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  • Mr Money TV

This Is Why Malaysia is Losing Out To Singapore

Updated: Jun 8, 2023

We're neighbours but worlds apart.

The Singapore Merlion and Malaysia Twin Towers

Malaysia and Singapore share many similarities, from our food, culture and even citizens. But when it comes to the economy, the differences are beyond obvious.

In 1965, the value of Singaporean dollar (SGD) and Malaysian ringgit (MYR) were the same, but today, 1 SGD is equivalent to ~3.30 MYR. Even the average monthly salary differs. In Singapore, they earn USD $4,100, which is five times more than Malaysia's meagre USD $804.

So, what led to these stark differences in economic success when we started out the same just a few decades ago?

#1 Education

The tie between education and the economic success of a country is indisputable.

A population with higher education attainment tend to produce a higher income workforce and individuals who are prepared to face the challenges of the real world. Unfortunately, this isn’t the case for the Malaysian education system.

In Malaysia, the government spends only $502 per capita on education, while Singapore spends $1,600 per capita. From very early on, Singapore realised that they had very few natural resources, so they made the choice to invest heavily on human capital as it was their only resource they can depend on.

And one of those investments was their education system. Singapore recruits top students to be teachers. Their job was to educate future generations to be competent on a global level. On the other hand, Malaysia has English teachers who don't even speak English well and Science teachers who barely got an A in their science subjects. This situation produces students who are uninterested in learning, and consequently, this affects the future economic success of the country.

While the situation remains gloom for Malaysia’s education system (no thanks to dirty politics), it’s not to say that we can’t do anything about it. In fact, now is the time for parents to improve their children's education. As a parent, perhaps you can start your children's education early by reading with them, instilling the importance of it, and talking to them about your experiences, successes, failures, and the challenges you’ve faced. These things will help your children to embrace challenges and failures, which will make them more creative and industrious in the future.

#2 Salaries

It was only in 2022 when Malaysia raised the minimum wage to RM1,500 from its previous RM1,200 salary. But if you live or have visited Malaysia, especially in the capital city, Kuala Lumpur, you’ll know that RM1,500 goes very quickly. The cost of living has simply become too unaffordable in the country.

Meanwhile, on the other side of the causeway, Singapore's civil servants are among the highest paid in the world at SGD4,500 per month. Their president Lee Kuan Yew once said, "you pay peanuts, you get monkeys." He was describing how if people of authority were to be paid lowly, the chances of them succumbing to corruption would be higher.

Of course, paying civil servants better salaries does not guarantee that there won't be corruption. After all, corruption is a complex issue that requires a comprehensive solution. However, paying civil servants better salaries can reduce the likelihood of corruption (an issue Malaysians can understand all too well).

#3 Housing Policy

Singapore's unique housing policy promotes integration and shared prosperity among its citizens. The government provides high-quality HDB flats (government housing) designed to shape society and foster cohesion between varying income levels.

In a HDB, each family is placed near another family with a slightly better economic level, encouraging aspiration and success. Additionally, ethnic quotas are in place to ensure that families from different backgrounds interact and live harmoniously. These housing projects come with all sort of amenities nearby, creating little townships all throughout the country. You could simply walk to school, grocery stalls, hospitals, gyms or malls as it's all connected through proper township planning.

In contrast, Malaysia's government flats are not as well-built or maintained which lowers it's attractiveness. Because of this, people who can afford it would rather buy a property developed by private companies. Integration among citizens is also challenging since there's no system in place that requires people to intermingle with others from different backgrounds.

Nevertheless, Malaysians can still contribute by encouraging their children to interact with neighbours from different ethnic backgrounds, nurturing a new generation that values unity and integration.


There’s no denying that Malaysia's economy has fallen behind Singapore's due to various factors. However, it's not all gloom and doom; the rakyat can still take proactive steps to improve their own education and encourage unity among their community.

With that being said, it's crucial for Malaysia, especially those in power to wake up and address these issues in order to catch up and compete on a global level once again.

If you found this read interesting, I'm glad to tell you that we made a video about it as well! You can check it out here. It discusses more about this topic and you'll get to hear what Peter thinks of it, especially as a parent raising his kids in Malaysia.



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