Tuesday, May 17, 2011

Expatriate Cost of Living Bangladesh, Dhaka

Bangladesh can be found in Southern Asia, it is bordered on the west, north and east by India and the southeast by Burma (Myanmar). On the south there is an exceedingly uneven deltaic which is fissured by many rivers and streams which flows into the Bay of Bengal.

The Climate here is tropical with mild winters (October to March); and hot, humid summers (March to June).  Bangladesh has a tropical monsoon climate characterized by high humidity, variations in rainfall and high temperatures (June to October).  Dhaka has a hot, wet and humid tropical climate, with a monsoon season.  Average annual temperatures are logged at 27.5 °C (81.5 °F), monthly means varying between 19.5 °C (67 °F) in January and 32 °C (90 °F) in April.  87% of the annual average rainfall is logged between May to October this measures up to 2,121 millimeters (83.5 in).

Public health and the quality of city life are negatively affected by the increasing air and water pollution caused largely by the traffic congestion and industrial waste.  Coupled with this pollution, is the erosion of the natural habitats which threatens to destroy much of the regional biodiversity.

The Bangladesh terrain is mostly flat alluvial plains and is hilly in the southeast. 

Dhaka is the capital of Bangladesh and the principal city of Dhaka District.

Dhaka consists of tropical vegetation and moist soils, which are flat and close to sea level. This results in Dhaka being susceptible to flooding when the monsoon season arrives owing to heavy rainfall and cyclones, and its’ location on the Eastern banks of the Buriganga River.  The city also lies on the lower reaches of the Ganges Delta. 

Bangladesh is a developing nation despite continuous domestic and international efforts to improve its economic and demographic prospects.  Bangladesh grows a significant amount of rice (chal), tea (Cha) and mustard. Although two-thirds of the population are farmers, more than three quarters of the export earnings come from the garment industry. A large portion of foreign currency earnings is from  remittances sent by expatriates living in other countries.

Dhaka is the commercial heart of Bangladesh.  There are a large number of migrant workers, which results in a large segment of the population being employed as hawkers, peddlers, small shops, rickshaw transport, roadside vendors and stalls.  The textile industry employs approximately 800,000 workers while half of the workforce is employed in household and unorganized labor. Its’ growing middle class population is driving the market for modern consumer and luxury goods. Even with all this work, unemployment remains high at 19%.  

The Cost of Living in Dhaka:

The overall cost of living index, equates it with low cost of living locations. The overall cost of living index is comprised of the prices for defined quantities of the same goods and services across all 13 Basket Groups.  Dhaka is currently ranked 283 overall, most expensive location in the world for expatriates to live, out of 300 international locations.

Comparing the cost of living in Dhaka, Bangladesh basket by basket with , shows that in Dhaka:
·         Alcohol & Tobacco is more expensive
·         Clothing is cheaper
·         Communication is more expensive
·         Education is cheaper
·         Furniture & Appliance is cheaper
·         Grocery is cheaper
·         Healthcare is cheaper
·         Household is cheaper
·         Miscellaneous is cheaper
·         Personal Care is cheaper
·         Recreation and Culture is more expensive
·         Restaurants, Meals Out and Hotel is cheaper
·         Transport is cheaper

The overall weighted cost of living difference between India, Mumbai and Bangladesh, Dhaka is -26.96%.

The Home Location India, Mumbai is ranked as a high degree of hardship location with a hardship premium of 30%
The To Location Bangladesh, Dhaka is ranked as an extreme hardship location with a hardship premium of 40%
The relative difference in hardship premium (i.e. Host Location Premium minus Home Location Premium) is 10%

The following arbitrage exchange rate was used as the basis of the Xpatulator calculation. (This exchange rate is updated quarterly):
1.5510 Bangladeshi Taka (BDT ) to 1 Indian Rupee (INR )
0.6447 Indian Rupee (INR ) to 1 Bangladeshi Taka (BDT )

Applying the cost of living difference based on what will be paid from salary, together with the hardship difference, and arbitrage exchange rate, the Xpatulator calculation is as follows:
* 7,245,300.00
Indian Rupee (INR ) = 100,000 US$
Home/Current location salary
Indian Rupee (INR )
+ Cost of living difference - 26.9624%
Indian Rupee (INR )
+ Hardship Difference 10%
Indian Rupee (INR )
Indian Rupee (INR )
x Exchange Rate 1.5510

Salary in Host/New location
Bangladeshi Taka (BDT )

This means, based on all the above factors, that a person would require a salary of 9,331,315.64 Bangladeshi Taka (BDT ) in Bangladesh, Dhaka to have the same standard of living as currently enjoyed in India, Mumbai on a salary of 7,245,300.00 Indian Rupee (INR ). This salary compensates for the overall cost of living difference of - 26.9624%, the hardship difference of 10%, and the exchange rate.

Steven is Chief Instigator at http://www.xpatulator.com a website that provides cost of living index information and calculates what you need to earn in a different location to compensate for cost of living, hardship, and exchange rate differences. You can use the Salary Purchasing Power Parity (SPPP) calculator to produce a similar report to the example of Baku and Riyadh, using your own locations. The complete cost of living rank for all 300 locations for all 13 baskets is available here

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