Thursday, 6 March 2014

Singapore world's most expensive city for expats

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."








Singapore 'world's most expensive city'
By Alvin Foo, The Straits Times, 5 Mar 2014

SINGAPORE has been ranked as the world's most expensive city to live in, in a survey released yesterday by the business intelligence arm of the Economist magazine.

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

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

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 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."





Many basic goods 'cheaper in Singapore'
High-end items pricier but essentials not usually costliest, study shows
By Yasmine Yahya, The Straits Times, 7 Mar 2014

A BOTTLE of wine in Singapore may cost more than twice as much as it does in Paris but basic items such as bread, cigarettes and petrol are not that expensive here, even for expats.

A recent study by the Economist Intelligence Unit found Singapore to be the most expensive city in the world overall for an expat.

The study assumed that the expat would rent private property, drive a car, shop at high-end stores and send his kids to an international school.

It found that high-end clothing, cars and utilities were costlier for expats in Singapore than in most other cities of the world.

But when it zoomed in on the prices of basic goods, it found that Singapore was not usually the most expensive city.

The EIU compared the prices of bread, wine, cigarettes and petrol across the 10 cities in the world it found to be most expensive. It found Singapore was the costliest place for only wine.

Among the 10 cities, Singapore was the cheapest place for bread, the fourth priciest for cigarettes and the sixth for petrol.

A bottle of table wine costs US$25.04 (S$31.80) on average in Singapore. In Australia, it costs US$22.58 in Sydney and US$22.28 in Melbourne.

Deloitte South-east Asia's executive director of consulting Eugene Ho said both countries levy high taxes on alcohol.

He said: "In Budget 2014, it has been announced that Singapore will increase liquor duties by 25 per cent, which will make it even potentially higher priced in future."

Bread is costliest in the Venezuelan capital of Caracas - a 1kg loaf costs US$11.02 there. Paris is second at US$8.44.

PwC Asia-Pacific indirect taxes leader Koh Soo How said Caracas has a complicated foreign exchange control system that makes the official exchange rate almost 10 times higher than the black market rate.

He said: "Rising inflation and a high reliance on food imports makes the average price of food in Caracas much higher than elsewhere, which probably accounts for the US$11 that you have to pay for a loaf of bread in Caracas."

The editor of the EIU study, Mr Jon Copestake, said French consumers prefer smaller, higher quality bread items from bakers rather than the mass-produced supermarket bread favoured in many markets.

"As a result, when factoring these items up to 1kg and bearing in mind weaker economies of scale, bread can be much more expensive," he said.

Cigarettes are most expensive in Sydney and Melbourne, followed by Oslo.

Tax and regulation form a significant part of the cost of cigarettes and Scandinavian countries such as Norway place a strong emphasis on regulating such items, Mr Copestake said. Australia also imposes high taxes on tobacco goods, he added.

As for petrol, Singapore is only sixth most expensive. Petrol is costliest in Paris, followed by Oslo and Copenhagen.

"This is due to the heavy taxation on petrol, which is aimed at discouraging driving in order to decrease pollution and combat climate change," Mr Ho said.






Singapore ranked 5th costliest city to work, live in
By Cheryl Ong, The Straits Times, 4 Mar 2014

SINGAPORE has come in fifth in a ranking of the costliest cities to work and live in.

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 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.





Living with the EX FACTOR
Survey naming S'pore as most expensive city strikes a chord with many
By Alvin Foo, The Straits Times, 8 Mar 2014

"TO BRIE or not to brie" - that is now a financial consideration of living here, quipped a friend after learning that imported cheese was an item in a much talked-about cost-of-living survey listing Singapore as the world's costliest city.

Cheese or no cheese, mention "cost of living" and "price hikes" to anyone here and you are very likely to evoke a strong response, especially in the last few years.

The events of recent days certainly proved this, following widespread media reports on Tuesday of Singapore being ranked as "the world's most expensive city" by the Economist Intelligence Unit (EIU) in a study aimed at helping companies work out pay packages for expatriates.

Observers were quick to note that the EIU report came just a few weeks after a Budget which focused on fostering inclusive growth, with the much-praised Pioneer Generation Package as its cornerstone.

The study provoked a host of responses online and offline, ranging from those who called the survey "completely irrelevant" to ordinary Singaporeans while highlighting its methodology, to others who used it as a convenient trigger for government bashing.

The buzz also spread to Parliament on Wednesday, when Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said such surveys which focus on expatriates do not reflect the living costs of Singaporeans.

First, currency. The strengthening of the Singapore dollar has made this place pricier for expatriates paid in foreign dollars but not for locals.

Second, the kinds of goods and services included in the survey are "quite different" from those used by average Singaporeans.

A close look at the 400-odd items in the EIU consumption basket throws up several which will not apply to a vast majority of Singaporeans - Burberry-style raincoats, international school fees and Cointreau liqueur being the more obvious. But the basket also includes a substantial number of everyday items such as chicken, cinema tickets, toiletries, Coke, fresh fruit and vegetables, and taxi fares.

Basket contents aside, I believe the EIU report attracted such widespread attention because it strikes a chord with locals for whom the cost of living is probably foremost in their minds.

The price of my baby's milk powder rose from $39.90 to $47 in six months.

Now, I pay nearly $20 for a KFC meal for two, compared with just over $10 several years ago.

I saw the neighbourhood noodle stall raise its price from $2.50 to $3 while reducing the number of wantons.

Shrinking hawker food portions coupled with rising food court prices and soaring medical bills - my infant daughter's bout of viral fever cost $200 to treat - mean I feel increasing pressure for my income to grow to keep pace with price hikes.

Rising costs are part and parcel of positioning ourselves as a global city, which also results in better job opportunities as more large corporations expand here.

As Singapore grows in prominence regionally and internationally, the law of supply and demand will result in soaring prices as demand rises and incomes go up.

Moreover, economists note that Singapore has also emerged stronger from the global financial crisis relative to other major cities such as London, New York and Tokyo.

Several readers have also noted that there are aspects of the so-called "expatriate life" to which many ordinary Singaporeans aspire, such as owning a car, living in private property, dining in good restaurants, watching a concert or play, and being able to afford branded clothes.

Tied in to these aspirations is the overriding goal of our pioneer generation: that their children and grandchildren can lead better lives than they did.

But the rising cost of living results in the growing realisation that the Singapore dream of the five Cs - a pile of cash, credit cards, a car, a condominium and a club membership - is increasingly out of reach.

A new car can easily set one back by $100,000 or more, while even a modest condo unit will cost more than $1 million.

This recent reality seems harsh for a generation which finds that securing a good university degree and landing a decent-paying job no longer guarantees the finer things in life.

Law and Foreign Minister K.Shanmugam said last year during a Singapore International Chamber of Commerce lunch dialogue that the "step-up ladder progress" from small flat to condominium to private landed property is "not so easily available" any more.

He said: "At one time, 5 per cent went to university. So if you had a degree, you're guaranteed that you'll have a nice house, to put it in very simple terms.

"Today, 27 per cent go to university, and our landed stock is less than 5 per cent."

I recall interviewing a couple in their early 40s last year who bought a five-room flat in Serangoon in the mid-1990s with a Housing Board loan of around $194,000.

They were able to pay it off in seven years without scrimping and sacrificing their spare cash, while still being able to afford overseas family holidays with two children and own a car.

These days, with HDB flats in mature estates that easily cost above $400,000, paying off a mortgage in under 15 years without compromising one's quality of life has become much more difficult. And it is more likely to require two incomes instead of one.

I recognise that there are limits to what any government can do as Singapore becomes a global city and competes with the likes of Hong Kong, Tokyo, London and New York for talent.

But bearing in mind local aspirations while growing Singapore as a prominent city is something policymakers here have to grapple with.

As for me, I reckon it's about finding my level of contentment in an increasingly cosmopolitan and costlier country, and recognising that I can be contented without being complacent or lazy.

There is a story of a rich businessman who was troubled to find a fisherman sitting beside his boat after a hard day's work.

"Why aren't you out there fishing?" he asked.

"Because I've caught enough fish for today," said the fisherman.

"Why don't you catch more fish than you need?" the wealthy man asked.

"What would I do with them?"

"You could earn more money and buy a better boat so you could go deeper and catch more fish. You could purchase nylon nets, catch even more fish, and make more money. Soon you'd have a fleet of boats and be rich like me."

The fisherman asked: "Then what would I do?"

"You could sit down and enjoy life," said the businessman.

"What do you think I'm doing now?" the fisherman replied as he looked placidly out to sea.

"I'm already enjoying my life."





COST OF LIVING
Problems with global comparisons

IT IS official now: We live in the world's most expensive city ("S'pore 'world's most expensive city'"; Wednesday).

The media hype surrounding the release of the Economist Intelligence Unit's (EIU) cost of living index, which ranked Singapore first among 131 global cities surveyed, can easily make one lose sight of what the survey set out to measure.

The survey forms part of a professional tool that the EIU markets to human resource departments of international corporations to compute cost-of-living adjustments for business travellers and expatriates. To this end, price data for a fixed consumption basket of a typical (Western) expatriate is collected around the globe and combined to city-specific indices.

In no way does the survey compare the cost of living of local citizens across the globe, unless one believes that everybody drives a Mercedes-Benz to town wearing an Armani suit, orders champagne, and then decides to spend the night at Marina Bay Sands.

Cross-border comparisons of the cost of living are plagued by many problems. With respect to the relevance of the EIU survey to ordinary folk, these problems primarily concern differences in local tastes and the substitutability between goods.

Not everyone here eats beef or pork, or at least not in the amounts consumed in the West. Traditional South Asian and South-east Asian cooking makes more creative use of vegetables.

Market prices also influence consumption habits, and thus the measured local costs of living.

But even if one is an expatriate who cannot live without a slice of real gruyere cheese and a fancy car, goods prices need to be assessed in relation to direct and indirect income taxation.

When considered in isolation, the price tag of a six-year-old Honda in Singapore is almost prohibitive due to taxes and fees, but low personal income taxes by international standards (for both locals and foreigners) leave me financially better off than when I was in Washington, DC, with comparable gross income and a Honda.

I do not intend to downplay people's concerns about the impact of rising prices on real income inequality in Singapore. Broad-based participation in economic growth is an important goal for public policy to secure social stability. Yet, the EIU survey is the wrong place to look for assessing that situation.

Martin Bodenstein (Associate Professor)
National University of Singapore
Department of Economics
ST Forum, 7 Mar 2014





Why cost-of-living survey matters

I AM writing as an "ordinary" Singaporean who is told that "Burberry-type raincoats, four best seats in a theatre and three-course dinners in high-end restaurants" do not feature in my consumption basket ("Cost-of-living surveys reflect expatriate, not local, costs"; Thursday).

The prices of such items will inevitably be used as benchmarks for all retailers and restaurateurs looking to cover increases in labour and rental costs.

For instance, although Orchard Road rents are probably out of most ordinary Singaporeans' price bracket, anecdotal evidence suggests that landlords have an eye on what these are when determining the rental prices to charge elsewhere.

Back in 2012, a study by the National University of Singapore found that more than two-thirds of Singaporeans felt they did not have enough money for their wants ("Middle-income Singaporeans feel the squeeze, survey finds"; Nov 29, 2012).

It would be interesting to know what it is that most ordinary Singaporeans aspire to do and to own.

Singaporeans are told to be realistic about their options; they need to "run hard" and "out-compete the world". At the same time, they cannot afford to be given optimistic encouragement, for it is best to accept the "unvarnished" truth ("Harsh world or land of possibility?"; Thursday).

To want to "run hard" and "out-compete the world", it is human nature to also want to be able to access the rewards. And it does include being able to afford those items that do not feature in the average Singaporean's consumption basket.

Otherwise, it will simply emphasise inequality, which can be socially corrosive.

Social scientists Richard Wilkinson and Kate Pickett outlined the problem eloquently in their book, The Spirit Level: Why Greater Equality Makes Societies Stronger: "Greater inequality seems to heighten people's social evaluation anxieties by increasing the importance of social status.

"Instead of accepting each other as equals on the basis of our common humanity as we might in more equal settings, getting the measure of others becomes more important as status differences widen. We come to see social position as a more important feature of a person's identity. Between strangers, it may often be the dominant feature."

I am sure many Singaporeans like me aspire to "live the good life" on the back of economic growth, but find the lifestyle they wish to have moving rapidly out of their reach. This is what drives disenchantment not only among the young, but also people of my generation - namely, those who should feel a strong commitment, having worked to contribute to Singapore's growth.

If we are to have a "reach-for-the-stars confidence", then we ought to be able to afford the stars.

Lorraine Boon Ling Li (Ms)
ST Forum, 8 Mar 2014





Healthy dose of realism

MS LORRAINE Boon Ling Li's assertions deserve a riposte ("Why cost-of-living survey matters"; last Saturday).

It is not true that prices of items such as "Burberry-type raincoats, four best seats in a theatre and three-course dinners in high-end restaurants" will be used as benchmarks for restaurateurs and retailers - not when the market caters to so many diverse segments, with each one subjected to its own unique competitive pricing pressures.

There is really no contradiction when Singaporeans are exhorted to run the best race they can and yet be prepared to face a future that is not a bed of roses. Not when reality surrounds us with so many competitors, each no less innately gifted or driven to succeed than us.

Also, even without the inordinately expensive and unnecessary luxuries of life that markedly increase the cost of living (for expatriates), the standard of living and quality of life for Singaporeans do not suffer much, if at all.

While greater equality makes societies stronger and we should be aiming for a lower Gini coefficient, it should be noted that communist and socialist countries, which once proudly proclaimed egalitarianism, have quietly dismantled their unworkable political systems. In the meantime, capitalism, with all its egregious opportunism and social inequalities, reigns supreme.

It is natural to work hard and expect our just rewards, but it is presumptuous to think that the stars are ours to grab as a right just because we are encouraged to reach for the stars.

At a class reunion I just attended, some old schoolmates drove up in swanky Ferraris while others took the bus. Even as some of us were captains of industry, chief executives of listed companies or medical specialists earning millions of dollars, others were normal-level employees or middling general practitioners.

Like any cohort of bright-eyed students starting out by aiming for the stars, in the race of life we had all strung out in the normal distribution of a bell curve and landed where we deserved to be, getting no more and no less than what we had put in in sweat and tears.

Yet, unlike the social scientists Ms Boon quoted, none of us saw social position as more important than personal identity. We were oblivious to status and all were accepted and feted as equals, a minister in attendance being no exception.

Education and experience with the vicissitudes of life had disabused us of any preconceived prejudice.

Yik Keng Yeong (Dr)
ST Forum, 12 Mar 2014






Costliest city? But can it be home to citizens?
That is the enormous challenge Singapore faces as it joins the ranks of top global cities
By Han Fook Kwang, The Sunday Times, 16 Mar 2014

Singapore is the most expensive city in the world.

True or false?

This debate was one of the most-watched spectator sports last week, and is still making the rounds.

The different reactions to the Economist Intelligence Unit (EIU) survey were more interesting than the result itself because of what they say about this evergreen cost-of-living issue.

In one camp are those who rubbished the survey, accusing it of using flawed methodology and making invalid comparisons across cities.

I think we can ignore this group because, like it or not, it was a well-researched study done by an established organisation of the international news weekly, The Economist, and which had been doing it for the last 30 years.

But it is important to understand exactly what the study is about and who it was meant for.

In fact, it was done mainly for companies which post staff overseas and want to know how much "cost of living" allowance to pay them.

So, for example, taking New York's index at 100, Singapore scored 130 in the latest survey, which means that if a company went strictly by the EIU's index to peg its rates (most would take other factors into account), it would pay someone being posted here 30 per cent more in allowances than another person in the Big Apple.

The study was never meant to determine the cost of living here compared with New York's for citizens of either city.

The question then is whether Singaporeans ought to be concerned that their country is the costliest place for expatriates, at least according to the EIU.

Some obviously do, going by the responses of this newspaper's readers.

Their views are aptly summed by this excerpt from a letter we published last week:

"Although it is true that the kinds of goods and services included in the survey are not those consumed by 'ordinary' Singaporeans, we cannot assume that all Singaporeans are ordinary. Many of us, even the 'ordinary' ones, do have aspirations. We do yearn for imported cheese, filet mignon, high-end dining and so on. If we do not buy them, it is not because we do not want them but because we cannot afford them."

One quick point, though, about the survey lest it be thought it covered only things bought by expats on million-dollar salaries who eat imported cheese every day. In fact, the EIU studied the prices of more than 160 items, including very ordinary ones such as white rice, bread, toothpaste, detergent, water and electricity.

That's as it should be, as even Ferrari-owning foreign bankers need to clean their teeth and wash their clothes.

And it obtained these prices from three types of shopping places - supermarkets, and mid-price and specialised shops - depending on where they were mostly bought from.

But the sentiment behind that reader's comment about aspiring to want the good life is a valid one and needs to be addressed.

Another reader made a similar point in a slightly different way. She wrote: "Singaporeans are told to be realistic about their options; they need to 'run hard' and 'out-compete the world'...

"To want to 'run hard' and 'out-compete the world', it is human nature to also want to be able to access the rewards. And it does include being able to afford those items that do not feature in the average Singaporean's consumption basket.

"Otherwise, it will simply emphasise inequality, which can be socially corrosive."

The question facing Singapore, and which lies behind these sentiments, is whether it can be a successful global city attracting some of the best people from around the world, and still be a country that its citizens feel at home in and can enjoy the benefits its international status brings.

If you look at the EIU's list, the top 10 most expensive places are all up there in any ranking of global cities: Singapore, Paris, Oslo, Zurich, Sydney, Caracas, Geneva, Melbourne, Tokyo and Copenhagen.

It seems you can't be a successful international magnet without also being an expensive one.

That's an observation with important implications for any aspiring city, but especially Singapore, because the city is the country.

So how serious is the effort here to want to be in the same league as these other cities?

In fact, Singapore's global ambition has been an important part of its economic strategy for some time now, and it is well on the road to achieving it.

It is the reason why it started promoting the business of wealth management in a big way, attracting many of the super-rich here.

It was also why it approved the setting up of two casinos in large integrated resorts despite strong objections from some quarters, brought the Formula One race here, and spent a billion dollars on the iconic Gardens by the Bay.

The results have been quite spectacular, changing the physical landscape especially in the Marina Bay area, as well as culturally, with the presence of so many foreigners, without whom the dining and entertainment businesses would not have changed so dramatically in the last decade.

Just as the country was successful in the early years in attracting multinational companies to set up their factories here, it looks now to have repeated that success in the global city competition.

Singapore's achievement in this area hasn't gone unnoticed, which explains why Knight Frank, in its latest study, predicted that it will have more multi-millionaires - with assets of more than US$30 million (S$37.9 million), excluding their own homes - than any other city bar London in 10 years' time: 4,878 to be exact.

Note that these are actual numbers of super-rich individuals, and not counted on a per capita basis.

Sellers of imported cheese and filet mignon should be cheering quietly at the prospect.

But here's the key question: Is it possible to envisage a future where Singapore is top in this league, a destination of choice for the very rich, but also a comfortable home for its citizens across all income levels?

Or will this be an impossible act, and lead to the country becoming "socially corrosive", as that reader put it?

It isn't the only place where this issue is being raised.

London's success as a financial centre has raised questions in Britain about the unbalanced growth in the country and how to spread it more evenly to other cities. But citizens there at least have the option of moving to Sheffield or York if they find the capital too expensive or fast-paced.

Singaporeans have no such choice.

To be fair, the Government recognises this problem, which is why it has stressed that it wants to achieve more uniform growth for all, rather than growing at all cost.

But no one should be under any illusion about the enormity of this challenge, one not attempted anywhere else on this scale.

Can Singapore square the circle?

That's what the discussion arising out of the EIU survey should ultimately be about.







Singapore '4th most expensive city for expats'
By Melissa Tan, The Straits Times, 15 Jul 2014


The Republic climbed one rung from fifth place last year, Mercer said in its annual cost of living survey released last week.

It is also the second-priciest city in the Asia-Pacific region, after Hong Kong.

The survey covered 211 cities across five continents. It measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment.

The most expensive city for expatriates is Luanda in Angola, in southern Africa, which holds the spot for the second year in a row.

It is followed by N'Djamena in Chad, which is a landlocked country in central Africa. Hong Kong comes in third.

"While Luanda and N'Djamena are relatively inexpensive cities, they are quite costly for expatriates since imported goods come at a premium," said Mr Ed Hannibal, partner and global leader for Mercer's mobility practice.

His statement adds: "In addition, finding secure living accommodations that meet the standards of expatriates can be challenging and quite costly as well. This is generally why some African cities rank high in our survey."

Mercer said African, European and Asian cities are generally the most expensive for expatriates due to currency fluctuations and the impact of inflation on goods and services.

Two Swiss cities - Zurich and Geneva - take fifth and sixth spots respectively.

Cities in Asia account for four of the 10 most expensive worldwide.

Apart from Hong Kong and Singapore, Tokyo and Shanghai also make it to the list. Tokyo drops four spots to seventh while Shanghai jumps four places to 10th.

Japanese cities have dropped in the ranking this year owing to the yen weakening against the US dollar, said Ms Nathalie Constantin- Metral, a principal at Mercer.

"However, Chinese cities jumped in the ranking, including Shanghai, Beijing and Shenzhen, due to the strengthening of the Chinese yuan," she said.






Beating Hong Kong, Zurich, London and New York. 
Posted by BBC News on Wednesday, March 9, 2016








Singapore remains the world's most expensive city but Zurich replaces Paris for second place
Posted by The Economist on Monday, March 14, 2016








Is Singapore the most expensive city to live in?The Economist Intelligence Unit’s (EIU) Worldwide Cost of Living...
Posted by Ministry of Trade & Industry on Thursday, March 17, 2016






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