By Laura Gibbs
COVID-19 has pushed more jobs to become remote. This has great potential for developing Asian economies.
Digital nomadism is a phenomenon that grew popular around the same time as ‘The Four Hour Work Week’ by Tim Ferris was released. In his book, Ferris suggests that when building a business, to consider geoarbitrage as a way to cut costs. The concept of geoarbitrage means moving to a cheaper city or country in order to cut your living costs, without a cut in your income. Effectively, by lowering your living costs, you can save more money, and it might be even more beneficial to your wallet than a pay increase (after you consider the additional taxes and workload on your pay rise).
With the increased popularity and acceptance of remote working in the last decade, more workers than ever are travelling the world while working on their laptops. Add to this the small army of Ferris followers, that have moved to low cost of living cities to ‘bootstrap’ while they build their business, and a global pandemic that, for example, forced 49.2% of UK adults to work remotely, and you have a global phenomenon that offers countless opportunities. But what are the real costs to being a Digital Nomad, and what are the benefits that they can bring to Asian economies?
The average American worker gets 10 days of paid holiday, although by law there is no obligation to offer holiday pay at all. This means, most Americans don’t have enough time to travel internationally. Even amongst Europeans and other regions, Asia is a 10-14 hour flight away and so the usual trip of two weeks barely allows travellers to scratch the surface.
However, when an employee is able to work remotely, then they can spend more time in a city, using their evenings and weekends to explore different regions, rather than a fly by visit on a 10 day vacation. The most popular hotspots for nomads in Asia are Thailand, Vietnam and Bali, because of their low living costs, good wifi and easier access to western amenities. Individuals also benefit from cheap regional flights, and tend to travel more than if they were at home, although they don’t travel all the time.
However, while the digital nomad lifestyle has its obvious appeals, there are costs associated with it too. Individuals have to pay for visas, rent a place to stay (while for some, also paying a mortgage at home), and household items needed. Western groceries cost more in Asia, as does an increase in local travel. However, when you compare the costs of rent alone in a major European, American or even developed Asian city, the amount of money saved by living in a cheaper southeast Asian city will more than cover the costs of life as a digital nomad.
When you add a small community of digital nomads to a city, the local community tends to benefit. If most of these nomads are remote workers, they create a new demand for office space, rental apartments, long term vehicle rental, and a range of other services, like visa assistance. They also tend to eat out more, tip and also explore local popular spots.
It’s estimated that a European tourist visiting Thailand will spend around 68,000 Baht across 2 weeks, whereas a Digital Nomad living in Thailand may spend that per month. They are likely to stay longer, and are spending consistently - preferring to eat out, stay in serviced apartments and taking local weekend trips - contributing to the economy all year round. Their spending should be seen as a form of remittance as the money is earned abroad but spent within the local economy, and these remote workers are not taking jobs away from locals, rather they are more likely to create new jobs as local regions open new businesses to satisfy their demands. Digital nomads who stay in a place for 3 months or longer are more likely to pay for local language courses, and also go to ‘language meetups’ allowing locals free access to native speakers of English and other languages. They also add a layer of multiculturalism.
However, in some areas digital nomads with western wages can inadvertently increase the price of goods for locals. Digital nomads usually don’t contribute to the country’s taxes, but still use the majority of public goods on offer. Many countries in southeast Asia have tried to counter this by creating a tiered price structure to charge foreigners more. And for some more conservative communities, digital nomads may be less than welcome, especially when they don’t conform to local standards of dress and etiquette.
Ultimately it is a government's decision on how open a country is to remote workers. Some counties, like Japan and China make it difficult to stay long term as foreigners, while others, have capitalised on the remote workers desire to stay somewhere legally. For around USD $550, Vietnam offers 1 year visas with little paperwork. Barbados, a tourist island in the caribbean, has started to offer year long remote worker visas for USD $2,000, in the hope to keep their economy afloat after a drop in tourist arrivals. And Mexico, Bermuda and Estonia are also trying to win over remote workers with long stay visas.
In light of Covid19, travel has become less appealing and more local, with popular tourist destinations suffering from the lack of traveller dollars being spent. At the same time, many major companies have asked employees to work remotely and this provides incredible opportunities for Asian economies. By making the visa requirements easier, and welcoming remote workers, countries could entire thousands of Google, Facebook, Twitter employees to come spend their hard earned incomes in developing countries, exploring local cultures while contributing to local businesses. There may be some costs for governments, but ultimately the benefits of attracting remote workers to a region outweighs the paperwork involved.