Money can buy many things –
a tasty meal, a nice car, a luxurious home.
But what about a long-term stay as a digital nomad on the beautiful Indonesian resort island of Bali?
Well, with $130,000 to spare in the bank account, that could become a reality too.
Digital nomads have been defined as “people who choose to embrace a location-independent,
technology-enabled lifestyle that allows them
to travel and work remotely, anywhere in the world.”
And while the digital nomad lifestyle has gained much traction since the onset of the pandemic,
the phenomenon has steadily been on the rise since 2014, based on worldwide searches
for the term, which the OECD says started making its rounds online in 1997.
The first image of the digital nomad you have is,
the guy working in a cafe for five hours, trying to get the free Wi Fi,
between Bali, Phuket, and partying and having cheap beers on the beach.
The Indonesian government, however, is taking a slightly different approach
through a “second home visa,” permitting wealthy foreigners,
professionals, investors, and retirees to stay in the country for up to 10 years.
Matthieu Chauveau has been working as an entrepreneur
in Bali since the start of the pandemic.
The people are amazing, the sweetest people in the world, in my opinion. One of the best places
to surf in the world. And it’s well located, 2-3 hours from Singapore, Thailand,
not too far from Australia. We have a beautiful villa, at half the price of an apartment in Paris.
The only painful part is sometimes the traffic, but I can live with that.
According to local authorities, the second-home visa -- is a “non-fiscal incentive” for certain
foreigners to make a positive contribution to the Indonesian economy.
And Matthieu has been doing just that. In 2020, he founded Tropic Invest to help
foreign individuals and organizations invest safely in Indonesia. Today, his company
has expanded to facilitate the development of real estate projects in the country.
In Bali, or in Indonesia in general, the property market, you cannot get a loan as foreigners,
so you need to pay cash. So now, around Canggu, a villa will be $350K or $400K,
$500K, so it’s quite a lot of money So it’s clearly that type of people,
that this new visa wants to attract. Because they bring wealth, they will spend,
buy houses, send their kids to school, they will maybe set up new companies.
Indonesia is just one of the many countries that have launched new visa
programs targeting digital nomads like Matthieu.
As of June 2022, more than 25 countries and territories have
introduced their versions of digital nomad visas to draw remote workers,
according to a report by the Migration Policy Institute, a US-based think tank.
Kate Hooper is a policy analyst who co-authored the report.
Even though the first programs were really introduced around the pandemic, initially as
a way to substitute for the fallen tourists that happened during the early months of the pandemic,
they now seem to have outlived the travel restrictions of the Covid era. And so we're
now seeing more and more countries introducing these programs with fairly competitive terms
around how long you can stay, the minimum income, and various other sort of arrangements like
whether or not you have to pay income tax. So, there's an element of competition.
According to Indonesia’s tourism minister, 95 percent of digital nomads
surveyed rated the country as a top destination for remote work.
So which factors do digital nomads typically consider when moving to a new destination?
We wanted to pursue something different, different environment. We knew that for the nature
of our business, we could provide a service here, as well as internationally. It’s one of the biggest
powerhubs in Southeast-Asia. The way that systems work here, I call it lifestyle optimization.
It's definitely about lifestyle, I’m a new mother, and to get some help
at home, I’m a very busy businesswoman, and so trying to juggle the two was really hard
and with the skills shortages in Australia, it was hard to find help.
So, I decided to move here for lifestyle and also
I grew up on an island myself, so I wanted that for my daughter.
For Matthieu, a longer-term perspective helped him narrow down the options.
Many people think Indonesia is a very far country and not very well developed. Actually, Indonesia is huge,
280 million people, the growth is amazing, 6 percent a year. And in the next 5 years, 10 years
they will become much bigger than France, U.K., Europe. If you’re an entrepreneur, and you want
to be close to one of the fastest-growing markets in the world, then you need to be in Indonesia.
But adopting a digital nomad lifestyle isn’t easy. A report by independent workforce management
platform MBO Partners noted that personal safety, being away from family and friends,
and loneliness were among the top challenges cited by American digital nomads.
So how does Indonesia’s second-home visa stack up against other countries?
The simple answer is that it differs in three fundamental ways. In other countries,
digital nomads are typically business owners or employees of a company in their place of origin.
In Indonesia, candidates need not be employed, but are encouraged to invest in the country.
If you want to capture part of this market, you cannot do it without being based in Indonesia
or partnering with someone in Indonesia. The regulation is very tricky to understand;
you need the right lawyers, notaries, it takes time.
Secondly, most visas offered elsewhere permit digital nomads
to stay for up to a year, with the option of extending in certain instances.
Whereas in Indonesia, the period of stay is up to 10 years.
And finally, wherein some proof of monthly or yearly income is required for most countries,
Indonesia requires a six-figure sum in applicants’ bank accounts.
There’s a history of retiree visas in the region and this is where I think
Indonesia’s new visa really aligns with, more than digital nomad programs -
geared towards people who aren’t currently employed, might have passive income,
but are quite high net-worth individuals and allowing people to stay for longer periods of time.
But there are questions about how these visa programs will be implemented.
For example, issues around taxation, social security, and labor laws.
Kate tells me this requires a policy rethink.
The ability to work from anywhere, and the reality of immigration systems and employment systems,
taxation systems, are all built with a particular country in mind. There’s an interesting gap
between the interest of employers in offering remote work policies as a perk to attract workers,
and what they feel comfortable offering. So even with some of the more high-profile,
work from anywhere policies, it ends up being a little bit more restricted,
because I think employers are worried about falling foul of some of these rules.
According to the OECD, digital nomads, as with any other foreign resident,
are considered tax residents in the host country after 183 days. However, several countries,
including Croatia and Mauritius, have issued tax exemptions for up to one or two years.
If you work in Indonesia and you generate revenue in Indonesia,
you should definitely be taxed. If you earn a million dollars,
one of the main criteria to decide where you will be based will be on taxation.
Whether these digital nomads will have a sizeable effect on the local economy,
also remains to be seen.
There have been some studies trying to pass out the different economic
benefits and potential drawbacks of digital nomads, but they’re really in their infancy.
So these studies take into account things like the impact on local housing prices,
spending by digital nomads in restaurants, on services, on cars, as well as some of the more
intangible contributions. A lot of these digital nomad programs come along with wraparound
services that are trying to attract people to move to particular areas.
Sometimes these are areas a little less visited by tourists –
or trying to attract people during the off-season.
If you create a company in Indonesia, I think it’s a great rule, you need to
hire 10 Indonesian for one expat. You bring your knowledge, investors, and talents,
but you have to give back to the country. It’s like a win-win partnership.
Policy makers are adapting to the changing geography of work. But are they doing enough?
I think another question as well for digital nomad programs is that currently, they're intended to be
strictly temporary. So even if you end up staying for a couple of years, the idea is that you're
staying for a limited period of time, and then you'll return to your country of origin. Are you
going to see more on-ramps being created that allow a digital nomad who's built ties with the
local community to then stay on a longer-term basis?
Currently, that route generally doesn't really exist.
But that's one area where we might see some adaptations going forward as well.
Gauging the success of Indonesia’s second home visa will take time. Most importantly,
however, the initiative has provided another avenue for foreigners to pursue a lifestyle
they wouldn’t otherwise be able to enjoy in their home countries.
I think Bali would be an ideal place to bring in foreign investment
so a visa like this would be perfect for a lot of people I know and
for me depending on how we structure our business in the future.
Having the option to live where I want whenever I want and get on a plane
and do something different, for me, it’s a no-brainer for that visa.