Is Singapore Really The Most Expensive City?

Ever since Singapore was deemed the “most expensive city in the world” four years ago, it’s actually been given that “honour” for four consecutive years, according to the Economist Intelligence Unit’s (EIU’s) Worldwide Cost of Living report. But is it really that bad? The BBC says no.

First, take a look at the latest rankings. We’re way above 2nd-placed Hong Kong and 3rd-placed Zurich.

Could this be what former prime minister Goh Chok Tong meant when he said he wanted Singapore to have a “Swiss standard of living”? Oh wait, perhaps he actually meant Swiss cost of living.

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A Closer Look

The news has led to unsurprising rumbles among locals and foreigners alike over the high cost of living here, and how we attained this infamous title — everyone wants to find something (or someone) to blame for our expensive life.

But before we complain, we should put this ranking in context — things may not be as bad as it seems, at least for locals.

BBC News finally took it in their hands to take a closer look at the report. Writer Tim McDonald, in an article released on April 7, asked the question: Is Singapore Really The World’s Most Expensive City?

We’ll tell you his answer now: Not exactly, he says, and this is why:

1. The Report Focuses On Expats

To begin with, Mr McDonald says the purpose of the index is not to uncover the cost of living for the average citizen, but instead to help calculate allowances for expatriates.

The report itself states:

The survey itself is a purpose-built Internet tool designed to help human resources and finance managers calculate cost-of-living allowances and build compensation packages for expatriates and business travellers. The survey incorporates easy-to-understand comparative cost-of-living indices between cities.

In simpler terms, the index indicates the most expensive cities for expatriates to live in. Not the foreign domestic and construction workers that build our intricate buildings but those we normally see walking around the CBD in office wear. (Just to be clear, both groups of foreign workers deserve equal respect for their contributions.)

And the index is definitely not meant for locals, so those who have a pink IC, this index doesn’t measure your life.

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2. The Report May Not Take Into Account Currency Exchange Rates

In the EIU index, it states that the prices they chose “reflect costs for more than 160 items in each city” that come from a “range of stores: supermarkets, mid-priced stores and higher-priced speciality outlets”.

Subsequently, these prices are converted into US dollars using the prevailing exchange rate.

A stronger Singapore dollar that keeps up with the US dollar, compared with other currencies like the Hong Kong dollar that fluctuates more, means that expatriates’ cost of living in Singapore would be relatively more expensive.


3. The Report Measures Atas Items

As the report focuses on expats who likely have an expense account for living here, the actual items it measured the prices of also tend to be those that people who are spending their company’s money would buy.

According to the report’s methodology, the survey compares “more than 400 individual prices across 160 products and services. These include food, drink, clothing, household supplies and personal care items, home rents, transport, utility bills, private schools, domestic help and recreational costs”.

But upon closer inspection, you’d realise that “private schools” is one of the factors in the study, which we can safely say the majority of locals don’t send their children to. (No, tuition centres aren’t counted.) 

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Mr McDonald also cited Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam, who spoke on the index in 2014. He was reported by Channel NewsAsia as saying:

So for example, the EIU basket includes imported cheese, filet mignon, Burberry-type raincoats, four best seats in a theatre, three-course high-end dinners for four people… I don’t think they’re irrelevant to an expatriate cost of living basket but it’s quite different from cost of living basket for Singaporeans.

Even the report’s author Jon Copestake admits that people don’t have to buy and may not need to buy every item in the list. The BBC quoted him as saying:

You can find bargains in almost any city around the world, and you can live more frugally than the comparative cost of living which we apply.

4. The Report Ignores Public Transport

Said Mr Tharman in 2014:

“Transport is also part of the cost of living basket for these cost of living indexes but no public transport — it’s just cars and taxis. And our public transport as you know, is in fact significantly cheaper than most other cities (like) New York, London and Tokyo.”

Indeed, the BBC article also acknowledges that cars may be expensive in Singapore, but cars aren’t the only way to get around here. We have a relatively affordable public transport network that brings people almost everywhere on this tiny island, as such a car isn’t as much of a necessity in Singapore than it may be in other countries, even for expats.


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The article also quoted American Jeremy Mackie, a Singapore-based creative director at content agency Click2View, as saying he even saves money taking public transport in Singapore:

I spend about SGD250 ($178) a month on taxis and trains. I recently did a calculation and that’s about half of what I spent on car payments and insurance in the US.

5. The Report Ignores Hawker Food

The BBC article rightly noted that if filling your stomach is all you need to do, we have cheap hawker food available. If you want your cheap food to be tasty too, we have the cheapest Michelin-starred meal on earth.


And if you want cheap alcohol, look no further than our hawker centres and kopi tiams too, where you can get Tiger beer for about $5.

This is compared with the No. 3-ranked city of Zurich, where cheap hawker food is non-existent.

6. The Report Ignores the HDB

Private condominiums aren’t cheap, but the majority of Singaporeans live in subsidised public housing, which isn’t that cheap nowadays either, but surely cheaper than private housing.


A More Accurate Report

Mr McDonald went on to cite the National University of Singapore’s Asia Competitiveness Institute (ACI) index, created using some of EIU’s findings, as a better gauge.

It separates its findings into those for “ordinary residents” and expats, and uses yearly average exchange rates instead.

Any guesses where Singapore stands for both categories? Surprisingly, not first.

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This goes to show that the EIU index wasn’t off by that much, as Singapore ranks in the top 5 under cost of living for expatriates.

However, we ordinary residents are doing pretty alright, as our cost of living is ranked a mere 48th out of 103 cities.  sg expensive


Don’t Take Everything At Face Value

Also, note that these indexes focus on cities, not countries. Singapore, being one of the few city-states in the world, has all its needs compacted into one city, unlike cities in other bigger countries.

These indexes teach us to never take things simply at face value.

Sure, it feels like everything’s rising and we’re being choked by the increasing amounts of moolah we are forking out, but at least we know we’re not that bad. At least not yet.

Featured image from The Finder and