Expat drift from Singapore continues to gather speed
A desire to leave the city state continues to grow among Singapore’s expats, according to a Financial Times report in July. We’ve reported on this before, and it continues to be an issue. ‘Jabs, jobs and travel restrictions’ are the reasons behind the discontent, the paper says. Some expats were ‘locked out’ of Singapore when Covid-19 closed the country down. Fears over employment, in particular, are driving expats to return to their home nations, or to other economic hubs, such as Dubai. Expats have also found themselves at the end of the vaccination queue, with vaccines opening up to non-Singaporeans only recently.
We have also reported previously on initiatives to increase local hires, a position which has been lent traction by Covid-19. 90% of Singapore’s Covid-19 load was experienced by migrant workers in areas such as construction, and then Manpower Minister Josephine Teo called, in March, for efforts to ‘strengthen the Singaporean core.’ The qualifying threshold for employment passes has now been raised twice, and expats have begun looking elsewhere.
Mercer’s new city rankings are released
In late June, Mercer released its latest ranking for 209 of the world’s cities, revealing the world’s most expensive cities for expats. Ashgabat in Turkmenistan comes top of the list, knocking Hong Kong into second position. It is true that the Turkmen city, which has been experiencing serious financial problems, such as hyperinflation, is a bit of an outlier, since Mercer’s top ten mainly features big financial hubs, such as Tokyo (fourth), Zurich (fifth) and Singapore (seventh). Beirut rose up the rankings this year to the world’s third most expensive city.
Mercer’s Northeast International Mobility Leader, Vince Cordova, says that the change in rankings is a reflection of changing business practices over the course of the pandemic. International remote hires, for instance, have become more commonplace, in lieu of bringing expats into countries. He adds that China has also been the only economy to see substantial growth in 2020, which has driven some of its cities up the list: Beijing comes in at number nine and Shanghai at number seven. However, Cordova is predicting a ‘comeback’ in the US dollar, which might change the face of the Mercer rankings in 2022.
Seasoned expat bankers say that Singapore still looks a more attractive bet than Hong Kong at the moment, due to lower accommodation and education costs, but as we’ve reported above, Singapore is seeing an exodus of expats due to other factors. Also, Hong Kong has seen a 55% growth in financial activity over the last five years, meaning that it’s still not an unappealing proposition for banking firms, for example.
Markets bounce back and younger investors do well
The UK press reports that the FTSE World index produced a 26.2% return in the last 18 months, showing that markets have bounced back from the Covid-19-related crash. Interactive Investor, which runs a DIY trading platform, reveals that younger investors have done better than their older peers over lockdown – a 15.3% return for those in the 25 to 34 age bracket, as opposed to a 7% return across the over 65s. Younger investors have tended to invest in trusts rather than individual stocks and shares, and favour tech stocks, such as Zoom, Amazon and Tesla, rather than more traditional offerings, such as Lloyds.
Younger investors have, however, had a heads-up from the Financial Services Authority over phenomena such as bitcoin trading, which can be hazardous. Risky assets are perhaps to be avoided among the inexperienced, but younger traders tend to be conservative in their choice of trusts, such as the Scottish Mortgage Trust and Vanguard. Interactive Investor’s CEO says that some of the cliches about gung-ho younger investors might need revisiting!
Tax doubles up for Australian expats
Australian expats who returned home (in the understandable belief that lockdown might prove short lived) are now finding themselves facing a double tax whammy due to their inadvertent elongation of their residency. International tax advisers Baker Tilly say that the ramifications of Australia’s draconian Covid-19 policy could be ‘dramatically complicated.’ Their spokeswoman says:
“…many of our clients are now questioning whether they may have inadvertently created a permanent establishment for their entity and dragged it into the Australian tax net by adhering to that advice and by themselves being physically present in Australia. This is a fluid situation. We haven’t had the time or opportunity to plan as we would normally do; we now have to consider residency status on a more frequent basis due to new time constraints.”
Many expats have been unable to afford property costs at home and in their host nation, and have been forced to let tenancies abroad go, making them resident officially and solely in Australia. This has coincided with Australia’s recent tax reforms, which have explicitly brought the question of residence (the ‘183 day test’) into play. Baker Tilly describe all this as ‘tax’s version of long Covid’ and say that the implications of all this will, sadly, be with returnee Australian expats for some time to come.
Hope for amelioration of Chinese tax regulations
Meanwhile, tax is also on the mind of Western businesses in China, who are hoping that the country’s financial authorities will relax some of the tax regulations in an effort to prevent an expat exodus from the nation.
China has been in the news over the past year, first with bad press over Covid-19 and then with increasing unease over the plight of the Uighur people and the Belt and Road project, which has seen representatives of the Communist Party buying up assets, which range from the leases of entire ports, such as Darwin and Piraeus, to minor English public schools. China has, previously, attracted foreign companies due to its tax breaks, but some of these were reduced some years ago, rendering the nation a little less attractive.
American Chamber of Commerce in Shanghai President Ker Gibbs has called for offsetting measures to high taxation, such as income tax, if China wants to retain its foreign capital – and its expat residents.