Home » Expat Focus Financial Update 09 May 2016

Expat Focus Financial Update 09 May 2016

Firms worried over global prospects

A global survey of employers’ confidence reveals that more than half of companies around the world are looking at freezing or cutting employment and just 14% are taking on more staff, according to a survey.

The Global Economic Conditions Survey from the Association of Chartered Certified Accountants (ACCA) says that business confidence was at its lowest in the first quarter of this year than it has been at any point in the past four years.However, business confidence in the US is much stronger and is still growing.

The survey reveals that 26% of firms in America are looking at creating jobs, which is well above the global average of firms looking to boost numbers at 19%.

In addition, 23% of firms in North America are also looking to boost their investment in their capital projects, again much higher than the global average.

The report highlights that companies are increasingly looking to lower their operating costs and then focusing on innovation as the second most important priority as a means to beat their competition.

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The regions looking to cut investment the most are Central and South America, followed by Africa and the Caribbean.

A spokesman for ACCA said: “When North America is taken out of the equation, the economic picture is not a pretty one with emerging markets being besieged and revenues for commodity firms having collapsed since the middle of 2014.

Chinese business confidence has also fallen to its lowest since our records began and almost half of firms reporting a drop in the income in the first quarter.”

The report highlights that firms in emerging markets are struggling the most as their bottom line is being increasingly squeezed with wages rising around the world. Companies are finding it more difficult to cope with falling revenues.

In addition, many currencies have also seen a sharp drop against the US dollar, which has pushed up companies’ operating costs and makes imports more expensive.

There are also growing business fears in larger economies at the prospect of the UK voting to leave the European Union. Business confidence in the UK is now at its lowest since the second quarter of 2012 – which in turn is bringing down business confidence in Western Europe.

However, the report also underlines that with the UK’s current contribution to the EU budget likely to be reinvested there if there is a vote for ‘Brexit’, the money will create more employment opportunities, particularly for highly skilled expats helping to address shortages in some sectors.

Kuwait expat remittances 'should be taxed'

An MP in Kuwait has called for a tax of up to 5% on expat remittances in a bid to boost the state’s coffers because of the drop in income suffered with the fall in the price of oil.

Expats can only send cheques and money orders overseas via accredited money exchanges and banks which are scrutinised and controlled by Kuwait’s finance ministry so imposing the tax would be a straightforward process, the MPS said.

In a bid to deter expats from sending money via irregular channels, the MP is proposing that lawbreakers face six months in prison or a fine of KD10,000.

In figures given to Parliament, around KD2 billion is sent abroad every year by expats working in Kuwait and a tax on this revenue could generate KD20 million.

The MP, Faysal Al Kandari, said the tax would be ‘fair and just’ and help improve services delivered by the state.

A similar proposal was unveiled last year by another MP, who said that a tax on remittances would help pay towards the subsidised services that expats enjoy from the state but this bid was rejected by Parliament.

Kuwait planning to deport expats

Meanwhile, the government in Kuwait is reportedly looking at plans to deport expats who lose their job as part of their campaign to reduce the number of foreigners living and working in the country.

Currently, expats account for 70% of the country’s population and, according to one newspaper report, 41,000 expats have been told to leave since January last year.

In addition, the government is also looking to deport expats immediately if they are sacked by their employer.

UAE offers less attractive expat packages

Expats looking to enjoy lucrative assignments in the UAE should think again because many of the benefit packages are no longer available, according to one newspaper report.

The Khaleej Times says that the recession has hit the generous perks that attracted many expats – these include high bonuses and subsidising of schools, gyms and transport.

While many employers are still offering bonuses of between two and six months of salary, they are performance-dependent which never used to be the case, the paper reports.

However, salaries across the Middle East are beginning to rise again, with an average increase of 5.1% being predicted this year, though some countries will be offering more.

For instance, construction managers in UAE will earn, on average, $6,300 per month while a senior project manager can earn $9,300.

The high-growth sectors in UAE which are offering the best opportunities for expats are currently gas and petrochemicals, construction, semiconductors and renewable energy.

Expats barred from Brexit vote

A legal ruling has prevented around 800,000 British expat voters living in Europe from voting in the June 23 referendum on whether the UK should leave the EU.

A group of expats had brought a legal challenge in a bid to take part in the vote since they were prevented from doing so because they had lived outside of the UK for more than 15 years.

Those who have lived abroad for under 15 years can still vote.

However, the legal action is not over since the expats who brought the legal challenge are looking to appeal to the UK’s Supreme Court.

Apparently, around 1,000 UK expats living in Spain are clicking on a government webpage to register for voting in the EU referendum every day.

According to government figures, more than 80,000 expats have registered to vote, though there are more than 250,000 expat Brits currently living in Spain, with most being eligible to vote.

For British expats who want to vote in the referendum, the deadline for postal votes is 16 May and they must register every year to vote in UK elections.

Meanwhile, a survey of British expats living overseas has revealed that 84% of them will be voting to remain in the EU.

The survey from Angloinfo questioned 2,800 Brits about how they are planning to vote in the EU referendum and 84% said it would be economically better that the UK remains.

Of those Brits who are planning to vote to leave, they told researchers that the UK would be free from EU interference and they would be able to negotiate better economic relationships with other countries.

Expat entrepreneurs being lured by Queensland

Australia’s Queensland government has unveiled an AUS$8 million project to attract start-ups to the region from around the world.

The move is part of Queensland’s bid to become a leading destination for innovation and it is making available funds of up to AUS$100,000 to start-up firms.

The programme, entitled Hot DesQ, is also open to Australians and established start-ups which want to expand across the Asia-Pacific region.

There will now be an annual start-ups and innovation festival to be staged in Brisbane, with the project expected to deliver around $20 million to the economy over three years.

77,000 expats laid off in Middle East

The slowdown in the Middle East’s construction industry has led to 77,000 expats being laid off by the Saudi-based Binladin Group.

The firm is the largest construction company in the region and has now issued final exit visas for the expats to leave Saudi Arabia.

However, there were fears that the expats would not receive final salaries, which lead to disturbances in some parts of the country. The company says they will be paying ‘full compensation’ to their expat employees.

The slowdown in oil exports has also seen Saudi Arabia’s economic growth fall and its gross domestic product is projected to expand by 1.5% – the lowest level since the global financial crisis.

Qatar's wage protection system is working

After coming under worldwide criticism for its lack of protection for expat workers working on stadiums for the 2022 FIFA World Cup, Qatar’s Wage Protection System is safeguarding the rights of around 1.3 million expats living and working in the country.

Under the system, it’s now mandatory for employers to transfer a worker’s salary to their bank accounts on time.

Failure to comply with the wage protection system will see the government taking action against the employer.

There’s also more protection being planned with a new law that regulates the entry, residency and exit of expats coming into force shortly which will protect the rights of both employees and employers under the country’s contractual system.

Bahrain firms to pay for hiring expats

New rules covering the employment of expats in Bahrain have now come into force and local employers who want to hire or renew the visas of expat workers must now pay an additional BD300 for each employee.

The aim of the new scheme is for local employers to hire more local people. The system for renewing visas comes into effect next year, and the Bahrain government is warning that this means expat visas will not be automatically renewed unless employers pay the higher amount.

A spokesman for the government told reporters that the new system was aimed at helping businesses and investors as well as promoting Bahrainisation.

He added: “Our goal is to provide jobs for Bahrainis and the new system offers employers an option to either employ a Bahraini or having to bear higher costs which is also putting economic pressure on them to hire more Bahrainis.”

Cheapest places for US expats to retire

One website aimed at helping US expats has pinpointed which countries are the cheapest for them to retire to by scoring each locality on a range of criteria including visas, entertainment, lifestyle, climate and infrastructure.

The site used the International Living ‘Global Retirement Index’ as its source and found that Panama City in Panama offered the best value for money offering for US expat retirees.

The city was closely followed by Tayrona in Columbia and then Pattaya in Thailand.

Next on the list is Barcelona in Spain which was highlighted as being an attractive option for retirees on a limited budget.

Among the most welcoming is Belize and then Sarawak in Malaysia, where a US expat’s income should go a long way due to the low cost of living.

The website also highlights Nicaragua and Sliema in Malta as offering cheap retirement destinations, with the latter being particularly popular for US expat retirees.

The top 10 list of best places for US expats to retire to is completed by Guatemala and finally Portugal’s Lagos, which will probably meet more retirement needs than the number one spot of Panama City, the website says.

In other news…

Speaking Dutch: Expats living in Holland can now access a video on demand service created by the country’s public broadcasters to watch Dutch TV programmes with English and Arabic subtitles. The aim is to help expats and newcomers become used to Dutch society.

Dinner for expats: Expats who are lonely in Luxembourg City can make friends with a new dining club called Spoontano, which is an organisation which arranges group dinners around the world, as a Russian expat is organising one for expats there.

UAE brings in e-visa: Expats living and working in the GCC region will need to apply for an e-visa before visiting UAE – though expats from some countries, including the EU, will not have to do so. Some professions are exempt, but those who do need the e-visa will need to apply before travelling.

No veggies for expats: Expats are no longer allowed to buy vegetables at Jeddah’s central market in a crackdown for greater ‘Saudization’. Traders have complained they are doing nothing wrong in serving expats and say the move will lose them a lot of money.

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