Why does a destination that is a ferry away have a seemingly lower cost of living?
For nations that are geographically close to each other yet operating on completely different economic models, there will bound to be fluctuations in prices of goods and services when comparing using the same currency base.
For Singaporeans who have been on edge about inflation and grappling with cost of living pressures, it may be surprising for them to find out that the prices of similar goods and services in Batam may cost half (or even less than half) than how much they pay for if they were consuming them in Singapore. Even after you factor out the effects of a stronger exchange rate, there are many other fundamental reasons at play here.
We take a look at five goods and services in Batam, Indonesia, and how much they cost compared with prices in Singapore.
Read Also: Renting VS Co-Living VS Serviced Apartments: How Much Do These Living Arrangements Cost For A Year?
Bubble Tea – Up To 56% Less Than Prices In Singapore
According to a survey by DollarsAndSense, it was observed that the price of many Singaporeans’ favourite beverage – bubble tea – is almost half the price in Batam.
A medium cup of Oolong Tea with no pearl and less sweet (25% sugar) from a known bubble tea brand in Singapore costs IDR$17,000, which is about S$1.54.
In Singapore, a medium cup of Oolong Tea with no pearl and less sweet (25% sugar) usually costs about $3.50 a cup.
Could it be the water? We are certain that the reason behind this is because of the affordable manpower and lower rental cost of operations in Batam.
Movies – Up To 79% Less Than Prices In Singapore
Movie buffs, be happy to know that you can catch a movie in a plush cinema in Batam for only about S$3.16 or IDR$35,000.
This is up to five times less than the prices we pay in Singapore. A movie here will usually cost around S$14.50.
A cinema at a Batam shopping centre / Image Credit: Angela Teng (DollarsAndSense)
The cinemas in Batam are also well decorated and may even be in better condition than some of our cinemas here. There are plenty of movies on screen as well, with English versions similar to the ones shown here.
The likely reason why the prices are so divergent could be once again due to rental and manpower costs. It is comparatively lower in price to rent commercial spaces in Batam because of the vast land available.
Food: A&W 2 Piece Chicken Set, Chicken Katsu Don – Up To 58% Less Than Prices In Singapore
A chicken katsu don in a restaurant in a shopping mall costs IDR$90,000, which is equivalent to S$8.10.
Meanwhile, a 2 piece chicken set meal at A&W will cost IDR$60,000 or S$5.40 for a set meal.
An A&W outlet in Batam / Image Credit: Angela Teng (DollarsAndSense)
To compare, a chicken katsu don in a shopping mall in Singapore will usually be priced around S$18.90 to S$22.00. Meanwhile, a similar fast food 2 piece chicken set meal at A&W in Singapore will cost S$8.90.
A chicken katsu don meal in a Batam restaurant / Image Credit: Angela Teng (DollarsAndSense)
The possible reason for the price difference is that Indonesia has its own local produce market and the country provides a large amount of produce for domestic use. That keeps costs down for consumers.
In Singapore, food products are mostly exported, but it has plans to improve its food security with its 30 by 30 goals.
A Gel Manicure – Up To 77% Less Than Prices In Singapore
You can get some pampering done for yourself in Batam with a manicure and you will be convinced to try one out if you know that the rate of a basic express hand gel manicure is around S$9.04 or IDR$100,000.
An express gel manicure in session / Image Credit: Angela Teng (DollarsAndSense)
The rates of an express gel manicure in Singapore would cost at least S$40.00. This could be due to the cost of materials, labour costs and also the cost to rent a salon in a mall.
Hotel Stay – Up To 60% Less Than Prices In Singapore
A price check on multiple hotel rates in Batam revealed that it cost on average less than S$100 or IDR$1,105,000 a night for a sea view room with a queen sized bed.
Hotel with a seafront view / Image Credit: Angela Teng (DollarsAndSense)
A sea view hotel in Singapore can cost much more but for comparison purposes, we will compare with five star hotels along the river and has similar features and offerings. E.g., Grand Copthorne Waterfront is priced at S$250 a night.
Why will it cost more to stay in a sea view hotel Singapore? Well, the country is a small island and various sorts of properties are constantly competing for land use. On top of that, Singapore is also a popular destination for tourists and businesses. These factors drive up the prices of hotel rates. With high occupancy, hotels are able to price their room rates higher.
Recap: Why Is There Such A Fluctuation In Prices When Singaporeans Cross The Border
In summary, there are various reasons why a neighbouring country has a perceived different cost of living than Singapore.
A for-profit company has to account for operating costs when running a business (which includes rental costs and manpower costs). There are the rental rates businesses have to pay for which adds to operational costs, in addition to the manpower costs to run a business. In Singapore, rental rates and labour costs eat up a big portion of operational costs for businesses, leaving little room for the prices of goods and services to be lowered.
As manpower costs are higher due to the tight labour market in Singapore, the labour cost to hire workers to provide services such as manicures, massages, retail and food and beverage businesses will also lead to higher pricing of the services provided. Business costs will usually then trickle down to consumers.
Singapore being a country that imports most of its goods, also has to pay more to bring items into the country, due to its lack of natural resources. This will lead to higher prices of everyday things, such as poultry, meat, fish, vegetables, and dry goods.
We must also note that for a developed country like Singapore, it is a top destination for many expats. It has a robust economy, a pro business environment, offers plenty of career opportunities for jobseekers, stable political environment, low crime rates, low corruption, and a world-class education system. These are great qualities that attract many people to want to stay and work here, which will also drive up prices.
If residents want higher salaries, they will have to deal with the high cost of living in Singapore. The benefits of a country with a stronger currency (ahem, meaning salaries with stronger exchange rates) will also lead to the impression of goods and services being cheaper overseas. The drawback for a country with a strong currency will, however, be weaker exports and higher business costs to manage operations here.
Here’s a photo of a cat that doesn’t deal with cost of living / Image Credit: Angela Teng (DollarsAndSense)
But of course, we must also note that for locals in their respective countries, these goods and services may not be considered cheaper for them as they have their own cost of living concerns, salaries that they earn in their country given according to market forces, and housing considerations. There is no better or greater place to be all things equal, unless you include job security, quality of life, and political stability into the big picture.
For Singaporeans, this is the price to pay for living in a country dealing with such economics (a highly competitive talent-driven economy that is also highly competitive for talent, coupled with a lack of natural resources). Let’s also be reminded that Singapore has already tied with New York as the world’s most expensive city to live in. You can read more here if you wish to find out about the details.
Featured Image Credit: Angela Teng (DollarsAndSense), Pexel
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