By | Miles Gooseman | Financial Consultant – The Fry Group Singapore, Independent Financial Advisor, Tax Planning, Co-Chair (BCCS)
While Singapore has long served as the perfect relocation gig for expats for many reasons, it has been observed that their numbers have started to dwindle. Here’s a look at the top three reasons why, and if you’re looking to relocate here, what you need to know about the ‘Lion City’.
Prime position, premium prices
Beyond being well placed among other countries and providing quick weekend getaways for those with wanderlust, it’s important to consider Singapore’s position in the global economy as well. As a place for relocation, most Western expats will not require to learn another language, as English is spoken here. Safety is not a concern, making it family-friendly (although some may gripe that it’s too regulated), and corruption is definitely not a problem when it comes to setting up shop. The city-state ranks as one of the richest countries in the world in terms of per capita income, and represents a key global financial centre.
Singapore draws in 15 million international visitors per year, and is considered an attractive investment in Asia, especially for US companies. For those looking to move to Singapore – for example international investors, corporations, expats and buyers – the business landscape is unparalleled.
But premium comes at a price. It is no surprise then that Singapore has earned the dubious honour of being the “world’s most expensive city for expatriates” for a fourth straight year, according to the Economist Intelligence Unit’s (EIU) latest league table. Naturally, this has resulted in businesses thinking twice about sending talent to be based here, as opposed to her neighbouring countries such as Thailand, Vietnam and China.
Another reason for the reduced influx of expats is the increasingly tight work visa restrictions:
- For those wishing to work in Singapore, you must first find employment from abroad and must not enter Singapore to seek work.
- Employers must pay a foreign worker levy each month they employ someone from abroad, and can only take on staff from abroad under the quota levels for that type of work visa.
- Employers must prove that they first considered local employees fairly for jobs, based on merit, as laid out by the Singapore Ministry of Manpower (MOM)
The above combined has led to a decrease in expat contracts as they are viewed as becoming more politically contentious. An eFinancialCareers survey conducted in 2014, found that 55% of Singaporeans believe that foreigners are receiving preferential treatment in the workplace, while 62% of Singaporean financial services professionals think that expat packages cause “friction in the office.” Fast forward to 2017, and little has changed, despite the Singapore government’s reaction to growing public concern about expats by tightening its work-permit procedures.
When coupled with the fact that the local economy has somewhat slowed down while overseas economies have since improved, it’s no surprise that many expats (one out of every 10) have left Singapore’s shores for their homeland.
Big things do not come in smaller packages
Given the above, MNCs and other organizations that send employees to Singapore have revised their ‘expat package’. The beginning of the end for expat packages was originally triggered by cost controls brought in by financial institutions during the 2008 global financial crisis. But other factors have contributed to their demise.
Previously, employers in multinational groups offered generous salary and compensation packages that included several perks such as:
- housing in prime locations
- schooling for children (if any)
- leisure packages in the form of gym, golf and country club memberships
- transportation with return air fares for the entire family
- full coverage of moving-in costs, such as international shipping of furniture and other household goods from home i.e. relocation package.
Today, while employers still provide a cost of living allowance in addition to the salary package in order to mitigate the high cost of living, and allow employees to maintain a certain degree of spending power, expats may still feel as though they’re getting ‘less for more’. This is especially so when placed in comparison to other famously expensive countries like Hong Kong and Switzerland, where it’s believed that expats can earn more.
Evolution of Expats
These factors have led to a completely different environment for expats in Singapore today. Where previously large multinational groups offered the full perks and lavish pre-2008 to all employees moving here, it is now mainly reserved to a small number of C-suite seniors. Another cost cutting measure is to send a new breed of Western-educated Asian managers overseas, who come on the scene with the distinct advantage of bringing a better and blended cultural fluency, and at a lower cost as compared to their Western counterparts.
According to the founder of Expat Research, Dr Yvonne McNulty, there are two main types of expats in Singapore: those in the country on local terms, and foreigners there on ‘expatriate contracts’. The former tend to earn the required $3,300 per month to qualify for a foreign professional’s Employment Pass (EP), whereas the latter have more perks and areas covered, from accommodation to car allowances.
While the case currently seems strong for some to vote against relocation to Singapore, the fact that Singapore is a vibrant city whose strict laws provide a good quality of life, security for business and all-round safety, remains. Plus, the exodus of expats has also led to a decrease in rent by about 20% in the past year, particularly in coveted areas such as Sentosa, making one cost much cheaper. Regardless if you’re choosing to move to or leave Singapore, your main concern should be securing your financial future; having a stable plan for your finances is a must. As a Financial Consultant at the Fry Group, I have a lot of experience in advising expats on how to plan their finances and make the most of their money – whether they’re living abroad, thinking of moving back, or are somewhere in between. As an expat myself, I understand your needs and concerns.
Please feel free to get in touch via email email@example.com, or connect with me on LinkedIn if you need any advice.