http://www.straitstimes.com/archive/...-rich-20140306

S'pore the costliest city? That's rich

Survey findings based on consumption patterns of high-living expats

Published on Mar 06, 2014

By Yasmine Yahya


A STUDY out this week naming Singapore as the world's most expensive city has become a major talking point around town.

Many people say the study confirms that the cost of living here has spiralled. But others argue that the Economist Intelligence Unit (EIU) report does not reflect the consumption patterns of ordinary Singaporeans. Rather, it focuses on high-living expats, they say.

Included in the basket of items the study used to compute the cost of living in 131 cities worldwide were imported cheese, filet mignon, the four best seats in a theatre and Cointreau liquor - hardly regular buys of the average local.

The EIU seemed to focus on high-end options for clothing, which it says cost more in Singapore than anywhere else. The study says a white business shirt costs $259, a daytime dress $485 and a Burberry-type raincoat for men costs $2,295 at a department store. Children's dress shoes cost $199 and a girl's dress $169.

The study also took into account taxi fares and the costs of buying and running a car but excluded public transport. And it included fees at various international schools as part of the overall cost of living.

Other costs in the study were based on the habits of Western expats. For example, the report states that the monthly electricity bill for a family of four would be between $938.96 and $1,433.32, far higher than the utilities bill for most families here.

The editor of the EIU report, Mr Jon Copestake, told The Straits Times that electricity bills tend to be high for expats living in warm climates such as in Sri Lanka, Malaysia and Singapore as they often use air-conditioning.

Former Nominated Member of Parliament Calvin Cheng said: "Rental rates for the survey are taken from average rates of locations like Orchard Road and River Valley, where most Singaporeans do not live in. Most locals live in HDB flats which they own."

Since the survey compares the cost of living for expatriates across different cities, it focuses on factors that do not affect the cost of living for Singaporeans.

Speaking in Parliament yesterday, Deputy Prime Minister Tharman Shanmugaratnam pointed out that the Singapore dollar has strengthened over the years, which means that the city is more expensive for someone who is paid in a foreign currency. However, for Singaporeans, it improves their purchasing power, as it means imported goods are cheaper, and helps when they travel.

Indeed, a study by the Asia Competitiveness Institute (ACI) at the Lee Kuan Yew School of Public Policy last year showed that while Singapore is the most expensive place in the world for expats, it is only the 60th most expensive for the average resident. It came to this finding by taking into account, for example, the costs of hawker food, government schools and public hospitals.

But high-end goods and city apartments aside, the study has struck a chord with ordinary Singaporeans, who reckon that the prices of everyday goods have been rising too.

Mr Sathiyasivan Balakrishnan, 25, who works in the hospitality sector, said: "Most of us, if we eat out, eat at hawker centres. But hawker food prices have been increasing every year too."

A measure of how much prices have risen is core inflation, which excludes the cost of private road transport and accommodation. It rose 1.7 per cent last year on top of 2.5 per cent in 2012.

Companies do feel that Singapore is an expensive place to conduct business, noted Singapore Business Federation chief operating officer Victor Tay.

"This might be negative to companies considering Singapore as a potential investment destination," he said, adding that the Government should look at measures to stabilise business costs.

Studies such as this may also make it harder for Singapore to attract top talent from around the world, he said.

Still, economist Selena Ling said the study is unlikely to hurt Singapore's competitiveness. "Singapore has never been a cheap place. So the question is whether the value that Singapore adds to your business outweighs the costs."

DBS economist Irvin Seah agreed.

"We know we can't compete on costs, and the cost of business here such as rental and labour is on the high side compared to regional countries," he said.

"But other comparative advantages would come into play. Investment decisions are not just based on cost of living but on a broad spectrum of factors like the reliability of the legislative framework, quality of the labour force and infrastructure."

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Additional reporting by Tee Thou