Tuesday, December 11, 2012

Singapore moves down to 8th most expensive location in Asia as cost of living falls

Singapore has dropped two places to become the region’s 8th most expensive location for expatriates, while retaining 31st position globally. This is according to the latest Cost of Living survey from ECA International, the world's leader in the development and provision of solutions for the management and assignment of employees around the world. This survey compared the year-on-year movement between September 2012 and September 2011 data.

While Singapore has dropped down the regional ranking, globally it has maintained its position due to the movements of other locations worldwide. For example, while Beijing (22nd globally) and Shanghai (26th), are now more expensive than Singapore. Paris (42nd) and Rio de Janeiro (64th) are now cheaper – largely a result of the weakening of their currencies against other major currencies.

Hong Kong has also leapt up the rankings and is now just below Singapore. Tokyo retains its position as the most expensive location in Asia and the world.

Lee Quane, Regional Director, Asia, ECA International said, “While the cost of ECA’s representative basket of goods and services in Singapore increased by 2.7% over the past 12 months,  this rate is well below the regional average of 6.5%. It is also significantly lower than the 5% increase we’ve witnessed in China over the year. This, together with the fact that the Renminbi has strengthened against many currencies, including the Singapore dollar, in the same period is making Chinese locations increasingly expensive. This could be stripping them of the competitive edge they once had over other locations in Asia as companies looking to set up in the region might think twice, now, about posting staff to China.”

Living costs for assignees are affected by inflation, availability of goods and exchange rates, all of which can have a significant impact on assignee remuneration packages. To help multinational companies calculate assignment salaries, ECA carries out two Cost of Living Surveys per year, comparing a basket of consumer goods and services commonly purchased by assignees in more than 400 locations worldwide.

“Certain living costs such as accommodation rental, utilities charges, car purchases and school fees are not included in this survey. Although such items can have a significant effect on overall cost of living, they are usually compensated for separately in expatriate packages so this data is researched and published separately,” explained Quane.

Hong Kong catching up with Singapore
While there has been no movement in the global ranking for Singapore, Hong Kong has jumped 26 places up the list of most expensive cities. The Special Administrative Region is now the 32nd most costly location for international assignees – just one position below Singapore. A year ago items in ECA’s cost of living basket cost 8% more in Singapore than in Hong Kong. Today, the prices in Singapore are only 0.4% more expensive.

"This year we have seen the cost of items in ECA’s shopping basket in Hong Kong increase 6.7% - much higher than the price inflation observed in Singapore and higher than the regional average increase” said Quane. “This, along with the Hong Kong dollar’s peg to a stronger US dollar is making the SAR more expensive for many companies sending employees there on assignment.”

Asia region highlights
Over the past three years, Asian locations have climbed up the global ranking. Nine Asian locations now feature in the top 50 most costly locations for international assignees worldwide. In 2009, only four did, none of which were Hong Kong, Singapore, Beijing, Shanghai or Seoul.

Tokyo is still the most expensive location in Asia and globally – despite Japan being the only location in Asia to experience price falls this year. On average, prices of items in ECA's Cost of Living basket for Asia have increased by 6.5% – significantly less than last year's average increase of 8.2%.

While Hong Kong and mainland Chinese locations have seen some of the biggest leaps up the Asian ranking this year, some of the region’s biggest falls have been witnessed in Indonesia. The weakening of the Rupiah against major currencies has contributed to Jakarta falling 32 places, to become the world's 123rd most expensive location for expatriates.

In Malaysia, Kuala Lumpur has risen from 186th to 179th in the global ranking and 29th in the region while Georgetown is in 215th  globally, just above Mumbai (216th globally) and Ho Chi Minh City (217th).

Karachi in Pakistan remains the least expensive Asian location in the ranking.

See Singapore moves down to 8th most expensive location in Asia as cost of living falls for more.

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