Singapore: Expat Staff Moving Out?

Half of expatriates in Singapore have been hit by rental increases of more than 40 per cent. About seven in 10 businesses are ready to relocate their staff out of Singapore. This is if there is no relief from rising operating costs.

A survey conducted by the European Chamber of Commerce, Singapore (EuroCham), was aimed at assessing the extent and severity of the impact of rising costs of rental on business operations in Singapore.

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The findings warned that the situation is “not sustainable”. If business costs do not fall or the Government doesn’t step in to help, then “Singapore will lose its attractiveness to foreign companies which will decide to relocate their offices to neighbouring countries”.

The survey was done in collaboration with 14 European national business groups, the Singapore International Chamber of Commerce, the British Chamber of Commerce Singapore and the Canadian Chamber of Commerce in Singapore. In all, 268 local and international businesses operating in Singapore, which are members of these chambers of commerce, responded to the survey.

The survey found that 50 per cent of employees who have had to renew their residential housing lease in 2023 or in 2022 had faced rental increases of more than 40 per cent. Another 36 per cent found that the hike was between 20 to 40 per cent.

As many as 62 per cent either received less than S$1,500 a month or nothing at all from their companies to offset the rent increase. Beyond economic impact, 97 per cent of the companies surveyed indicated that employees exhibited visible anxiety and psychological distress over rising costs of residential rental in Singapore.

Asked to indicate the most important factors that have led to an increase in operational costs, 22 per cent of respondents cited “increased cost of rental: residential allowance for employees”. General cost increase due to inflation came in a close second at 21 per cent, followed by rising salaries (18 per cent).

On how badly the business has been affected by rising costs of residential rental, more than half, or 53 per cent, gave a rating of four or five on a five-point scale — with five being the most badly affected.

Given the rising costs of operations, 69 per cent of companies indicated they would be ready to relocate their personnel out of Singapore.

One reason that Singapore is expensive is the large number of businesses and people that want to remain in Singapore. But regional cities are catching up in terms of quality of manpower, infrastructure and quality of life.

To remain competitive, Singapore has to maintain a particular niche or competitiveness so that people still want to be in Singapore regardless of these costs. That needs administrative and business skills to turn Singapore into a niche, premium centre for services, manufacturing and commerce. Meanwhile, it is an opportunity for Malaysia to seek out these businesses and relocate them. Will MIDA or MITI do that?

Reference:

Survey: Amid soaring rentals, seven in ten Singapore firms ready to move expat staff overseas, The Malay Mail, 27 March 2023