New EP Point Based System 2023 onwards. Thoughts?

[nelyanne]

It normally does not make economic sense for an EP holder to stay here long-term without financial support. Even many locals are unable to afford living here without financial support from their parents initially and the government via HDB eventually.

At my employer, hiring an EP locally almost never happens anymore. The vast majority of EP holders are brought in from overseas offices and given some sort of expat package. In the rare instances where we hire an EP locally, it is usually a trailing spouse who came on a DP, and their EP holding spouse already has support.

I think this reduction in locally hired EP holders is at least partly driven by other key policy changes. The ABSD policies signal that EP holders are expected to rent rather than buy. The local school fee policies and availability of seats signal that EP holders are expected to put their kids in International School.

Just because it might not make sense to stay here on EP for a long term, it does not mean that people will completely stop coming. It's still possible to come and enjoy the stay, without a plan to settle for good.
Hiring local EPs is nothing uncommon, it happens all the time. But maybe not so much in MNCs.

[malcontent]

It normally does not make economic sense for an EP holder to stay here long-term without financial support. Even many locals are unable to afford living here without financial support from their parents initially and the government via HDB eventually.

At my employer, hiring an EP locally almost never happens anymore. The vast majority of EP holders are brought in from overseas offices and given some sort of expat package. In the rare instances where we hire an EP locally, it is usually a trailing spouse who came on a DP, and their EP holding spouse already has support.

I think this reduction in locally hired EP holders is at least partly driven by other key policy changes. The ABSD policies signal that EP holders are expected to rent rather than buy. The local school fee policies and availability of seats signal that EP holders are expected to put their kids in International School.

Just because it might not make sense to stay here on EP for a long term, it does not mean that people will completely stop coming. It's still possible to come and enjoy the stay, without a plan to settle for good.
Hiring local EPs is nothing uncommon, it happens all the time. But maybe not so much in MNCs.

You are right — I only know what I see happening at my employer, which is a major MNC. However, it is worth noting that we used to hire many local EP holders back in the 2000’s. So much so that we had a special quasi-expat program for them (I even tried to get on it myself, but to no avail).

I have to believe that today, any locally hired EP holders are going to be actively trying to convert to PR and pursue the SC path, or else they would be looking for greener pastures outside SG.

[malcontent]

Heres another consideration, Assume job holder makes it through all the hoops mom throw at them and they land a job of 10k
4500 is just the rental for a 2 bed condo these days
Another 4000 grand in living expense assuming a family of 2 or 3 considering inflation, eating out,etc
The balance savings is 1500, hardly worth the effort to move here. I could be wrong but idk just throwing out povs for discussion

Maybe the same job can be done by a single person, who can rent a smaller apartment for 3k, and doesn't have school fees to pay. Then, this person can still enjoy a happy life for 10k. Lack of expat packages is giving an advantage to single people and childless couples where both persons can work. That's what I've seen in my previous company. Most of the people transferred to Singapore had no kids. Some people decided to come back to home country after they became parents.

This is actually a really good point. When I first moved here I was unmarried, and my first job only paid S$2.3k and I rented a room in an HDB for $450/mo, and I could still save a good % of my salary.

[Wd40]

This is actually a really good point. When I first moved here I was unmarried, and my first job only paid S$2.3k and I rented a room in an HDB for $450/mo, and I could still save a good % of my salary.

I am married, single income wife is home maker and my daughter goes to International School. Yet, I have managed to save like 50% of my salary throughout my 13 years stay here.

I just reorganized my networth tracker this weekend and here are some interesting stats:

I saved 852k SGD over these years since Jan 2010, cumulative from my salary, prior to that my networth was 87K and I came to SG in Jun 2009. Then the return on investment from my most adhoc poorly managed investments over these years is cumulative 342k.

So 87K+852k+342k = 1281K. This is what I have achieved by staying in Singapore on an EP for 13 years Worth it or not?

[rajagainstthemachine]

Heres another consideration, Assume job holder makes it through all the hoops mom throw at them and they land a job of 10k
4500 is just the rental for a 2 bed condo these days
Another 4000 grand in living expense assuming a family of 2 or 3 considering inflation, eating out,etc
The balance savings is 1500, hardly worth the effort to move here. I could be wrong but idk just throwing out povs for discussion

The 10k of today is the 6k of 10 years ago. Nobody said you are entitled to a 2 bed condo and a great lifestyle and then great savings too for the salary of 10k. So if you need to save, suck it up and put yourself up in a HDB. Thats what I have been doing. My salary is 10k and then bonus and exployer pension another 2k. So 12k monthly. I spend 2.3k on a 3 bedder HDB, 1k for daughter's school and yet my monthly expense is less than 6k and I save 6k.

I am sure rents will go up next renewal but so will our salaries. I was saving 3k out of 6k 10 years ago and now I am saving 6k out of 12k.

This is just normal inflation jump conditions it works in SG. Rents remain stable for a long time and then suddenly jump. People who have been here very long, like SMS and Malcontent, will know this. In around 2005-06 condos used to rent for 1.5k whole condos! HDBs were not even available for foreigners to rent. Then they suddenly shot up and I know when I came here in 2009, the old timers were complaining how everything is more expensive. But hey, thats how it works. The lower people in the expat value chain get pushed out and higher people move in.

If you see Hong Kong, it is already much more expensive than Singapore and there is no reason why Singapore should lag behind.

Also it is not like rentals are going up only here. They are going up everywhere. We have just had a pandemic and insane amount of money printing and now crazy inflation in most countries, in the US and Europe close to double digits. Europe is not going to have gas for their winter heating! The whole world is in a major crisis.

So hold on there, this will eventually get solved, like it always does. Salaries will go up along with inflation and we will find an equilibrium and then rents will again be stable for a long time.

Agreed you could live a life of stinginess and frugality and downshift to an hdb, thats definitely an option, however i Would then question the logic of moving to singapore if thats the life that said expat is expecting? If not
disappointment sets in
The 2.3K hdb is now 2.9 to 3K btw

[Wd40]

Agreed you could live a life of stinginess and frugality and downshift to an hdb, thats definitely an option, however i Would then question the logic of moving to singapore if thats the life that said expat is expecting? If not
disappointment sets in
The 2.3K hdb is now 2.9 to 3K btw

Maybe that is the whole point the said expat came to Singapore in the 1st place, the place they came from wasnt any better, if anything the quality of life in Singapore even with HDB and public transport is way better than in a 3rd world country. The icing on the cake is the said expat can retire 15 years earlier, and then chill at a beach town, what is not to like?

[malcontent]

I am married, single income wife is home maker and my daughter goes to International School. Yet, I have managed to save like 50% of my salary throughout my 13 years stay here.

50% savings on a single earner household with a kid in international school is really good.

I used to save 50%, but since we’ve owned a home, I’ve had to treat principle portion of our mortgage as savings.

[smoulder]

This is actually a really good point. When I first moved here I was unmarried, and my first job only paid S$2.3k and I rented a room in an HDB for $450/mo, and I could still save a good % of my salary.

I am married, single income wife is home maker and my daughter goes to International School. Yet, I have managed to save like 50% of my salary throughout my 13 years stay here.

I just reorganized my networth tracker this weekend and here are some interesting stats:

I saved 852k SGD over these years since Jan 2010, cumulative from my salary, prior to that my networth was 87K and I came to SG in Jun 2009. Then the return on investment from my most adhoc poorly managed investments over these years is cumulative 342k.

So 87K+852k+342k = 1281K. This is what I have achieved by staying in Singapore on an EP for 13 years Worth it or not?

Not sure if you have already posted it, what kind of investments have you put your money into over the years?

[Wd40]

This is actually a really good point. When I first moved here I was unmarried, and my first job only paid S$2.3k and I rented a room in an HDB for $450/mo, and I could still save a good % of my salary.

I am married, single income wife is home maker and my daughter goes to International School. Yet, I have managed to save like 50% of my salary throughout my 13 years stay here.

I just reorganized my networth tracker this weekend and here are some interesting stats:

I saved 852k SGD over these years since Jan 2010, cumulative from my salary, prior to that my networth was 87K and I came to SG in Jun 2009. Then the return on investment from my most adhoc poorly managed investments over these years is cumulative 342k.

So 87K+852k+342k = 1281K. This is what I have achieved by staying in Singapore on an EP for 13 years Worth it or not?

Not sure if you have already posted it, what kind of investments have you put your money into over the years?

I was very naive and thought the stock markets are overvalued so missed out on most of the rally in the last decade. My investments have been in India fixed deposits. It is only in the last couple of years, I have started investing in the global stock index funds and now I have a 60/40 ratio. Since I didn't get PR, I was vary of keeping money in SG, and I used to think India interest rates are higher and economic growth is faster so even if the FX depreciates I will make better returns than keeping in SG fixed income.

So that's why my CAGR is probably lower than 2%. I did well in savings but I did poorly in investing.

[malcontent]

I was very naive and thought the stock markets are overvalued so missed out on most of the rally in the last decade. My investments have been in India fixed deposits. It is only in the last couple of years, I have started investing in the global stock index funds and now I have a 60/40 ratio. Since I didn't get PR, I was vary of keeping money in SG, and I used to think India interest rates are higher and economic growth is faster so even if the FX depreciates I will make better returns than keeping in SG fixed income.

So that's why my CAGR is probably lower than 2%. I did well in savings but I did poorly in investing.

Sorry for going off topic, but this is a really valuable post. Believe me when I say, you are not alone. I also underperformed the market for at least the first 1.5 decades of my career. Instead of market timing, my mistake was to think I could beat the market by stock picking.

I would say that trying to do market timing and stock picking are the top two reasons individual investors underperform the market.

For the last decade I’ve simplified my investments dramatically. Aside from my employer shares (ESPP), I am 100% invested in low-cost, broadly diversified index ETFs, and only a tiny handful of them. Since I’ve done this I’ve had the best returns of my life — but equally important, I’ve stuck it out through some tough downturns. Luckily I’ve been doing that since the Asian crisis in 1998, so I’ve had a little practice.

One time my broker called up and said “hmmm, I see you have two shares” - he sure seemed puzzled, but these two shares were index ETFs that included thousands of stocks. There is beauty in simplicity. After decades of research in personal finance, I am convinced that the gold standard for investing is the Bogleheads 3 fund portfolio.

https://www.bogleheads.org/wiki/Three-fund_portfolio

If you invest in nothing other than this, you will do better than the vast majority of investors out there.

For those that haven’t heard of Bogleheads, it is a non-profit group dedicated to financial literacy and is named after the late, great Jack Bogle, founder of Vanguard and the father of low-cost index investing. Notice the information for non-US investors (links on that page) which follows the same concept but using London traded ETFs for tax reasons.

[smoulder]

Mal - did I read it correctly that you've been investing in index funds /ETFs since 1998? That is a pretty significant length of time and would have netted you some great gains.

[rajagainstthemachine]

Etfs are the best bet on investment, none of the idiot relationship managers in banks wanna sell you one though, its not in their kpi or comms

[malcontent]

Mal - did I read it correctly that you've been investing in index funds /ETFs since 1998? That is a pretty significant length of time and would have netted you some great gains.

Yes, but remember there weren’t many ETFs back in 1998, and also remember I was just starting out, barely saving $1k per month. I remember I had shares of QQQ back then… held on for almost a decade and finally sold it around break-even (2000-2010 was a horrible decade for the Nasdaq). Had I continued to hold it I would have had an amazing return. However, I do still hold Nasdaq stocks as part of my total market index ETF (which is around 30% technology), so it’s still there, sort of.

[sailtraveller]

I think the new framework has a lot of potential, if managed dynamically enough.
Singapore's "closed door" system, where it's always a gamble on approvals, it's just not suitable for businesses that need to move quickly. I always rather hire local than foreigner - I never met anyone in SG telling me "I love to hire expensive EPs and go through the application process".

My only fear is - if not dynamic or adjusted enough - it will result in the same issue I have now: I can't find anyone local SC/SPR, and I can't get someone on EP from abroad.

Btw - talking about open, point-based systems. For my wife I used the official WP SAT tool from MOM - and I discovered something interesting and completely unofficial - if we kept all the details identical but changed the nationality to any other than hers (Malaysian) - it will say S-Pass for that profile/salary - but EP if Malaysian. She got recently a 5yr EP on 4k salary (her first EP).

[malcontent]

I think the new framework has a lot of potential, if managed dynamically enough.
Singapore's "closed door" system, where it's always a gamble on approvals, it's just not suitable for businesses that need to move quickly. I always rather hire local than foreigner - I never met anyone in SG telling me "I love to hire expensive EPs and go through the application process".

My only fear is - if not dynamic or adjusted enough - it will result in the same issue I have now: I can't find anyone local SC/SPR, and I can't get someone on EP from abroad.

Btw - talking about open, point-based systems. For my wife I used the official WP SAT tool from MOM - and I discovered something interesting and completely unofficial - if we kept all the details identical but changed the nationality to any other than hers (Malaysian) - it will say S-Pass for that profile/salary - but EP if Malaysian. She got recently a 5yr EP on 4k salary (her first EP).

No surprise there. I still remember, after getting my first EP application rejected twice, I asked the officer point blank - hey, what is the deal… if I was Malaysian you’d have already approved. What do I have to do have to do to get this thing approved?

At first he stuck to the script - it’s on a case by case basis, but then I just stared at him… and he finally took pity on me and suggested what I “might try to do” to get it approved. Had he not done that, I probably would have gotten the 3rd and final rejection and been sent packing! I had no plan B, so not sure where I would have gone. I was completely broke too!