One of the indices that compare the purchasing power of a country is the Big Mac Index, compiled every year by The Economist.
The BIg Mac index is the amount of local currency that is required to buy a big Mac in that country.
According to the index, Malaysia has one of the cheapest Big Mac. Since I do not subscribe to the Economist online, I have to post the list from Wikipedia:
Five most expensive (as of 4 February 2009)[4]
- Norway – USD 5.79
- Switzerland – USD 5.60
- Denmark – USD 5.07
- Sweden – USD 4.58
- Eurozone – USD 4.38
Five most affordable
- Malaysia – USD 1.70
- Hong Kong – USD 1.71
- China, People’s Republic of – USD 1.83
- Thailand – USD 1.86
- Sri Lanka – USD 1.95
We have one of the cheapest Big Mac, meaning that our purchasing power parity is strong. But before we start to rejoice, we need to look at another index first.
This is the alternative index, or how much time a person needs to work in order to buy a BIg Mac locally.In fact, this will give a better picture than the Big Mac index.
I will post the graph from The Economist on this: (you can also go to the Economist here)
(click to enlarge)
Malaysia is not on the graph, but I can tell you Malaysian in Kuala Lumpur needs to spend 33 minutes to buy a Big Mac locally.
Look at Shanghai. A few years ago, it took a Shanghai worker more time than a Malaysian to work to buy a big Mac there, now SHanghai has not only overtaken Kuala Lumpur, but Singapore as well.
If a worker needs less working time than a Malaysian to buy a big Mac, it means that he is much better paid, and if he works the same time as a Malaysian, he can wither buy more things than that Malaysian, or if he and the Malaysians buy the same things, he would have more savings and richer than the Malaysian.
This means that even though our Big Mac is among the cheapest, our people’s wages are low that we have to work so much more time to buy a big Mac.. That says a lot about our standard of living as well as our standard of well being..
Newzealanders, Australians and Canadians , even thou their big Mac is so much more expensive ths in term of our curency, needs to work 14 minutes to get a BIg Mac. Meaning that they are almost 3 times better paid than us..
Let us call the time needed to work to buy one Big Mac as 1Mac, since nowadyas, everyting has a prefix 1. When can we achieve the status as the Australian to buy that 1Mac?
1Mac in 1Malaysia
Dr. Hsu's forum 
Oct 27, 2009 @ 16:18:16
Just a thought. 1Mac if you rearrange the letters, can become 1MCA…
That is what MCA is now calling themselves, 1MCA, 1 Team,……etc etc,, even when MCA now is more like 3MCA or 5MCA, its top people still want to call it 1MCA.
Star LRT should change name to 1LRT, rapid KL to 1KLRapid, Bukit Bintang to Jalan 1BB, Pudu can be renamed 1Pudu, SS2 can be called 1SS2, Proton be called 1Proton… LGE should call his state 1Penang….
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Oct 27, 2009 @ 16:21:14
Dr Hsu. It not just price alone. Malaysia’s Big Mac had shrunk by 50%. And the pickled cucumber is missing. Are all the Big Macs the same?
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Oct 27, 2009 @ 16:25:26
On further thought. The Big Mac index may not be usable anymore because it may not be uniform around the world. The Malaysian BigMac is definitely not American portion.
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Oct 27, 2009 @ 16:53:26
We will never achieve the same 1Mac status as the Australian worker so long as we continue to depend on imported low wage low skills foreign workers. Wages have to be suppressed to sustain cost competitiveness so the 33 minute Malaysian 1Mac is likely to hang around.
Malaysia is currently trapped in an economic conundrum of its own making, not able to wean itself off cheap imported labor and yet not able to move up the value chain utilizing skilled indigenous labor to produce higher value goods and services. Expect a steady state of economic stagnation in the next few years and smarter neighbors to overtake us with the sub-30 minute
1Mac.
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Oct 27, 2009 @ 17:11:53
The EIU graphics is based on UBS report. According to UBS Price and Earnings 2009 report http://www.ubs.com/1/e/wealthmanagement/wealth_management_research/prices_earnings.html
Conclusion on M’sia: low income, low price place.
I have doubts on how M’sia can move up the value and income chain unless we make a SERIOUS change to the education system, bureaucracy and values (incl. meritocracy) in the society. I just feel that M’sia has been regressing rather than progressing in the past decade – really hope I am wrong.
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Oct 27, 2009 @ 17:30:15
Malaysia’s economy not only in a state of stagnation. the more worrying part is may be stagflation whereby economic growth is stagnant while cost of living inflated due to corruption and inefficiencies.
Look at the main objective of Najib’s 2010 budget : Towards a high income society. But how ? he hasn’t give us any clue to achieve that. So, back to hot air lip service again? Worst of all is all the genius ministers echo the slogan and praise the budget as a superb one.
We have very experienced businessman and technocrats who have good grasp of economic and financial matter, but are they being offered a chance on the nation building economic exercise? I doubt so. Lets face it, our ministers who are entrusted into economic matters for the past 10 years were limited 3 person : Mustapha Mohd, Effendi Nawawi and Nor Mohd Yaacop. Out of the 3, only Mustapha is a politician while the other 2 were formerly civil servants. This clearly shows UMNO got no capable economic captain that can be even good enough for a trial.
Malaysia is destined to be left behind tailing Indonesia if they continue to have political stability and Susilo charting its route into prosperity. Then we can continue the slogan shouting game where 1UMNO for 1Nasi Lemak, 1MCA for 1Hainanese Chicken Rice and 1MIC for 1Roti Canai, while 1Gerakan be the 1KPI referee to ensure all three delicacies sharing the No. 1 spot each receiving 1 trophy in different weightage base on population %. 1Fair Malaysia with 1Deteriorating living standard.
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Oct 27, 2009 @ 18:48:17
Dr,
I can’t help but to chip in. The 1MCA is already an abbreviation for: (sounds like)
“Won Millionaire Copperfield Association”
Now you hear (me going to resign) but NOW you DON”T.
And the big Mac, the word, “big” is an illusion, only the “photo” is big, reality is something else, actually “no” value, not worth the value. Most restaurants have “delicious” looking photos in the menu, cos’ the professionals took it, they color touch and gloss it over. When you get the food on the table, you would probably think it came from the pig-thrash. I kena once in a Japanese restaurant, I never go back again.
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Oct 27, 2009 @ 22:34:27
1Malaysia camp.
Cilipadi, I told you, 9th moon rolling into death. One drown and two missing. The NEW bridge collapse.
All for the 1Malaysia camp. Bad omen.
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Oct 27, 2009 @ 23:07:41
I think the comparison method for the BigMac is not right. The measure should be USD/Sq cm of BigMac.
The second measure of the per hour pay for the McDonald worker. The second measure will give us a better picture of 1Malaysia.
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Oct 27, 2009 @ 23:23:09
1 BULL on high income.
give us some relief and whack us on higher petrol 9 (coming soon) and cant even spare RM50 for a credit card.
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Oct 27, 2009 @ 23:29:57
Dr,
Pkr is heading for some political turbulence soon.
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Oct 28, 2009 @ 05:32:56
CYC,
You are right to worry. Stagflation will arrive in Malaysia just before chaos and collapse of the current economic order if much needed institutional reforms do not come in time to save the day. Decay appears imperceptibly slow till towards the rotten end when foundations suddenly collapse. This may be when the oil bonanza runs out ( 20 more years? ) and subsidies on basic necessities have to be removed before it bankrupts the government. However, our BN-Umno government chooses
short term political expediency to stay in power rather than implementing tough reforms.
Just imagine the impact when low wages meet rocketing living costs in a situation where more than half the population are on subsistence wages. Food riots and demonstrations will be the order of the day. It can then be the hour-plus 1Mac except that McDonald’s would have pulled out of Malaysia. It just announced a pullout of economically stricken Iceland.
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Oct 28, 2009 @ 10:10:43
monk,
that wis why i said that there is a fractioalising virus around all the parties.
PKR is having problems, PAS is going to have some problems, DAP is alright so far. But the problems in PAS and PKR would affect PR and the 2 party system may revert back to one-party-dominates-all system.
AI should have concentrated in governing the states and also put his own house in order, disciplinaing racist like the MP Z.
But perhaps klm is right; this may be a process of evolution…
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Oct 28, 2009 @ 11:23:15
Umno is a sly old fox, not so easily to let go power. I said before, “master strategist”. This is the effect of what we see now in PKR and PAS.
Nik Aziz has the wisdom to counter it by calling an EGM.
PKR is too ambitious to go Sabah and Sarawak. The politicians there are totally different and “very liquid”. Anything can happens. Money rules there. It is best to let Sabah and Sarawak alone. Let them have the “autonomy” they want.
PR will be on stronger footing after clearing these messes.
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Oct 29, 2009 @ 09:58:58
Why compare Big Mac – it’s all imported ingredients and processed food with cost built in from advertisement.
Compare local foods. A plate of fried noodle/rice or nasi lemak in Malaysia cost RM3.00 to 4.00 whereas in Australia it’s A$8.00 to A$12.00 (RM24.00 to RM36.00 with xchange at A$1 to RM3.00). A Kopi-O cost RM1.00 in Malaysia and it’s A$4 (RM12.0) in Australia.
Compare labour cost. Fixing a spilt unit aircon in Malaysia cost RM150 whereas labour cost in Australia cost A$600 (RM1800) – you need an electrician, refrigerator tradesman and air-con installer. Labour cost is more than the price of air cond
Getting a plumber to fix your leaking tap cost RM50.00 in Malaysia. Well, a plumber in Australia charge A$80 per visit and it’s A$50 per 1/2 hour – that will be A$200 (RM600) if he takes his time.
So sometime don’t be over reacted or excited over foreign index. Use Asian or local index to compare our salary.
It’s still cheaper to stay in Malaysia though our wages may be low compared to western countries.
Though we have no shoes but we still have feet.
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