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)
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)
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?