Asian cities — except those in Japan — have seen a significant increase in cost of living attributable mainly to currency fluctuations that have created headwinds for multinational organizations, an annual survey by global consulting firm Mercer said.
Currency fluctuations, driven by economic and political unrest, are contributing to the cost of expatriate packages for those on the front line of the globalization of their organizations, private and public alike, according to the Cost of Living Survey released by Mercer, a leading firm of financial analysts.
Factors such as instability of housing markets and inflation for goods and services have serious impacts on the overall cost of doing business in a global environment, the survey found.
However, close to 75 percent of multinational organizations expect long-term expatriate assignments to remain stable or increase over the next two years to address business needs, as the global economy grows increasingly interconnected, Mercer said.
“Sending employees abroad is necessary to compete in markets and for critical talent,” Mercer talent business president Ilya Bonic said.
Employers need a reliable and accurate reflection of the cost to their bottom line.
Asian cities — particularly Hong Kong and Singapore — top the list of most expensive cities for expatriates, while Luanda, the capital of Angola, retains the most-expensive title for the third straight year due to steep prices for imported goods and safe living conditions, the survey indicated.
Hong Kong ranks second worldwide, but is the most expensive city in Asia as a result of its currency being pegged to the US dollar, thus driving up the cost of living locally, the survey said.
The US dollar has gained value against major currencies thanks to stable economic recovery and expectations of interest rate hikes.
Hong Kong is followed by Singapore with a fourth ranking and Shanghai at sixth, Beijing at seventh and Seoul at eighth, the survey said.
Taipei was ranked 41st this year.
Taipei was named the 61st-most-expensive city in the world for expatriates last year, up from 62nd the previous year.
The cost of living in Asian markets has been high for many years, but lower tax rates in Hong Kong and Singapore and relocation allowances add incentive for international moves, said Kate Bravery, another talent business executive at Mercer.
Japanese cities dropped in the rankings this year because of the country’s weak currency versus the US dollar, the survey found, as Japan steps up monetary easing to stimulate economic growth.
Chinese cities climbed due to a relatively stronger yuan together with the high costs of imported consumer goods, the survey indicated.
Elsewhere in Asia, Bangkok rose 43 places from last year while Hanoi and Jakarta gained 45 and 20 notches respectively, the survey said.
The survey assessed 207 cities across the world and measured the comparative cost of more than 200 items, including housing, transportation, food, clothing, household goods and entertainment.
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