Living, working, spending — what will be enough in big cities

BNM’s provisional estimates of a living wage for those in Kuala Lumpur range between RM2,700 and RM6,500 per month

by FARA AISYAH / Pic by AFIF ABD HALIM

Malaysia’s rising cost of living has been hogging the limelight over the last few years. From prices of houses to services and daily necessities, consumers in many parts of the country, especially major cities, are feeling the heat.

Despite the higher economic growth of 5.9% recorded last year, inflation had also reached a new recent high of 3.82% compared to 2.1% in 2015 and 2.09% the year after.

The ringgit’s weakness and higher crude prices have fuelled the rise in prices of necessities. Economists and politicians have differing “views” on the rising cost of living.

Recently, however, the focus has been on wages. Previously, the lowwage regime has helped the country to sprint to economic success. As the country prospers, many sectors continue to depend on the “low-pay” business model to keep cost low, boost profit and retain competitiveness.

To keep the business model alive, foreign workers are employed in the millions, while locals are rooted to a slower wage rise.

The debate over rising cost of living and low pay accentuated when the central bank highlighted the need for “living wage” to ensure Malaysians can participate in society with opportunities for personal and family development, and freedom from severe financial stress.

Bank Negara Malaysia’s (BNM) provisional estimates of a living wage for those living in Kuala Lumpur range between RM2,700 and RM6,500 per month.

BNM’s living wage estimate for a single adult in Kuala Lumpur is RM2,700 a month, a couple without child (RM4,500) and a couple with two children (RM6,500).

The Malaysian Reserve (TMR) looks at the basic expenses for those living in the capital and how they are juggling between needs and wants, and how far their wage will take them.

A Place to Call Home

For many, buying a house, especially with a Kuala Lumpur postcode, is all but a dream. The only other option is renting. But, to find an affordable rental unit in the most expensive city in Malaysia is not an easy task.

Rental of condominiums can run from RM1,500 in the outskirts of the capital to RM15,000 in the city centre. Most city dwellers instead opt for renting rooms as the solution.

“You can get a room in some mid-range condominiums in Kuala Lumpur for between RM500 and RM700 a month with reasonable facilities and security.

“There are of course lower priced rooms of older developments, which command lesser in rental,” said Laurelcap Sdn Bhd property valuer Kit Au Yong.

Rental charges largely depend on the area, facilities, accessibility and fittings of a particular unit.

“For single-room apartments, rental applies the same economics depending on the offerings such as location and facilities.

“The price can range from RM1,000 and reach RM3,000 for a property with new facilities and better location,” Au Yong said.

He said the best locations within the city centre and Golden Triangle — Bukit Bintang and Jalan P Ramlee — to the periphery of capital include Jalan Kuching, Jalan Ipoh and Pudu, among others.

Meanwhile, a three-bedroom apartment without much facilities in Kuala Lumpur could go for about RM2,000 per month. An apartment in the fringes of Kuala Lumpur like Jalan Ipoh, Jalan Setapak and Jalan Pudu ranges from RM2,000 to RM3,000 per month.

The coming of the light rail system 30 years ago has helped people mobility in the capital

Wheels to Work and Elsewhere

Besides rental cost, transportation concerns run high among those living in the capital. The easiest would be to take public transport. Kuala Lumpur has never been short of such services. From those pink mini buses to outskirt bus service companies like Tong Fong, getting around the capital and neighbouring towns and neighbourhoods has never been a huge problem.

The coming of the light rail system 30 years ago has helped people mobility in the capital. Daily commuters can purchase a monthly card for rail, bus and feeder services. A single adult is estimated to spend around RM100 a month to get around using public transport.

The other option is to purchase a car. That, however, comes with a greater financial commitment.

A Perodua Axia 1.0 Standard E (manual gear) in Peninsular Malaysia is priced at almost RM24,000 and a buyer has to pay RM220 a month for a nine-year car loan.

Monthly fuel prices will cost another RM200, while services for a brand new car such as an Axia would make you poorer by around RM600 annually. Additionally, a buyer has to save around RM100 a month for road tax and insurance which costs around RM1,000 annually.

Car owners will also need to set aside about RM100 for toll charges for their travelling, despite being in thecity.

The cheaper option is to buy an entry-level motorbike which will run you RM126 poorer a month for a three-year loan besides an estimated RM50 monthly for fuel.

For a married couple with two cars, the bills alone could easily sprint to above RM1,200 monthly depending on the models of both cars.

Living the Sidewalk Cafe Life

Eating out has not only be a trend, but a necessity to many. Long hours at work, minimum time to prepare home-cooked dishes, the need to socialise and the comparatively high prices of basic goods have made eating out a norm than a luxury.

Eating at inexpensive restaurants in the capital could cost around RM25 per day with a RM5 breakfast, RM10 for lunch and dinner each for a person. Easily, that would cost a single person RM750 a month.

A couple with two children might spend about RM500 monthly on groceries and another RM400 for their occasional eating out sessions.

But working parents will find that a major expense will be the spending for those outside breakfasts, lunches and teas when they are at work. Easily, both working parents with or without children, will need to fork out another RM1,000 for this expense.

Having the Necessities

Eating at inexpensive restaurants in the capital could cost around RM25 per day with a RM5 breakfast, RM10 for lunch and dinner each for a person and easily, that would cost a single person RM750 a month

Much of the living expenses costs are items considered negligible, but together, they will command a sizeable portion of one’s salary.

Utility bills can be sizeable depending on usage. Broadband will cost around RM169 monthly. Cable TV about RM150. Electric bills for homes may range from RM30 monthly and RM80 to a few hundreds depending on the number of air conditioners instaled. And there are also water bills, handphones, sewerage and other utilities.

Then, there are key spending which many can’t afford to neglect — insurance protection is becoming one key component in the life of many families. And it is getting to be more expensive to get protection.

Life insurance premiums and family takaful contributions had risen 48% since 2010 and the amount for this basic necessity can be costly.

Great Eastern Life Insurance planner Ravinder Singh said a single adult will pay RM200 per month for a life insurance and investment policy, while a couple without children may have RM400 monthly premiums.

“As for a couple with two children, they are paying RM700 per month for a life insurance and investment policy and RM175 for one child,” he told TMR.

Besides insurance protections, many young workers have to service their education loans, Employees Provident Fund, Social Security Organisation and other related mandatory payments.

Families with children also have to pay for educations costs, nursery, maids, schooling, transport, tuitions and other related costs — which varies but remain a substantial expenditure for many families.

While the debate continues about the comfortable wage level, it is clear the wage structure needs revision, taking into account the new realities.