Singapore overtakes Hong Kong to become 3rd most expensive country in Asia for expatriates

Singapore has jumped three places to become the 6th most expensive city, and 3rd most expensive country in Asia, according to ECA International, the world’s leader in the development and provision of solutions for the management and assignment of employees around the world.

 

The continued strength of the Singapore dollar against major currencies has also catapulted the city up the global ranking, rising from 68th to 36th position in the space of a year. It is now more expensive for international assignees than Hong Kong, New York, Amsterdam, Frankfurt and Shanghai. Goods and services commonly purchased by international assignees now cost almost 3% more in Singapore than in Hong Kong. Just a year ago, they cost 5% more in Hong Kong than Singapore.

 

"While we are seeing price increases in a number of Asian locations, the main reason for Singapore’s rise in our ranking over the past 12 months is the strength of the currency," says Lee Quane, Regional Director, Asia for ECA International. "The Singapore dollar has risen by more than 10% against the greenback between surveys, for example, and allowances paid to protect the purchasing power of employees on long-term assignment in the city are now higher than those paid to international executives posted to many other financial centres including Hong Kong, London and New York."

 

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 a Cost of Living Survey twice a year comparing a basket of consumer goods and services commonly purchased by assignees in 400 locations worldwide.

 

Price inflation is being witnessed around the world as the cost of food, oil and other commodities rise. In Asia, the prices of ECA’s basket of goods and services in local currencies have increased by around 5.3% on average. Bangladesh (7%), Vietnam (6.2%), Indonesia (5.8%) and Hong Kong (5.5%) are among the Asian economies that have seen the highest rates of price inflation.

 

However, currency movements still have the biggest influence on rankings.  In Asia, the Singapore dollar, Malaysian ringgit and Mongolian tugrik have appreciated the most over the twelve months between surveys.

 

"In some cases, strong currencies have contributed just as much as inflation to a country’s rise up the ranking, "Quane added. "As well as Singapore, we have seen this happening in Ulaan Baatar, Bangkok and Kuala Lumpur – these locations have risen by 23, 20 and 16 places respectively. Other locations  have fallen in the ranking despite  major increases in local prices. Hong Kong and Vietnam are examples of this – the weakening of their currencies has more than counterbalanced the impact of price inflation."

 

Tokyo remains the most expensive location in Asia – and globally – for international assignees. Although Japan is the only Asian country surveyed where the actual cost of goods in the ECA basket of goods has fallen, a strong currency and already higher costs for goods mean that cost of living for assignees is significantly more expensive than in other locations in the top ten.

 

Seoul joins Japanese locations at the top of the ranking. A combination of price increases in the Korean capital and the continued strengthening of the won against the US dollar sees it maintain its position as the 5th most expensive location in the region and ranked 22nd globally.

 

Little change has been seen in China but Hong Kong’s drop in the ranking  means it is currently only marginally more expensive for international assignees than Beijing , ranked 46th and Shanghai in 47th position. Xi’an is the cheapest mainland Chinese city featured in the survey, ranked 126 places behind Beijing in 172nd.

 

Hanoi is the Asian location that has fallen most in the ranking from 200 to 224 while Karachi (at 240) remains the cheapest location in Asia and globally.

 

The strengthening of the Australian dollar which hit parity with the US dollar last November has seen Australian locations continue their rise up the ranking. Sydney has moved from 29th to 16th position year-on-year.  A year ago, goods and services in Sydney were 3% more expensive than when purchased in Hong Kong. Now they are 17% more costly. Sydney is followed by Canberra (18), Brisbane (21), Melbourne (25), Perth (26) and Adelaide (28).

 

The Norwegian capital Oslo remains the most expensive location surveyed in Europe and the 2nd most expensive globally. It is followed by Stavanger (4th globally) and the Swiss city Zurich (6th).

 

Of the European locations surveyed cost of living has increased the most in Swiss locations. In Switzerland, where inflation is low, it is the strong Swiss franc that has contributed to pushing Zurich up to 6th position globally from 10th.

 

With the weakening of the euro against major currencies between surveys, many eurozone locations have fallen down the ranking significantly. A year ago, the cost of living index for expatriates going to Singapore was almost level with that of Frankfurt. Now the same items purchased in Singapore cost 9% more than in Frankfurt, largely due to the euro depreciating against the Singapore dollar.

 

"On-going economic troubles in the eurozone region have affected the single currency," says Quane. "As a result many locations where the euro is used have dropped down the ranking. This continues the trend we have seen in recent surveys, whereby more and more companies are introducing or increasing cost of living allowances when assigning staff from Europe to Asia."

 

Caracas (15) is the most expensive location in the region for international assignees - a result of rampant inflation. The Venezuelan capital is followed by Brazilian locations Rio de Janeiro (23) and Sao Paolo (27).

 

In North America, Vancouver (37), is the most expensive location for assignees, followed by Ottawa (40), Toronto (42) and Manhattan (44).

 

Luanda, Angola, ranked 7th globally, is the most expensive location for international assignees in Africa followed by Libreville (Gabon, 19th) and Kinshasa (Democratic Republic of Congo, 24th). While these locations are among some of the most expensive surveyed, Africa is also home to some of the least expensive locations, with Maseru (Lesotho), Alexandria (Egypt) and Durban (South Africa) ranked 237th, 235th and 225th respectively.

 

In the Middle East, Tel Aviv, ranked 29th globally is the most expensive location surveyed while Dubai is 175th. Jeddah, 234th is the least expensive.

 

 

Figures used in this release were taken from ECA’s Cost of Living Survey.

 

ECA International’s cost of living indices are calculated based upon surveys carried out annually in March and September using a basket of day-to-day goods and services.  The data used above refers to year on year movements between ECA’s March 2011 and 2010 surveys.

 

The data is used by ECA clients to calculate cost of living allowances for assignees. The survey covers:

Food: Groceries; dairy produce; meat and fish; fresh fruit and vegetables

Basic: Drink and tobacco; miscellaneous goods; services

General: Clothing; electrical goods; motoring; meals out

 

Certain living costs such as accommodation, utilities (electricity, gas, water costs), car purchase and school fees are not included in the survey. Such items can make a significant difference to expenses but are usually compensated for separately in expatriate packages.

 

This comparison of cost of living was calculated on a base composed of various developed countries and is used to reflect an international lifestyle. Other indices available from ECA reflect specific city-to-city comparisons, and different levels of shopping efficiency.

 

ECA is the world’s leader in the development and provision of solutions for the management and assignment of employees around the world. Delivering data, expertise, systems and support in formats which suit its clients, ECA’s offer includes a complete 'out-source' package of calculations, advice and services for companies with little international assignment management experience or resource; subscriptions to comprehensive online information and software systems for companies with larger requirements; and custom policy and system development projects for companies who manage thousands of international assignees around the world.