Thursday, November 16, 2006

Rising Cost of Living in Malaysia

While cost of living will rise in Singapore due to the impending rise in the Goods and Services Tax to 7 per cent from 5 per cent, the cost of living has already hit the roof in Malaysia.

The main culprit is the big jump in petrol prices, following the Malaysian government's move to cut state subsidies drastically this year to help cope with the big jump in global oil prices. Many businessmen and even traders at pasar malams (night markets) have marked up their price tags, citing higher transportation costs. Some increases could well be justified. Others simply smacked of profiteering.

The Malaysian ringgit is definitely worth a lot less nowadays following the big jump in petrol prices, based on dad's anecdotes from friends and from his casual observation. Petrol pump prices have gone up by a staggering 40 per cent in two years. Consumers have definitely felt the pinch. The official Consumer Price Index increase of 4 per cent is definitely understated.

Instead of removing subsidies overnight, the government should have heeded former prime minister Dr Mahathir Mohamad's advise to allow the currency to appreciate more following its de-pegging. It would have been a less painful option.

Prices will rise further in Malaysia. This is because the Malaysian government is set to introduce its first GST in 2007. Will there be an offset package like in Singapore to help the poor? Malaysia may well announce some form of package to offset the impact of the GST on the poor.

But implementation of government policy in Malaysia is, as usual, another story.

14 comments:

DESHPANDE said...

Hello,
I am from Karnataka, presently working at hyderabad. I recently got an offer from a malaysian company. They have offered to 4,700 Ringgits (excuse me if I am using a wrong name for Malaysian currency). and also explained to me that it would be around 60,000 Rupees. ALso that I can comfortably live well with 1200 Ringgits (or Malaysian currency). Can you please help me understand the way of life there and cost of living and how much I can save there. Thanks a lot for your help and also let me know if you are not the correct group I should be contacing for these kind of questions.

Reply at itsdeshpande@gmail.com
--
Regards,
Manoj Deshpande.
9885809240.

Sophie said...

sorry deshpande,

i didnt see ur posting earlier. you can definitely survive with RM4,700 in malaysia but dont expect to live like a king in kuala lumpur or johor baru. u didnt say where the job offer is.

anyway, cost of basic stuff u need in kl:

1. rental of an apartment in kl can range from RM700 to RM2,000 per month depending on your location.
2. u definitely need a car unless u live near the office. u cant rely on public transport in kl. car monthly instalment will set u back between RM300 and RM1,000 per month for a malaysian car
3. food can be quite cheap if u cook. eating out can be quite expensive for ringgit earners.
4. petrol price has shot up to RM1.90 per litre.

hope it helps.

cheers

Anonymous said...

Hi Sophie,
I am a Doctor from India and getting a job offer from a private hospital near KL ( Subang).They have offered me around 10,000 RM before tax. Is it going to be good enough for a family of 3 - to include housing , schooling etc.Is staying in KL cheap ?
Would really appreciate your reply.
rwl

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