifting toward a wider approach, such as BUDI95 and the Early Schooling Assistance, which benefits Malaysians in general, including the middle class.
Regarding the income thresholds for the B40, M40, and T20 categories, he explained that these limits are adjusted based on household income and expenditure surveys, which are conducted twice during each Malaysia Plan.
For instance, Mohd Shahar noted that the income range for the M40 group increased from RM5,250–RM11,819 in 2022 to RM5,860–RM12,679 in 2024.
The next survey will be carried out in 2027, with the results to be published in 2028, he added.