The problem with digital nomad visas


As Southeast Asia begins to recover from the effects of the pandemic on international travel, many Southeast Asian countries have created new visas to attract foreign workers and digital nomads. Indonesia’s Digital Nomad Visa allows foreign nationals to live in . Malaysia has launched its own digital nomad visa which will allow a . And Thailand has also joined the game with a 10-year Long Term Residence (LTR) visa for wealthy foreigners in the tech sector.

The benefits expected by host country governments are clear. Tourism has played such an important role in Southeast Asia’s economy – accounting for up to 20% of pre-pandemic GDP in the case of Thailand. With tourism hitting hard over the past three years, governments are looking for ways to support the economy with spendthrift travelers and create jobs. Indonesia’s tourism minister said the five-year visa will help create more while in Thailand, the government hopes that the LTR visa can yield wealthy and talented foreign workers over the next five years. The Thai government also estimates that the new LTR program will bring in around $25. over the next decade.

But most discussions of digital nomad policies lack criteria other than economic growth to evaluate them. Ideas like equity, inequality and the common good are rarely heard. A fuller picture of the programs would include the harmful effects they can have on their host countries.

Taxes

These visa regimes come with all sorts of attractive tax advantages for foreign nationals. The whom Indonesia hopes to lure to the shores of Bali will not have to pay tax on their overseas earnings. In Thailand, persons benefiting from the LTR will benefit from a flat and reduced tax rate of .

But if these workers make a lot of money, especially by local standards, from their remote jobs, is it fair that they pay less tax to under-resourced governments? While an Indonesian would be taxed at 30% if he earned more than 500 million rupees per year (US$33,000), a foreign worker would earn his income tax-free. In Thailand, it’s a similar situation. Foreign workers would only have to pay 17% compared to the 35% tax a Thai would pay on earnings over 5,000,000 baht (US$130,000) per year. In the long term, Thai nationals would generally bear greater responsibility and burden for paying government taxes.

Perpetuating global and local inequalities

Another problem is that these visa regimes generally favor only the wealthy and exacerbate class and income inequality globally and locally. On the one hand, these programs aim to attract foreigners from more developed countries. Thailand targets specific groups in Europe and expects LTR requests will come from Europe. But what about skilled digital nomads from other countries who want to relocate but can’t meet the income threshold? And not only that, but what about blue collar workers who have the potential to also contribute to the economy?

On the other hand, there will also be economic impacts on local residents. If digital nomads with high purchasing power enter a country, they could also drive up the price of basic goods and necessities in that country. For example, in Mexico, prices for rental homes and vacation homes increased by . Could this foreshadow what could become of Southeast Asia?

In some ways, this is already happening. A a survey of the gentrification of tourism in Bali (2021) finds that “gentrification of tourism leads to an increase in the rental value of land and property”.

Another example is the price of rents in Singapore. New expatriates, such as those , are partly responsible for the increased demand in the city-state’s rental market. This year, properties rented by expats are increasing on average by . What happened in Singapore could very well happen in Bangkok and other Southeast Asian cities, displacing people from their homes because they simply can’t afford it anymore.

Changing cultural fabric

Not only can we expect an increased economic burden on local residents, but cultural shifts and commodification are also occurring to meet the needs of visitors.

Cities and places are only too happy to adapt to meet the preferences of foreign digital nomads. Growing up in Bangkok, I see the changes every time I come back. A local family shop goes bankrupt and a glamorous air-conditioned cafe with English menus takes its place. Thanks to urban sprawl, the city is getting bigger and bigger and the sphere of this changing culture is expanding. Where my mother lives, which used to be the end of the train line, is now considered the ‘town’ and there are many nearby restaurants that cater to a western clientele in the area.

As tourism increases, destinations gentrify and tourist facilities are built to accommodate newcomers. This change can erase the local culture and way of life. The case of Bali shows friction between locals and newcomers; there is local residents that digital nomads are invading the island and some locals see tourism of their culture (such as temples and rituals) as “.”

How to reconcile protection of citizens and economic recovery?

The increase in global movements that emerged after the pandemic can and will be used as a means of economic recovery in Southeast Asian countries. But as the wave of digital nomads reaches its climax, governments should also consider the multi-level implications that their projects bring, namely the impact on their country’s culture and people.

Is there a way to promote and share their culture in a less commercial and commodified way? Or is there a way to incentivize and protect long-time residents from rising prices and gentrification?

There are no easy answers, but finding a way to balance economic recovery with the needs and interests of their citizens will be key as we enter an era of increased digital nomadism.

READ NEXT: Thailand is reopening to tourists. What would more ethical tourism look like?

TNL Editor: Nicholas Haggerty (@thenewslensintl)

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