Despite prices increasing by 5.5% in Hong Kong on average, the city has fallen from 33rd to 45th position in ECA’s ranking looking at cost of living for international assignees.
For the first time, Hong Kong has been overtaken by Singapore, which has jumped from 68th to 36th position year-on-year. Goods and services commonly purchased by international assignees now cost almost 3% more in Singapore than in Hong Kong. Just a year ago, they cost 5% more in Hong Kong than Singapore.
"High inflation and a weak dollar have had a double whammy effect on Hong Kong," says Lee Quane, Regional Director, Asia for ECA International. "High levels of price increases have impacted on the purchasing power of Hong Kong people at home, while overseas their purchasing power has been affected by a weaker dollar. For businesses, the progressively weaker dollar means that companies sending staff out of Hong Kong to many locations will need to continue to pay or even increase allowances in order for employees to maintain their purchasing power while on assignment."
Singapore has jumped three places to become the 6th most expensive city, and 3rd most expensive country in Asia, according to ECA International, the world’s leader in the development and provision of solutions for the management and assignment of employees around the world.
The continued strength of the Singapore dollar against major currencies has also catapulted the city up the global ranking, rising from 68th to 36th position in the space of a year. It is now more expensive for international assignees than Hong Kong, New York, Amsterdam, Frankfurt and Shanghai. Goods and services commonly purchased by international assignees now cost almost 3% more in Singapore than in Hong Kong. Just a year ago, they cost 5% more in Hong Kong than Singapore.
"While we are seeing price increases in a number of Asian locations, the main reason for Singapore’s rise in our ranking over the past 12 months is the strength of the currency," says Quane. "The Singapore dollar has risen by more than 10% against the greenback between surveys, for example, and allowances paid to protect the purchasing power of employees on long-term assignment in the city are now higher than those paid to international executives posted to many other financial centres including Hong Kong, London and New York."
Living costs for assignees are affected by inflation, availability of goods and exchange rates, all of which can have a significant impact on assignee remuneration packages.
Price inflation is being witnessed around the world as the cost of food, oil and other commodities rise. In Asia, the prices of ECA’s basket of goods and services in local currencies have increased by around 5.3% on average. Bangladesh (7%), Vietnam (6.2%), Indonesia (5.8%) and Hong Kong (5.5%) are among the Asian economies that have seen the highest rates of price inflation.
However, currency movements still have the biggest influence on rankings. In Asia, the Mongolian, Malaysian and Singaporean currencies have appreciated the most over the twelve months between surveys.
"In some cases, strong currencies have contributed just as much as inflation to a country’s rise up the ranking," Quane added. "As well as Singapore, we have seen this happening in Ulaan Baatar, Bangkok and Kuala Lumpur – these locations have risen by 23, 20 and 16 places respectively. Other locations have fallen in the ranking despite major increases in local prices. Hong Kong and Vietnam are examples of this – the weakening of their currencies has more than counterbalanced the impact of price inflation."
Tokyo remains the most expensive location in Asia – and globally – for international assignees. Although Japan is the only Asian country surveyed where the actual cost of goods in the ECA basket of goods has fallen, a strong currency and already higher costs for goods mean that cost of living for assignees is significantly more expensive than in other locations in the top ten.
Seoul joins Japanese locations at the top of the ranking. A combination of price increases in the Korean capital and the continued strengthening of the won against the US dollar sees it maintain its position as the 5th most expensive location in the region and ranked 22nd globally.
Little change has been seen in China but Hong Kong’s drop in the ranking means it is currently only marginally more expensive for international assignees than Beijing, ranked 46th and Shanghai in 47th position. Xi’an is the cheapest mainland Chinese city featured in the survey, ranked 126 places behind Beijing in 172nd.
Hanoi is the Asian location that has fallen most in the ranking from 200 to 224 while Karachi (at 240) remains the cheapest location in Asia and globally.
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