The 2025 Budget has the potential to reshape Malaysia’s household income classification from a “pyramid” structure to a “diamond” shape, akin to those in many high-income developed nations. Economic analyst Datuk Dr. Nazri Khan, chief investment officer of Berjaya Mutual Bhd, noted that the current classification into B40, M40 and T20 groups resembles a pyramid with the lowest income group being the largest.
He believes that the measures outlined in the budget can help expand the middle class leading to a future classification of M60 where households earn between RM5,000 and RM15,000. During a discussion on the Borak Harini Podcast, Nazri Khan emphasized that Prime Minister Datuk Seri Anwar Ibrahim’s initiatives are designed to strengthen the middle class.
One key measure includes raising the minimum wage from RM1,500 to RM1,700 effective February 1, 2025 which he described as the first step towards “fattening” the middle class. He expressed optimism that these changes could help Malaysia progress toward becoming a high-income nation. Nazri pointed out current positive indicators including Bursa Malaysia being the world’s top-performing stock market and the ringgit being the strongest currency in the region.
However, he stressed the need for further improvements such as attracting foreign direct investments and sustaining these performances. Despite a growing economy and declining inflation, Nazri acknowledged a perception gap: wage growth is not keeping pace with economic growth which leaves the middle class feeling overlooked.
He stated that without a significant expansion of the middle-income category, Malaysia will remain stuck in a pyramid-shaped income classification, contrasting with other countries that have successfully transitioned to a diamond structure.
