Sunday 13 September 2009

 Malaysia is the cheapest place in the world to buy a Big Mac 

A schoolmate of mine Nik Azam came up with this piece which I thought should be shared with you all. He said that the price of a Big Mac in Malaysia is RM5.50. This is equivalent to US$1.52. A fact that we should really include in our TDC Advertisement “For those that love the Big Mac – come to Malaysia to feast”. Currently the Ringgit is undervalued by -57% compared to the US$. It is the most undervalued currency in comparison to Indonesia -51%, Thailand -50%, Philippines -42%, Singapore -26% and Japan -9%.

What are the implications of an undervalued currency? First we are all force to take a discount in our pay by 57% - our buying power decreases by 57%!

The Good.
·     We become a cheap manufacturing center.
·     Factories and other business establishment that may have to close down
       survive the recession.
·     Jobs are saved.
The Bad.
·      It does not encourage our producers and our service providers to be
       competitive in terms of efficiency and productivity.

The Ringgit had been undervalued for several years not because of market forces alone, but due to intervention by Bank Negara. The question now is do we want to continue with this? Those who gain the most are not the workers but the exporters who are paid in US$ but pay their expenses in RM. Will they pass some of their profits to their worker? Not bloody likely!

We feel ourselves this effects when we go overseas, for the Umrah, to attend our children convocation or just for a pleasure tour. We have to pay world prices from our pay packet denominated in an undervalued currency. If we go to Switzerland we have to pay 57 + 58% more. With these kinds of prices it might be better for us all to stay in beautiful Malaysia.

But even just by staying back in Malaysia, it will still affect us. What we use, what we eat – so much of these are imported. Again we pay from our discounted income. On top of that when the price of petrol was hiked up by about 40% the eatery pumped up their prices. When petrol price was brought down, food price did not correspondingly come down. While competition and the working of the free market have adjusted these price to the near correct level the prices in Malaysia has not adjusted downwards, a reflection of the undervalued RM.

The people do not have any say in this policy and do not get anything out of it. The high rate of EPF contribution directly contributes to their long-term savings but this discount of 57%, where does it go? 


  1. agreed!

    the quality of living drops. But our govt doesnt see it like that, they think we are the cheapest place in the world to live in.

    But never compare on the income side how much the locals are losing out.

  2. this is the illogical logic of UMNO leaders...

  3. Couldn't agree more with you. Our govt is misleading the people. It is the purchasing power that counts. Our cost of living is cheap not to Msians but to foreigners.

    Take the income of our fresh graduates for example(They are currently being paid about RM2000-2500/mth). Then calculate how many times their monthly income needed for them to be able to buy an entry level Japanese car and a decent house/apartment within 20km of city centre. Also,what is the % of their income they have to spend for :

    1)a night stay in 4-5 star hotel in KL, Penang, Ipoh or JB
    2)good buffet lunch at these hotels
    3)a return Mas flight from KL to Adelaide
    4) etc...etc

    Compare the above with graduates in UK, Spore etc.. and you will get the answer. It is not only because our currency is undervalued but we are also cheaply paid as well. Do not convert the currency for this simple reason - what we earn here, we spend here and vice-versa. A Toyota Vios here is abt RM80,000, a buffet lunch about RM70-80/person, a 5-star hotel room is abtRM400/night depending on season.

    Again it is the purchasing power that counts. Perhaps you can enlighten us on the cost of living in Australia comparative to the income level using the above as a guide. On a dollar per dollar basis, I am sure it is much cheaper.

  4. Malaysia might be the cheapest place in the world to buy a Big Mac ... sadly many of her ppl still can't afford to eat it or many din even know wat is Big Mac.