Malaysia is 3rd cheapest place to buy a Big Mac
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"Big Mac" Index: A light-hearted guide to measure the value of global currencies
KUALA LUMPUR: MALAYSIA has been ranked one of the cheapest places in the world to purchase a Big Mac, according to The Economist.
The British news magazine's annual "Big Mac" Index, which gauges if global currencies are at their correct level, has ranked Malaysia third behind India and South Africa as the cheapest place in the world to purchase the McDonald's signature burger.
"The price paid for a Big Mac in Malaysia is RM7.40, which is equivalent to US$2.23 when converted using the global exchange rates.
"This amount is lower when compared with the actual price of a Big Mac that is sold in the United States for US$4.62, indicating a 50 per cent difference.
"In other words, the Big Mac sold in Malaysia is half the price of the same burger sold in the US," the magazine revealed.
India's "Maharaja Mac" only cost US$1.54, which is three times less than it is sold in the US, hence making it the cheapest Big Mac available in the world.
At the other end of the spectrum, Norwegians are being ripped off for a Big Mac as it is sold for US$7.80, 70 per cent more than what the burger costs in the US.
Other countries listed as selling Big Macs at high prices included Venezuela (USD$7.15) and Switzerland (US$7.14).
"Big Mac" Index was invented by The Economist in 1986 as a light-hearted guide to measure the value of currencies worldwide. It is based on the theory of purchasing power parity, the notion that in the long run exchange rates should move towards a value that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries. McDonald's Big Mac was selected as a measuring tool as it is sold in about 120 countries.
KUALA LUMPUR: So what's the big deal about the price of Big Macs?
For one, the relatively cheap price for a Big Mac here reflects that prices of food items in Malaysia are not what they are being made out to be.
Independent economic macro-analyst Prof Dr Hoo Ke Ping said while it was true that some might find prices of food items to have risen somewhat, Malaysians should be thankful that they can still enjoy relatively cheap meals compared with other countries.
He said the Big Mac index was proof that essential items in the country were still relatively cheaper than other countries.
"Although some prices of food items, petrol and electricity have gone up, our prices are still cheap."
Hoo said it was a misconception that prices of essential items had gone up, adding the speculation was sensationalised, over-hyped and not fully defined.
The fluctuation of prices in food items depends on various factors, such as the weather, growing conditions and changes in regulations, as well as subsidies, he said.
"For example, the price of rice is cheap because of the flood of Thai rice into the market.
"Compared with international standards, the cost of healthcare and education is still relatively cheap. Even with the cut in petrol subsidies, we still enjoy cheaper petrol prices than other countries."
Accountant Muhammad Aiman Sofian said lower salary levels in Malaysia meant that the ratio of expenses to income was smaller compared with other countries.
