Sat11182017

LAST_UPDATEFri, 17 Nov 2017 11pm

High Cost Of Living Tops Malaysians Grouses : Are The Complaints Justified?

Earlier this month a Facebook user had vented his frustration on the high cost of food in Malaysia, pointing out that £5 (about RM27) can stretch so much further in United Kingdom compared to the same amount in Malaysia. His frustrated rant must have struck a chord as his posting went viral with over 35,000 shares.

Rysherz Ryan had shared on his Facebook page that he could buy a bundle of banana, a box of seedless grapes, 10 apples, one iced lettuce and 5 packets of Kinder Bueno chocolate for RM27 (£5) in the UK , comparing it to the cost of the same items if bought in Malaysia, which he pointed out would cost him double, totalling RM44.

Many Malaysians still reeling from the GST, petrol price hike and plummeting ringgit making imported goods pricier rallied behind his cause, blaming the government, our nation's leaders and the poor management of the country's finances as the cause of their sky-rocketing living costs.

Stories about these comparisons are not something new, but many Malaysians thrive on condemning their own country without stopping to see what it's like out there.

Earlier this year, Prime Minister Datuk Seri Najib Razak had presented the Government Transformation Programme (GTP) and Economic Transformation Programme (ETP) report for 2014 which announced that the per capita income of the people rose from US$7,059 (RM24,706) in 2009, to US$10,426 (RM36,491) in 2014.

Among the major objectives of the GTP's National Key Result Areas is Tackling the Cost of Living of the People so the government is very aware that this is a contentious issue among the 'rakyat'.

Cost of living is the expense of keeping up a certain way of life. As major cities grow and expand around Malaysia, the cost of living will vary significantly from major cosmopolitan hubs to a rural backwater town.

How true is the perception that the ringgit doesn't stretch as far as it used too? After all, as more Malaysians get used to a higher standard of living compared to the generation before, maintaining the higher living standard will naturally cost more.

Regular Malaysians And How They Are Coping

Syafiq Mohamad, a 30 year old who works in the private sector shared with us about cost of living in Malaysia.

“Personally I think the cost is getting expensive with the Ringgit value dropping at an alarming rate.

“A lot of necessities are getting expensive. I mean even a can of sardine has become expensive.

He also expressed that whatever it is (the current situation in Malaysia) to compare Malaysia with other countries is a bit immature.

“It is all a matter of perspective, really.

“I’ve read about the rant by Rysherz Ryan on Facebook and in my opinion I get what he is trying to say but he is being unfair. Tax system in the United Kingdom is different from Malaysia.

“UK people pay a lot for tax and the government gives back hence the cheaper goods and other things. But in Malaysia only a small percentage of people pay income tax.

“With the new GST, I hope the government will give back what we have paid.”

Nur Sakinah is a 45 year old mother of four children and full time housewife echoed the same view.

“All goods are getting expensive. I used to spend for RM200 a month for groceries but now it could go between RM300 and RM350 a month.

Pic malaysiatoday netPic malaysiatoday net“We have to cut back a lot of things and we also have to settle with cheaper brands.”

That's the tricky part. As Malaysians become more affluent, we do tend to go for more premium brands when in reality, the basic ingredient might not vary much but you are just paying a premium on the brand name.

A contributor on a forum topic on the cost of living on quora.com sometime back had pointed out that it was more expensive for her to live in Kuala Lumpur compared to Singapore but check out the number of branded or higher end items on the list that the majority of Malaysians would not even consider on their monthly expenditure like high-end restaurant dining, renting a room in a posh area and buying imported branded clothing.

For 1 Person

  1. Hawker centre food: RM 4 - 6 (comparable to Singapore, even after converting)
  2. Lower mid range restaurant: RM 30
  3. Mid range restaurant: RM 50
  4. High end restaurant: RM >80
  5. Room in a house: RM 500
  6. Room in an area like Bangsar: RM 800
  7. Master Bedroom in an area like Bangsar: RM 1500
  8. Work shirt from Uniqlo/Zara/other chain fashion: RM >90

“I am also shocked by how expensive fine dining is in KL. A comparable meal at an averagely nice French restaurant would cost as much, and not be as good, as a really good one in Singapore or elsewhere. "Luxury" definitely commands a premium here.”

The key word here is 'luxury'.

Many of the younger generation today have bought into the perception of success and happiness based on the Western notion of a certain standard of living and maintaining that 'standard' of living is not cheap.

A current gauge on the higher spectrum of cost of living can be found at the expatriate outreach site expatistan.com which shows the vast range in the cost of living in different cities and states in Malaysia. It also compiled data contributed by expatriates on the cost of living in major cities in KL compared to other parts of the world.

Look At The Economic Fundamentals First

With all the hype comparing high living cost between Malaysia and other countries, we contacted Prof Dr Shazali Abu Mansor of the Faculty of Economic and Business, Universiti Malaysia Sarawak (UNIMAS) for an economic perspective on the matter.

Prof Dr Shazali Abu Mansor of the Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS)Prof Dr Shazali Abu Mansor of the Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS)

“It is not an accurate measurement. He cannot compare £5 with RM5.

Some people like to make as if Malaysia is the only country that face high cost of living but Prof Shazali observed that many countries around the world struggle with the high cost of living.

“Among the reasons we are having this issue is because of the rise of cost of input due to weather variables like the drought.

“Malaysia is not the only country that is affected. It is a global phenomenon. So it is not fair to say that only Malaysia has high cost of living.

“Even in Indonesia the cost of living is quite high compared to Malaysia.

The Greek debt crisis started in 2009 and shows no sign of abating. Amid this period numerous progressions have happened in Greece.

The earnings of the Greek people have declined, levels of unemployment have expanded, elections and resignations of politicians have affected the nation's political scene profoundly, the Greek parliament has passed numerous austerity bills, and protests have become a regular sights throughout the nation.

Nevertheless, Prof Shazali tells us that what happened in Greece only has minimal impact to our economy due to political relationship.

“Our political relationship with Greece is not strong as with other European countries,” he says.

“However if anything happen to China then we will feel the impact.

When asked about whether the Ringgit value can regain some strength in the near future, Prof Shazali is being optimistic about it.

“It is normal for what goes up must come down and vice versa. It is just like stocks. Unless our country ceases all economy activities like export and import but we are not, so I think there are no reasons for Ringgit to keep weakening.

“There are nothing critical to make people think that Ringgit will keep on weakening because we still have our exports in other words there is no sign that Ringgit will keep on decreasing,” he concludes.

Datuk Seri Idris Jala, Minister in the Prime Minister's Department and CEO of PEMANDU had commented on those who choose to paint a negative view of Malaysia's economic situation at every opportunity.

"The irony is that when we first embarked on the National Transformation Programme in 2009, ...critics were vociferous in their accusations that we had neither the political will nor the capability to deploy reforms.

"Few other governments in the world have embarked on such an extensive way to share the nation’s scorecard. But somehow our critics have deemed these intentionally transparent steps to be insufficient.

"When we went a step further to reference complementary data from the World Bank’s Malaysia Economic Monitor, June 2014 and Asian Development Bank’s conference in May 2013, naysayers, true to form, countered with calls of lies, and damn lies.

"The moral to this story is that there are folks who refuse to acknowledge yet alone appreciate any improvement the country has made. Their vision is tunnelled and motivations, highly suspect."

Shankaran Nambiar, Senior Research Fellow of the Malaysian Institute of Economic Research (MIER) noted that Malaysia had charted a year of solid achievement on the economic front in 2014, in an article in the EastAsiaForum journal in January this year.

"One of the more impressive achievements of the Malaysian government in 2014 was the resolve it demonstrated in trying to balance the budget. Prime Minister Najib Razak inherited a budget situation characterised by a lack of fiscal discipline from previous administrations, and he made a concerted effort to address this problem .

"He has implemented policies that will see a reduction in the fiscal deficit from 3.5 per cent of of GDP in 2014 to 3.0 per cent of GDP in 2015. The government has also rationalised subsidies.

"Fortuitously, the global price of oil has been falling, lending a fine sense of timing to the subsidy cuts which are best executed when market prices are declining, as they are now.

"Equally commendable was the decision to introduce a goods and services tax (GST) in April 2015."

According To Global Statistics, Malaysia's Cost Of Living Is Neither Too High Or Very Low

So, are Malaysians correct in saying the cost of living has skyrocketed? The answer could be both yes and no. The reason lies in the fact that the Malaysian government has heavily subsidized the people's cost of living for far too long.

Malaysians have gotten used to unrealistically low prices due to the government's subsidies regime covering fuel, basic necessities and electricity which has skewed the people's expectation of the real living cost in the rest of the world. This distortion cannot be allowed to continue if the nation is to take decisive steps towards a developed nation and economy.

The government has slowly started the gruelling task of rolling back subsidies, starting first with scrapping the fuel subsidy last December..

The general perception Malaysians have that the cost of living has increased rapidly is actually the adjustment period for everyone to come to terms with paying for the real prices of goods and services. In other words, Malaysians are now facing the true cost of living and businesses in Malaysia will now have to pay for the true cost of doing business.

It's not a fun time and definite not easy for the lower income group which is why Malaysia has continued with BR1M handouts despite a constant chorus of objection.

AllianceDBS Research chief economist Manokaran Mottain says Malaysians will have to get used to the higher cost of living. “It may take them some time to adjust but this is the reality,” he had stated as reported in a local news daily last year.

The dean of Malaysia University of Science and Technology’s business school Dr Yeah Kim Leng, an economist, was also quoted in the same report as saying inflation this year will have a negative impact on the real income of the 40% of Malaysian households with monthly incomes of less than RM3,000.

“This group tend to spend proportionately more on ‘essential’ items such as food and fuel. Price changes of these items tend to be higher and more volatile. Since income of this group tends to be relatively fixed, the 5% expected rise in inflation will squeeze their savings or increase their debt level to the limit,” he says, as reported in the local news daily.

Malaysians can access any website that compile global data on world living conditions and see the true picture.

Below are cost of living index by country 2015 mid year compiled by Numbeo:


 


Below is cost of living comparison between Singapore with Malaysia and London with Kuala Lumpur:



Looking at the examples above, saying that living abroad will be cheaper than Malaysia is misleading.

Idris Jala in an editorial written on his blog last month against critics of the government's GTP and ETP initiatives had made the following astute observation.

"When facing such an accusation, I know critics fail to understand the meaning and context of our national transformation. For them, transformation must be seen and felt immediately and by everyone. They expect a brand new world where economic struggles and social injustices are things of the past.

"This is not transformation but a miracle, and we are not miracle workers. Together with government agencies and the private sector, we are tasked to take the country towards high-income in a sustainable and inclusive manner. It calls for the discipline of implementation, facilitation, monitoring and reporting in what can only be a gruelling period of ten years."


--Malaysian Digest