Some advanced thoughts on Malaysia and KL

 

After returning from my trip to KL, it might be time to talk a bit deeper. I hope that these random thoughts can moderate some of the feelings of folks who are caught up in the fervour started on some Telegram groups about buying homes in JB or KL.

a) Conscious currency conversion between SGD and MYR

While in KL, I often divided the cost of any item I wished to buy by 3.5 to calculate the equivalent cost in SGD, and I would always conclude that the price was low. Malaysians in Singapore do the opposite. They apply a multiplier of 3.5 and always conclude that everything in Singapore is costly. 

I had an attitude adjustment from a Malaysian friend who works as a PMET in Singapore. He has to travel to and from every week to give his family a better life. He is the only person who provides a unique perspective on all this. He says that Singaporean food is very cheap compared to Singaporeans' salaries. 

Imagine what it's like to pay MYR $15 for economic rice as someone who works in Malaysia. 

b) By the numbers, KL would make an excellent retirement destination for Singaporeans

If you look at the situation from a pure numbers perspective, my ERM students researched and showed that an expat in KL can live on $20,000 SGD a year, including rent in a one-room apartment. This means that a 4% withdrawal rate and a $500,000 portfolio can provide a working retirement plan for a single person. 

Beyond the numbers, issues like political stability, changes to the MM2H scheme, and safety will still be a big impediment for many Singaporeans. Having close relatives nearby and being a good driver can greatly help your retirement journey. 

c) Buying Malaysian real estate is still a terrible idea

After my trip, despite all the news about more collaboration between our two governments, buying property is still a bad idea. Singapore's land scarcity is unique to us, and we can't transplant our ideas about owning land to Malaysia. 

KL has old towns like Cheras. KL also has townships which are has-beens like Subang Jaya and upcoming yuppie enclaves like Putrajaya. The fates of house valuation will be based on these shifting tides.

It's nowhere close compared to the millions of dollars of equity you made buying your EC during the PM Lee era. 

That being said, there is nothing wrong with renting a unit in Malaysia using dividend payouts or HDB rents from Singapore. 

d) Education and being stuck in the lower parts of the value chain is an issue

Bank Negara has been trying to hype the Ringgit for the rest of 2024. They might be right in the short term, but I can't see how the Ringgit can maintain its current value against the SGD over the next 10 years. The locals need to improve their English proficiency, and I can't even speak English to someone in an up-market European-themed eatery. Also, the convenience store clerk of a Japanese outlet would turn your business away, claiming no loose change.

PM Anwar surprisingly knows about this problem but has chosen to anger his nationalists by asking us for help with English teachers. After I visit KL, I can understand how urgent this request is. Of course, how we respond will be equally entertaining. 

I encourage intrepid Gen Z types to consider trying out some kind of digital nomad lifestyle centred around KL. Earing in SGD and spending in MYR is da bomb! 

It's still relatively easy to fit in culturally, and for the more enterprising guys, you'll never know whether you can find a spouse while you are there.