These days, the first thing you’re asked in Hong Kong (when you do see people) is, “So, what’re you guys thinking?” That question is underpinned by the certainty that, given the city’s increasingly illogical, fear-inducing and chaotic Covid policies that have left the population on edge, surely you must be contemplating an escape — temporary or permanent.
As the exodus of both expatriates and locals accelerates — nearly 1% of the entire population left in February — and droves more are expected to depart, the responses have become increasingly diverse. Singapore, often thrown out as the obvious next choice, isn’t the only exit plan. Now, they range from Dubai, Portugal, Barcelona, southern Italy and Thailand, to moving closer to home — Australia, the UK, Canada or the US.
For many, it may just be a hiatus if Hong Kong sorts itself out or, at least, allows children back into school without the persistent threat of a poorly managed pandemic response and family separation. But that is a big if: more than two years into the pandemic and the territory is still building box-like quarantine facilities with squat toilets.
For now, everyday life has become all but impossible and it is taking a toll on people’s mental, economic and financial welfare. That means the advantages of a promising adventure have mostly disappeared when weighed up against basic quality of life. In tumultuous times like these, priorities change — dramatically. Individuals and families’ values have come into sharp relief, now that the daily hustle-bustle, office routines and comforts of expat existence are no longer front and center. The cost-benefit calculation of creating a life that affords things that are otherwise taken for granted, like personal freedoms, well-being, and happy and healthy children, is front-of-mind.
Layered on top of that is the calculus of friendly tax regimes and the ability to travel, for work and fun. These days it’s less about an adventure, or even a stellar job opportunity, that will lead people to give up other aspects of life like being close to family and friends, open green space and solid infrastructure. The trade-off is real: Places like Hong Kong and Singapore now actually rank very low on HSBC’s Expat Explorer survey.
Still, it is a difficult decision. Whether it’s the inflexibility or limitations of financial services and regulatory licenses in some countries, access to working visas, or regional roles that only work in relevant time zones, it’s hard to pick up and leave unless companies make it possible for their employees to seek out a new home base. The alternatives: Live apart from your family or find a new job.
That’s why Singapore, long a territory with designs on taking over Hong Kong’s role as regional hub that caters to the world, was typically a reflexive choice. For some senior executives and highly skilled workers, it may still work. But in reality, it isn’t that easy: Employment passes are increasingly difficult to get, for a start. Trailing spouses have found it hard to find work. And expatriates haven’t had the best experience there, particularly through the early part of Covid. To add to all of this, Singapore doesn’t quite have the market maturity and stature of Hong Kong, nor does it have the deep pool of talent, capital and expertise. (Think legal professionals who have made their careers building client bases focused on Chinese tech, deal-making and regulation. Or, equity capital markets and large, publicly listed fee-paying firms.)
As a result, several other options have cropped up. Dubai is showing itself as a friendly expat territory. It’s tax-free, with several visa arrangements, including a recently unveiled remote working visa that allows you to work from the Gulf business hub serving employers elsewhere. Anecdotally, financial firms are moving parts of their operations there, especially asset management businesses with significant pools of capital and low regulatory oversight. The time zone works, straddling Europe and most of Asia. Last month, drinks maker Pernod Ricard asked executives to temporarily relocate outside Hong Kong, with Dubai as an option.
Still, questions around Dubai’s long term viability, deep business connections and blistering temperatures are significant concerns. Regardless, it has lured many over the last year because of its flexibility and ability to maintain commercial relevance by keeping air travel open and its fingers on the global expat pulse.
Other European nations are also topping people’s lists. For those that have spent years in the region, Switzerland and Portugal are increasingly becoming a haven. Portugal offers a non-habitual resident pass where foreign income is tax exempt, along with other benefits for the first 10 years. While the program has been in place for some time, the number of foreign citizens living in the country is at an all-time high. They accounted for 7% of the population last year. Still, these won’t be permanent solutions for all.
Perhaps, in six months, people will return to Hong Kong. But the poor governance that forced people to flee and the fear of living in a place where the Covid death rate is now one of the highest in the world, has all but stripped faith in the city. The worries now are about basic healthcare, family separation and a lack of access to education. That isn’t what a global city luring economic migrants from all over the world looks like. The memory of this will be longstanding. Already, airlines are reconsidering their regional hubs, as are financial services businesses.
For companies and countries trying to lure workers across the economic spectrum as we emerge from the pandemic, the key will be flexibility — in addition to what the pandemic has forced them to come to terms with. The cost of doing business will be even higher if the trained workers they’ve invested in for years start changing their minds. It may serve them well to start planning — before their employees and taxpayers do.
Bloomberg
