Singapore’s No. 1 ranking in EIU Cost of Living Survey

I refer to the transcript of Mr Tharman’s Budget 2014 speech for his comments on Singapore’s Number 1 ranking in EIU’s cost of living survey.

Mr Tharman said the strengthening of the Singapore dollar makes Singapore goods expensive for someone who is paid in a foreign currency. Firstly, many expatriates are given the choice of being paid in Singapore dollars. Secondly, the EIU cost of living survey ranks countries based on prices of goods and services only, it does not rank countries based on how affordable goods and services are relative to salaries. Singapore’s No.1 ranking in the EIU cost of living survey has everything to do with prices and nothing to do with salaries or the currency of salaries. Therefore, Mr Tharman’s argument about someone being paid in a foreign currency is completely irrelevant in so far as Singapore is No.1 ranking in the EIU cost of living survey is concerned.

Since most goods in Singapore are imported, the strengthening of the Singapore dollar vis-a-vis the USD will not affect the USD price of these imported goods.

Mr Tharman also said that a stronger Singapore dollar makes imported goods cheaper. But the reality is that Singapore’s imported goods have become more expensive, not cheaper. The strengthening of the Singapore dollar merely allows importers to make better margins without necessarily lowering the prices of the goods they import.

Mr Tharman claimed that the EIU’s basket of goods that include imported cheese, filet mignon and Burberry type raincoats is geared towards higher end expatriates that differ from the basket of goods consumed by ordinary Singaporeans. However, according to the EIU website [2]: survey prices are gathered and listed from three types of stores: supermarket, medium-priced retailers and more expensive speciality shops. Surely, supermarket goods cannot be too different from goods consumed by Singaporeans? Thus, while the goods quoted by Mr Tharman are quite different from those consumed by Singaporeans, many other goods not quoted by Mr Thaman are quite the same as those consumed by Singaporeans. This is further supported by the statement from EIU spokesperson Mr Jon Copestake who said [3]: The highest-weighted category in our survey is that of groceries and everyday staples which include goods like fresh fruits and vegetables, meat, fish, rice, etc.

Mr Tharman also complained that the EIU survey’s transport category only included cars and taxis but not public transportation whereas the average Singaporean takes public transport. But if the average Singaporean is consigned to taking public transportation while the average person in some other country can afford to drive, wouldn’t that in itself show that our cost of living is higher than other countries and that our people cannot afford what people in other countries take for granted? The EIU Worldwide Cost of Living 2014 summary report explained that high COE led to Singapore’s transport costs being three times higher than those in New York. So it is not just the rich or the expatriate but the average Singaporean too who must pay four times the price for a car compared to the average New Yorker.

Mr Tharman said our public transport is cheaper than other cities. But public information on public transport doesn’t inspire the confidence that those figures are correct. LTA compares average MRT fare and average bus fare separately with those of other cities. But the Singapore public transport model is a hub and spoke model that forces most home-to-destination or destination-to-home journeys into a series of MRT and bus ride combinations. Providing separate statistics for MRT and bus journeys distorts the true picture of our public transportation costs. As an example:

Home to MRT station by bus: $0.80 Average bus fare: $0.80
MRT station to destination by MRT: $1.00 – $0.40 rebate = $0.60 Average MRT fare: $0.60

But the cost of the journey from home to destination is actually $1.40. We should be comparing $1.40 with other countries, not $0.80 or $0.60 separately. Comparing $0.80 or $0.60 with other countries makes us look cheap when the actual cost is $1.40. The more hub and spoke a transport model is, the greater the distortion between cost of home-to-destination journeys and cost of individual MRT and bus journeys. EIU is therefore correct to exclude public transport costs because they never truly reflect the cost of public transport in Singapore anyway.

Mr Tharman then claimed that few surveys measure living costs of ordinary residents and went on to cite the one from the Lee Kuan Yew School of Public Policy as the one that does. But the Lee Kuan Yew School of Public Policy survey is quite a useless survey because it is almost never used by anyone outside Singapore. It is almost like North Korean statistics useful only within North Korea.

I refer too to the 6 Mar 2014 Straits Times report “S’pore the costliest city? That’s rich” [4]. In that report, Straits Times claimed that the EIU study included fees at international schools as part of overall cost of living. However, the EIU website [2] says: the final three subcategories of:

• Housing rents
• International schools, health & sports
• Business trip costs

are not included in the index calculation. Hence, Straits Times is wrong to say that international school fees are included as part of overall cost of living since it is excluded from the index calculation.

Straits Times also quoted former MP Calvin Cheng saying rental rates were taken from Orchard Road whereas most Singaporeans live in HDB flats [4]. Does Mr Cheng not know that housing rents are excluded from the index calculation and hence does not impact our cost of living ranking?

If housing rents and international school fees had been included in the index calculation, Singapore cost of living would have shot up even more.

In conclusion, the state and its media, by listing only a handful of the more than 400 individual prices across 160 products and services in the EIU survey, failed to show that the items are generally expat-centric and irrelevant to Singaporeans.

[1] Straits Times, “Cost-of-living surveys reflect expatriate, not local, costs”, 6 Mar 2014

[2] http://help.worldwidecostofliving.com/AbouttheEIUWorldwideCostofLivingsurvey/Howarethepricesgathered.aspx

[3] http://www.radioaustralia.net.au/international/2014-03-06/singapore-downplays-its-new-tag-as-the-worlds-most-expensive-city/1275746

[4] Straits Times, “S’pore the costliest city? That’s rich”, 6 Mar 2014
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 overal cost of living.

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.”

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3 Responses to “Singapore’s No. 1 ranking in EIU Cost of Living Survey”

  1. Anonymous Says:

    Trust the PAP to brainwash us with their selective statistics to con us. Who would believe them except the daft ones?

  2. dotseng Says:

    Demolished!

    Darkness 2014

  3. Nemo Says:

    There may be an element of truth in what Tharman says but his evidence is like no evidence. If anyone bother to check, there is a link in the bbc article to a PowerPoint from the policy school to explain their method. They took the eiu item price data and apply a different weight for local and expat. The result is shocking… Using local weight show a rank of 60+ and using expat weight show a rank of 5. There is a complex formula in there, but there is no economics or statistical basis … Where is the citation for related work by ilo, IMF or world bank who produce similar works? If u want Singapore to rank lowest, just need one item that Singapore is cheapest and put 99.99% of the weight there can already.

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