Cost-of-living surveys reflect expatriate, not local, costs
By Janice Heng, The Straits Times, 6 Mar 2014
A DAY after the Economist Intelligence Unit ranked Singapore the priciest city in the world, Finance Minister Tharman Shanmugaratnam came out to say that such surveys which focus on expatriates do not reflect the living costs of Singaporeans.
He said he knew the report was making the rounds and attracting a lot of attention, and thus it was important to make clear that such surveys "are really aimed at measuring expatriate cost of living in different parts of the world".
The costs measured differ from those facing an average Singaporean in two important ways: the role of currency, and which goods and services are considered.
"An important reason why we've become expensive for expatriates is that the Singapore dollar has strengthened," said Mr Tharman, noting that the EIU report itself points out this reason.
That makes things pricier for an expatriate paid in a foreign currency, but it improves Singaporeans' purchasing power, both at home when buying imported goods and when travelling.
Mr Tharman also noted that the kind of goods and services included in the survey are "quite different from (those) consumed by ordinary Singaporeans".
The EIU consumption basket includes imported cheese, filet mignon, "Burberry-type raincoats", four best seats in a theatre, and three-course dinners in high-end restaurants for four people.
"And indeed for these items, Singapore's expensive," said Mr Tharman. But such items would not feature in the average Singaporean's consumption basket.
"It's not that these surveys are wrong, it's not that they are misguided," he said. "They're measuring something quite different from the cost of living for an ordinary local in different cities around the world."
Few surveys measure living costs for ordinary residents, but Mr Tharman cited one that did.
Singapore was the fifth most expensive city out of 109 for expatriates but only 61st for locals, comparable to Hong Kong at 58 and Seoul at 60. "So that's the basic difference," said Mr Tharman.
"From time to time, these surveys will come up. I know some people will give it a spin, but it's measuring something quite different from the cost of living for our residents."
S'pore 'world's most expensive city'
By Alvin Foo, The Straits Times, 5 Mar 2014
By Alvin Foo, The Straits Times, 5 Mar 2014
A stronger Singdollar and rising vehicle and utility prices pushed the Republic from sixth spot last year to first among 131 cities in the study, ahead of Paris, Oslo, Zurich and Sydney.
This is the first time that Singapore has been in top spot in this survey, which has been carried out for more than 30 years.
Observers say that although the general cost of living here has been rising in recent years, this survey relates more to the expatriate lifestyle.
"Singapore's rising price prominence has been steady rather than spectacular," noted the EIU. It added that over the past decade, a "40 per cent currency appreciation" and "solid price inflation" have pushed Singapore up the ranking from 18th, 10 years ago.
EIU senior analyst Toby Iles told The Straits Times: "Singapore will remain among the world's high-cost cities due to the continuation of trends that have propelled it up there."
The report noted that transport costs here, which include certificate of entitlement premiums, are almost three times higher than in New York. Singapore is also the third-most expensive city for utility costs, partly as it relies on other countries for energy and water.
The proliferation of luxury brands at malls here also makes Singapore the costliest place in the world to buy clothes, it said.
A weaker Japanese yen pushed Tokyo down from top spot last year to joint-sixth along with Caracas, Geneva and Melbourne.
At the other end of the spectrum, Mumbai was the cheapest, followed by Karachi and New Delhi. Unlike for Asian markets, the survey also found that European cities are more expensive for a broad array of items rather than any specific category.
Singapore was the fifth-most expensive location for expatriates among 214 cities in a Mercer cost of living survey last year. The country was ranked 30th among 440 locations in a similar ECA International poll last year.
The EIU study uses New York as a base city. Conducted twice yearly, the study compares more than 400 prices across 160 products and services including food, drink, clothing, home rents, transport, private schools and utility bills. The survey is designed to aid human resource and finance managers in working out living allowances and pay for expatriates and business travellers.
Economists such as Mr Song Seng Wun and Associate Professor Tan Khee Giap said the findings must be taken in context, as the survey is not an accurate reflection of life for the average Singaporean.
CIMB's Mr Song said: "It does not account for subsidies such as public housing grants, GST vouchers and utility rebates which a large number of local households enjoy."
Prof Tan, co-director of the Asia Competitiveness Institute (ACI) at the Lee Kuan Yew School of Public Policy, said an ACI survey out last year showed that Singapore was also top among 109 major cities globally for cost of living for expatriates, but ranked 60th for average resident costs.
Former Nominated MP and socio-political commentator Calvin Cheng said: "This is a survey that collected data from expats and is meant for expats."
He noted that rents for the survey were taken from average rates in spots like Orchard Road and River Valley, where most Singaporeans do not live.
5 items in Singapore and how their prices compare to other countries
The Straits Times, 4 Mar 2014
The Straits Times, 4 Mar 2014
Singapore has just beaten 131 cities to become the world's most expensive city to live in, according to the Economist Intelligence Unit's report. We look at five big ticket items the report mentions which have contributed to Singapore's climb to pole position and compare it to similar items in other cities around the world.
1. Property rental
1. Property rental
Singapore: A three-bedroom apartment, of between 1,200 - 1,500 sq ft, averages $8,000 a month.
New York: A three-bedroom apartment, of between 950 - 1,800 sq ft, ranges from US$1,750 (S$2,221) - US$2,500 in the outlying neighbourhoods to US$6,000 to US$15,000 in Manhattan.
2. Cars
Singapore: A Mercedes Benz E-class will cost upwards of $277,000 plus an Open category COE will set you back another $79,000 going by the last COE exercise.
Germany: A Mercedes Benz E-class will cost from 40,668 ($71,062) euros.
3. Clothing (luxury retail)
Singapore: A men's suit from Giorgio Armani starts from $3,000 and can go up to $4,000.
Italy: A men's suit from Giorgio Armani starts from 1,500 ($2,619) euros.
4. Food & wine
Singapore: The signature dish of steak tartare at L'Atelier de Joel Robuchon costs $52. A bottle of Moet & Chandon in Singapore costs at least $83.
Paris: A degustation menu at L'Atelier de Joel Robuchon costs 38 euros ($66). A bottle of Moet & Chandon in France can cost as little as 32.90 euros ($57).
5. Utilities
Singapore: Utilities bill for a four-person household in a HDB flat likely to average between $150 - $200.
Tokyo: Utilities bill for a four-person household in an apartment averages between 12,000 yen ($150) in summer to 30,000 yen ($375) in winter.
Survey on cities' living costs sparks debate
Singapore tops list but economists feel S$ rise, expat focus skew findings
By Kelly Tay, The Business Times, 5 Mar 2014
Singapore tops list but economists feel S$ rise, expat focus skew findings
By Kelly Tay, The Business Times, 5 Mar 2014
SINGAPORE may have climbed five spots to claim the "unenviable title" of the world's most expensive city, according to a bi-annual ranking compiled by the Economist Intelligence Unit (EIU), but economists downplay the significance of the results.
While acknowledging the undeniable existence of rising price pressures here, economists The Business Times spoke to cautioned against extrapolating that the cost of living for locals has skyrocketed.
This is because two key factors - currency fluctuations and the survey's expatriate focus - would "automatically limit" such deductions.
In order to achieve comparative indices, EIU's Worldwide Cost of Living survey converts each country's prices into US dollars. Therefore, a weaker yen pushed Tokyo - last year's most expensive city - down to sixth place, and this paved the way for Singapore to claim the dubious honour this time around.
Therefore, Singapore's ascent to costliest city was due in part to currency fluctuations - EIU noted that over the last decade, Singapore has seen 40 per cent currency appreciation.
Said UOB economist Francis Tan: "There's so much (buzz) about Singapore taking the top spot, but a lot of this has been fuelled by the fluctuations in different currencies. I wouldn't read too much into it, because next year we could be number 6 again."
Mizuho Bank economist Vishnu Varathan added: "If one were to look at cost of living from the point of view of a domestic person, then currency movements arguably don't matter as much."
CIMB economist Song Seng Wun was also keen to highlight the survey's expatriate focus and its purpose as a tool for determining foreigners' salaries.
In its description of the survey, EIU said: "The survey itself is a purpose-built Internet tool designed to help human resources and finance managers calculate cost-of-living allowances and build compensation packages for expatriates and business travellers."
Still, emphasising that the basket of goods is "fairly broad to address a lot of essentials", Jon Copestake, editor of the report, told BT: "The survey is also comparative between locations so it could be argued that if a city is most expensive for expats, then why not for everyone?"
But Mizuho's Mr Varathan pointed out that "the survey has got inherent biases": "As they're looking to compare (like-for-like) items, they probably missed out on some local stuff, and that's going to work against us. For example, if we take the price of a cappuccino, it will likely set you back about $5. But that's not the same as getting Ah Poh's coffee at Golden Shoe."
Limitations aside, all three economists agreed that the survey results are worth reflecting upon, especially since currency fluctuations only tell part of the story.
Noting that Singapore's rising price prominence has been "steady rather than spectacular", EIU said that the city-state was the 18th most expensive city 10 years ago.
It said that Singapore has some structurally expensive items that "skew the overall cost of living upwards", including cars. This has meant that transport costs in Singapore are almost three times higher than in New York.
Added EIU: "In addition, as a city-state with very few natural resources to speak of, Singapore is reliant on other countries for energy and water supplies, making it the third most expensive destination for utility costs."
Although the survey's findings could suggest that Singapore may be losing its cost competitiveness, UOB's Mr Tan thinks otherwise: "There's a reason why Singapore is expensive, and there's a price to pay for everything. If (multinational corporations) want to be in a country where you push a button and things work, where there is near-zero political risk, where the business environment is vibrant - they've got to pay a premium for that."
S'pore ranked 5th costliest city to work, live in
By Cheryl Ong, The Straits Times, 4 Mar 2014
By Cheryl Ong, The Straits Times, 4 Mar 2014
It now costs US$76,000 (S$96,415) a year for the combined cost of renting residential and office space here for an employee - 11 per cent more than it was five years ago.
The finding is from the World Cities Live-Work Index report released by property consultancy Savills yesterday.
The cost in Singapore is almost exactly the index's average cost to locate employees in a major city in the world, which had risen 21 per cent since 2009.
Savills said the index was derived by measuring the cost of office and residential rents for two seven-member teams in a prime financial location and in a secondary city location.
Reflecting the premium placed on prime space taken up by financial firms, the index showed that it cost US$81,000 to accommodate staff from the financial sector here last year, while firms in the creative industry had to fork out US$71,000.
However, it was still far more expensive to send an employee to Hong Kong, which topped the index.
At US$123,000, Hong Kong was 60 per cent costlier than Singapore, the report found.
In second spot was London, at US$115,000, with New York close behind at US$112,000.
Over the past year, the cost of living and working space per employee fell 1 per cent in Hong Kong, while it rose 2 per cent in London and New York.
In Dubai, costs shot up 41 per cent last year, ranking it as the seventh most expensive city. But this was in part due to "a generous allocation of office space per situation of high supply and low rents", Savills said.
"These findings go some way to demonstrating the rebalancing of world economies as more mature 'old world' cities demonstrate stable growth," said Ms Yolande Barnes. director of Savills World Research.
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