The Cost of Living in Malaysia

 Living the Dream vs Living the Reality?

So one of the main reasons people move to Malaysia and other part of South East Asia and the Middle East is the cost of living compared to earnings potential.

However, despite what the numbers seem to show in some key areas, the question that will decide whether or not a move abroad is viable is what the true cost of living actually is.

Now I'm aware that this is an 'interesting' time to discuss this topic given the much reported cost of living crisis that is sweeping Europe in the wake of the conflict in the Ukraine and the post Covid context. I'm not trying to be crass or triumphalist about our move, far from it - I'm genuinely worried about our ability to rebuild our lives in the UK when we return given the current context - we gave up a lot to move here to Malaysia and financial security was one of those things. Also we are not immune to the impacts of the cost of living crisis, although it is not feeding as directly into everyday expenses, it is making it more costly to get home and much more expensive to spend time in the UK especially given our current financial position. Combine that with the fact that the cost of living in South East Asia is not as straight forward as you imagine and the situation is much more complicated than the figures touted on various websites would have you believe.

If you were ever to contemplate doing something like this it is well worth doing some real digging to find out the truth behind the headline figures.

Comparing Apples and Oranges

This is literally the task you engage in when trying to assess the cost of living in another country. The mistake most commonly made is to assume that you just need to transpose costs from one place to another based on your current spending.

To an extent this will sort of work, but we simply haven't spent money on the same things here in Malaysia in the way we did in the UK. Partly because of a significant reduction in our disposable income compared to the UK, but partly because you simply spend money differently here - honestly, it's weird, but you just spend less on 'stuff'. We seem to be more focused on events and experiences - this is something we definitely need to bring back with us in terms of our attitude and approach when we go home.

Also your needs are different away from your home environment, particularly, if like us, you have moved from a temperate Northern hemisphere environment to an equatorial tropical one.

We don't need to heat our housing - no one here does. We do have to pay to cool it though!

However I suppose it is worth thinking about the implications for living costs here if you might be considering moving abroad or just casually interested.

Most of my early research seemed to suggest that the cost of living was between 40-70% lower in Malaysia than in the UK. Yes, that's the kind of variation the figures you find online. So not much help there.

Okay - the best starting point I can give is the fairly well documented average earnings per capita from each country.

On a GDP scale the UK has a per capita GDP that is about 50% higher - very roughly about $30000 in Malaysia compared to $45000 in the UK.

This of course does not convert neatly into actual take home wages - in fact Malaysia remains a middle income country with a mean average wage of around $10000 per year versus the UK at around $30-35000.

(Figures are in USD because that is the international currency standard.)

So let's assume a rough estimate of a 1-3 ratio in terms of income. Therefore to make Malaysia a 'cheaper' place to live the costs would have to be around 66% lower and indeed some authorities seem to suggest this is the case. But is it really?

Yes and no - it goes back to the apples and oranges metaphor. Are we really comparing like for like? After more careful research and filtering the best estimates seemed to suggest that Malaysia is 40-60% (again, a huge range, but probably more realistic) cheaper than the UK in cost of living terms, but that figure makes a whole range of generic lifestyle assumptions.

I'll try to sketch out the situation from our perspective as best I can and let you work out whether or not it is subjectively cheaper, as objectively it is, but there is no way if you move to Malaysia you'd be getting a UK wage. Unless you are, in which case, what are you waiting for?

1: Accommodation

Our estate - Permai Gardens (please note: we do not live in one of these mahoosive houses with private pool access!)

The bizarre 'Garden City' in Johor where less than 1% of the high end apartments and houses are actually occupied! Rents here are very affordable...

This is definitely objectively cheaper, probably by 50-60% or more if you are willing to compromise a little in terms of the age and location of a property.

What is clear is that you can land a real bargain with some pretty decent facilities here. For example we are paying about 650 pounds a month for a four bedroomed house that is at least half again as big as our house back home. It is on a gated estate and has a pool and gym. The house doesn't have a garden, but we do have a balcony, car port and five bathrooms (I have no idea why we need more bathrooms than bedrooms, but there we are). Now this is much more space than we need, but we chose this place due to the fact that it is within walking distance of the primary school. We have lucked out as it is perfect, but we are paying a premium. About a 3rd of our total income went on rent in the first five months of living here (Nicola wasn't working and the tax situation is... well, let's just say it's complicated). This situation will change as of August when the tax situation 'normalises', but accommodation costs are still disproportionately high in comparison to our experience in the UK.

However according to the website Statista this is about the same proportion of income spent on accommodation by private renters back in the UK.

It does bear repeating that we could have saved almost half of this had we compromised on location or floor space and gone for a condo, but the benefits outweighed the cost in our case, but depending on your needs and what you would be willing to compromise on you could definitely live well and spend less. 

In general you could pay less for rental prices here in comparison to the UK, but if you were on a local rather than expat package I suspect that the proportion of your income would be roughly similar to the UK so a zero sum game there.

The main difference would be the likelihood of finding a property with facilities such as covered parking, gyms, pools etc - this is much more the norm here.

Conclusion - if you have a better than average income here you will be able to find better accommodation at a lower rate than in the UK, but that is with the expat salary caveat and a warning about the strange emergency tax situation you encounter in your first year in the country. 

2: Transport

The Perodua Ativa - yes, the car none of you have heard of!

Again a mixed bag - public transport is cheaper; you can get from Penang to Kuala Lumpur return for about the equivalent of 35 pounds return on a high speed train (not quite as fast as the intercity lines in Britain). This seems cheap on the face of it, but again if we think about the 1-3 ratio it's not as far off as a proportion of a local wage as you might think. It seems cheap, but in reality it really isn't. Bus fairs are cheaper and the mass transit system in KL is cheaper than any equivalent in the UK, but probably, just like the train costs, in line with the 1-3 ratio.

What is definitely the case is that private transport is both objectively and subjectively more expensive - cars cost more if they are imported (we bought local), about 30% higher pricewise than in the UK. Not only that, but second hand cars hold their value much longer and at a much higher rate, so no cheap used bargains. This means that as a proportion of an an average private income a car will be some 3-5 times higher than in the UK! This is staggering and I can't help but wonder how there are so many cars on the roads given the objective costs.

This is partly explained by two factors. First - running costs; fuel is at the moment about five times cheaper here than in the UK as Malaysia is a net exporter of petrochemicals and the government subsidises domestic fuel. Also repair costs and parts (specifically if you buy a Malaysian car) are much lower too. There is also a very low road tax and the insurance costs are not that high either. The second factor is the wage disparity - there are a lot of people here who earn above the national average and these are the car owners. The others who are below this line are the ones on mopeds and scooters... and there is a lot of them.

Conclusion - Slightly cheaper if you don't drive, more expensive to buy a car, cheaper to run one. You will also get more money back when you sell your car as depreciation is much lower. So... yeah, not really help there am I?

3: Food

I think that a land of Milk and Honey sounds horribly sticky and smelly...

I would love to give you a straight 'yes this is cheaper' answer and tell everyone that this is the land of milk and honey, but given that those two products are horrendously expensive it would be remarkably disingenuous of me.

Like the two categories above it is not as simple as you might imagine. Dairy is very expensive - more so than in the UK, unless you hunt for a bargain importer (we found one), but even then it will be proportionately more expensive. This is not a surprise as imported food will always be at a premium. Imports from Australia and New Zealand are cheaper, local food is cheaper still. 

For clarification purposes here is a picture of some cheese in case you weren't sure what it looked like...

As a rule of thumb I would say our food bill is half what it would be in the UK. Thus making it proportionately more expensive to live here if you are on a local wage and buy what we do. However, if you are on a local wage you wouldn't do that - you'd go to the wet markets and would not eat dairy and would probably not be vegetarian. 

Eating out is objectively and subjectively cheaper. It is done on a scale which means that most people buy food from some form of external vendor rather than eat at home. Hawker markets are essentially massive communal kitchen/diners that people frequent most nights or grab take out on the way home. It is certainly more cost effective to eat out locally than to cook your own food using imported ingredients and as a result we tend to do that far more often than we did in the UK. A meal for 3 with drinks will average anything between 5-10 pounds, more often at the lower end of that scale.

Yet again though it is easy to get fooled by the headline figures. Until relatively recently the average UK household would have spent only about 10% of their budget on food shopping. The cost of living is rising in Europe - I am keenly aware of that and I hope that everyone is able to come through this as unscathed as possible. However it is an historical oddity for such a low percentage of household income to be allocated for basic food supplies in Europe and the average cost of food here is a bigger proportion of people's incomes than that. There is upward pressure on prices here, it just isn't as dramatic as it is in the West as imports from Russia and Ukraine are not as pivotal in South East Asia.

Conclusion - Cheaper, but not by as much as you'd imagine, unless you go fully local in your approach.

4: Utilities

Essentially - electricity is slightly cheaper, but proportionately more expensive as chunk of wages; water is far cheaper (we pay about a pound a month - 25 times less than in the UK); gas is far cheaper and for cooking only (you'd need to be psychotic to heat a house in Malaysia), about 20% of the cost per unit in the UK. 

Mobile phone tariffs and internet costs are about a third to a quarter of that in the UK. So on the whole it's cheaper even when taking into account the difference in wages on a local scale.

Conclusion - Cheaper, but only just.

5: Everything Else

Entertainment, leisure travel, clothes, medicine and gadgets are all cheaper, but not by the 1-3 ratio across the board. Cinema yes, medicine no, leisure travel yes, clothes no, gadgets no.

Basically you will pay more as a chunk of your income here for some things, less for others.

Conclusion - Depends what you want to spend your money on - 'stuff' is more costly, doing things probably less.

To sum up...

Well that has cleared things right up then! 

I know people want simple answers, but the simple answers tripped us up when looking at our financial planning so I'd advise looking at any of these things with great caution (yeah, I know, great caution is how I do everything). 

If you come to South East Asia expecting it to be the cheap paradise that it may have been as little as 10 years ago you will be in for a shock. The world is rebalancing and this means that as a Westerner you can't come over here and wield your financial clout like a club any more. The expat wages have stagnated and we are currently taking home about 40% of what we would have done in the UK. This means that we need to live very carefully. This will change with the tax situation, but even then we will have seen a drop of between 40-50% of take home pay, which still puts us in a better position than the average local earner! This is not a desperate issue as we can live just as well on that here as we could in the UK, just differently that's all. We have swapped one comfortable lifestyle for a differently comfortable one. When taking into account the cost of living we have essentially the same level of lifestyle here as we had at home - which is to say a pretty good one!

The financial situation is not what attracted us to the idea of moving - far from it - it was the experience, but you need to be realistic about what that experience will bring. Yes, there are parts of the world and jobs where you can still pull in the big bucks - the UAE is still paying higher wages to expats, although not as much as it once did, but on the whole you need to look carefully at the numbers before committing.