Executive Summary:

• The idea that 40% of developing country populations live in poverty dates back to the 1970s.
• The classification of income groups in Malaysia into the B40/M40/T20 builds on this idea and was formally embraced in 2006.
• Following up on recent research conducted by Khazanah Research Institute, this paper presents further evidence of the existence of a B20 in Malaysia, rather than a B40, who are distinct to, and significantly lagging behind, their counterparts in the middle- and upper-classes.
• With this in mind, we propose that the Malaysian government target and extend its welfare policies to the B20 specifically, and focus on policies which can empower individuals and households in the middle-class to boost their economic security.
• Some examples of such policies include the provision of affordable housing, healthcare, and transport, and measures which attract and create higher-skilled and better-paying jobs in(to) Malaysia.