Introduction

Malaysia is a dynamic and rapidly developing nation in Southeast Asia, making it an attractive destination for expatriates and businesses. Known for its rich cultural diversity, stunning landscapes, and robust economic growth, Malaysia offers a unique blend of modernity and tradition. Its strategic location, well-developed infrastructure, and favourable business environment further enhance its appeal to international investors and global talent.

As we move into 2024, understanding the cost of living in Malaysia is crucial for employers who wish to attract and retain talent. According to Mercer’s 2024 Cost of Living City Ranking, Kuala Lumpur is highlighted as one of the cities that successfully combines a low cost of living with a high quality of life. This makes it particularly attractive to expatriates, remote workers, digital nomads, and companies seeking to draw top talent. The ability to offer both affordability and quality makes Kuala Lumpur stand out among global cities.

Recent data indicates that Malaysia’s economy continues to grow steadily, with a GDP growth rate of 4.5% projected for 2024, according to the World Bank. This economic stability and quality of life make Malaysia an attractive destination for expatriates.

This article provides a detailed look at the cost of living in Malaysia, with insights on housing, transportation, food, healthcare, and education. We will explore the average costs of these essential needs, offering a comprehensive overview to help employers make informed decisions.

By understanding the nuances of the Malaysian cost of living and leveraging the expertise of EOR services, employers can enhance their talent acquisition and retention strategies, ultimately contributing to their business success in the region.

Housing

Rental Prices

Housing costs vary significantly depending on location. Major cities like Kuala Lumpur and Johor Bahru have higher rental prices than smaller towns and rural areas. In 2024, the average monthly rent for a one-bedroom apartment in the city centre is approximately MYR 2,500 (USD 550); outside the city centre, it drops to around MYR 1,500 (USD 330).

Buying Property

For those considering purchasing property, prices also differ based on location. In Kuala Lumpur, the average price per square meter is around MYR 7,000 (USD 1,540) in the city centre and MYR 4,000 (USD 880) outside. The Malaysian government offers incentives to foreign buyers, including the Malaysia My Second Home (MM2H) programme, which could be a significant factor for expatriates.

Average Housing Prices by Major City

Kuala Lumpur

Kuala Lumpur, the capital city, is known for its vibrant urban life and excellent amenities. The average price per square foot for non-landed properties here is MYR 818 (USD 180), with median prices around MYR 1,202,348 (USD 264,515). Popular areas such as KLCC and Bukit Bintang command higher prices due to their central location and connectivity.

Johor Bahru

Johor Bahru, situated near the Singapore border, offers a lower cost of living compared to Kuala Lumpur. The median price per square foot is MYR 509 (USD 112), with median property prices at MYR 644,300 (USD 141,795). The city is undergoing significant infrastructure developments, including the proposed LRT system, which is expected to boost property values.

Georgetown, Penang

Georgetown is known for its cultural heritage and coastal beauty. The median price per square foot for properties here is MYR 386 (USD 85), with median prices at MYR 730,625 (USD 160,800). The city offers a mix of historic charm and modern amenities, making it a popular choice for both locals and expatriates.

Employer Support for Housing

Employers in Malaysia often provide housing allowances or rental assistance as part of their compensation packages, especially for expatriates. This support can significantly ease the financial burden on employees and enhance their overall satisfaction. Common practices include:

• Housing Allowance: A set amount added to the salary to cover rental costs.
• Company-Provided Accommodation: Employers may offer furnished apartments or houses.
• Relocation Assistance: Covering the costs of moving and settling in, including temporary housing.
• Flexible Benefits Packages: Allowing employees to choose between different types of housing support based on their needs.

Providing such benefits can help attract and retain top talent, ensuring that employees are well-supported and able to focus on their work without worrying about housing logistics.

By understanding the housing market and offering appropriate support, employers can greatly enhance their employees’ living conditions and overall job satisfaction in Malaysia.

Source: EdgeProp and PropertyGuru

Transportation in Malaysia

Public Transport

Malaysia boasts an efficient and affordable public transport system, particularly in urban areas. Kuala Lumpur, the capital city, offers a comprehensive network of buses, light rail transit (LRT), mass rapid transit (MRT), and monorail services. These systems are well-integrated, providing convenient and cost-effective transportation options for daily commuters. The monthly public transport pass in Kuala Lumpur costs about MYR 100 (USD 22), making it accessible for most residents. In comparison, a monthly public transport pass in major U.S. cities like New York costs around USD 127, and in London, it can be as high as GBP 138 (approximately USD 175).

The country is continually expanding its transportation infrastructure to enhance connectivity and convenience. For example, the new MRT lines, such as the MRT Sungai Buloh-Kajang (SBK) Line and the MRT Putrajaya Line, reduce traffic congestion and provide seamless travel across the Klang Valley. Additionally, the LRT Kelana Jaya and Ampang Lines serve as vital arteries connecting suburban areas to the city centre.

Public buses, operated by RapidKL, offer extensive coverage across Kuala Lumpur and surrounding areas. The introduction of the Bus Rapid Transit (BRT) system has further improved travel efficiency by providing dedicated lanes for buses, reducing travel time during peak hours. Overall, Malaysia’s public transport system is a reliable and cost-effective option for both locals and expatriates.

Private Vehicles

While public transport is highly efficient, many residents prefer the convenience of private vehicles. Owning a car in Malaysia involves several costs, including purchase price, maintenance, insurance, and road taxes. Petrol prices in Malaysia are relatively low compared to global standards due to government subsidies, making driving an affordable option for many. As of 2024, petrol prices in Malaysia are approximately MYR 2.05 per litre (USD 0.45). In comparison, petrol prices in the U.S. average around USD 1 per litre, while in the U.K., they are about GBP 1.47 per litre (approximately USD 1.85).

Potential car owners should be aware of the high import taxes on foreign cars, which can significantly increase the purchase price. Maintenance costs are relatively moderate, but they vary depending on the make and model of the vehicle. Regular servicing, tyre replacement, and occasional repairs should be factored into the budget.

Insurance is another essential expense, with premiums based on the vehicle’s value, engine capacity, and the driver’s risk profile. Comprehensive insurance is recommended for better coverage against accidents and theft. Road tax, calculated based on the vehicle’s engine capacity, is an annual cost that car owners must pay to keep their vehicles legally on the road.

Traffic congestion can be a significant challenge in urban areas, especially during peak hours. However, the government’s continuous efforts to improve road infrastructure and expand public transportation options aim to alleviate this issue. For those living in suburban or rural areas, private vehicles remain a practical necessity due to limited public transport options.

Employer Support for Transportation

Employers in Malaysia often provide transportation allowances as part of their compensation packages, especially in urban areas where commuting can be costly. Common practices include:

• Transport Allowance: A fixed amount added to the salary to cover commuting costs.
• Company-Provided Transportation: Shuttle services or company cars for employees.
• Parking Allowance: Reimbursement for parking fees for employees who drive to work.
• Flexible Benefits Packages: Options allowing employees to choose between different types of transportation support based on their needs.

Providing such benefits can help attract and retain top talent, ensuring that employees are well-supported in their daily commutes and can focus on their work without transportation concerns.

By understanding the transportation landscape and offering appropriate support, employers can significantly enhance their employees’ convenience and overall job satisfaction in Malaysia.

Source: RapidKL and RinggitPlus

Food and Dining

When comparing food prices, Malaysia offers significantly lower costs than both the U.S. and the U.K.. Groceries and dining out in Malaysia are more affordable, providing high-quality, diverse food options at a fraction of the cost. This affordability can be a major advantage for expatriates and businesses, contributing to a higher quality of life at a lower expense.

Groceries

The cost of groceries in Malaysia is generally lower than in many Western countries. A monthly grocery bill for a single person ranges from MYR 300 to MYR 600, approximately USD 65 to USD 130, depending on dietary preferences and shopping habits.

Comparatively, in the U.S., a single person’s monthly grocery bill averages around USD 250 to USD 350; in the U.K., it ranges from GBP 150 to GBP 200 (approximately USD 190 to USD 250). This significant difference highlights the affordability of groceries in Malaysia.

Common Grocery Items in Malaysia

1. Rice (1 kg): MYR 3.50 – MYR 5.00 (USD 0.75 – USD 1.10)
2. Chicken Breast (1 kg): MYR 15 – MYR 20 (USD 3.25 – USD 4.35)
3. Milk (1 litre): MYR 7 – MYR 10 (USD 1.50 – USD 2.15)
4. Eggs (12): MYR 5 – MYR 7 (USD 1.10 – USD 1.50)
5. Apples (1 kg): MYR 8 – MYR 12 (USD 1.75 – USD 2.60)

Eating Out

Dining out is an integral part of Malaysian culture, with various affordable options available. A meal at a mid-range restaurant costs about MYR 20-50 per person, equivalent to USD 4.35-10.85. In comparison, a similar meal in the U.S would typically cost around USD 15-30; in the U.K., it would be around GBP 12-20 (approximately USD 15-25).

Street Food and Hawker Centres

Street food is even more affordable, with meals costing as little as MYR 5-10 (USD 1.10-2.15). Malaysian hawker centres offer diverse, delicious, and inexpensive food options. For instance:

1. Nasi Lemak: MYR 5 – MYR 8 (USD 1.10 – USD 1.75)
2. Char Kway Teow: MYR 6 – MYR 10 (USD 1.30 – USD 2.15)
3. Roti Canai with Curry: MYR 2 – MYR 4 (USD 0.45 – USD 0.85)
4. Satay (10 sticks): MYR 10 – MYR 15 (USD 2.15 – USD 3.25)

Employer Support for Food and Dining

Employers in Malaysia often provide meal allowances as part of their compensation packages, particularly in urban areas where dining costs can add up. Common practices include:

• Meal Allowance: A fixed amount added to the salary to cover meal expenses.
• Subsidised Canteens: Companies may operate subsidised canteens to provide affordable meals.
• Meal Vouchers: Provide meal vouchers that can be used at various dining establishments.

Providing such benefits can help attract and retain top talent, ensuring that employees are well-supported in their daily dining needs and can focus on their work without concerns about food expenses.

By understanding the food and dining landscape and offering appropriate support, employers can greatly enhance their employees’ well-being and overall job satisfaction in Malaysia.

Source: Numbeo: Food Prices in Malaysia and Numbeo: Price Rankings by Country of Meal, Inexpensive Restaurant (Restaurants)

Healthcare

Public Healthcare

Malaysia’s public healthcare system is highly subsidised and offers quality services. Public hospitals and clinics, managed by the Ministry of Health, ensure basic healthcare services are accessible and affordable for all residents.

Private Healthcare

For those who prefer private healthcare, Malaysia offers world-class medical facilities at a fraction of the cost in Western countries. Private hospitals in Malaysia are known for their modern equipment, highly skilled medical professionals, and shorter wait times than public hospitals. Health insurance is recommended to cover the cost of private medical treatments, which remain affordable compared to the U.S. and U.K. despite being higher than public services.

Cost Comparison between Malaysia, the U.S., and the U.K.

1. General Practitioner (GP) Visit:
   • Malaysia: MYR 50 – 100 (USD 11 – 22)
   • U.S.: USD 100 – 200 per visit
   • U.K.: Free under NHS (long wait times, potential underfunding issues)
2. Specialist Consultation:
   • Malaysia: MYR 150 – 300 (USD 33 – 65)
   • U.S.: USD 250 – 500 per visit
   • U.K.: Free under NHS (with referral, long wait times)
3. Hospital Stay (per day):
   • Malaysia: MYR 300 – 600 (USD 65 – 130)
   • U.S.: USD 2,000 – 4,000 per day
   • U.K.: Free under NHS (potential for long waits for elective procedures)

Public vs. Private Healthcare

Malaysia’s healthcare system offers a mix of public and private options, catering to different needs and preferences. The public system is highly subsidised, making it accessible, while the private sector provides premium services at relatively low costs.

Expatriates and EPF Contributions

Expatriates working in Malaysia are required to contribute to the Employees Provident Fund (EPF), which is mandatory. The EPF is a social security institution that provides retirement benefits and includes a medical benefit component. Contributions are 11% of the employee’s monthly salary, while the employer contributes 12-13%. This fund helps cover public healthcare costs, ensuring expatriates can access essential medical services at subsidised rates. This setup contrasts with the U.S., where healthcare costs are predominantly covered by private insurance plans.

Employer Practices and Recommendations

Employers can play a significant role in supporting employee healthcare by offering comprehensive health insurance packages. Common practices include:

• Health Insurance: Providing health insurance covering public and private healthcare services.
• Wellness Programs: Implementing wellness programs that promote healthy lifestyles and preventative care.
• Employee Assistance Programs (EAPs): Offering EAPs that provide confidential counselling and support for mental health and well-being.
• Flexible Spending Accounts (FSAs): Allowing employees to set aside pre-tax dollars for medical expenses.

By offering these benefits, employers can enhance employee satisfaction, reduce absenteeism, and promote a healthier workforce.

Source: Health System Tracker, The Guardian

Education

Public Schools

Public schools in Malaysia follow the national curriculum and are free for citizens. However, they may not be the first choice for expatriates because the language of instruction is primarily Malay. Additionally, public schools may have limited resources and facilities compared to private and international schools.

International Schools

International schools are the preferred option for expatriates, offering curricula such as the International Baccalaureate (IB), British, and American systems. Tuition fees for international schools can be quite substantial, with annual fees ranging from MYR 30,000 to MYR 50,000 (USD 6,600 to USD 11,000) for primary and secondary levels. Top-tier international schools can charge up to MYR 100,000 (USD 22,000) per year for high school.

Beyond tuition, parents must cover additional costs such as application fees (over MYR 1,000 or USD 220), school development fees (up to MYR 20,000 or USD 4,400), examination fees, technology fees, uniforms, international trips, and extracurricular activities. The cost of international school education is likely to continue rising, with annual increases of 5% to 10%.

Private Schools

Private schools offer a more affordable alternative, with annual tuition fees ranging from MYR 5,000 to over MYR 20,000 (USD 1,100 to USD 4,400) for primary and secondary education. Top-tier private kindergartens using methods like Montessori can cost up to MYR 30,000 (USD 6,600) per year.

Home Schooling and Other Options

Home-schooling centres and private learning centres, which often follow international curricula, are another option. Costs can range from MYR 400 to MYR 3,000 (USD 90 to USD 660) per month. Private Chinese independent schools offer another alternative, with fees ranging from MYR 3,500 to MYR 6,000 (USD 770 to USD 1,320) per year, excluding boarding costs.

Providing a high-quality, well-rounded education in Malaysia can be expensive, particularly in urban areas. Parents must plan carefully to ensure they have the resources to support their children’s educational needs.

Employer Support for Employees’ Children’s Education

Employers can significantly support their employees by including education-related benefits for their children in their employment packages. Common practices include:

• Education Allowance: Providing financial assistance for school fees and other educational expenses for employees’ children.
• Scholarship Programs: Offering scholarships for employees’ children to attend international or private schools.
• Flexible Work Arrangements: Allowing parents to adjust their work schedules to accommodate their children’s schooling and activities.

By offering these benefits, employers can help alleviate the financial burden of education, attract top talent, and improve overall employee satisfaction and retention.

*Source: OCBC

Key Actions for Employers in Malaysia

Salary Adjustments

In Malaysia, adjusting salaries to reflect the cost of living is crucial for attracting and retaining top talent, especially given the rising living costs in urban areas like Kuala Lumpur and Penang. Competitive salaries are aligned with industry standards for local employees, ensuring that they can comfortably manage their expenses. For expatriates, salary packages often include additional allowances to compensate for the cost of living differences between Malaysia and their home countries. Regularly reviewing and adjusting salaries can help employers stay competitive in the job market.

Relocation Assistance

Providing comprehensive relocation assistance is essential for expatriates moving to Malaysia. This often includes housing allowances to cover rental costs, which can be high in major cities. Additionally, employers may offer assistance with school fees for expatriates’ children, ensuring they can access quality education at international or private schools. Relocation packages might also cover travel expenses, temporary accommodation upon arrival, and services to help expatriates settle in, such as finding a home or navigating local bureaucratic processes. These measures make the transition smoother and more appealing for international talent.

Benefits Packages

Enhanced benefits packages are a key component of a competitive employment offering in Malaysia. For local employees, benefits typically include health insurance, which covers medical, dental, and vision care. Transportation allowances are also common, helping employees manage commuting costs. Meal vouchers or subsidised meals can significantly improve daily living standards. For expatriates, benefits packages often extend to cover international health insurance, additional housing allowances, and sometimes even costs associated with returning home periodically. Providing robust benefits packages can greatly enhance employees’ quality of life and job satisfaction, leading to higher retention rates.

Standard Employment Packages in Malaysia

For local employees, typical employment packages include:

• Base Salary: Competitive and aligned with industry standards.
• Health Insurance: Comprehensive coverage for medical, dental, and vision care.
• Transportation Allowance: Monthly stipends to cover commuting expenses.
• Meal Vouchers/Subsidised Meals: To support daily food expenses.
• Annual Bonuses: Performance-based financial incentives.

For expatriates, the packages often include additional perks:

• Housing Allowance: To cover rental costs in major cities.
• Education Assistance: Covering school fees for children at international or private schools.
• Relocation Support: Including moving expenses, temporary accommodation, and settling-in services.
• International Health Insurance: Providing coverage for medical needs in Malaysia and abroad.
• Home Leave: Annual travel allowances for trips back to the home country.

Conclusion

Employers in Malaysia must adapt their compensation strategies to meet the needs of both local and expatriate employees. Companies can attract and retain top talent by offering competitive salaries, comprehensive relocation assistance, and enhanced benefits packages, ensuring long-term success and employee satisfaction.

Employer of Record (EOR) services can be invaluable for companies expanding into Malaysia. EORs handle various administrative and legal responsibilities, including payroll, benefits administration, and compliance with local labour laws. By partnering with an EOR, employers can ensure that they offer competitive compensation packages while adhering to local regulations. This simplifies the process of managing both local and expatriate employees in Malaysia and ensures that businesses can focus on their core operations without getting bogged down in administrative details.

Contact Eos Global Expansion today to learn how we can assist in developing tailored employment packages and strategies to support your workforce.

Photo by Sabeer Darr on Unsplash