Singapore’s expensive. Should we relocate overseas?

Disclaimer: This post is sponsored by Allianz Global Investors.

It’s undeniable – in 2023, things are getting pricier for the average Singaporean.

One sure sign?

A cup of coffee cost $1.50 pre-COVID. These days? It can go up to $2.50.

Rental prices are perhaps even scarier – a humble three-room flat that used to cost $1,800 is now $3,000.

Faced with such intense prices, there’s a small but growing trend of Singaporeans looking to move overseas to places where the cost of living is more manageable.

This is known as geoarbitrage – moving to somewhere where the cost of living is lower than your home.

You can think of it as a more intense version of going to Johor Bahru to pump petrol/buy groceries.

Common destinations for Singaporeans include Malaysia, Indonesia, Thailand, or even Taiwan.

Sounds possible? Maybe. Here are our thoughts on geoarbitrage, the pros and cons, and whether or not it’s something you want to work towards.

How to geoarbitrage?

To be absolutely honest, the main factor in this conversation is income.

To geoarbitrage, you’ll need Singapore-level income, whilst living in a cheaper country.

People who can take advantage of geoarbitrage typically fall into three broad categories:

• Remote workers, who generate this income through labour
• Retirees, who have invested capital and get dividends/interest/payouts
• Some hybrid of the two

Let’s examine them briefly.

Remote Workers

Not too long ago during the pandemic, many of us were bona fide remote workers – but in 2023, the situation is different.

Power has returned to the employer, and workers have been commanded to return to the office.

This means to be a remote worker these days, you’ll generally need to be one of the following:

• Highly skilled individuals who have bargaining power over employers
• Entrepreneurs and self-employed folks who set their own working arrangements
• Employees who were remote working before the pandemic as part of a global team
• Solo workers who can work independently of main teams

Another thing that you want to do is to build trust with whoever is paying you. This is key, because if you’re doing a remote job, your competition will be global.

Without trust and a relationship, you’re just another random person online; albeit the most expensive one.

You can build trust by:

• Working in the Singapore office to show that you can work independently with little supervision
• Build a track record of work done remotely (for example, if you were a freelance writer or software engineer)

It should also be said that there is very little chance for some occupations to be done remotely. i.e: If you work in the police force

Retirees (Above 65)

If you’re not going to work, then you should have passive income.

Stories of older Singaporeans retiring overseas isn’t breaking news. For those intrepid enough to move overseas, life can indeed be better in some regard.

About $300,000 in your CPF Retirement Account (RA) can give you CPF LIFE payouts of $1,500-$2,000 per month.

This is a modest amount in Singapore, but more than enough for a cushy life in places such as Johor, Bali, Chiang Mai.

If you’re below 65, you’ll need to rely on other sources of income until CPF LIFE kicks in. In 2023, fixed-income products generally yield between 3-5%.

To generate $2,000 in living expenses, you’ll need about $500,000 – $800,000 in investable funds.

Here’s an exhaustive table of how you might want to do this.

Source	Returns	Based on $200,000	How reliable is this income?	Remarks
Singapore Savings Bonds	1-3%	$2,000 – $6,000	Very reliable	Limit of $200,000
Investment-grade  bonds	2.5-5%	$5,000 – $8,000	Reliable	Company can default
Income Funds	4-5%	$8,000 – $10,000	Reliable	Risk of capital depreciation
Endowment	3-5%	$6,000-$10,000	Reliable	Lock in
Corporate bonds	3-5%	$6,000-$10,000	Reliable	Company can default
REIT-ETF	5-6%	$10,000 – $12,000	Less reliable	Risk of capital depreciation
Dividend stock	4-6%	$8,000-$12,000	Less reliable	Risk of capital depreciation
Renting out of your HDB flat	4-10%	N/A	Less reliable	Not exactly passive income

Do note that the safety and reliability of these income instruments are not created equal.

For example: You can rely on government bonds for a guaranteed payout, but not for the dividends from a company.

If you’re someone who is depending on their investments solely for income, you will want to carefully examine where you put your money. We favour solutions provided by the government, or by reputable fund managers – people we can hold accountable.

(The sponsor of this article, Allianz Global Investors, does provide income solutions that you can check out here).

Hybrid

A hybrid arrangement works for people whose skills cannot command high incomes online, or do not have enough to fully rely on passive income.

For example: $500,000 in investments could reliably generate about $1,666 in income every month, based on a 4% yield.

They could then supplement this income by working – whether remotely, or in-person at their new location. This could range anything from being a virtual assistant, blogger, or even a video editor.

They might also be able to negotiate for remote work in their current role – but perhaps they might need to take a pay cut.

Suppose they could make a modest $750 per month, that would be $750 + $1,666.

Popular destinations + some of our picks

The world’s most, and least, affordable cities are in Asia | The Economist

Thailand

Thailand has long been a favourite destination for people (particularly people from US and Europe) looking to geoarbitrage. You should probably learn to speak Thai though.

Popular cities: Chiang Mai, Phuket, Pattaya, Hua Hin, Koh Samui.

Cost of living for a single person without rent: $748

Relevant Visa: Non-immigrant Visa-O-A (long stay) – extendable after 1 year

Visa-free travel: 30 days, extendable to 60 days

Malaysia

Despite all the jabs we make about each other, Malaysia and Singapore are relatively similar in culture, languages and cuisine. Going back to Singapore is also straightforward.

Popular cities: Johor Bahru, Malacca, Penang, Kota Kinabalu, Kuching, Ipoh, Petaling Jaya

Cost of living for a single person without rent: $640

Relevant Visa: Malaysia My Second Home (MM2H)

Money needed:

• Minimum offshore income of RM 40k/month (~ SGD12,000/month)
• Minimum fixed deposit of RM 1 million/month (~SGD 302k). Allowed to withdraw half the amount for property purchase, healthcare and children’s education
• Proof of minimum liquid assets of RM 1.5 million (~SGD 450k)

Visa-free travel: 30 days

Indonesia

Bali has long been expats’ go-to retirement destination, but it has become a victim of its own success; things can get pretty pricey. If you’re looking at Indonesia, and are on a budget, you might want to look somewhere else.

Popular cities: Bali, but also Bandung, Yogyakarta, Tanjung Pinang (Batam), Medan, Padang.

Cost of living for a single person without rent: $603.60

Relevant Visa: Second Home Visa

Money needed:

• Proof of savings: at least USD $1.5k/month (~ SGD 2k/month) for daily expenses
• Proof of purchased property value of at least USD $35k (~ SGD 46k) or rented accommodation of at least USD $500 (~$662) for popular areas like Bali

Visa-free travel: 30 days

Vietnam

In the last decade, Vietnam is quickly emerging as a retirement destination. Many find the people friendly, things affordable, and weather appealing.

Popular cities: Hanoi, Hoi An, Nha Trang, Da Nang.

Cost of living for a single person without rent: $640.90

Relevant Visa: No retirement visa available. Alternatives are the Investor Visa (DT Visa, 1 year) or the Tourist Visa

Money needed:

• You can get a DT4 Visa for a 1-year stay if you contribute up to VND 3 billion (~SGD 169k) to the Vietnam economy. You will need to be an owner, capital-contributing shareholder or representative of a company looking to expand into Vietnam.

Visa-free travel: 30 days

Taiwan

If you can avoid major economic centres such as Taipei and Hsinchu, Taiwan can be surprisingly affordable. For many Singaporeans, the cuisine, nature and weather are a huge draw.

Suggested destinations: Taichung, Yilan, Chiayi, Kaohsiung, Taitung

Cost of living for a single person without rent: $1015.70

Relevant Visa: No retirement visa available

Visa-free travel: 30 days

Japan, Australia, New Zealand

These are not classic geoarbitrage countries, but for those who have higher budgets, they could be affordable – if you avoid major cities like Sydney, Melbourne, Tokyo, Osaka, Auckland, etc.

They also have long allowances for visa-free travel; you can fly in every three months or so.

Country	Cost of living (Single person, without rent)	Relevant visa	Visa-free travel
Japan	$1229.60	Japan Work Visa. No retirement visa available	90 days
Australia	$1,402.10	Investor Visa and Retirement Visa, but not available at the moment	Visa required, 90 days per trip
New Zealand	$1,314.50	Temporary Retirement Visitor Visa, requires NZD $750k to invest in New Zealand	90 days

What other factors should I consider?

As a personal finance page, our first consideration naturally will be cost.

As a general guideline, the more economic opportunities there are in a city, the more expensive it will be.

Hence, Chiang Mai will be cheaper than Bangkok; Same as Taiping vs Kuala Lumpur, Hualien vs Taipei.

Of course, cost should be just one of many considerations. Some of those we’d consider:

Travel time to Singapore: Plans can change, and there’s no place like home. The closer to Singapore, the better. The good news is that there are direct flights from Changi Airport to many Southeast Asian cities.

Safety: Few cities will be as safe as Singapore, but it’s also absurd to expect Singapore-level safety if you’re moving out of Singapore. We’d avoid major cities with plenty of crime.

Language and culture: Humans are social creatures, so you’ll have to make friends to fit in. If you don’t speak the language, or can’t integrate into the culture, it’s going to be difficult.

Convenience and amenities: Not everywhere will be as convenient as Singapore, but most major Southeast Asian cities are convenient enough, especially if you have spending power. Rural towns might be different.

VISA requirements: Unless you’re thinking of doing Visa Runs every 30 days, you will have to see whether you qualify for a longer-stay visa. This differs for every country.

Property: If you’re not in the country for long, it’s often a smarter idea to rent a place. However, if you do intend to buy a place, then do note that many Southeast Asian countries have restrictions on foreign ownership.

A final note about geoarbitrage

Is Singapore getting more and more expensive? Absolutely.

Is it the only place getting more expensive? Absolutely not.

With this context, I think it’s important to realise two things:

A large part of why we can take advantage of geoarbitrage is because we’re coming from Singapore.

Many foreigners move to Singapore to earn higher salaries and improve their career prospects. The same reasons that make Singapore a good place to live and work, also make it expensive.

Other people elsewhere are struggling as well.

The entire world is facing a cost-of-living crisis; it is very likely the locals in the geoarbitrage countries are also finding things pricier. Keep this in mind, and be sensitive and respectful when you go overseas. You are the ‘rich foreigner’ there.

Our take? Singapore is one of the world’s most connected cities. We have one of the world’s strongest passports. One of the highest when it comes to purchasing power.

To be enslaved to the idea of working, living and retiring ONLY in Singapore is to limit yourself and the life you might lead.

As the saying goes: The frog in the well knows nothing of the sea.

Stay woke, salaryman

A message from our sponsor, Allianz Global Investors

In an increasingly globalised world, we have more options when it comes to where and when we want to live and retire.

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DISCLAIMER: The article is not issued by Allianz Global Investors Singapore Limited.