4 financial mistakes you shouldn't make in Malaysia

Many Singaporeans visit Malaysia to enjoy the lower cost of living. Whether it's for a family vacation, a day excursion to fill up on supplies, or some free time during a business trip, Malaysia is a terrific place to enjoy local products and services at a lower cost than we would spend in Singapore.

The allure of cross-border shopping has been a long-standing tradition for Singaporeans, with Malaysia offering a treasure trove of bargains and experiences. This phenomenon has not only become a cultural norm but also a significant economic factor in the relationship between the two neighboring countries. The Malaysian Tourism Board reports that Singaporeans make up the largest group of foreign visitors, with over 10 million trips recorded annually before the pandemic. This influx of Singaporean shoppers has led to the development of numerous shopping complexes and markets near the border, catering specifically to this demographic.

However, just because products are cheaper in Malaysia does not imply we should overspend. Here are some financial blunders to avoid in Malaysia.

#1 Buying Something You Cannot Bring Home To Singapore.

While the reduced cost of products in Malaysia, due to the favorable exchange rate between the Singapore Dollar (SGD) and the Malaysian Ringgit (MYR), may be appealing, it is important to realize that certain things cannot be lawfully returned to Singapore. Some things, such as chewing gum and firecrackers, are widely recognized to be illegal in Singapore. However, there are certain more typical things that, while totally legal in Singapore, cannot be imported from Malaysia.

Meat and meat products, such as Bak Kwa (barbecued sweet meat) and pork floss, are forbidden from being imported into Singapore from certain countries, including Malaysia. This prohibition also applies to other meat products, such as poultry, eggs, and any type of meat.

Furthermore, while tobacco-related products, such as cigarettes, are significantly cheaper in Malaysia, they are categorized as dutiable articles, and bringing them into Singapore without declaring and paying the necessary charges is unlawful. As a result, it is critical to be aware of these restrictions in order to avoid penalties upon return to Singapore.

It's worth noting that these restrictions are not arbitrary but are part of Singapore's stringent biosecurity measures. The Agri-Food and Veterinary Authority of Singapore (AVA) implements these regulations to protect the country from potential outbreaks of animal diseases and to maintain food safety standards. In recent years, there have been several high-profile cases of travelers being fined or even arrested for attempting to smuggle prohibited items across the border. These incidents serve as a stark reminder of the importance of familiarizing oneself with customs regulations before embarking on a shopping spree in Malaysia.

If you are caught engaging in any of these activities, you may face penalties. At the very least, you will be required to dispose of these objects, incurring a financial loss.

#2 Purchasing Items That Are More Expensive In Malaysia

While it is true that many products in Singapore are more expensive than in Malaysia, this does not imply that everything in Malaysia is necessarily cheaper. The last thing you want is to think you're "saving" money only to end up spending more on a product that could have been purchased for less in Singapore.

There are certain things that are actually cheaper in Singapore than in Malaysia. While this list may vary over time, when purchasing in Malaysia, you should exercise caution with certain types of merchandise. These include technological devices, particularly the latest versions, as well as items from Singaporean firms. Purchasing certain expensive brands may not result in significant, if any, savings.

While taking advantage of the possible discounts that shopping in Malaysia might provide, doing a little research and comparing costs to avoid overpaying for specific things can also be advantageous.

In the age of digital commerce, savvy shoppers are increasingly turning to price comparison apps and websites to ensure they're getting the best deals. These tools allow users to quickly compare prices across different retailers and countries, making it easier to spot potential savings or avoid overpaying. Some popular apps among Singaporean cross-border shoppers include PricePane and iPrice, which aggregate prices from various online and offline retailers in both Singapore and Malaysia. By leveraging these technologies, consumers can make more informed decisions and maximize their savings when shopping in Malaysia.

#3 Pumping the Wrong (V-Power Racing) Petrol

Every driver entering Malaysia from Singapore understands that filling up on gas is a necessary, especially since fuel prices are much lower. It's practically a ritual to stop at a gas station right before crossing the border back into Singapore. However, while pumping petrol in Malaysia is generally simple, there are a few important rules to follow.

First and foremost, do not pump Ron 95 gasoline. The Malaysian government subsidises this grade, which is reserved for Malaysian people. This may confuse Singaporean drivers, as many of us are used to using grade 95 gasoline in Singapore. However, in Malaysia, foreign-registered automobiles are not permitted to drive on Ron 95.

In Singapore, better-grade gasoline, such as Ron 98 and premium grades, is often priced 20-30% more. However, in Malaysia, it is critical to be even more cautious while selecting the appropriate fuel. While Ron 97, which Singapore-registered vehicles should use, costs roughly RM 3.25 per litre (little less than S$1) and provides excellent value, the situation changes dramatically if you choose premium fuels such as V-Power Racing. This high-performance fuel costs roughly RM 6.15 (S$1.84) per litre, which is nearly double the price of Ron 97.

The disparity in fuel prices between Singapore and Malaysia has led to an interesting phenomenon known as "petrol tourism." This practice involves Singaporean drivers making short trips across the border solely to fill up their tanks with cheaper fuel. While this can result in significant savings, it's important to consider the hidden costs. The time spent queuing at popular petrol stations near the border, the wear and tear on vehicles from frequent short trips, and the potential for traffic congestion all need to be factored into the equation. Additionally, Malaysian authorities have been known to conduct spot checks on foreign-registered vehicles to ensure compliance with fuel regulations, adding another layer of complexity to this cost-saving strategy.

The major message for Singaporean drivers is to stick with Ron 97 when refueling in Malaysia. It provides significant savings over Singapore prices, but be wary about choosing premium fuels, as the price increase can be enormous.

#4 Do not pay in Singapore dollars (SGD).

Given Singapore's proximity to Malaysia, some Malaysian institutions may accept Singapore Dollars (SGD). However, the exchange rate in these instances is usually unfavorable and uncompetitive.

A same approach applies when making card payments. If you are given the option of being charged in SGD or Malaysian Ringgit (MYR), it is often preferable to use MYR. By doing so, you will profit from the current market exchange rate, which is frequently better than the rate offered when using SGD.

The issue of currency exchange and dynamic currency conversion (DCC) is a common pitfall for many international travelers, not just those crossing the Singapore-Malaysia border. DCC is a financial service that allows credit card holders to see the cost of a transaction in their home currency at the point of sale. While this might seem convenient, it often comes with hidden fees and unfavorable exchange rates. Financial experts recommend always opting to pay in the local currency and using credit cards that offer no foreign transaction fees. For frequent travelers between Singapore and Malaysia, some banks offer specialized cross-border accounts that allow for seamless transactions in both currencies, potentially saving significant amounts in exchange fees over time.