Even as Singapore’s Deputy Prime Minister and Finance Minister was dismissing a report which ranked Singapore as the most expensive city in the world, the prices of Certificates of Entitlement (COEs) for vehicles were shooting up to their highest in months in some categories.
A COE is what one needs to purchase and own a car in Singapore.
The prices in Cat A, which is for cars above 1,600cc or 130bhp, increased by 2.7 per cent to a four-month high of $80,710.
The COE prices in Open Cat, which is for any vehicle type, climbed 3.8 per cent to $82,000. This is also its highest since last November.
The highest jump, however, was for motorcycle COEs. They rose a significant 14.3 per cent to register at S$4,001 from S$3,501 – its highest since 1995.
The rise in the prices of these certificates perhaps reflects the worries of Singaporeans generally.
So when the Economist Intelligence Unit (EIU) ranked Singapore as the most expensive city in the world this year, it resonated with many Singaporeans.
This may explain why the DPM found it necessary to issue an immediate response to it in Parliament.
The EIU survey examined 160 services and products in 140 cities around the world. The survey list include food items, entertainment, and clothes and is aimed at helping human resource departments in companies decide where to place their workers, and the costs associated with this.
But just as swiftly as the news of Singapore rising to pole position as the most expensive city made the rounds around the world, Mr Tharman sought to downplay the EIU findings which, he said, were “really aimed at measuring expatriates’ cost of living in different parts of the world.”
“They are basically aimed at comparing cost of living for expatriates in different cities or countries,” the Finance Minister said. “Hence, there are two things that make these surveys quite different from the factors that affect the cost of living for Singaporeans.”
One of the two things he referred to is the strength of the Singapore dollar.
“An important reason why we have become an expensive place for expatriates,” he explained, “is that the Singapore dollar has strengthened. Indeed, the EIU report points this out.”
However, Mr Tharman said that a stronger dollar benefits Singaporeans, as it “improves purchasing power for Singaporeans – in Singapore because imported goods become cheaper (and for us, food and everyday items are all largely imported).”
The other thing which he said made the survey different for locals and expats was the items used in the study – these include imported cheese, fillet mignon.
“And Burberry-type raincoats,” Mr Tharman said, “which are not very common in Singapore. It also includes the price of the four best seats in the theatre; and three-course dinners at high-end restaurants for four people.”
He said, “It is not that these surveys are wrong, or that they are misguided. But they are measuring something quite different from the cost of living for an ordinary local in different cities around the world.”
The EIU, in response to Mr Tharman’s explanation, said it acknowledged the points raised by the minister. However, it said that the basket of goods which it used for the survey included many everyday items as well.
“The survey basket ranges from a loaf of bread to a luxury car,” Jon Copestake, the editor of the EIU study said. “In fact, 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.”
The EIU survey results come on the back of Singapore being recently ranked as the world’s seventh most expensive city in the Expatistan’s Cost of Living index, and according to Pricewaterhouse Coopers, its property market is among the world’s top ten most expensive.
At the same time, Singapore has one of the biggest income inequality gaps in the world.
These survey results, as with the EIU one, are thus generally seen by Singaporeans as reflective of the situation they face.
A January survey by the Singapore Polytechnic of young Singaporeans found that the cost of living was a “major worry” for them. Among their concerns were whether Singapore would be an affordable place for them to live in, and whether they would be able to afford a house and a car.
But it is not just the young who worry about living costs.
Elderly Singaporeans were also recently reported to have been advised by some doctors to let their Medishield premiums lapse because these senior citizens could no longer afford to pay for these.
Medishield is an insurance scheme which helps to pay for large hospitalisation bills.
The premiums “have risen so high” for older Singaporeans that “it has become impossible for (them) to maintain their coverage”, said the Government Parliamentary Committee for Health in August last year.
It prompted the government to step in and introduce the Pioneer Generation Package (PGP) last week. The PGP is basically to help Singaporeans 65-and above pay their Medishield premiums and to receive yearly Medisave top-ups, among other things.
But even as the elderly struggle, on the other end of the spectrum Singapore was named the wealthiest country in the world by Knight Frank in 2012, it also has the most concentration of millionaires in the world, and is ranked 6th for the number of billionaires.
And on the same day the EIU report was making the rounds, a Knight Frank report said Singapore will soon overtake Tokyo as the Asian city with the most ultra-high-net-worth – US$30 million and above – individuals within a decade.
That number is expected to be almost 5,000 individuals by 2023 – just one place behind London globally.
But increasingly, Singaporeans are questioning what all this mean for them on a daily basis as they have to put up with a more crowded city, keener competition for jobs, and an ever-rising cost of living where even affording basic daily necessities has become a challenge.
A BBC report last week on the poor in Singapore said “it comes as no surprise that the less well-off would struggle to pay for daily necessities.”
“There is no minimum wage or poverty line set and no welfare provision along the lines of many developed Western economies,” the BBC said.
But Mr Tharman said that low- and middle-income Singaporeans “have incomes that grow faster than the cost of living.”
“That is what is important and what we have fortunately been able to achieve,” he said in Parliament.
“Indeed, for the low-income households, if you exclude from the CPI index the imputed rentals for those who own their homes (they do not actually have to pay rentals), then the increase in real incomes of the 20th percentile household was 19% over the last five years.”