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Is Cost of Living in Singapore Really That High?

 In Living and Experiences
Helix bridge at Marina Bay Sands Singapore

Is Cost of Living in Singapore Really That High?

For the fifth consecutive year, the Economist Intelligence Unit’s Worldwide Cost of Living (WCOL) 2018 ranked Singapore as the most expensive city in the world. Interestingly, Singapore is ranked only 9th in terms of Gross National Income per Capita by the World Bank.

While neither of the above statistics should be considered out of context, this shows that Singaporeans are still able to enjoy their lives in the most expensive city without the highest income. In this article, I will elaborate on how this is possible and some of the implications behind these statistics.

Take the EIU report with a pinch of no-frills salt

To compile the ranking, the EIU compares over 400 individual prices across 160 products and services, including food, drink, clothing, household supplies, personal care items, home rents, transport, utility bills and recreational costs. Undoubtedly, this survey is one of the most thoroughly researched, but there are still limitations.

While not incorrect, the EIU prices tend to reflect premium goods and services. In response to the WCOL, the Department of Statistics in Singapore has published their own finding on average prices for consideration. Comparing the two, you can see that average prices tend to be near or even lower than the minimum values in the WCOL. In Singapore, you can find the most premium of goods and services as long as you are able to spend. However, if you go for middle-range items, your stay will not be nearly as expensive as the WCOL presents.

 

Data from: gov.sg

Exchange rate costs

To enable comparability, the EIU converts prices to USD in the WCOL rankings. As a result, the EIU prices are much higher than the Department of Statistics prices since the SGD has appreciated against the USD over the years (note: the WCOL prices in the above infographic by the Department of Statistics have been converted from USD to SGD.) However, if your company pays for your salary in SGD, the exchange rates would not have much effect on you.

Transportation is expensive if you drive

Certain items in the basket of prices used by the EIU are indeed extremely expensive (and in specific cases, anomalies due to the regulation in Singapore), which drive up Singapore’s overall cost of living. In particular, car prices are notoriously sky-high. Before buying a car in Singapore, you will need to obtain a Certificate of Entitlement (COE) and this costs anywhere from S$30,000 to S$60,000, with a validity for only 10 years. Coupled with the fees, taxes and the dealer’s margin, a Volkswagen Jetta that usually costs around S$25,000 can cost S$120,000 in Singapore.

However, a car might not be a necessity in Singapore given our vast public transportation network which covers almost every place that you would frequent. Unsurprisingly, our Mass Rapid Transport (MRT) is the most common mode of transport amongst Singaporeans, and it is also one of the cheapest amongst major cities. For a typical 10-kilometre journey by the MRT, commuters only pay S$1.33, the 6th cheapest when compared across 36 cities from Asia, Australia, Europe and North America. In contrast, a ride on the London Tube starts from £2.90 (S$5.18). Singapore also has one of the lowest train fares at S$0.77 when compared amongst the 36 cities, making public transportation one of the most affordable in developed cities.

 

Data from: Public Transport Council

Personal income taxes are low

In Singapore, income tax rates for foreigners range from 15% to 22%. However, if you reside in Singapore long enough, you may be deemed a tax resident and pay an even lower tax rate. For more information on the duration required, visit the Inland Revenue Authority of Singapore website here.

Even if you are unable to obtain Singaporean tax residency, the 22% tax rate is relatively low compared to other countries.

 

Data from: KMPG

What does it feel like to live in the world’s most expensive city?

Ask any Singaporean who has travelled to the U.S. or Europe and they will tell you that Singapore is still much cheaper to live in. What’s really beautiful about Singapore is the flexibility to live out both the splurger lifestyle and the frugal way of life. If you are looking to splurge, there is access to plenty of global extravagant goods and services, from world-renowned brands to Michelin Star restaurants. However, if you are looking for a frugal yet comfortable lifestyle, Singapore will certainly not feel like the most expensive city that you have ever been to.

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