'Policymaking must consider disparities in income between states'

KUALA LUMPUR: Policymaking must consider income threshold differences across states as there are huge disparities in the middle 40% (M40) income threshold between different states in Malaysia.
According to The State of Households 2018: Different Realities report published by Khazanah Research Institute (KRI), a top 20% (T20) household in certain parts of Malaysia may have an income level similar to a bottom 40% (B40) household in other parts of Malaysia.
"Nationally, the M40 households refers to those with monthly income between RM4,360 and RM9,619. However, if we consider the income distribution at state level, the equivalent state-level thresholds vary significantly," it said.
For example, a T20 household in Kelantan, Perlis or Pahang may have income equivalent to a B40 household in Kuala Lumpur. This does not take into account the fact that costs of living in the states may also be very different.
"A one-size-fit-all threshold applied uniformly across Malaysia for public policy such as social welfare, affordable housing, education policy and others will be a gross over-generalisation of the diverse set of household income thresholds in the different states in Malaysia," it said.
It noted that the biggest difference in income within the different states of Malaysia is associated with urbanisation while across Malaysia, the biggest difference is associated with education levels.
The report, which was launched today, is KRI's third instalment of the publication which explores the diverse economic realities and challenges of almost seven million Malaysian households.