Singapore, 14 October 2008 – Despite the global financial crisis, multinational companies based in Singapore are still expecting an increase of cross-border moves in Asia and a hike in overseas transfers based on local plus package terms, according to a survey entitled ‘Key trends of cross-border moves in Asia’ conducted by PwC International Assignment Services (IAS). This is a first-ever survey specifically focused on understanding the international mobility trends and challenges of Singapore-based companies.
Out of the 105 companies that were surveyed, 64 percent expect an increase in cross-border moves in the region over the next two years on short-term assignments and 53 percent expect an increase in transfers on local plus terms. Singapore, China and Hong Kong emerge as the top assignment locations in Asia, with 70 percent of companies ranking Singapore the top assignment location in the region.
Singapore and Hong Kong also stand out as the main locations in Asia where companies implement the local plus and localisation 1 models. An overwhelming 79 percent of the companies surveyed with localised employees consider Singapore as the easiest location in Asia to localise foreign talent. This is a testament to Singapore’s drive to attract foreign talent through the use of government initiatives such as the Personal Employment Pass and Singapore’s competitive personal tax rates and concessions. In recent years, the Singapore government has taken several strategic steps to attract foreign investors and talented individuals by providing attractive corporate and personal incentives. The survey confirms that these efforts are paying off.
Comparing with a 2004 survey conducted in Singapore focusing specifically on localisation practices, the cost to company and the business needs remain as the two key drivers of localisation for companies today. “In the wake of this financial crisis, many banks are hiring or replacing more cautiously. Recruitment today is now focused on critical positions to meet business needs,” says Mr James Clemence, Partner at PwC IAS. “The talent crunch in recent years prompted many financial services companies to be more aggressive in their remuneration packages. In Asia, we have seen companies offering a range of incentives such as sign-on bonus, guaranteed bonus and stock awards to attract both local and foreign talent. However, in the current market, we expect to see less of these upfront inducement payments due to cost control measures.”
Managing risks associated with a growing mobile workforce
One of the trends that surfaces in the survey is that many potential areas for non-compliance with tax and immigration requirements are often ignored, overlooked, considered too low risk or, more often than not, unknown. More than half of the companies interviewed indicate that Human Resources seldom or never track and monitor the travel days of their employees. This in particular relates to the ever increasing group of short-term business travellers. In many companies, the responsibility of tracking travel days may lie with the business units, secretaries or the employees themselves. This may be a cause for concern when the tracking process is not own or centrally managed as employees’ exposure to tax and immigration obligations may not be fully adhered to.
“Companies need to be aware that the authorities in many countries are looking at these areas more diligently. It is essential for them to have a clear understanding of the various rules in the relevant locations for their business, share those rules with their business leaders and employees, and have systems in place to ensure compliance in a practical but managed way. The financial and reputational risks for those who continue to ignore these requirements will build up year-on-year as the risk of detection becomes greater,” warns Clemence.
1 Localisation is the practice or process of transforming an expatriate remuneration package (including base salary, incentive compensation, assignment benefits, social security and pension plans) into one that is similar to what the locally hired employees enjoy, with the understanding that the employee intends to remain in the host location permanently.
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The survey on ‘Key trends of cross-border moves in Asia’ was conducted by PwC International Assignment Services. From March to July 2008, HR professionals from 105 Singapore-based companies participated in the survey. Face-to-face interviews were conducted with 76 companies and a web survey with 29 companies. During the face-to-face interviews, our consultants met with participants to collect and verify the data. Where necessary, data collected via the web was also verified with the respondents. Out of the 105 companies participating in the survey, 35 percent have their global headquarters in North America, 36 percent in Western Europe and 24 percent in Asia. The key industries of the participating companies are Financial Services and Real Estate (28 companies), Technology and Telecommunications (21 companies) and Consumer goods (13 companies).
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