KUALA LUMPUR, July 13 — Malaysia’s capital city is now more expensive than several top US cities for expatriates, thanks to a combination of price increases and the ringgit’s appreciation against the US dollar, according to Mercer consultancy.
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The report also showed that a person living and working in Kuala Lumpur has only 33.8 per cent the purchasing power of their peers in New York, 42 per cent that of London, 33.7 per cent that of Sydney, 32.6 per cent that of Los Angeles and 31.6 per cent that of Zurich.Economists attribute KL’s poor purchasing power to a combination of a relatively weak ringgit, a lack of competition and distortions and inefficiencies in the market, where many industries are allowed to operate as monopolies or oligopolies.
There has also been a distinct lack of consumer protection on the level seen in Western countries which also contributes to the lack of competitive pricing.
The government’s heavy involvement in business through GLCs, or government linked companies, could also be seen as one of the factors curbing market efficiency and innovation although the Najib administration has pledged to reduce its role in business outside sectors that have strategic and pioneer status.
Things could change however when the Malaysia’s Competition Law comes into effect on January 1st next year.
The most expensive city in the world for expatriates in Mercer’s 2011 ranking is Luanda, Angola while the cheapest is Karachi, Pakistan at 214.