ASEAN KEY DESTINATIONS
Singapore offers some of the most generous expatriate salary and benefits packages in Asia Pacific
*When tax is factored in, Singapore falls to ninth in Asia Pacific’s overall most expensive locations for expat packages
*Cost of expatriate packages in Singapore lowest in five years in USD terms – widening the gap with Hong Kong
* Malaysia offers the lowest total expatriate packages for Middle Managers in the region
Singapore – 17 May, 2017 - Companies sending their expatriates to Singapore offer some of the most generous expatriate salary and benefits packages in Asia Pacific, with the total cost to companies falling over five years in USD terms. This was one of the findings of the latest MyExpatriate Market Pay survey published annually by ECA International, the world's leading provider of knowledge, information and software for the management and assignment of employees around the world.
When considering the cost of an expatriate package companies need to factor in three main elements: the cash salary, benefits – such as accommodation, international schools, utilities or cars – and tax. To assist companies relocating staff with benchmarking their packages against the market, ECA conducts its annual MyExpatriate Market Pay Survey of pay levels for expatriates around the world, including benefits, allowances, salary calculation methods and tax treatment.
The value of a typical expatriate package for Middle Managers in Singapore is now SGD 316 600 (USD 235 500). The total cost of expatriate pay packages in Singapore for Middle Managers has fallen to a five-year low in USD terms. However, Singapore still offers some of the highest expatriate salary and benefits packages in the region, with some of the lowest tax rates.
“Singapore is a very attractive proposition for both companies and expatriates alike. Companies sending expats here offer some of the most generous salary and benefits packages in the region, sitting in the top three for both elements in the Asia Pacific rankings,” said Lee Quane, Regional director – Asia, ECA International. “However, when tax is factored in, Singapore falls down to ninth in the Asia Pacific’s overall most expensive locations as it has one of the lowest personal tax rates in the world. This ensures that Singapore remains one of the cheaper locations for companies to send their expats to in the region - behind Japan, Hong Kong and China.”
The value of a typical expatriate package for Middle Managers in Hong Kong is around SGD 356 800 (USD 265 500), with the total cost of expatriate pay packages in Hong Kong remaining the fourth highest in the region.
Over the past five years, the gap has widened between Singapore and Hong Kong for the total cost of an expatriate package offered to Middle Managers. In USD terms, the total cost of Singapore’s expatriate packages has fallen by six per cent over this period, compared to Hong Kong’s decline of just two per cent due to the relative strength of the Hong Kong dollar.
“In local currency terms, although expatriate salaries continue to rise in Singapore, reaching the highest levels since our survey began, the cost of the benefits element has significantly declined. This has meant that the total cost of an expatriate package for companies in Singapore has fallen over the past few years in local and USD terms,” mentioned Quane.
The most expensive part of the expatriate package in Singapore is typically the benefits element, to the extent that the benefits components are often more expensive than the assignee's net take-home pay.
“Even though international school fees have risen in Singapore, the overall cost of benefits packages have fallen in USD terms by 10 per cent over a five-year period due to expatriate accommodation rental prices declining,” explained Quane.
Japan is home to Asia's most expensive expatriate packages. On average, a package for an expatriate Middle Manager there is worth SGD 493 900 (USD 367 500). The total package has risen by a significant amount from last year’s total, by around 12 per cent, with the yen strengthening against the US dollar in the survey period.
Malaysia continues to offer the region’s lowest total expatriate pay packages – with packages falling by 13 per cent in USD terms since 2012, falling behind Sri Lanka and Pakistan in the process. The average cost of a total expatriate package in Malaysia now lies at just under SGD 225 900 (USD 168 000).
A total package for an expatriate Middle Manager in China is worth around SGD 379 800 (USD 282 500) on average.
“Expatriate packages in China have declined in USD terms from last year’s totals due to the yuan weakening against the dollar over this period. China remains attractive for foreign companies sending expatriates here as although costs are rising in local currency they have fallen in USD terms over the past 12 months,” stated Quane.
The significance of high tax rates on the total cost of expatriate packages
India’s tax element has the opposite bearing to Singapore’s, with high tax making it less appealing to foreign companies. This can considerably increase assignment costs, as is the case with India, where nearly half of the total expatriate package is consumed by tax. India has the third highest total expatriate pay packages in the region, at SGD 373 500 (USD 277 900). When tax is excluded, India falls out of the regional top 10 locations.
When choosing an expatriate pay approach, companies need to be clear about the reasons behind the assignment so that their choice reinforces this. This can help organisations to decide whether they wish to create equity among home or host country peers – something that has become even more complex as companies manage increasingly diverse nationalities in and out of different markets. This will also need to be balanced against benefits and costs to the business.
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