KUALA LUMPUR: The average expatriate who works in Malaysia now gets the lowest payment package in the Asia-Pacific, lower than his or her peers in Sri Lanka and Pakistan, as the value of what Malaysian employers pay slips in the face of a weaker ringgit.

The average cost of a total expatriate package for middle managers in Malaysia now lies at just over US$176,000 (RM730,400), compared to US$239,400 in Singapore — the ninth-highest paying country in the region — according to the latest expatriate market pay survey published by ECA International. The firm provides information and solutions for the management and assignment of employees worldwide.

In terms of absolute ranking, Malaysia is now two spots behind where it was last year, according to the annual MyExpatriate Market Pay survey by ECA International, which it has conducted for about 40 years.

The impact of currency conversion aside, expatriates here get paid relatively cheap because, to begin with, Malaysia is a pretty cheap location in terms of cost of living compared to other countries, said ECA International’s regional director for Asia, Lee Quane, in an email reply to The Edge Financial Daily recently.

“This means that allowances, commonly provided to expatriate staff globally to ensure that their home country purchasing power is protected, are lower or even not provided to staff assigned to Malaysia.

“Secondly, the cost of providing benefits in Malaysia is low compared to others in the region. This is particularly true for accommodation and education, which are usually the two biggest costs. Although not as low as Hong Kong and Singapore, the tax rate in Malaysia is also relatively low, again keeping the total cost to the company down,” explained Quane.

Thus, looking at the reasons for all of the above, Quane said it “is not a cause for concern for Malaysia and is reflective of the costs of goods and services here”.

“In terms of strategic decisions, it means that the cost of sending an employee to work in Malaysia is relatively cheap and so [the country] should remain an attractive option for companies,” added Quane.

Malaysia has been relatively cheap for a long time compared to some other locations in Asia, noted Quane, although both Indonesia and Pakistan had cheaper packages five years ago.

“Very high inflation in both of those countries has pushed those companies up the charts above Malaysia. As we saw earlier, one of the main reasons for the decrease has been the weakening of the ringgit. This does mean that employees may feel worse off than they did before, especially if they have to send money back to their home countries,” noted Quane.

Still, from a company’s point of view, the relative fall down the chart is a good thing as the lower cost means Malaysia remains a “very attractive location for sending employees”.

Which may be why the number of expatriates coming here has not dwindled but continued to rise, in line with global trends over the past 20 years. According to ECA International’s latest Managing Mobility 2016 survey, Malaysia was the eighth most popular destination — fifth among Asian locations — for companies to send employees.

“Generally, we find that the number of expatriates being sent to a country is heavily dependent on the general economic prospects of that country, as companies continue to look for markets showing strong growth where they can expand their businesses,” added Quane.

Engineering and technology, along with petrochemicals and banking, are the biggest industry groups represented in the Managing Mobility 2016 survey, which reflects the strength of those industries in the Malaysian economy.

Although the current low oil price situation is impacting the oil and gas industry in Malaysia — which generally employs large numbers of expatriates — Quane believed the Malaysian economy “should be diverse enough overall to continue to show strong growth and attract investments”.

Ongoing corruption allegations in the country, however, is another hurdle. Quane noted that it may have a negative effect on general business sentiment and in turn impact the number of expatriates being sent to Malaysia.

Meanwhile, he shared that most expatriates in Malaysia come from Singapore, the UK, Australia and Thailand and work for Malaysian companies which are bringing employees to their headquarters.

“For employees, Malaysia should still be seen as an attractive location, but they may be concerned that the salary they receive in ringgit may be worth less in their home country. There are actions that companies can take to ensure that their employees don’t lose out this way, such as paying part of the salary in the home country’s currency,” said Quane.

That said, air pollution and personal security remain issues that need to be addressed for expatriates working here, which may account for Kuala Lumpur’s two-spot slide to 120th in terms of most liveable location in the world for Asian expatriates in ECA International’s most recent Location Ratings Survey.

Otherwise, Kuala Lumpur offers excellent facilities, recreation, good quality housing, and more, which are important factors to expatriates, said Quane.