Singapore is a small island off the southern tip of Malaysia, and is considered a city-state.
I’m not going to go into the full history of how Singapore came to be, but to quickly summarise Singapore first came to attention when a free port was opened that allowed traders to trade without paying customs duties. As such it quickly grew into a major hub of business and it is this style of thinking that has led the country to what it is today – a lost cost place to do business.
Without any major natural resources, Singapore instead relies on human talent as its major export. Today Singapore is known as a hub for many financial institutions, IT companies, and still to this day – shipping and logistics.
In order to draw in that human talent, Singapore has very low income taxes, and no capital gains taxes (low by my standard anyway, coming from Australia). With anything though there is a lot of controversy in Singapore about how it looks after its people. For example, because taxes are very low – there is no government pension. Likewise, there is no free health care. And because the country is so small, car ownership is ridiculously expensive. There is also no minimum wage, and foreign workers are often used as the builders of major construction projects, or for jobs that Singaporeans are not interested in doing. I don’t claim to know all the ins and outs, however from my six years in Singapore I have become quite so-called “localised”.
- I live in an HDB flat – Housing Development Board (HDB) flats are what 80% of the population lives in. They are “affordable” 99 year leasehold properties that either Singaporean or Permanent residents can own. Foreigners are okay to rent them as long as HDB has approved the original owner to lease out their own flat.
- I am a Permanent Resident. Originally I was here on an employment pass, however the requirements for maintaining an employment pass were getting quite difficult, and given that I had married a Singaporean citizen, I did not want to be in the position that if I was out of work for whatever reason they could kick me out of the country after 30 days!
Singapore suits my style – i.e, I don’t like to give the bank money in interest, I don’t want to pay a lot of tax, and I like to keep my costs as low as possible (or as my friends call me, a tight-ass Aussie). Singapore offers all that. The vast majority also speak English, and everything is written in English so communication is not a problem. (You’ll pick up many Singlish words over time).
Many ex-pats will complain that Singapore is so expensive, and it can be, but for me the choice is there. You can live cheap, or you can live expensively. For me I think I’m in the middle ground where my basics are covered at a reasonable price, leaving me enough spare to enjoy some travel and nice restaurants now and then.
At the same time, because I may not be able to ever count on a government pension, and I am no longer paying Superannuation back in Australia – I really need to plan for my own retirement as there may not be any entity out there that will look after me. Therefore I must invest my money wisely if I hope to beat inflation and then some.
Now that I am a PR, I do pay into my CPF account in Singapore. CPF (Central Provident Fund) is a compulsory retirement savings plan that all citizens and PR’s must pay into. It gives guaranteed interest returns which are bond like in stability. Better than bonds in fact, it is guaranteed. A lot of people will also complain about CPF (is there anything humans won’t complain about?) because they can’t control the investments going into it (there are certain funds you can choose to invest with it, but not very extensive), and there is a minimum sum balance that needs to be maintained upon your retirement. This minimum sum keeps going up, so a lot of people feel that they will never be able to access their own money. This isn’t exactly accurate, it’s just that they will not be able to access a lump sum and to me this is the whole idea of why this minimum sum was brought in in the first place. Previously people could withdraw the lot, give it as a loan to their kids or gamble it away, and then what? The money is gone and who is going to look after them? So to me, minimum sum is a safety net to ensure your own stupidity won’t get you.
CPF can also be used to help pay for your mortgage, and your health care / insurance premiums. To me it is a good centralised system.
Speaking of centralised systems. In Singapore most government agencies are tightly integrated with each other. Every person in the country has an identity number which you can use across just about everything. (Some may consider it very 1984 though).
TL/DR; Singapore is a great place to work and invest out of, extremely safe and clean country, public transport is excellent, car ownership is expensive, home ownership and rent varies, as do food costs. There are no capital gains taxes for individual investors, nor is there any estate tax liable upon your demise!
I give it 4 out of 5 stars.