UBS Study On Price & Earnings Of Cities
Should I Be Thankful?

Having gone through the UBS study on price and earnings of global cities, I am quite convinced on the validity of the assumptions, methodology and conclusions. Firstly, they weighted according to how much it would cost to buy a basket of goods in each city, the breakdown are as follow:
Food/groceries 18%; Beverages/tobacco 5%; Hygiene & healthcare 7%; Clothing 6%; Household and electronic devices 7%; Home/house 18%; Heating/lighting 5%; Transportation 14%; Miscellaneous 20%.

Cost of living index is calculated on the basket of goods containing 154 items (products and services) - that is then reweighted according to the Consumer price index relevant for that specific country. As for earnings, the wages are calculated across 14 selected industries/job types and only takes data from local people and also the prevailing tax rates.

The following are the rankings of PRICES using data but NOT including rentals. The study is based on 71 business cities surveyed. New York city is pegged at 100, meaning if your city is at 95, your city is technically 5% cheaper than New York, etc...
1) Oslo 121.5
2) London 110.6
3) Copenhagen 109.2
5) Tokyo 106.8
7) New York 100
11) Paris 95.6
15) Los Angeles 91.6
19) Amsterdam 87.7
24) Seoul 85.8
27) HK 82.1
30) Sydney 80.4
32) Singapore 76.6
36) Dubai 74
40) Taipei 68.9
51) Jo'burg 59.7
54) Bangkok 55.3
57) Jakarta 51.8
60) Shanghai 50.3
62) Beijing 49.6
67) Manila 46.7
70) Mumbai 38.5
71) Kuala Lumpur 36.8

The PRICES ranking changes substantially if rents were included, and they should be, and especially in major Asia cities: London would become the costliest city with 105.5 with New York being pegged at 100 still. Other cities which moved up the rankings when rent was included were Chicago, Los Angeles, Tokyo, Sydney and HK. But Kuala Lumpur remained the cheapest place at 71st position.

So for WAGES, as long as Kuala Lumpur does not finish at 71st also, Malaysians should be pretty well off, ... right?!! Again using New York as 100:
1) Copenhagen 118.2
2) Oslo 117
3) Zurich 115
5) New York 100
6) London 89.2
8) Dublin 88.3
18) Tokyo 78
20) Sydney 74.6
32) Seoul 44.2
36) Taipei 35.5
38) Singapore 32.3
40) HK 27.4
53) Kuala Lumpur 15.7
59) Shanghai 11.5
66) Bangkok 8.2
67) Mumbai 7
68) Jakarta 6.3
69) Manila 6.3

Most of the Asian cities would move up by another 10 spaces roughly if we were to take net wages instead of gross. On balance, Kuala Lumpur looks great, cheapest but gets paid by a significantly higher relative quantum, mainly we don't have to worry about excessive property prices/rentals. Fuel is still subsidised as are a number of necessities - thanks to super normal revenue from our resources (oil and gas, plantations, timber, etc...). When you put PRICES and EARNINGS side by side, you get purchasing power. Here is the more important ranking, which is Purchasing Power, based on net wages, again with New York pegged at 100:

1) Zurich 115.6
2) Geneva 112
3) Dublin 106.5
7) New York 100
9) Sydney 99
10) Auckland 98.7
15) Oslo 91.2
20) London 86.8
24) Tokyo 81.8
31) Paris 72
35) Seoul 56.2
37) Kuala Lumpur 50.9
38) Singapore 50.8
43) Hong Kong
56) Shanghai 22.9
62) Mumbai 18
65) Bangkok 14.6
67) Manila 13.5
68) Jakarta 12.2

Guess, we should be happy.... now, if we can only get our car prices to be the global average (presently the cost of buying a car in Malaysia and Singapore is about 80%-100% more expensive than the global average).

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