The expat community in Bali is probably among the most diverse
of all such communities in the world. Why? Because Bali is
unlike any ‘conventional’ expat posting in that
the vast majority of expats are not sent here but choose to
live in Bali. The few exceptions would include managers and
the top staff of five-star hotels but I suspect they do not
put up too much resistance or haggle too long over their benefit
packages when they are told ‘You are being posted to
Bali’.
What is the difference in financial terms?
Let’s say you are in the oil industry and you are asked
to go to a not particularly popular destination such as the
Congo (as I was when it was Zaire). The first reaction is
‘no thank you’. But if the company desperately
needs expertise in a particular location it has to offer incentives.
These may include an enhanced salary, cost of living allowance,
hardship allowance, free housing and transport, payment of
local taxes, children’s education in a local international
school or in a boarding school back home, club membership,
paid vacation flights, full medical insurance and continued
membership of the company pension plan. The only expats in
Bali who come close to enjoying this kind of package are hotel
managers and those sent by foreign government agencies. International
school teachers hired overseas will also enjoy some of the
‘perks’, but for those who have come to Bali and
sought work locally or have set up in business there is little
more to look forward to than a modest monthly salary or income
from the business.
What are the implications of this?
Over the course of the past ten years I have talked to expats
in Bali across the whole spectrum from those struggling to
make a basic living to highly successful professionals and
business entrepreneurs. To those in the former group who cannot
even afford medical insurance my advice has been to think
seriously about leaving the island. Most expats can expect
free emergency medical treatment in their home countries but
a serious illness or accident here can be disastrous. Emergency
medical evacuation by a special flight costs at least US$25,000.
Without cash or insurance there is no way out. One correspondent
recently asked if I could write an article to help the ‘dreamers’
who come to Bali believing they can live in paradise without
any money. My advice to them is that unless they can get onto
a sound financial footing their dream can quickly become a
nightmare.
Do the successful expats need any advice?
They do not need any advice on how to make money because they
have already proved how successful they are at it! Nevertheless
they generally do not enjoy the support and stability that
‘conventional’ expats can expect from the head
offices of the large corporations. There is no job waiting
for them back home if things go wrong here. They often do
not have the life cover (equivalent to up to three years’
salary) that comes with a company posting and few have critical
illness cover, even though the chance of suffering a career-threatening
illness is more likely than death before age 65. When you
work for a large corporation it will generally look after
your tax matters and invariably will be helping you to build
up a substantial retirement pension. Many successful business
people fail to compensate for this when left to their own
devices. Although this form of pension will soon die out,
most people who have worked for large companies all their
lives can expect a pension related to their final salary throughout
retirement. No such regular income is available to those who
have left the ‘comfort zone’ of their home countries
to seek their fortunes here. The only way to replace a regular
pension is to accumulate a lump sum which can generate income
in retirement. How much you will need depends on many factors
but if you can live on $2,000 a month in today’s money
you are going to need to accumulate half a million dollars
to generate that level of income.
What about the large majority?
I would say that the majority of expats I have met in Bali
enjoy a reasonable income and have a comfortable lifestyle.
Most however do not make adequate provision for the long term
or protect themselves as much as they should against the unforeseen.
Most will never enjoy the level of income and benefits of
expats who will accept postings such as Nigeria or Kazakhstan,
but few would exchange their Bali lifestyle for such riches!
Colin Bloodworth is a senior adviser with Financial Partners
International. The views expressed are his own. If you have
any questions you may contact him at 021 520 8099 or colin.bloodworth@financial-partners.biz
