Malaysia offers excitement, adventure and opportunity for expats. A booming economy, rich culture, a high level of development and friendly locals make the country a vibrant and energetic place to live and work.
There has been a long history of empires and immigration in Malaysia, making for a hectic mix of ethnic backgrounds and a plethora of languages. Luckily for expats, English has become widespread, and is well established at all levels of society.Whilst Islam is the state religion and over 60% of Malaysians identify as Muslim, the country has a very tolerant attitude to religion with sizable populations of Buddhists, Hindus and Christians living happily together. This means there is always a party to enjoy; towns will host festivities for Eid Mubarak, Diwali and Christmas in equal measure.
But as rich and varied as Malaysia is, it’s important to weigh up the cost of living. Whilst comparatively cheap, Kuala Lumpur is listed as the 96th most expensive city to live in the world, and prices have been rising in recent years.
Before you move, make sure you analyse the costs of everything, and make a budget for everything you need in the country. To help balance the books, we’ve taken a look at the costs of essentials to make sure your money matters in Malaysia are free from melodrama.
Malaysia is a fairly friendly place as far as taxes go. Anyone living in the country will find themselves sorted into one of three categories which will dictate their income tax rates.
Anyone staying for longer than 182 days is regarded as a resident, and is liable to pay income tax. Residents pay anything up to 25%, depending on their income level.
Temporary residents pay a flat rate of 26% if they stay for less than 182 days. The third category is a bit more complicated.
Exemption from income tax is granted to anyone over 55 years old, receiving a state pension or living on the interest of savings. As long as this class works fewer than 60 days a year, they avoid tax on earnings.
Sales tax applies to a wide range of products, including books, technology and fees for education or medical care. Food, clothing, sports equipment and building equipment is tax free, but tobacco and alcohol are loaded with a 15% levy.
Expats can be smart with their tax situation, international banking is common in Malaysia and expats are not required to pay tax on foreign income or interest if registered under the Malaysia My Second Home scheme.
The country also has reciprocal agreements with nations around the world to avoid expats being hit with taxes twice. Americans subject to the FATCA legislation especially should explore this legislation.
The growing middle class in Malaysia is making the most of its disposable income and free time. Joining the local leisure centre or country club can quickly lead to a host of new hobbies.
Expats in Kuala Lumpur and Penang have a thriving social scene with groups like International Women’s Association introducing new arrivals to each other and new pastimes. Expect to suddenly be belly dancing, playing ping-pong and dining out with new friends in short order. Joining a club can cost as little as US$30 a month.
Cinema tickets can be less than US$3, which is significantly cheaper than Western prices, as are theatre and concert tickets.
Transport costs are entirely dependant on your commute. A train journey in the centre of town can be US$0.50 and a monthly pass could set you back US$23.
Whilst traffic in Kuala Lumpur is pretty hectic, it can be worthwhile buying a car for journeys to the outskirts or for exploring the countryside. Fuel subsidies have been reformed in recent years, but Malaysian-produced gasoline has only gotten cheaper, with a litre costing only US$0.50 and diesel costing even less.
Buying brand new isn’t always the cheapest deal, with a Volkswagen Golf costing around US$36,857, but second hand vehicles can be significantly cheaper.
Many expats join the buzzing hoards of scooter riders flitting through city traffic on cheap Vespas.
Utilities are cheap in Malaysia, thanks to a government policy to provide the country with good value local energy sources. Consumers’ power is supplied from a mix of renewable and homegrown fossil fuels, with gas being as low as US$3 a quarter.
Until late 2014 cooking gas was also subsidised, with the government picking up almost half of the cost. With a slump in fossil fuel prices, this subsidy ended and is unlikely to return.
Even paying full price won’t break the bank for most expats. Electricity, water, heating, cooking and even garbage disposal can come to less than US$48 a month. Expect this to rise if you are addicted to your air conditioning, though.
Malaysia enjoys some of the best telecommunications in Asia, with nearly 30 million mobile phone subscribers and millions more with landlines. Sadly this has not translated into a world-beating Internet infrastructure and the country is listed a dismal 70th place on the 2015 State of the Internet report.
Getting online is still a toe-curlingly slow experience, defining broadband as anything with a faster rate than 56kbs. For this nostalgic experience of mid-90s Internet connection, expect to pay some of the world’s highest costs, US$40 a month.
Much like fuel, subsidies to food have been reformed in recent years, instead giving cash to the poorest Malaysians.
This means that the cost of staple food has risen slightly. But thanks to Malaysia’s year-round growing season, fruit and vegetables are available cheaply at any time thanks to not needing to account for shipping costs.
Most towns will have an old market for meat, poultry and fish, which can all be bought fresh at exceptionally good prices. Cooking at home can be a very effective way to stretch a budget; 1kg of rice costs less than US$1, and the same weight of chicken breast will set you back US$2.5.
Eating out can cost quite a bit more, but is still a bargain compared to the west. Two can dine at a quality restaurant and get three courses and drinks for about US$15.
The costs start to climb if you like a drink at home. A bottle of mid-range wine can cost US$13 and a beer in a bar can be US$2.50. This is fairly comparable to European prices, but the cost of booze can be so much higher than food that a night on the town can quickly take tiddly expats by surprise.
Like in much of Asia, Malaysia enjoys a good range of cheap, high quality technology. Cameras and computers as well as washing machines and microwaves can all be found at bargain prices year-round.
Things only get better if you shop around holiday periods. Retailers celebrate Muslim, Hindu, Christian and Buddhist festivals by slashing prices and fiercely competing to offer the best deal.
Malaysians are enjoying more and more disposable income and are keen to spend their cash on the newest and shiniest gadgets available.
Expect to find yourself collecting electronic devices to cater for just about every daily task you can imagine.
Malaysia has dual systems offering healthcare. Both the private and public sector deliver some of the world’s best care and attract high levels of healthcare tourism.
Expats are permitted to use the public healthcare systems, but many opt for the private system. In either case, all foreign residents are required to take out medical insurance from a provider approved under the Foreign Worker Hospitalisation and Surgical Insurance Scheme. This gives the expat full access to state hospitals for a set amount of care.
These approved insurers offer a range of packages so be sure to shop around.
It’s always worth taking out specialist health insurance that will not only give access to private doctors and dentists, but also provide repatriation to your home country in the event of serious injury or illness.
There are three options to educate your children whilst living in Malaysia, and all cost money.
Public schools are subsidised by the state and are the least costly option for expats. The standard of education is very high and schools pride themselves on offering a range of extracurricular activities. The only drawback to these schools is that classroom sizes can be as high as 50 children per teacher.
Private schools are expensive, but may be the best option for short-term expats, as the schools operate entirely in English. The schools follow a curriculum set by the government but enjoy smaller classes and better-trained teachers. Expat parents should also budget for expensive uniforms.
The final option is international schools. A prominent number of these are British-inspired schools in Kuala Lumpur, and they concentrate on following the British curriculum as well as recreating a British working culture. These schools can be very expensive.
As with anywhere in the world, you get what you pay for, but in Malaysia your pound can buy a bigger pad. Some parts of Kuala Lumpur have become ultra fashionable so prices are artificially high, but shopping around the less trendy areas can uncover perfectly reasonable bargains at equally reasonable prices.
It’s entirely possible to blow US$1,100 a month on a 2-bed apartment in the chic streets, whilst buying a modest terraced home in its entirety will only set you back US$48,000. The further out from the centre of KL you look, prices quickly start tumbling and one-bed apartments can be found for less than US$300 a month.
The Government has attempted to forestall a property boom, instituting a 26% tax on income made from buy-to-let properties. This puts a lot of potential landlords off entering the market, but those that do take the plunge pass this cost on to the tenant. In most cases it makes sense to buy your property outright and expect to make a modest profit when selling it on.
House prices in Malaysia have been steadily climbing along with demand over the past decade. Whilst prices are expected to rise further still, don’t expect a UK-style housing bubble to drive costs sky-high.
It’s possible that your employer may have property available to rent cheaply to expat employees. If not, you should at least insist that a relocation allowance gets added to your pay check.
The cost of living in Malaysia is currently cheaper than in most Western countries. Brits and Americans in the country will find the spending power of their dollars and sterling can give them serious clout in the ringgit economy. That’s not to say the Malaysian exchequer is not catching up.
After consistent 6% annual growth over the half century, Malaysia enjoys one of the best economic records in Asia thanks to careful macro-management by a succession of governments. In 2014, the county’s GDP broke US$746.8 billion and it looks on course to be a self-sufficient industrialized nation by 2020.
Kuala Lumpur’s successful fiscal management has translated into a high level of education and enough investment in infrastructure to rank the country as the 15th most developed in the world.
All this nationwide growth has lead to an increase in the spending power of Malaysians, closing the gap with western currencies. The basics are still cheap; it’s possible for two to dine on generous portions in a mid-level restaurant for as little as US$11. But the cost of big, luxurious investments is climbing.
In line with the growing economy, Malaysia has recently introduced a 6% sales tax and cut subsidies to small business, who have raised prices by 20%. Consequently 56% of expats surveyed by Jobstreet report having minimised the amount they dine out.
Whilst money in Malaysia is no longer stretching as far, most expat employers are raising wages in an attempt to keep pace with price fluctuations as well as the customary bonus packages.
Malaysia’s near neighbour, Singapore, is still considerably more expensive and prices do vary around the country, with the capital of Kuala Lumpur and tourist hotspot Penang being the priciest.
Wherever you end up in the country, plot out a budget and negotiate hard with your employer for the best deal you can get, using the average Malaysian monthly salary of US$1700 as a guide.
Article by Andy Scofield, Expat Focus International Features Writer