Is cost of living in Malaysia too high?

Using the Big Mac benchmark does put our purchasing power quite high - meaning we are actually quite good in terms of spending power, with consideration to how much currency is needed to commit a purchase. Once incomes get considered, that's a different story.

Which means: a Big Mac here (after taking into account foreign exchange)cheaper than in the US. But real incomes in the US is higher, so basically they can afford more Big Macs with their incomes over there than we can with our incomes over here, although we can get them at a cheaper price (after taking into account foreign exchange).

The question isn't too much about what our purchasing power is now, but in what direction it is heading. Is inflation going faster than pay rises? Keep in mind though that prices for goods are more elastic and thus usually change faster than wages (which tend to be revised in longer cycles), so wages not changing at the moment does not mean that they're not headed for a change.

The differing prices of Big Macs may illustrate yet another evidence that supply and demand (different populations have differing demands) ultimately determine the prices of goods. Costs of production may be a contributing factor, but if it's so, then we should be able to see a pattern of increase based on shipping distance, or the availability of beef.

The Big Mac Index:
http://www.economist.com/markets/indicators/displaystory.cfm?story_id=8649005
Reading tip: Descending down the graph are cheaper prices for the Big Mac in terms of the USD.