Cost of Living in Malaysia – Retire in Malaysia, Part 2

fruit and vegetables in Costa Rica
Who wouldn't want to buy fresh fruit & vegetable at a place like this? [Photo by M M from Switzerland (Malaysia), via Wikimedia Commons]

As with every country we review for you, we always have an eye on our cost of living comparison to the benchmark US$1300 per month, which is about the average US Social Security payment. We’ll come back to you on this at the end of this review.

Malaysian Currency

Let’s talk a bit about Malaysian currency just so we’re all on the same page. The currency is called the Ringgit (RM), and its code on the currency exchanges is MYR while its symbol is RM. Common denominations in bills are 1, 5, 10, 50 and 100 RM. Coins in general use are 5, 10, 20 and 50 sen (cents).

Current (August 2016) rounded conversion rate is 4 Ringgits to a US dollar, so a Ringgit is worth about a quarter in US currency. Comparisons to other currencies vary with market prices but today the rate is about 3 Ringgits to a Canadian or Australian dollar, 5.25 to a British Pound Sterling and 4.4 Ringgits to a Euro. The average inflation rate at this time is 2.1% annually.

Cost of Living in Malaysia: What’s Cheap and What’s Expensive

Let’s start with the rule of thumb that applies pretty universally but especially so in more remote parts of the world (read non-Western world): If the commodity is imported then it’s going to cost more.

This is true of both manufactured goods and foodstuffs. This stands to reason as there are transportation costs involved. Also demand may be lower in the importing country, which drives cost up.

A corollary to this is that goods found in the market-place are often less expensive than the same goods found in the retail store. While the biggest example of this is food, it also applies to most items that you’ll come across at the market.

The reason for this is that overheads are lower at the market and all transactions are done in cash. That means there’s no costs for electronic transactions and often an avoidance of taxes.

Finally, processed, packaged or frozen foods will cost more. This is inherent in the extra cost associated with preparation; what food companies would call value added content. For the most part, these goods are found in retail stores and are imported. Two strikes already!

This will seem counter-intuitive to many Westerners, who have different buying experiences and habits in their home country. There, high production volumes will lower costs (we’re told) and markets are places for the retailing of specialty items at higher prices. This is the reverse of what you’ll find in more traditional shopping venues.

Cost of Living  in Malaysia: Food Costs at Home

The prices I’m going to show you are current and an average from across Malaysia. Like many places, larger cities will have more expensive prices. This is especially true of Kuala Lumpur, the capital. Also tourist areas on the Northeast shore will have higher prices for restaurants and alcohol.

The market food prices below come from the Numbeo website, an invaluable research tool when investigating offshore costs. Prices are in US dollars, measurements in US as well.

Average Food Prices in Malaysia [Source:]

Cost of Living in Malaysia: Eating Out

Once again we’ll look at average prices across the country and compare to Kuala Lumpur, one of the more expensive places to eat. You’ll see that the differential isn’t huge and nothing like the differences in rent for example (more on that later).

An inexpensive meal at a restaurant in Malaysia might cost you $2.25 as compared to perhaps $2.50 in KL, as the locals call it. Something more upscale averages $12.50 for two people having a three course meal. KL price might be $15.00.

That’s without alcohol of course; a bottle of wine will be between $12.50 and $15.00. Draft domestic beer runs between $0.65 and $3.00 per 20 oz pint (0.5 liter bottle).

So whether you’re in the city or not, dining at a restaurant is pretty inexpensive compared to Western prices.

Cost of Living in Malaysia: Accommodation

The average cost across the country to rent a one bedroom unfurnished apartment in a city center is $395 US. Compare this to the same apartment outside the city center which averages $220 US.

A three bedroom apartment in the city center will be about $710 while outside the center a gentler $400.

That’s providing the city in question isn’t Kuala Lumpur! In KL, a one bedroom apartment in the city center will set you back about $600 US and outside the city center a more modest $310 US.

A three bedroom in KL runs an average of $1065/mo while outside the center of town you’ll find 3 bedrooms for around $530.

So, unless you decide to settle in Kuala Lumpur, or the center of another major city, your cost for rent shouldn’t take up more than 30 to 40% of our baseline income of US$1,300.

Cost of Living in Malaysia: Household Help

Interestingly, domestic labour is not supplied by Malaysians but by immigrants, much like in the USA. The maids are generally represented by an agency and you’ll pay a fee for the agency to help you find the right maid. Consider that these maids generally live in and you’ll be supplying room and board as well as wages.

The maids will come from either Indonesia or the Philippines. Maids from Indonesia will generally only speak their native tongue and will cost about $90/mo in wages for 7 days per week service.

Maids from Philippines will cost twice as much, around $175/mo for 6 days a week labor but generally speak English at some level.

The hiring, accommodation and training of these people are your responsibility. They will be registered with the government and must adhere to strict rules, particularly the Indonesian maids. For them you must open a joint bank account to pay them as they’re not allowed to carry cash for two years. Filipinas are not so restricted.

Cost of Living in Malaysia: Summary

It seems that Malaysia is yet another country where you can live easily on the $1,300 base line we’ve discussed. Accommodation, food and household help are quite inexpensive.

Next, we’ll look at a host of other factors such as communication, transportation and entertainment costs. I’ll see you there!

Lower cost of living is just one of the financial benefits of retiring in Malaysia. Check out this comprehensive guest article about Malaysia’s financial benefits by Lieu Ching Foo, a prominent personal finance blogger and independent financial adviser in Malaysia.