S’pore is 9th most expensive Asian city

Source : Straits Times – 3 Dec 2009

A STRONGER currency and a rise in inflation have made Singapore a more expensive place for expatriates to live in, a survey has found.

Singapore jumped three spots from a year ago to become the ninth priciest Asian city in the latest cost of living ranking by human resource company ECA International.

It beat Taiwan’s Taipei and China’s Shenzhen and Guangzhou, but remained cheaper than Japan’s Tokyo and Yokohama, and China’s Beijing, Shanghai and Hong Kong.

Worldwide, Singapore’s rising cost of living catapulted it into the 78th spot on this year’s global survey, up almost 20 places from 97th last year.

The main reason for the movement – and, in fact, for most of the changes in this year’s survey – was exchange rate fluctuations, said ECA International.

The Singapore dollar has gained about 10 per cent against the US dollar since March. This has helped push up the cost of living in Singapore, compared with some neighbouring cities whose currencies are pegged to the US dollar such as Hong Kong.

According to ECA International, living costs in Singapore are now just 7 per cent lower than in Hong Kong, compared with a 15 per cent gap last year.

‘While such increases are unlikely to deter companies from relocating staff to Singapore, the cost of doing so is now higher than it was a year ago,’ said Mr Lee Quane, regional director of Asia for ECA International.

He said the stronger Singdollar, coupled with the fact that inflation here has been slightly higher than in some other Asian cities, means that companies have to pay their expat workers higher cost-of-living allowances.

The same applies to Japanese cities, which maintained their top spots in the Asia ranking as the yen soared against the greenback. South Korean locations also surged up the ranks, with Seoul jumping four places to seventh this year, after the won regained some of its lost value.

Expats in Singapore said yesterday that they feel the cost of living has gone up.

‘In terms of personal costs, day-to-day expenses have definitely increased,’ said Mr Trevor Gawne, who is from Australia and based here as managing director of Fuchs Lubricants.

He said the prices of raw food in particular, such as eggs and fresh milk, have gone up quite considerably in the past 12 months, especially if they are imported from countries like New Zealand and Australia, which have seen their currencies strengthen against the Singdollar.

But while rising costs are a concern, a bigger worry is the volatility of costs, said Mr Phillip Overmyer, an American and the chief executive of the Singapore International Chamber of Commerce.

‘What I think is a bigger concern at the corporate level is the high fluctuation we are seeing in Singapore costs in general,’ he said.

‘Housing rentals, office rentals and the prices of general goods and services have been swinging back and forth a lot over the last couple of years.’

This is worrying for companies because they cannot predict costs and plan accordingly, and it hurts Singapore’s competitiveness, he said.

Ms Laura Deal, executive director of the American Chamber of Commerce in Singapore, agreed that the extreme swings in costs ‘can really destroy budgets and cause pain for small companies’.

‘You can get caught in a really bad housing or office lease if you sign at the wrong time, and end up paying 30 per cent more than your neighbour,’ she said. ‘We think it is important for the Government to control the volatility of costs a little bit more.’

ECA International’s survey calculated the cost of living around the world based on a basket of day-to-day goods and services. The survey is done twice a year, but comparisons are made year-on-year to strip out seasonal differences.

In March, Singapore was 10th in the Asia rankings.

In the global rankings, Angola’s capital Luanda took top spot as the city with the highest cost of living in the world – many regularly used items are expensive to obtain in the city due to the country’s war-damaged infrastructure.

Other cities placed in the global top 10 included Tokyo, Yokohama, Oslo and Copenhagen.