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Economist’s cost of living report ‘not representative’ of life of local residents

SINGAPORE — While cost of living surveys are useful for human resource managers when deciding where to place their workers globally, they are not a good representation of how life is for local residents. This was a point made by Deputy Prime Minister Tharman Shanmugaratnam as he weighed in on a report released by the Economist Intelligence Unit (EIU) on Tuesday, which ranked Singapore as the costliest place to live in.

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SINGAPORE — While cost of living surveys are useful for human resource managers when deciding where to place their workers globally, they are not a good representation of how life is for local residents. This was a point made by Deputy Prime Minister Tharman Shanmugaratnam as he weighed in on a report released by the Economist Intelligence Unit (EIU) on Tuesday, which ranked Singapore as the costliest place to live in.

The EIU report attracted widespread coverage in international media and also went viral on social media. Apart from the effect of currency appreciation, the cost of living in Singapore has also been pushed up by high private transport costs and utility charges, the report said.

Mr Tharman pointed out that cost of living differs between expats and locals due to currency movements and the different goods and services consumed by the two groups.

With the Singapore dollar strengthening over the years, the country has become a more expensive place for someone who is paid in a foreign currency or for corporate headquarters located abroad. However, a stronger Singapore dollar means that Singaporeans have a greater purchasing power here — because imported goods become cheaper — as well as overseas, Mr Tharman noted. He pointed out that some goods and services measured in the EIU report are “a bit on the high end”, such as imported cheese, filet mignon, branded raincoats, the four best seats in a theatre and three-course dinners at restaurants for four people.

The report took into account the costs of taking taxis and buying cars but did not measure the costs of commuting on buses and the MRT. Compared with most cities such as New York, London and Tokyo, the costs of such mass commuting are “significantly cheaper” here, said Mr Tharman.

He cited a survey done by the Asia Competitiveness Institute in 2012, which had distinguished between the cost of living for expats and for a typical resident household. It found that while Singapore was ranked fifth out of 109 cities in the index for expatriates, it was ranked 61st when it comes to cost of living for Singapore residents.

What is important for the Government is that Singaporeans’ incomes grow faster than the rise in cost of living. In the past five years, lower- and middle-income households have experienced income growth in real terms, he noted. In terms of business costs, Mr Tharman reiterated that Singapore must continue to be a vibrant place. There has to be acceptance that “we are not going to be a cheap location for business”, he said.

Mr Jon Copestake, editor of the EIU report, was quoted by AFP acknowledging the points raised by Mr Tharman. However, he said the basket of goods includes many everyday items as well, and the highest-weighted category was that of groceries. He added that as expats form a growing community in Singapore, the impact of high costs will affect more and more people.

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