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2015 Annual Indices for Expatriates and Ordinary

Residents on Cost of Living, Wages and Purchasing

Power for World’s Major Cities

Associate Professor Tan Khee Giap

Co-Director, ACI-LKYSPP-NUS

Professor Tan Kong Yam

Co-Director, ACI-LKYSPP-NUS

MrYuan Randong

Research Associate, ACI-LKYSPP-NUS

Mr Luu Nguyen Trieu Duong

Research Assistant ACI-LKYSPP-NUS

ACI’s Research Publication on Indices for Expatriates

and Ordinary Residents on Cost of Living, Wages and

Purchasing Power

2

Presentation Outline

1. Motivation for Research

2. Expected Contributions and Implications of ACI Indices

3. List of Cities

4. Comparative Literature Review

5. Three Improved Features in the ACI Indices

6. Data Sources

7. Assumptions Made

8. Methodology

9. ACI 2015 Annual Indices for Expatriates and Ordinary Residents on Cost of

Living, Wages and Purchasing Power

10. Case Study A: The Effects of Exchange Rates on Cost of Living

11. Case Study B: Comparing Cost of Living across Geographical Regions

3

1. Motivation for Research

The ACI aims to provide for ordinary residents, multinational executives, potential investors, policy makers and government officials reliable estimates on cost of living for the world’s major cities across the globe in a professional manner as follows:

• Our book provides annual indices and rankings for cost of living since 2005 for ordinary residents (the first ever comprehensive study of this kind available today) and expatriates (which are widely available but done less rigorously as compared to the ACI study);

• Our book also provides annual indices and rankings for wages and purchasing power since 2005 for ordinary residents;

• Data used and their sources are explicitly disclosed;

• Our rigorous methodology is explained openly;

• Weights employed for consumption baskets are justified and stated clearly;

• All assumptions made are also laid down in a transparent approach. 4


5

• For transparency and consistency

Unless assumptions, methodology and data sources are disclosed

publicly, it can lead to spurious or misleading results for cities.

• For policy makers:

Poverty statistics can be measured differently taking into account

cost of living of ordinary residents.

Differences between ordinary residents and expatriates, which were

previously hidden by a national index, are now made salient.


6

• For academics:

More accurate depiction of price levels for each city.

Distinction between ordinary residents and expatriates opens up

more tools for social research.

• For multinational corporations:

Employers can review and adjust compensation packages

according to cities for expatriates.

Allowing employers to adopt more competitive compensation

packages for workers working abroad given the differences in cost

of living between expatriates and ordinary residents in a given city.

No City Country

1 ADELAIDE Australia

2 AMMAN Jordan

3 AMSTERDAM Netherlands

4 ASUNCION Paraguay

5 ATHENS Greece

6 ATLANTA United States

7 AUCKLAND New Zealand

8 BAKU Azerbaijan

9 BANGKOK Thailand

10 BARCELONA Spain

11 BEIJING China

12 BERLIN Germany

13 BOGOTA Colombia

14 BOSTON United States

15 BRATISLAVA Slovakia

16 BRISBANE Australia

17 BRUSSELS Belgium

No City Country

18 BUCHAREST Romania

19 BUDAPEST Hungary

20 BUENOS AIRES Argentina

21 CAIRO Egypt

22 CALGARY Canada

23 CARACAS Venezuela

24 CHICAGO United States

25 CLEVELAND United States

26 COLOMBO Sri Lanka

27 COPENHAGEN Denmark

28 DALIAN China

29 DETROIT United States

30 DOHA Qatar

31 DUBAI United Arab Emirates

32 DUBLIN Ireland

33 FRANKFURT Germany

34 GENEVA Switzerland

3. List of Cities

The ACI Annual Indices on Cost of Living, Wages and Purchasing Power cover 103 cities across six continents.

7

No City Country

35 GUANGZHOU China

36 HELSINKI Finland

37 HONG KONG Hong Kong, China

38 HONOLULU United States

39 HOUSTON United States

40 ISTANBUL Turkey

41 JAKARTA Indonesia

42 JOHANNESBURG South Africa

43 KIEV Ukraine

44 KUALA LUMPUR Malaysia

45 KUWAIT Kuwait

46 LEXINGTON United States

47 LIMA Peru

48 LISBON Portugal

49 LONDON Great Britain

50 LOS ANGELES United States

51 LUXEMBOURG Luxembourg

No City Country

52 LYON France

53 MADRID Spain

54 MANILA Philippines

55 MELBOURNE Australia

56 MEXICO CITY Mexico

57 MIAMI United States

58 MILAN Italy

59 MINNEAPOLIS United States

60 MONTEVIDEO Uruguay

61 MONTREAL Canada

62 MOSCOW Russia

63 MUMBAI India

64 MUNICH Germany

65 NAIROBI Kenya

66 NEW DELHI India

67 NEW YORK United States

68 OSAKA / KOBE Japan

8

3. List of Cities

No City Country

69 OSLO Norway

70 PARIS France

71 PERTH Australia

72 PITTSBURGH United States

73 PRAGUE Czech Republic

74 PRETORIA South Africa

75 QINGDAO China

76 QUITO Ecuador

77 REYKJAVIK Iceland

78 RIO DE JANEIRO Brazil

79 ROME Italy

80 SAN FRANCISCO United States

81 SANTIAGO Chile

82 SAO PAULO Brazil

83 SEATTLE United States

84 SEOUL South Korea

85 SHANGHAI China

86 SHENZHEN China

No City Country

87 SINGAPORE Singapore

88 SOFIA Bulgaria

89 ST PETERSBURG Russia

90 STOCKHOLM Sweden

91 SUZHOU China

92 SYDNEY Australia

93 TAIPEI Taiwan, China

94 TEL AVIV Israel

95 TIANJIN China

96 TOKYO Japan

97 TORONTO Canada

98 VANCOUVER Canada

99 VIENNA Austria

100 WARSAW Poland

101 WASHINGTON DC United States

102 WELLINGTON New Zealand

103 ZURICH Switzerland 9

3. List of Cities


Economist Intelligence Unit (EIU) : Worldwide Cost of Living Index

• Updated annually• Includes only cost of living index for

expatriates• Based on a single set of weights for the

basket of goods and services; geared towards Western consumption

10


Mercer: Cost of Living Rankings

• Updated annually• Includes only the ranking of cities according

to cost of living for expatriates; no index value

11


UBS: Prices and Earnings Report

• Updated every three years• Offers indices on price levels for expatriates• Basket of goods and services used to

calculate indices was based on European family of three

• The same basket assumed common consumer preferences across all cities regardless of geography, lifestyle, culture etc.

12

5. Three Improved Features in the ACI Indices

1. More comprehensive coverage• Cost of living indices are reported for both expatriates and ordinary residents, the first of

its kind in the world.

• Wages and purchasing power indices are also reported for ordinary residents.

2. More rigorous methodology• The ACI report distinguishes between the ordinary residents and the expatriates in terms

of cost of living.

• Expatriates tend to purchase high-end products and have western consumption

preferences.

• Ordinary residents purchase typical products and have a local pattern of consumption.

3. More reliable data• The data on item prices was drawn from EIU, which is considered the most reliable

private source of data by most researchers.

• Consumer preference profiles were taken from the International Comparison Program

(ICP) survey by the World Bank and household expenditure surveys in various countries.

• Wages and mean weekly hours actually worked data are from the International Labour

Organisation (ILO) database. 13

6. Data Sources

• Price data from the EIU City Database.

• Price data for Miscellaneous Goods and Services category from UBS.

• Weights data for each consumption item are derived based on the ICP survey

conducted by the World Bank and household expenditure surveys in various

countries.

• Daily average exchange rates from Bloomberg Terminal.

• Annual inflation rates mainly from the World Development Indicators, World

Bank, supplemented by data from International Financial Statistics (IFS),

International Monetary Fund (IMF); PC-AXIS database, Taiwan Directorate

General of Budget, Accounting and Statistics and United Arab Emirates National

Bureau of Statistics

14

6. Data Sources

• Nominal Expenditure per capita and Real Expenditure per capita from the ICP,

World Bank.

• Both the EIU City Database and the ICP survey provide a compendium of item

price data. However, key differences required selective use of both.

EIU provides data at a city-level, but reports expatriate-oriented prices.

ICP provides data only at national level, but reported price indices are

more reflective of the local consumption preferences.

• Gross average nominal monthly wages in local currency units from the

International Labour Organisation (ILO) database.

• Mean weekly hours actually worked from the ILO database.

15

7. Assumptions Made

In developing the indices, we have made the following assumptions :

• Expatriates are assumed to follow Western consumption pattern, gearing

towards high-end and lifestyle products. The consumption basket for

expatriates is the average of the consumption baskets of 24 industrialised

countries*.

• The consumption pattern of expatriates is assumed to be the same across

103 cities.

• The consumption pattern of ordinary residents varies from country to

country. The consumption pattern of ordinary residents is influenced by

geographical location, social values and cultural affiliation in the respective

countries.

*Note: 24 industrialised countries refer to Austria, Australia, Belgium, Canada, Denmark, Finland, France,

Germany, Great Britain, Greece, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Netherlands, New Zealand,

Norway, Portugal, Spain, Sweden, Switzerland and United States. 16

7. Assumptions Made

• Ordinary residents living in different cities of the same country are assumed

to have the same consumption pattern.

• Consumption patterns of both expatriates and ordinary residents are assumed

to change over time. The changes in spending preference are partially affected

by the variation in prices and quality of goods and services.

• As the ICP survey is conducted every six years, proxy for the nominal

expenditure per capita and real expenditure per capita in years not covered

under the study will be made based on exchange rates and inflation rates.

• As the data for inflation rates, nominal expenditure per capita, real

expenditure per capita, nominal monthly wages and mean weekly working

hours are not available at city level, the national level data will be used as the

proxy.

17

8. Methodology: Cost of Living Index

• We rank the Cost of Living Index for each city (for either Expatriates of

Ordinary Residents) in a descending order.

• A larger Cost of Living Index value implies that the city has higher cost of

living. A smaller Cost of Living Index value implies that the city has lower cost

of living.

• New York is used as base city (i.e. Cost of Living Index of New York = 100).

• Cities with Cost of Living Index larger than 100 are more expensive than New

York. Cities with Cost of Living Index smaller than 100 are cheaper than New

York.

• All prices used to construct the Cost of Living Indices are in US dollar.

Conversion, where required, is carried out using the yearly average exchange

rates. Yearly average exchange rates are calculated from the daily average

exchange rates obtained from the Bloomberg Terminal. 18

8. Methodology: The 10 ACI Consumption Categories

19

• The ACI Cost of Living Indices consist of 10 Consumption Categories,

165 product and services and 283 price data entries. The 10

Consumption Categories are as follows:

1. Food & Non-alcoholic Beverages

2. Alcohol & Tobacco

3. Clothing

4. Housing Rents & Utilities

5. Household Supplies & Domestic Help

6. Health

7. Transport

8. Recreation

9. Education

10.Miscellaneous Goods and Services

8. Methodology: Cost of Living Index for Expatriates

• Cost of Living Index for Expatriates in city m is calculated as follows:

Cost of Living Index for Expatriates in city m = i=1n PC,m,i ×Wi i=1n PUS,NY,i × Wi

× 100

where m = city;

C = the country where city m is located in;

NY = New York;

US = United States;

i = item;

n = number of items in the consumption basket for expatriates;

PC,m,i = US dollar denominated average price of item i in city m of country C†;

Wi = weight of item i within Cost of Living Index for Expatriates.

†Note: For an item, multiple prices might be collected from various locations, for example from the

supermarkets, branded stores, chain store, etc. PC,m,i is the average of all available prices for the same

item in each city.

20

8. Methodology: Cost of Living Index for Ordinary Residents

• Cost of Living Index for Ordinary Residents in city m is calculated as follows:

Cost of Living Index for Ordinary Residents in city m =

CPC,mEIU ×NPCICP

NPCEIU

CPUS,NYEIU ×

NPUSICP

NPUSEIU

wherem = city;


NY = New York;

US = United States;

CPC,mEIU= i=1

n PC,m,i ×WC,i;

i = item;

n = number of items in the consumption basket;

PC,m,i = US dollar denominated average price of item i in city m of country C;

WC,i = weight of item i within Cost of Living Index for Ordinary Residents in country C;

NPCICP =

index of nominal expenditure per capita for country C

index of real expenditure per capita for country C;

NPCEIU = mean CPC,m

EIU from all cities within country C; 21


Index of nominal expenditure for country C

=Nominal expenditure per capita for country C

Nominal expenditure per capita of the world

Index of real expenditure for country C

=Real expenditure per capita for country C

Real expenditure per capita of the world

22


• World Bank conducts the survey to get ICP data every five or six years, i.e.

only the 2005 and 2011 ICP survey data are relevant for our study.

• For the period 2006-2010 and from 2012 onwards, we need to proxy for ICP

survey data.

• We use the ICP index available for 2005 to proxy forward for 2006, 2007,

2008, 2009 and 2010 data, making adjustments for changes in inflation and

exchange rates. We then use the ICP index available for 2011 to proxy

forward for 2012 and 2013 data, making adjustments for changes in inflation

and exchange rates.

• Exchange rates and inflation rates are key factors which affect the comparison

of cost of living for ordinary residents across countries.

23


• Formally, the NPCICP for a particular year T within the 2006-2010 period is

given by:

NPC,TICP = NPC,2005

ICP ×Exchange RateC,2005Exchange RateC,T

×

t=2006

T

1 + Inflation rateC,t ∀ T

∈ 2006, 2007, 2008, 2009 and 2010

whereC = country;

T = year;

NPC,TICP = NPC

ICP in year T;

Inflation rateC,t = yearly average inflation rate for country C in year t;

Exchange RateC,T = yearly average exchange rate between country C and the United States in

year T (expressed as local currency unit per US dollar).

24


• Likewise, the NPCICP for a particular year T within the 2012-2013 period is

given by:

NPC,TICP = NPC,2011

ICP ×Exchange RateC,2011Exchange RateC,T

×

t=2012

T

1 + Inflation rateC,t ∀ T

∈ 2012 and 2013

whereC = country;

T = year;

NPC,TICP = NPC

ICP in year T;

Inflation rateC,t = yearly average inflation rate for country C in year t;

Exchange RateC,T = yearly average exchange rate between country C and the United States in

year T (expressed as local currency unit per US dollar).

25

8. Methodology: Wages Index for Ordinary Residents

• We rank the Wages Index for each city in a descending order.

• A larger Wages Index value implies higher wages for ordinary residents in

the city. A smaller Wages Index value implies lower wages for ordinary

residents in the city.

• New York is used as base city (i.e. Cost of Living Index of New York = 100).

• Cities where ordinary residents earn higher wages (on average) than their

counterparts in New York has a Wages Index value which is larger than 100.

Cities where ordinary residents earn lower wages (on average) than their

counterparts in New York has a Wages Index value which is smaller than

100.

• Similar to prices, monthly wages are converted from local currency units to

US dollar using the yearly average exchange rates.

26

8. Methodology: Wages Index for Ordinary Residents

• The Wages Index for Ordinary Residents in city m is calculated as:

Wages Index for Ordinary Residents in city m

=gross hourly wageC,mgross hourly wageUS,NY

× 100

where:

m = city;


NY = New York;

US = United States;

gross hourly wageC,m =monthly wagesC×12

mean weekly hours actually workedC×52;

monthly wagesC = monthly wages in country C;

mean weekly hours actually workedC = mean weekly hours actually worked in

country C.

27

8. Methodology: Purchasing Power Index for Ordinary Residents

• We can understand purchasing power as the number of baskets of goods and services that the ordinary residents can enjoy if they work for an hour. A higher purchasing power is thus more desirable as ordinary residents are able to enjoy more goods and services given that they work for an hour.

• We rank the Purchasing Power Index for each city in a descending order.

• A higher Purchasing Power Index value means that ordinary residents in the

city are able to consume more baskets of goods and services given an hour of

work. A lower Purchasing Power Index value means that ordinary residents in

the city are able consume fewer baskets of goods and services given an hour

or work.

• The Purchasing Power Index for Ordinary Residents reflects the purchasing

power of ordinary residents in the city of interest relative to that of their

counterparts in the base city. With New York chosen as the base city, the

Purchasing Power Index for Ordinary Residents in New York is always 100.00. 28

8. Methodology: Purchasing Power Index for Ordinary Residents

• The Purchasing Power Index for Ordinary Residents is calculated by dividing

the Wages Index for Ordinary Residents against the Cost of Living Index for

Ordinary Residents:

Purchasing Power Index for Ordinary Residents in city m

=Wages Index for Ordinary ResidentsC,mCost of Living Index for Ordinary ResidentsC,m

× 100

where

m = city;

C = the country where city m is located in.

29

9. ACI 2015 Cost of Living Index for Expatriates^

30

Cost of Living

Ranking

for Expatriates

City Country

Cost of Living

Index

for Expatriates

Cost of Living Ranking

for Ordinary

Residents

1 CARACAS Venezuela 111.98 64

2 NEW YORK United States 100.00 5

3 ZURICH Switzerland 96.19 2

4 SINGAPORE Singapore 91.13 48

5 GENEVA Switzerland 90.40 6

6 TOKYO Japan 89.69 22

7 LONDON Great Britain 88.92 21

8 OSLO Norway 86.55 3

9 FRANKFURT Germany 84.71 19

10 SYDNEY Australia 82.51 1

11 HONG KONG Hong Kong, China 80.54 59

12 MOSCOW Russia 79.76 82

13 PARIS France 79.74 10

14 MELBOURNE Australia 77.74 4

15 COPENHAGEN Denmark 75.58 8

16 OSAKA / KOBE Japan 73.53 40

17 HELSINKI Finland 70.74 16

18 LOS ANGELES United States 70.47 23

19 BRISBANE Australia 70.18 7

20 CHICAGO United States 69.94 29

^Note: Based on 2013 data, which were the latest available at the time the study was conducted.

Source: Asia Competitiveness Institute


31

Cost of Living

Ranking

for Expatriates

City Country

Cost of Living

Index

for Expatriates


for Ordinary

Residents

21 MUNICH Germany 69.80 37

22 STOCKHOLM Sweden 69.74 12

23 VIENNA Austria 69.38 26

24 WASHINGTON DC United States 68.63 32

25 ST PETERSBURG Russia 66.93 88

26 PERTH Australia 66.60 9

27 SEOUL South Korea 66.02 61

28 BARCELONA Spain 65.78 36

29 ADELAIDE Australia 65.37 11

30 HONOLULU United States 64.36 35

31 MEXICO CITY Mexico 64.21 70

32 ROME Italy 64.15 31

33 SHANGHAI China 64.15 67

34 ISTANBUL Turkey 64.03 73

35 MILAN Italy 64.01 34

36 BEIJING China 63.16 74

37 AUCKLAND New Zealand 62.52 27

38 MADRID Spain 62.44 42

39 TEL AVIV Israel 61.75 33

40 SAN FRANCISCO United States 61.44 38




32

Cost of Living

Ranking

for Expatriates

City Country

Cost of Living

Index

for Expatriates


for Ordinary

Residents

41 MINNEAPOLIS United States 61.24 41

42 TORONTO Canada 61.20 14

43 WELLINGTON New Zealand 61.15 20

44 MIAMI United States 61.09 39

45 SAO PAULO Brazil 60.79 62

46 VANCOUVER Canada 60.34 15

47 RIO DE JANEIRO Brazil 59.95 63

48 BANGKOK Thailand 59.88 95

49 BOSTON United States 59.77 43

50 DUBLIN Ireland 59.35 17

51 BRUSSELS Belgium 58.39 24

52 HOUSTON United States 57.96 44

53 AMSTERDAM Netherlands 57.75 25

54 LISBON Portugal 57.32 47

55 LIMA Peru 57.11 72

56 BERLIN Germany 57.10 50

57 SEATTLE United States 56.87 46

58 JAKARTA Indonesia 56.67 97

59 CALGARY Canada 56.60 18

60 BOGOTA Colombia 56.49 71

61 REYKJAVIK Iceland 56.14 28




33

Cost of Living

Ranking

for Expatriates

City Country

Cost of Living

Index

for Expatriates


for Ordinary

Residents

62 KUWAIT Kuwait 55.96 68

63 LUXEMBOURG Luxembourg 55.56 13

64 MONTEVIDEO Uruguay 54.99 54

65 ATLANTA United States 54.69 51

66 DOHA Qatar 54.20 57

67 MONTREAL Canada 54.19 30

68 PITTSBURGH United States 54.13 49

69 SHENZHEN China 54.01 83

70 CLEVELAND United States 53.73 52

71 DALIAN China 53.18 85

72 QINGDAO China 52.66 75

73 LEXINGTON United States 52.59 53

74 GUANGZHOU China 52.17 84

75 SANTIAGO Chile 51.76 65

76 DUBAI United Arab Emirates 51.68 60

77 DETROIT United States 50.05 56

78 NAIROBI Kenya 49.48 94

79 BAKU Azerbaijan 49.34 98

80 LYON France 49.16 55

81 TIANJIN China 48.97 90

82 AMMAN Jordan 48.48 96




34

Cost of Living

Ranking

for Expatriates

City Country

Cost of Living

Index

for Expatriates


for Ordinary

Residents

83 PRAGUE Czech Republic 48.17 66

84 SUZHOU China 47.13 92

85 KIEV Ukraine 46.70 101

86 BUENOS AIRES Argentina 45.98 58

87 ATHENS Greece 45.66 45

88 TAIPEI Taiwan, China 45.64 87

89 BRATISLAVA Slovakia 44.10 69

90 MANILA Philippines 43.36 89

91 KUALA LUMPUR Malaysia 42.32 91

92 JOHANNESBURG South Africa 42.10 77

93 QUITO Ecuador 41.88 79

94 WARSAW Poland 41.87 78

95 BUDAPEST Hungary 41.72 76

96 PRETORIA South Africa 41.56 80

97 MUMBAI India 40.26 99

98 CAIRO Egypt 40.08 103

99 COLOMBO Sri Lanka 37.16 100

100 ASUNCION Paraguay 34.60 81

101 BUCHAREST Romania 33.42 86

102 SOFIA Bulgaria 32.57 93

103 NEW DELHI India 27.58 102



9. ACI 2015 Cost of Living Index for Ordinary Residents^

35


for Ordinary

Residents

City Country

Cost of Living Index

for Ordinary

Residents

Cost of Living

Ranking

for Expatriates

1 SYDNEY Australia 108.76 10

2 ZURICH Switzerland 103.66 3

3 OSLO Norway 103.42 8

4 MELBOURNE Australia 103.30 14

5 NEW YORK United States 100.00 2

6 GENEVA Switzerland 98.02 5

7 BRISBANE Australia 92.15 19

8 COPENHAGEN Denmark 90.23 15

9 PERTH Australia 88.29 26

10 PARIS France 87.94 13

11 ADELAIDE Australia 86.54 29

12 STOCKHOLM Sweden 83.52 22

13 LUXEMBOURG Luxembourg 82.85 63

14 TORONTO Canada 80.89 42

15 VANCOUVER Canada 77.66 46

16 HELSINKI Finland 76.77 17

17 DUBLIN Ireland 74.49 50

18 CALGARY Canada 74.47 59

19 FRANKFURT Germany 74.24 9

20 WELLINGTON New Zealand 72.86 43




36


for Ordinary

Residents

City Country


for Ordinary

Residents

Cost of Living

Ranking

for Expatriates

21 LONDON Great Britain 71.90 7

22 TOKYO Japan 71.78 6

23 LOS ANGELES United States 71.34 18

24 BRUSSELS Belgium 70.66 51

25 AMSTERDAM Netherlands 70.62 53

26 VIENNA Austria 70.48 23

27 AUCKLAND New Zealand 70.09 37

28 REYKJAVIK Iceland 70.02 61

29 CHICAGO United States 69.86 20

30 MONTREAL Canada 69.64 67

31 ROME Italy 68.53 32

32 WASHINGTON DC United States 67.64 24

33 TEL AVIV Israel 67.20 39

34 MILAN Italy 63.92 35

35 HONOLULU United States 63.38 30

36 BARCELONA Spain 63.26 28

37 MUNICH Germany 63.10 21

38 SAN FRANCISCO United States 61.39 40

39 MIAMI United States 60.58 44

40 OSAKA / KOBE Japan 60.55 16




37


for Ordinary

Residents

City Country


for Ordinary

Residents

Cost of Living

Ranking

for Expatriates

41 MINNEAPOLIS United States 60.29 41

42 MADRID Spain 59.43 38

43 BOSTON United States 58.22 49

44 HOUSTON United States 57.68 52

45 ATHENS Greece 55.97 87

46 SEATTLE United States 55.68 57

47 LISBON Portugal 53.55 54

48 SINGAPORE Singapore 53.54 4

49 PITTSBURGH United States 53.25 68

50 BERLIN Germany 52.46 56

51 ATLANTA United States 52.24 65

52 CLEVELAND United States 51.97 70

53 LEXINGTON United States 51.33 73

54 MONTEVIDEO Uruguay 50.80 64

55 LYON France 50.08 80

56 DETROIT United States 48.46 77

57 DOHA Qatar 46.48 66

58 BUENOS AIRES Argentina 46.12 86

59 HONG KONG Hong Kong, China 45.75 11

60 DUBAI United Arab Emirates 44.67 76

61 SEOUL South Korea 43.84 27




38


for Ordinary

Residents

City Country


for Ordinary

Residents

Cost of Living

Ranking

for Expatriates

62 SAO PAULO Brazil 43.77 45

63 RIO DE JANEIRO Brazil 43.47 47

64 CARACAS Venezuela 43.19 1

65 SANTIAGO Chile 41.42 75

66 PRAGUE Czech Republic 40.78 83

67 SHANGHAI China 40.41 33

68 KUWAIT Kuwait 38.88 62

69 BRATISLAVA Slovakia 38.81 89

70 MEXICO CITY Mexico 36.25 31

71 BOGOTA Colombia 36.12 60

72 LIMA Peru 34.23 55

73 ISTANBUL Turkey 34.10 34

74 BEIJING China 33.16 36

75 QINGDAO China 32.17 72

76 BUDAPEST Hungary 32.15 95

77 JOHANNESBURG South Africa 31.97 92

78 WARSAW Poland 31.84 94

79 QUITO Ecuador 31.75 93

80 PRETORIA South Africa 31.33 96

81 ASUNCION Paraguay 31.17 100

82 MOSCOW Russia 31.01 12




39


for Ordinary

Residents

City Country


for Ordinary

Residents

Cost of Living

Ranking

for Expatriates

83 SHENZHEN China 30.61 69

84 GUANGZHOU China 29.85 74

85 DALIAN China 29.69 71

86 BUCHAREST Romania 29.08 101

87 TAIPEI Taiwan, China 28.29 88

88 ST PETERSBURG Russia 28.01 25

89 MANILA Philippines 27.64 90

90 TIANJIN China 26.96 81

91 KUALA LUMPUR Malaysia 26.91 91

92 SUZHOU China 26.66 84

93 SOFIA Bulgaria 26.32 102

94 NAIROBI Kenya 25.46 78

95 BANGKOK Thailand 23.72 48

96 AMMAN Jordan 23.51 82

97 JAKARTA Indonesia 22.96 58

98 BAKU Azerbaijan 21.02 79

99 MUMBAI India 20.05 97

100 COLOMBO Sri Lanka 19.69 99

101 KIEV Ukraine 16.97 85

102 NEW DELHI India 16.04 103

103 CAIRO Egypt 15.05 98



9. ACI 2015 Wages Index for Ordinary Residents^

40

Wages Ranking

for Ordinary ResidentsCity Country

Wages Index

for Ordinary Residents

1 GENEVA Switzerland 247.47

1 ZURICH Switzerland 247.47

3 COPENHAGEN Denmark 241.05

4 OSLO Norway 240.36

5 LUXEMBOURG Luxembourg 182.45

6 ADELAIDE Australia 176.22

6 BRISBANE Australia 176.22

6 MELBOURNE Australia 176.22

6 PERTH Australia 176.22

6 SYDNEY Australia 176.22

11 STOCKHOLM Sweden 167.39

12 BRUSSELS Belgium 142.16

13 DUBLIN Ireland 141.73

14 CALGARY Canada 137.38

14 MONTREAL Canada 137.38

14 TORONTO Canada 137.38

14 VANCOUVER Canada 137.38

18 HELSINKI Finland 132.72

19 LYON France 127.28

19 PARIS France 127.28




41

Wages Ranking


Wages Index


21 VIENNA Austria 126.61

22 AMSTERDAM Netherlands 122.23

23 AUCKLAND New Zealand 117.97

23 WELLINGTON New Zealand 117.97

25 LONDON Great Britain 115.97

26 BERLIN Germany 109.22

26 FRANKFURT Germany 109.22

26 MUNICH Germany 109.22

29 REYKJAVIK Iceland 102.24

30 NEW YORK United States 100.00

30 ATLANTA United States 100.00

30 BOSTON United States 100.00

30 CHICAGO United States 100.00

30 CLEVELAND United States 100.00

30 DETROIT United States 100.00

30 HONOLULU United States 100.00

30 HOUSTON United States 100.00

30 LEXINGTON United States 100.00

30 LOS ANGELES United States 100.00

30 MIAMI United States 100.00




42

Wages Ranking


Wages Index


30 MINNEAPOLIS United States 100.00

30 PITTSBURGH United States 100.00

30 SAN FRANCISCO United States 100.00

30 SEATTLE United States 100.00

30 WASHINGTON DC United States 100.00

46 OSAKA / KOBE Japan 97.61

46 TOKYO Japan 97.61

48 SINGAPORE Singapore 97.16

49 MILAN Italy 96.87

49 ROME Italy 96.87

51 ATHENS Greece 90.86

52 BARCELONA Spain 86.00

52 MADRID Spain 86.00

54 TEL AVIV Israel 77.40

55 SEOUL South Korea 75.69

56 DOHA Qatar 55.10

57 KUWAIT Kuwait 50.77

58 LISBON Portugal 48.94

59 TAIPEI Taiwan, China 45.56

60 PRAGUE Czech Republic 45.01




43

Wages Ranking


Wages Index


61 HONG KONG Hong Kong, China 44.90

62 JOHANNESBURG South Africa 42.86

62 PRETORIA South Africa 42.86

64 BUCHAREST Romania 41.32

65 DUBAI United Arab Emirates 39.74

66 WARSAW Poland 38.41

67 MOSCOW Russia 37.69

67 ST PETERSBURG Russia 37.69

69 BUDAPEST Hungary 35.59

70 BRATISLAVA Slovakia 35.51

71 ISTANBUL Turkey 32.10

72 MONTEVIDEO Uruguay 27.65

73 SANTIAGO Chile 27.56

74 BAKU Azerbaijan 24.07

75 KUALA LUMPUR Malaysia 21.20

76 RIO DE JANEIRO Brazil 21.19

76 SAO PAULO Brazil 21.19

78 LIMA Peru 20.09

79 CARACAS Venezuela 19.97

80 BOGOTA Colombia 19.88

81 BUENOS AIRES Argentina 19.28




44

Wages Ranking


Wages Index


82 SOFIA Bulgaria 17.18

83 QUITO Ecuador 16.27

84 KIEV Ukraine 15.74

85 MEXICO CITY Mexico 14.85

86 BEIJING China 14.30

86 DALIAN China 14.30

86 GUANGZHOU China 14.30

86 QINGDAO China 14.30

86 SHANGHAI China 14.30

86 SHENZHEN China 14.30

86 SUZHOU China 14.30

86 TIANJIN China 14.30

94 AMMAN Jordan 13.35

95 NAIROBI Kenya 12.78

96 ASUNCION Paraguay 11.95

97 BANGKOK Thailand 9.10

98 CAIRO Egypt 8.25

99 MANILA Philippines 6.01

100 JAKARTA Indonesia 5.99

101 MUMBAI India 3.18

101 NEW DELHI India 3.18

103 COLOMBO Sri Lanka 3.12

^Note: Based on 2013 data, which were the latest available at the time the study was conducted. Source: Asia Competitiveness Institute

9. ACI 2015 Purchasing Power Index for Ordinary Residents^

45

Purchasing Power

Ranking


City CountryPurchasing Power Index


1 COPENHAGEN Denmark 267.16

2 LYON France 254.14

3 GENEVA Switzerland 252.46

4 ZURICH Switzerland 238.74

5 OSLO Norway 232.40

6 LUXEMBOURG Luxembourg 220.22

7 BERLIN Germany 208.19

8 DETROIT United States 206.36

9 ADELAIDE Australia 203.64

10 BRUSSELS Belgium 201.18

11 STOCKHOLM Sweden 200.43

12 PERTH Australia 199.59

13 MONTREAL Canada 197.28

14 LEXINGTON United States 194.83

15 CLEVELAND United States 192.43

16 ATLANTA United States 191.41

17 BRISBANE Australia 191.24

18 DUBLIN Ireland 190.27

19 PITTSBURGH United States 187.78

20 CALGARY Canada 184.47



46

Purchasing Power

Ranking




21 SINGAPORE Singapore 181.47

22 VIENNA Austria 179.63

23 SEATTLE United States 179.59

24 VANCOUVER Canada 176.91

25 HOUSTON United States 173.37

26 MUNICH Germany 173.09

27 AMSTERDAM Netherlands 173.08

28 HELSINKI Finland 172.88

29 SEOUL South Korea 172.64

30 BOSTON United States 171.75

31 MELBOURNE Australia 170.59

32 TORONTO Canada 169.84

33 AUCKLAND New Zealand 168.31

34 MINNEAPOLIS United States 165.86

35 MIAMI United States 165.08

36 SAN FRANCISCO United States 162.89

37 ATHENS Greece 162.33

38 SYDNEY Australia 162.03

39 WELLINGTON New Zealand 161.91

40 LONDON Great Britain 161.31



47

Purchasing Power

Ranking




41 OSAKA / KOBE Japan 161.22

42 TAIPEI Taiwan, China 161.05

43 HONOLULU United States 157.78

44 MILAN Italy 151.54

45 WASHINGTON DC United States 147.83

46 FRANKFURT Germany 147.11

47 REYKJAVIK Iceland 146.01

48 PARIS France 144.74

49 MADRID Spain 144.73

50 CHICAGO United States 143.14

51 BUCHAREST Romania 142.10

52 ROME Italy 141.37

53 LOS ANGELES United States 140.17

54 PRETORIA South Africa 136.78

55 TOKYO Japan 135.99

56 BARCELONA Spain 135.96

57 ST PETERSBURG Russia 134.58

58 JOHANNESBURG South Africa 134.05

59 KUWAIT Kuwait 130.56

60 MOSCOW Russia 121.56



48

Purchasing Power Ranking


Purchasing Power Index


61 WARSAW Poland 120.63

62 DOHA Qatar 118.53

63 TEL AVIV Israel 115.18

64 BAKU Azerbaijan 114.51

65 BUDAPEST Hungary 110.70

66 PRAGUE Czech Republic 110.36

67 NEW YORK United States 100.00

68 HONG KONG Hong Kong, China 98.14

69 ISTANBUL Turkey 94.12

70 KIEV Ukraine 92.71

71 BRATISLAVA Slovakia 91.50

72 LISBON Portugal 91.38

73 DUBAI United Arab Emirates 88.95

74 KUALA LUMPUR Malaysia 78.78

75 SANTIAGO Chile 66.54

76 SOFIA Bulgaria 65.27

77 LIMA Peru 58.69

78 AMMAN Jordan 56.78

79 BOGOTA Colombia 55.03

80 CAIRO Egypt 54.79

81 MONTEVIDEO Uruguay 54.43



49

Purchasing Power Ranking


Purchasing Power Index


82 SUZHOU China 53.64

83 TIANJIN China 53.04

84 QUITO Ecuador 51.24

85 NAIROBI Kenya 50.21

86 RIO DE JANEIRO Brazil 48.74

87 SAO PAULO Brazil 48.42

88 DALIAN China 48.17

89 GUANGZHOU China 47.91

90 SHENZHEN China 46.72

91 CARACAS Venezuela 46.25

92 QINGDAO China 44.46

93 BEIJING China 43.12

94 BUENOS AIRES Argentina 41.80

95 MEXICO CITY Mexico 40.98

96 BANGKOK Thailand 38.37

97 ASUNCION Paraguay 38.34

98 SHANGHAI China 35.39

99 JAKARTA Indonesia 26.09

100 MANILA Philippines 21.73

101 NEW DELHI India 19.82

102 COLOMBO Sri Lanka 15.85

103 MUMBAI India 15.85



50

• Under the trade-weighted managed floating exchange rate regime, the Singapore

dollar appreciated by 24.8% against the US dollar from 1.66 SGD = 1USD in

2005 to 1.25 SGD = 1 USD in 2013.

• In contrast, as the Hong Kong dollar (HKD) is pegged to the US dollar, the

HKD-USD yearly average exchange rate was rather stable throughout the 2005-

2013 period. In 2005, the exchange rate was 7.78 HKD = 1USD. It fluctuated

between 7.78 HKD = 1USD and 7.80 HKD = 1USD to eventually reach 7.76

HKD = 1USD in 2013.

• We suspect that the strong Singapore dollar has helped to push Singapore’s cost

of living rankings for expatriates and ordinary residents upward because any

generic increases in local prices over this period is magnified when the local

prices are converted into US dollar to construct the Cost of Living Indices.


51

• We investigate the effects of exchange rate fluctuations on cost of living

rankings through a simulation exercise. We simulate the Cost of Living Indices

and Rankings for expatriates and ordinary residents in Singapore between

2006 and 2013 under the assumptions that:

The yearly average exchange rate between the Singapore dollar (SGD)

and the US dollar (USD) remains unchanged at its 2005 level at 1.66 SGD

= 1USD throughout the 2006-2013 period.

The yearly average exchange rates between the local currencies of the

other 102 cities against the US dollar remain as they are in the original

analysis.


52

• For comparison purpose, we conduct a similar simulation exercise for Hong

Kong. The simulation assumptions are as follows:

The yearly average exchange rate between the Hong Kong dollar (HKD)

and the US dollar (USD) remains unchanged at its 2005 level at 7.78 HKD

= 1USD throughout the 2006-2013 period.

The yearly average exchange rates between the local currencies of the

other 102 cities against the US dollar remain as they are in the original

analysis.


53

• Original and Simulated Cost of Living Rankings for Expatriates in Singapore and

Hong Kong, 2005-2013:

2005 2006 2007 2008 2009 2010 2011 2012 2013

Cost of Living Ranking for

Expatriates in Singapore15 13 12 12 12 10 8 7 4

Simulated Cost of Living Ranking

for Expatriates in Singapore- 15 21 31 25 24 33 22 24

Cost of Living Ranking for

Expatriates in Hong Kong5 6 10 17 13 12 12 9 11

Simulated Cost of Living Ranking

for Expatriates in Hong Kong- 7 10 17 13 12 12 9 11

Singapore dollar/US dollar yearly

average exchange rate1.664459 1.588694 1.506799 1.414732 1.453777 1.362653 1.257163 1.249412 1.251006

Hong Kong dollar/US dollar yearly




54

• Original and Simulated Cost of Living Rankings for Ordinary Residents in

Singapore and Hong Kong, 2005-2013:


2005 2006 2007 2008 2009 2010 2011 2012 2013

Cost of Living Ranking for Ordinary

Residents in Singapore58 60 59 56 59 53 55 48 48

Simulated Cost of Living Ranking for

Ordinary Residents in Singapore- 60 62 65 62 64 69 66 67

Cost of Living Ranking for Ordinary

Residents in Hong Kong56 58 60 62 60 62 63 62 59

Simulated Cost of Living Ranking for

Ordinary Residents in Hong Kong- 58 60 62 60 62 63 62 59

Singapore dollar/US dollar yearly


Hong Kong dollar/US dollar yearly



55

• Singapore’s simulated rankings for expatriates and ordinary residents are lower than

its original rankings in all years. This shows that the appreciation of the Singapore

dollar has indeed helped push Singapore’s rankings upward.

• The trends of the rankings would also have been different had the Singapore dollar

not appreciated by 24.8% throughout 2005-2013.

• In contrast, Hong Kong’s simulated rankings for both expatriates and ordinary

residents are the same as its original rankings for almost all the years. This is not

surprising. Since the Hong Kong dollar is pegged to the US dollar, there is very little

fluctuations in the HKD-USD exchange rate to begin with so the simulation

scenario is very similar to the original analysis.


56

• Between 2011 and 2013, Singapore’s original rankings for both expatriates and

ordinary residents increased despite a relatively stable Singapore dollar during the

period.

• This increase in rankings may be due to generic increases in local prices. However,

another important contributing factor is exchange rate depreciations in other cities:

Between 2011 and 2013, Singapore overtook Frankfurt, Geneva, Oslo,

Osaka/Kobe, London, and Tokyo in terms of the cost of living ranking for

expatriates.

In terms of the cost of living ranking for ordinary residents, Singapore

overtook Atlanta, Berlin, Buenos Aires, Lexington, Lyon, Pittsburgh and Rio de

Janeiro.

The yearly average exchange rates (against the US dollar) of all non-US cities

among the cities mentioned above depreciated to different degrees between

2011 and 2013.


57

• As the Singapore dollar strengthens, local prices of imports in Singapore are

lowered. This is beneficial for both expatriates and ordinary residents.

• Meanwhile, an appreciating Singapore dollar makes the prices of Singapore’s

exports in the international market less competitive. As a result, international

demands for Singapore’s exports are likely to be reduced. The extent of this

reduction depends on the price elasticity of demand of oversea consumers for

Singapore’s exports. If demand is elastic, the slump in exports will be great and

this may have repercussions on the employment prospects of ordinary

residents working in the export sectors.


58

• A strong Singapore dollar does not have much of an impact on the income and

wealth of ordinary residents. This is because ordinary residents are remunerated in

local currency and they save and invest mostly in local assets, such as Singapore

dollar-denominated time deposits or savings with the Central Provident Fund (CPF).

However, the upper strata of the population, who may also hold foreign assets, may

be affected by currency appreciation.

• In contrast, an appreciating Singapore dollar has an income effect on expatriates.

The exact nature of the effect, however, depends on their remuneration

arrangements:

If the expatriate is paid in his home currency, or in US dollar, the value of his

income in terms of Singapore dollar will decrease. He therefore has less

income for consumption.

If the expatriate is paid in Singapore dollar, a strong Singapore dollar will lessen

any burden of remittances which he may have, making more income available

for consumption.

11. Case Study B: Comparing Cost of Living across Geographical

Regions

59

• For ordinary residents, cities in Western Europe are among the most expensive,

followed by cities in Oceania (specifically, Australia and New Zealand) and

North American cities. On the other hand, African and Asian cities tend to be

the cheapest, followed by Eastern European cities and cities in South America.

• There are, however, exceptions. A handful of Asian cities are as expensive as

their western counterparts. The cost of living for ordinary residents in Tokyo, for

instance, was more or less similar to that in London and Los Angeles.

• The explanation perhaps lies in the difference in the cost structure and, as a

result, the prices of non-traded goods and especially services between the

western countries and other, less developed, countries:

Locally provided, non-traded services such as haircut constitute an integral

part of the ordinary residents’ consumption basket.

By nature, the service industries are labour intensive and the average wages

in Western Europe, Oceania and North America are generally significantly

higher than that in Africa, Asia, Eastern Europe and South America.


60

• ACI 2015 Cost of Living Indices for Ordinary Residents^ by Geographical Regions:


^Note: Based on 2013 data, which were the latest

available at the time the study is conducted.

Western Europe

South America

North America

Australasia

Eastern Europe

Asia

Africa

11. Case Study B: Comparing Cost of Living across Geographical

Regions

61

• In contrast, there is no pattern in the geographic distribution of the cities

according to the cost of living for expatriates.

• This is perhaps because expatriates are geared towards high-end imports to

maintain a luxurious Western lifestyle. As such, their costs of living are mainly

affected by exchange rate fluctuations rather than local factors.


62

• ACI 2015 Cost of Living Indices for Expatriates^ by Geographical Regions:


^Note: Based on 2013 data, which were the latest

available at the time the study is conducted.

Western Europe

South America

North America

Australasia

Eastern Europe

Asia

Africa

63

Thank you!

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