Singapore is world's most expensive city—but only for expats
Is The Lion City still affordable to ordinary Singaporeans?
The Economic Intelligence Unit (EIU) has named Singapore as the most expensive city in the world for 2014 in its Worldwide Cost of Living 2014 survey released this week. However, some argue that this does not entirely reflect that true cost of living of ordinary Singaporeans.
Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam, said these cost of living surveys
“are basically aimed at comparing cost of living for expatriates in different cities or countries.
Hence, there are two things that make these surveys quite different from the factors that affect the cost of living for Singaporeans.”
He stressed that exchange rates and the cost of goods are two important factors that make the difference in comparing the cost of living of expats with that of Singapore residents.
“An important reason why we have become an expensive place for expatriates is that the Singapore dollar has strengthened. Indeed, the EIU report points this out.
The Singapore dollar has strengthened over the years, including in recent years and this means that it is a more expensive place for someone who is paid in a foreign currency, or for a corporate HQ abroad whose earnings are in foreign currency.
As the Singapore dollar strengthens, it becomes more expensive,” he said at the 2014 Budget debate round-up held in Parliament yesterday.
“The EIU tries to put together a basket of what they think are expatriate costs, perhaps more on the higher end of expatriates. It is quite different from the goods and services consumed by ordinary Singaporeans,” he added.
This was echoed by Daryl Webb, President of the New Zealand Chamber of Commerce in Singapore, who said “the report focused on expat living as opposed to the overall cost of living in Singapore. That said, I know the rising cost of living is impacting everyone.”
He said “expats used to be buffeted from sharp changes in costs of living here in Singapore, but since the GFC, expat packages are no longer the norm. Kiwis in Singapore are feeling the pinch of rising costs as much as locals. Housing and cars are very expensive compared to New Zealand, and while tax rates are much lower, the perceived economic benefits for being based here have largely been eliminated.”
Raffaella Orsini, Secretary of General, Italian Chamber of Commerce in Singapore said “Singapore needs to focus on the end-generation because otherwise it will be a country with no people who can afford to live in because it’s too expensive.”
She also stressed that while the introduction of pioneer packages helps offset costs, there could still be a huge challenge for the end-generation who will soon bear the burden of rising costs.
Meanwhile, Chung Ting Fai, Director of Hong Kong Singapore Business Association, said rising property and labour prices had a huge impact on Singapore’s cost of living.
“The vibrant property market has caused high property prizes and rental. The fact that a growing number of properties in Singapore are under real estate investment trust fueled the increase further.
The tightening of the foreign labour market also increases operating costs for establishments are restaurants and retailers then these result in more expensive in food and other necessities," he said.