The Exodus of Malaysia’s Urban Population

It has become too costly to live in cities. Malaysians are moving out of urban areas and heading to the rural towns.

By Oliver Ward, Edited by Isabel Yeo

While the 1960s saw the movement of Malaysians from rural towns to cities, today the converse is observed. In the present, Malaysian cities have been hit by an exodus as more and more young people are fleeing urban centres and returning to outlying towns and villages. While 74% of Malaysians now live in cities, the number is set to dwindle. The high cost of living is squeezing much of the country’s youth out of the major cities and sending them back to rural life.

Living in cities is becoming too costly

To survive in one of Malaysia’s bustling cities, the average person now requires RM2,700 (US$626) according to Minister Datuk Seri Dr Wee Ka Siong. “Those with children have to factor in another RM50 (US$12) to RM600 (US$140) per child per month”, he added.

In particular, the prices of homes have rocketed. In the second quarter of 2016, the price of buying a house in Malaysia increased by the highest rate globally. From 2015 to 2016, prices had risen by 7.2% -a larger growth than developed economies like the UK and the US, which grew by 5.2% and 5.1% respectively. In the last ten years, the cost of purchasing a house in Malaysia has increased by 99%. The rising costs of living are pricing out many of the younger inhabitants who are forced to return to their villages for a more affordable life.

Rural improvements are making the countryside a more desirable place to live

The extent of infrastructural development of rural areas is a key factor contributing to this rural migration. For example, improvements in roads and the construction of large highways have allowed people to commute easily between Kuala Lumpur and smaller towns on the outskirts of the capital. More villages and towns are now within easy reach of larger cities. Those who wish to continue working in the city can still do so while taking advantage of the cheaper costs of living in the outskirts.

As a result, people living in Kuala Lumpur are turning to these rural towns for a better standard of living. Investment in properties in the countryside is increasing and provincial towns are undergoing revivals thanks to the injection of money from the cities. While this investment is currently limited to larger towns, as more city-dwellers flee the cities in search of a better quality of life, the money will trickle down to more rural areas in the future.

There are now more opportunities in towns and villages

The option of working in the countryside is also available. There are now more jobs for young people in towns and villages than there used to be. The government has been promoting 20 new villages as tourist hotspots in a bid to attract more tourists into the countryside. This move will increase the number of rural jobs in the catering and hospitality sectors.

The agricultural sector is also financially lucrative. Products like soursop are in high demand, and rural farmers are benefitting from this increase in demand. Dr Wee, a Malaysian Minister, recounted how “a farmer told me he could get between RM600 (US$140) and RM700 (US$163) for selling just three Musan King durians”.

Government’s policies are contributing the shift

As part of Malaysia’s vision to create an advanced economy by 2020, the government has focused on lifting the B40 group (the bottom 40% household income group in the country). These families have a monthly income of less than RM3,900 (US$911), and many live in rural areas of the country.

Investment in infrastructure, IT and human capital like education and health-care have affected these communities more than any others. In the last five years, the income growth of this B40 group has grown by 13%, narrowing the wage gap between urban and rural communities.

The 11th Malaysia Plan also aims to bring broadband infrastructure to 95% of the country’s populated regions and government investment in High-Speed Broadband 2 (HSBB2) will give faster broadband on which the nations e-commerce industry can grow. They have also made broadband more affordable to the population. Consumer protections to keep broadband prices at just 1% of the GNI per capita mean the whole country can stay better connected, even poorer, rural communities.

Ultimately, the exodus from the cities is as much a testament to Najib’s success at diminishing inequality between rural and urban communities as it is an indication of increased urban prices.

What will this mean for Malaysia?

As rural regions now enjoy better internet access and connectivity, Malaysia’s e-commerce industry is likely to experience continued growth. Currently, 22 million of Malaysia’s 31 million population are connected to the internet, allowing rural regions to compete with urban centres for e-commerce opportunities.

Moreover, as property prices continue to rise in the cities and internet speeds increase in the provinces, we can also expect e-commerce businesses to relocate to smaller cities and towns in search of lower overhead costs and a lower cost of living for their employees.

As more of the urban youth flock to the countryside, the big cities like Kuala Lumpur may find that investment in property and infrastructure will take a slight hit. Unless immigration keeps the city expanding, foreign investment will also move to follow the people. This move will mean more investment in rural towns. Therefore, those currently living in the countryside need to prepare themselves for an increase in people to their towns.

The urban landscape of Malaysia is changing, but it may not necessarily be for the worse. While the high city prices are frustrating to younger Malaysians, it could be just what the country needs to give Malaysia a more even distribution of growth and reduce inequality between urban and rural regions. The pendulum swung to the cities after the 1960s; now it is time to swing back. The youth would be wise to embrace it and “Balik Kampung” (return to the village) for now.