Title: An Analysis of Rice Prices in Three Countries: Hong Kong, Singapore, and the Philippines as of April
1An Analysis of Rice Prices in Three Countries
Hong Kong, Singapore, and the Philippines (as
of April 20, 2008)
- by Thads Bentulan
- streetstrategist_at_gmail.com
2Rice Price Analysis of Three Countries
- We shall compare the rice prices of three
countries, Hong Kong, Singapore, and Philippines
(Prices as of April 20, 2008) - We shall analyze their affordability from the
point of view of both - - domestic helpers
- Janitorsin their own countries
3Why Singapore and Hong Kong?
- Why Singapore and Hong Kong?
- Because
- They are close Asian neighbors to the Philippines
- They have no natural resources, almost
everything, including rice, is imported,
therefore dependent on other countries meaning
they are not self-reliant on rice production, and
never intended to be self-reliant - They are Hyperwage First World countries which
are supposed to be expensive countries - These are small countries the law of labor
supply and demand may be expected to work because
of they dont have much excess of manpower
4Why DH and Janitors?
- Why analyze both domestic helpers and janitors?
- Their domestic helpers are not their local
citizens but imported laborers like Filipinos and
Indonesians, therefore their helpers are not as
protected by their govts as much as their own
citizens - There is a wide gap between DH and janitors (bec
the latter are their own citizens while the
former are usually imported Filipinas or
Indonesians) - To give us a flavor of the affordability from the
viewpoint of DH and janitor. - Remember DH dont spend for their housing,
clothing, transportation and food expenses on a
daily basis - Janitors, therefore, are better indicators of
affordability and standard of living
5Overpriced or not?
- How do we know if the prices of commodities are
overpriced or not, when comparing one country
with another? - If the cost of living in the US is high, then how
come an ordinary teacher there can afford to buy
a car but in the Philippines even a
superintendent can do so only with his retirement
pay? - How come if you open the gates, the Filipinos
will be running towards the US but the Americans
will not be racing to go to the Philippines? - A method of comparing overprcing in countries was
discovered and proposed by Thads Bentulan (Street
Strategist) and published in 2005 - His method eliminates the difficulties faced when
using only exchange rates and prices in each
country. - Instead of using price levels, his method focuses
on affordability and uses a new metric to
compare affordability.
6Low Cost of Living?
- Of what use are low prices if the people have no
money to buy the low-priced goods? - Are Third World countries really cheaper than
First World countries? - That affordability metric is minimum wage
labor-hours need to work for goods or services. - In effect, he uses labor-hours or
labor-minutes as a new unit of currency to
compare standard of living conditions from
country to country. - In his book Hyperwage Theory he discusses this
new metric in the following chapters - - Chapter 7 Labor as Unit of Currency
- Chapter 8 The Mispricing of Labor
- Chapter 9 The Myth of Cheap Countries
- Chapter 10 The Perfect Commodity
7Hyperwage Theory
- Hyperwage Theory was serialized in 2005 but is
now compiled as a book. - A PDF e-book version of Hyperwage Theory is
available as a FREE download fromhttp//streetstr
ategist.googlepages.com - The book provides some examples of
- Hyperwage Affordability Analysis (HAA)
- useful in appreciating the following rice
analysis. - It may be useful to read the book first.
8Rice Prices in Hong Kong, Singapore and the
Philippines
- To analyze rice prices in a country, we ask the
following - How long will it take for a minimum wage worker
to work for one kilogram of rice?
9Hyperwage Affordability Analysis
- Hyperwage Affordability Analysis taken from the
book Hyperwage Theory - Survey the prices of a product or service (in
this case, rice) at markets commonly accessible
to ordinary workers. - Obtain the minimum wage in the area.
- Convert the minimum wage into a per hour basis
- Compute how many minutes it takes for a minimum
wage worker to work for the product (one kg of
rice.) - Compare this labor-minutes data with those from
other countries.
10Hong Kong
- There is no minimum wage law in Hong Kong but
there is a minimum applicable for domestic
helpers. - In effect, this is Hong Kongs minimum wage.
- Latest figure is HK3,480 per month, one-day off
per week, 10-hour day. - To get a feel for the amount, we use latest
exchange rate of HK1PhP5.37 - (Domestic Helper)
- P18,687 per month (HK3,480) or
- P71.88/hour (HK13.38 per hour)
11Hong Kong
- The janitors in Hong Kong, using Dec 2007 data
from HKG Census and Statistics Department earn an
average of - HK5,241 per month (P27,777 per month)
- HK25.20 per hour (8-hr day) or (P133.54 per hour)
12Singapore
- Singapore has no minimum wage law but HKG is a
competitor that can lure DH away from Singapore
to HKG. Thus, Singapore cannot just price their
domestic helpers with lower wages without driving
away potential DH to HKG. - Filipino domestic helpers in Singapore earn from
S300-S400 per month. (The Indonesians and Thai
earn a bit lesser) - S350 per month or P10,853.50
- S1.35 per hour or P41.74 per hour
- Exchange Rate (S1PhP31.01)
13Singapore
- In Singapore, according to a 2005 data from the
Ministry of Manpower - Janitors earn an average of S792 / month or
P24,559.92 per month - Or S3.81 per hour or P118.08 per hour (8-hr day)
14Summary of Wages
The HKG Janitor earns 150 more than a HKG helper
who is usually a Filipina. The Singapore janitor
earns 230 than a Singa helper who is usually a
Filipina The Phil. Janitor earns 430 than a Phil
DH. In other words, it is the foreign governments
who are more protective of the lowest of the low
workers who are not even their citizens. The wide
gap shows how little the Phil government treats
its own modern-day slaves.
15Relative Wages
How about the prices of goods and services in
Singapore and HKG?
16How to analyze our economic status
Note If we obtain the ratio of the salaries
middle-level supervisors vs. janitors in each
country, and then compare them across countries
you will find out that the gap between the two
classes are oppressively wide for the
Philippines. In comparing across countries we
will find out that the Filipinos are masochists
they give themselves low salaries which is
counterproductive because this would lower the
purchasing power of the group (consumer) that
comprises 69 of the Philippine GDP. This
should be the kind of research that our
economists should develop.
17Data Survey
- The data used for this analysis come from
- Actual April 20, 2008 data from Hong Kong from
Wellcome Supermarket Chain - Actual April 20, 2008 data from Singapore from
Cold Storage chain (Singaporean sister company
of Wellcome) - These are supermarket chains, therefore the
prices used here are higher than is actually
available in wet markets - The prices in the Philippines are from wet
markets. - There is no sign of rice shortage in HKG and
Singapore, in fact, these actual prices are
slashed down from regular prices.
18Findings
- The results shown in the following pages may
surprise you but those who have read Hyperwage
Theory will not be surprised because these
results are predicted by the theory. - If we do the same analysis for other goods and
services like gasoline, haircuts, pork,
education, rent, laptops, computers, cellphones,
we can get an idea of the countrys affordability
numbers.
19The data explained
Converted to pesos to get a feel of the magnitude
of prices (in Phils currency) P37.48
Min. wage in local currency 3,480
Price/kg in local currency 6.98
The rice brand/ quality N o Frills
How many kg of HKG rice can a HKG Domestic
Helper buy with her HKG monthly salary? 498 kg
How many minutes does the HKG DH have to work to
pay for a kg of HKG rice? 31.29 minutes
Just for fun How many kg of HKG rice can a Phil
DH buy with her Phils one month wage? Only 53.36
kg
20Hong Kong
Founded in 1945, Wellcome is Hong Kong's
longest-established supermarket chain. Since
1964, the company has been wholly owned by Dairy
Farm. Wellcome has an overall staff of 5,000 in
more than 240 stores and serves more than 14
million customers every month.
21Spoiled for quality choice Actual photos of
branded rice sold in Wellcome Hong Kong
22HKG Domestic Helper
Wellcome is a neighborhood grocery chain in Hong
Kong. It sells rice in 5-kg, 8-kg, or 10-kg
packs. Prices as of April 20, 2008. The quality
of the cheapest No-Frills brand in this survey is
probably double than the Philippines Ganador. No
chipped grains, no unhusked palay mixed, no
peebles, etc..
The prices in the Philippines are near the Hong
Kong prices on a peso for peso level, P34 (low
quality) in Phils vs P37 (high quality) in HKG.
Yet, the wages of the domestic helpers in HKG are
about ten-fold than in Phils. These prices are
not from wet markets. It takes only a HKG DH
about half-hour work for a kg of rice, in the
Phils more than 6 hours. Is this good or bad? A
HKG DH can buy almost 500 kgs of rice with her
monthly wages while a Phil DH can only buy about
60 kg with hers.
23HKG Janitor
A HKG janitors enjoys quality of life using
electric polishers, working in aircon buildings
with granite and marble floor, and steel and
glass constructions. He works only for 17 minutes
for a kg of rice.
24Singapore
The name Cold Storage is an icon and its story
is unique in the corporate histories of
Singapore. The Company had humble beginnings - a
small depot storing and selling mainly frozen
meat from Australia. From that, it has grown to
become the premier player in retailing in
Singapore.
Operates 30 Cold Storage, The Fresh Food People
supermarkets strategically located across the
island in city center, affluent suburbs and HDB
estates. Operates 5 Market Place stores Jasons
The Gourmet Grocer, Tanglin Market Place, Paragon
Market Place and Jasons Market Place and an
organic and wellness-focussed store - naturally
marketplace by cold storage. Operates 48 Shop N
Save supermarkets islandwide.
25Quality Rice Choices from Cold Storage Singapore
26Singapore Domestic Helper
The Singapore domestic helper (who is a Filipina
anyway) has to work for 77 minutes for a kilo
of rice while (as we can see later) a Filipino
domestic has to work for 265 minutes. Is this
good or bad? Even the most expensive rice in
Singapore can bought with 123 minutes of work by
a Singapore DH.
27Singapore Janitor
The Singapore janitor has to work only for 27
minutes for a kilo of rice and his monthly salary
can buy 460 kg of rice. The Filipino janitor will
have to work for almost double (around 50
minutes). If you work for 10 years in Singapore,
it is like working for 20 years in the
Philippines as a janitor. The Filipino will have
to waste his entire prime of youth (20 years)
before he attains the wealth of the equivalent
Singaporean.
28Phil. Domestic Helper
Why is rice in an agricultural country like the
Philippines more expensive than in Hong Kong with
zero square meters of ricefields? The Ganador
rice is P39/kg in wet markets whose quality is
half than the No-Frills brand in Hong Kong being
sold at around P37/kg only. Shouldnt Phil rice
prices be only 1/10th of the HKG price because
Phil DHs wages are only 1/10th too?
29Phil. Janitor
It takes about 45 mins to 60 minutes for a
janitor in the Philippines for work for a kilo of
rice. How many hours more to work for
electricity, fare, food, water, and cellphones
and computers? Or is he even allowed the luxury
of ever buying a computer? Is this the attitude
of government towards the aspirations of its
people? Working in the US for 1 year is
equivalent to working in the Philippines for 10
years. Who in his right mind will not grab this
market opportunity if given the chance to work
abroad? Will this ever end? The broken families,
the pregnant daughters, the drug-addicted sons,
the unfaithful wife or husband left behind? The
GDP supposedly grew by 7.3 (I suspect this
figure) but has it resulted in 7.3 quality of
life? Or has it merely given the people 7.3 more
bago-ong, 7.3 more tuyo, or 7.3 more
galunggong? And how much of the 7.3 actually
went to the poor when the distribution ratio is
something like 19.5 in favor of the top 5 rich?
30Summary
The Philippines cannot claim to be a low cost
country. In the book Hyperwage Theory, the myth
of Third World countries being cheap countries
has been shattered by showing the comparison of a
few goods such as Big Mac, electricity, and
petroleum. This Hyperwage Affordability Analysis
(HAA) can be extended to all products such as
vegetables, rent, laptops, heavy equipment,
medicine, cellphones, massage, and rice. The
prices of rice are at par with that of Hong Kong
(even more expensive because in Phil wet markets
it is P39/kg for Ganador which is an inferior
quality to that sold in supermarkets in HKG for
P37). It takes only 17 minutes in HKG, 27 mins in
Singapore but 50 minutes in the Phils for a
janitor to work for a kilo of rice. Thus, Phils
is 300 more expensive than HKG and 185 more
expensive than Singapore as far as rice is
concerned. From the DHs point of view, Phils is
rice is 850 (!!) more expensive than HKG, and
350 more expensive than Singapore.
31Questions for Thought
- Questions
- Will increasing the minimum wage ten-fold result
in inflating the prices of commodities also
ten-fold? Note that HKG helpers get P18T while
Phil helpers get even less than P2T, yet the
price of rice in HKG is about the same as the
price of rice in Philippines. The Filipino
consumers are paying the same First World prices
(world market) for durable and non-durable goods
like computers, bulldozers, cellphones, software,
etc. using their Third World salaries. The prices
are not ten-fold they are about the same. - Which country is affordable for its citizens?
Low-wage countries or high-wage countries? Note
that it takes only 17 mins for a HKG Janitor
while it takes 50 mins for a Phil janitor to work
for a kilo of rice. - Is self-reliance on rice production a necessary
step before a country attains First World status?
Hong Kong and Singapore concentrate on adding
value to foreign investors by providing business
friendly, low tax, low tariff regimes. They leave
the low added-value production like rice to the
poor countries who do not value their labor cost. - Is quality of life better in low wage countries?
Note the helpers and janitors in HKG and
Singapore are working in aircon flats and
buildings using washing machines and electric
polishers. - Do high wages result in high inflation? HKG and
Singapore have very low inflation growths
compared to Third World countries like the Phils. - Does a country need natural resources to attain
First World status? HKG, Singapore and Taiwan are
high labor cost countries with no natural
resources yet they value their citizens by giving
them high wages which gives the workers high
purchasing power creating a strong domestic
demand thus creating a strong domestic economy.
32Questions
7. Should increasing cash wages be avoided? Every
price increase of imported raw material increases
the price of goods and service so the workers
purchasing power is reduced because the companies
simply pass on the new costs to the consumers.
This in turn reduces consumption which reduces
the GDP. Increasing wages will not necessarily
increase the prices by the same percentage
multiple. Increasing wages increases purchasing
power, increasing consumption expenditure which
in turn comprises about 70 of the GDP of most
economies in the world. (In the Philippines,
consumptions contributed 69 to the GDP last
year. 9. Should the government give only
non-wage benefits instead of cash? This merely
shows that the govt thinks that increasing the
cash wages of the lowest stratum of society, the
helpers and the janitors, is a bad policy. Is
this a correct mindset for a govt to have? 10.
Are HKG and Singaporean citizens happier because
they are wealthier? Not necessarily. Happiness is
an individual choice. But they have lesser deaths
dues to cellphone robber inside dirty jeepneys,
they have lesser street children dying of dengue
fever, they have lower growth rates in population
because they are conscious of high costs, they
have lesser petty corruption by lowly-paid
bureaucrats, they have lesser family arguments
arising out of money problems, they have no
brownouts. And their governments treat their
citizens with more respect because they are all
economically empowered, with greater self-esteem
because their teachers are not cleaning toilet
bowls in other countries.
33Wrong economics?
- Have you noticed that the Philippine economists
are descriptive rather than normative or
prescriptive? The government leaders and policy
makers are good in describing how poor the
country is but not in prescribing solutions to
its poverty. I call them descriptive
economists. How much longer should we give them
to correct our economic problems, another 75
years? - If they do have so-called solutions they are
usually bad economics such as subsidies that
affect only 1 of the people, or fraught with
loopholes and susceptible to corruption, and
solutions that beat-around-the bush, that dont
address the lack of purchasing power of the
people and perpetuate the strategy of poverty
(keeping people at low salaries to show the world
the Phils is a low-wage country. - Conclusion The workers in First World countries
have more purchasing power. It is a myth that
Third World countries are cheap. - Policy implications Instead of focusing on
controlling inflation, the government should
focus on raising wages and increasing purchasing
power. But why is the government afraid? Is it
because they are brainwashed that increasing
wages ten-fold will automatically proportionally
increase prices ten-fold?
34Wrong economics?
Note The single most important number for a
college student is his average grade, for the
economy that number is the GDP. As you can see
in the equation below, it is correct economics
to increase the wages because the consumers will
spend and give it back to businesses in less than
30 days, anyway. (Consumption comprises 69 of
the Phil. Economy). Runaway inflation does not
happen because right now, rice and computers are
more expensive in the Phils than in HKG.
35Final Thought
- Finally, forget about purchasing power
affordability ratios, forget about slavery wages
of domestic helpers in the Philippines, forget
about the shortage in Philippine harvest of rice,
forget about Hyperwage Theory . . . - Why is it that Hong Kong, one of the most
expensive places on Earth, and the Philippines,
one of the cheapest nations in the world, have
the same price level of rice today? - Note the HKG prices are from supermarkets while
the Philippine prices are from wet markets.
36-The End-
- Thads Bentulan
- streetstrategist_at_gmail.com