Tue, 29 Jul 2003

Jakarta's cost of living soars, outranks KL, Bandar Seri Begawan

Evi Mariani, The Jakarta Post, Jakarta

Jakarta is the second most expensive city in Southeast Asia, after Singapore, following a rise in living costs, according to the latest survey conducted by Economist magazine's research unit, the Economist Intelligence Unit.

According to the survey, Jakarta outranks Ho Chi Minh City, Hanoi, Bandar Seri Begawan, Bangkok and Kuala Lumpur, the capital of Malaysia, in terms of cost of living.

Twelve months ago, Jakarta was the sixth most expensive city in the region, behind Singapore, Ho Chi Minh, Hanoi, Bandar Seri Begawan and Kula Lumpur.

Singapore's cost of living is the highest in the region, as it was 12 months ago.

The survey, which was released on Monday, did not provide any particular reasons for Jakarta's climb up the list of the costliest cities.

It did, however, identify two general reasons a city's cost of living index changes, that is exchange rate movement and price movement.

"If, for example, a currency strengthens or inflation pushes the price of goods up, the relative cost of living in that country will also rise," the survey said.

The rupiah has strengthened by about 8 percent against the US dollar since the beginning of the year, while inflation stood at below 7 percent year-on-year in June this year.

Globally, Jakarta now ranks 84th on the list of the world's costliest cities, compared to its ranking of 104 a year ago.

Meanwhile, the world's most expensive cities are Tokyo and Osaka, which have held these positions since 1991, according to the survey.

Hong Kong ranks fifth and Singapore is 14th, along with Amsterdam.

Cities in the United States became relatively cheaper since last year as the dollar weakened, particularly compared with the euro. New York City, the country's costliest city, dropped out of the world's top-10 costliest cities to 13th.

Cities in countries whose currencies are pegged to the weakening US dollar also saw declines in cost of living. These cities include Beijing, Bahrain, Dubai and Riyadh.

On the other hand, living costs in European cities, particularly those in the euro zone, rose significantly as the strengthening of the euro against the US dollar made the region comparatively more expensive.

European cities dominated the top of this year's list, with seven cities ranked among the top 10. Paris leapt to seventh place from 17th last year, outranking London.

Cities with the cheapest living costs were Tehran, the cheapest of all, Asuncion, Harare, Manila, Sao Paolo and Mumbai.

The survey compares prices and products in more than a 100 cities around the world twice a year.

List of costliest cities

1. Tokyo 2. Osaka Kobe 3. Oslo 4. Zurich 5. Hong Kong 6. Copenhagen 7. Geneva, Paris 9. Reykjavik 10. London 14. Amsterdam, Singapore 84. Al Khobar, Istanbul, Jakarta, Jeddah, Kuwait City, Panama City 90. Casablanca, Ho Chi Minh 94. Hanoi, Kiev 96. Bandar Seri Begawan, Budapest, Kuala Lumpur, Nairobi 103. Bangkok, Phnom Penh 122. Manila

Source: Economist Intelligence Unit (countries sharing the same rank have the same index value)