Expat bankers fleeing Hong Kong see no easy escape to Singapore
Fri, 22 April 2022, 10:08 am·8-min read
Expat bankers fleeing Hong Kong see no easy escape to Singapore. (PHOTO: ROSLAN RAHMAN/AFP via Getty Images)
By Ambereen Choudhury, David Ramli and Faris Mokhtar
(Bloomberg) —Singapore should be the obvious winner from the gradual demise of Hong Kong as Asia’s top finance hub. It’s not quite working out that way so far.
Stricter visa requirements, hiring restrictions and other bureaucratic road blocks mean that the influx of bankers into Singapore from Hong Kong in recent months has been more of a trickle than a flood.
There are plenty of examples, though most firms are loath to talk about them publicly. One European bank is classifying its office in the Marina Bay financial district as the backup center for Hong Kong to make it easier to move staff. Another senior executive at a global firm said he’s feeling pressure to hire more local talent. Atlantic Partners Asia Capital, a money manager, is having second thoughts after shifting its head office to Singapore from Hong Kong.
“It’s harder to get people approved these days and this ‘hire local’ push is a real thing,” said Stephen Diggle, a former hedge fund manager who has lived in Singapore for two decades and now runs a family office. “You can’t bring 40 people here because they wouldn’t get work permits.”
Singapore’s restrictions are forcing some firms to look further afield to move workers as rigid Covid-19 rules and the increasing influence of China lessens Hong Kong’s appeal for global finance. Some are returning to London or Sydney, while others are shifting to Dubai, drawn by the low-tax welcome mat.
Right Time
This ought to be Singapore’s time to shine. A four-hour flight south and on the same time zone as its larger competitor, Singapore has long jockeyed with Hong Kong to be Asia’s pre-eminent finance hub. The city offers many of the same perks that Hong Kong’s well-heeled expatriates are used to — a tropical climate, good schools, low taxes, and easy connections to the rest of Asia.Read more on the debate over expats
Yet Singapore has been tightening up on foreign talent just as the exodus of financial professionals from the Chinese territory gathers pace, responding to voters’ concerns that foreigners are taking the best jobs.
Following its worst parliamentary showing since independence in the 2020 elections, the ruling party is looking to balance the country’s aspirations as a global business hub with a drive to ensure locals get more of the high-paying work.
Authorities recently introduced a series of dramatic changes in visa requirements for highly skilled foreigners, raising the minimum salary threshold and introducing a points system similar to the U.K. and Canada.
Under new rules announced last month, points will be awarded based on how the applicant’s nationality contributes to the diversity of their firm, in addition to education, skills and compensation. The state will also grant points if the company hires more local staff, part of an overhaul that goes into effect next year.
Expat Salaries
In February, Singapore raised the minimum expat salary threshold for the second time in two years to encourage firms to hire more locals. Companies are expected to develop a “Singaporean Core” of talent, and groom Singaporeans for leadership ranks. As recently as 2020, there were 1,200 companies on a watch list for a range of concerns, including having foreign workers make up more than half their workforce.The country is also making it harder for rich foreigners to create family offices, raising the minimum bar for local assets under management and other conditions to get key tax concessions. In addition, dependents of foreign workers now need a company-sponsored visa to work in Singapore, removing a popular outlet for spouses of visa holders to find part-time jobs.
The moves appear to be having an impact: The number of visas issued to foreign professionals, managers and executives fell last year to 161,700 — the fewest since at least 2010 as the tighter restrictions and the pandemic took their toll.
“If one wants to be a global hub, that means you need to attract the best and hence visas cannot be an issue,” said Tom Kirchmaier, professor at the Centre of Economic Performance at the London School of Economics.
The changing environment is prompting Atlantic Partners to rethink its decision to shift its head office to Singapore from Hong Kong, according to managing director Arv Sreedhar, who is weighing whether to return to the city-state after he builds out the firm’s European business.
“People with families who are a bit advanced in their careers are thinking, ‘what am I doing here?’ Why am I in a place which is unfriendly and unwelcoming?’” said Sreedhar, whose firm runs about US$2 billion. “It should have been the other way around,” he said. “Singapore could have attracted all the talent from Hong Kong.”
Other companies are seeking workarounds. One executive at a European bank said his firm applied for short-term visas to move some employees from Hong Kong because they faced difficulty getting permits for longer stretches.
Some international banks and professional services firms have expressed frustration over the pressure to hire local staff at the junior level, where it can be hard to find appropriate skills, people familiar with the matter said. That’s been exacerbated by a labor shortage, which has dropped Singapore’s jobless rate to just 2.4%, less than half Hong Kong’s level.
Singapore officials insist the country is seeking to attract top-notch foreign workers under the new points system. Yet it wants to boost local employment at the same time.
“Singapore will remain open and welcoming — we must,” Lawrence Wong, who was tapped last week as the presumptive next prime minister told Parliament in September. “But those who do business here must also recognize the value of our workforce and abide by our rules.”
Speaking at the opening of vacuum-maker Dyson Ltd.’s new headquarters last month, current Prime Minister Lee Hsien Loong acknowledged that being an open hub can be challenging.
“It is not easy to sustain this, particularly in an environment where there is every temptation, especially politically, to turn inwards and raise barriers,” Lee said. “But if we succumb to the temptation to close our doors, we will surely end up hurting ourselves.”
In a response to questions from Bloomberg News, the Ministry of Manpower said that if some firms or permit-holders found it more difficult in the past year to fill job vacancies or to enter Singapore, it was due to COVID-19 border restrictions.
“It would not have had anything to do with Singapore’s fundamental stance of being an open global cosmopolitan city that welcomes global talent,” according to the statement.
The ministry noted that non-resident employment increased in the fourth quarter of 2021 for the first time in two years, and they expect those workforce numbers to recover further this year.
Pandemic Response
Still, Singapore’s pandemic response has also rankled some foreigners. Although the measures haven’t been nearly as strict as Hong Kong’s, travel and quarantine rules only started to ease in October, long after cities like London and New York. For many, the easing was too little, too late.Mark Mobius, co-founder of Mobius Capital Partners, poses for a photograph following a Bloomberg Television interview in London, U.K., on Wednesday, May 15, 2019. The emerging-market benchmark index will probably keep falling if the trade war persists, given China's significant weighting, Mobius said during the interview.
Veteran emerging markets investor Mark Mobius moved his base to Dubai from Singapore after being “quite disappointed” with the way the Asian nation handled the pandemic.
“Hong Kong is going downhill unfortunately and they’re losing their status as a financial center; Singapore, of course, has been harmed by what happened with Covid,” he said in an interview last month before Singapore took further steps to ease restrictions. “Dubai is beginning to take its place and probably will surpass those two in the next 10 years.”
To be sure, financial firms have started to move staff to Singapore, though the numbers are small for now. Citigroup Inc. shifted half a dozen equities bankers to Singapore and other markets. Wells Fargo & Co., which has reduced its workforce in Hong Kong, is building up in Singapore. Societe Generale SA is temporarily relocating at least a dozen traders from Hong Kong, people familiar with the moves said in March.
In a recent call with investors, Credit Suisse Group AG Chief Executive Officer Thomas Gottstein said the Swiss bank plans to invest more in Singapore and has relocated some teams from Hong Kong.
“Money’s still going to come to Singapore because the Hong Kong situation is quite dire, so Singapore will accidentally benefit,” said Sreedhar at Atlantic. “I don’t think you give Singapore credit for that, you give Hong Kong credit.”
There are other signs that Singapore is slowly gaining ground on its northern rival, even as Hong Kong begins to ease some of its pandemic measures. Inquiries from expats at international schools have risen, while housing prices remain stable even as they tumble in Hong Kong.
Singapore’s growth in bank deposits averaged 7.3% between 2019 and 2021, about double the pace in the previous three years, in part reflecting foreign inflows. Growth in Hong Kong over the same period roughly halved to about 4.3%, according to Bloomberg Economics.
Diggle predicts it’s only a matter of time before Hong Kong cedes its role to Singapore, as the national security law takes hold and Covid restrictions affect travel and living conditions in the Chinese territory.
“This place has got everything - low taxes, it’s already got infrastructure, rule of law,” said Diggle. “Singapore will get the prize and we didn’t even fight for it - we just had to outlast Hong Kong.”
—With assistance from Nicolas Parasie and Joyce Koh.
