Some Hong Kong bankers heading to Singapore are having second thoughts over calls to “hire local staff.”

“It’s harder to get people’s buy-in these days and the ‘hire local’ push is real,” said Stephen Diggle, a former hedge fund manager who has lived in Singapore for twenty years and now runs a family office. “You cannot bring 40 people here because they would not get a piece permit.”

Singapore’s restrictions are forcing some corporations to look further afield in relation to relocating staff, as rigid Covid-19 rules and China’s growing influence reduce Hong Kong’s attractiveness for global finance. Some return to London or Sydney, others move to Dubai, attracted by the attractive low-tax welcome offer.

This ought to be Singapore’s time to shine. A four-hour flight south and in the identical time zone as its larger competitor, the island nation has long vied with Hong Kong as Asia’s leading financial center. The city offers most of the same advantages that wealthy Hong Kong expats are accustomed to – a tropical climate, good schools, low taxes and simple connections to the remainder of Asia.

However, Singapore is stepping up its efforts to draw foreign talent because the outflow of monetary professionals from China accelerates, responding to voters’ concerns that foreigners are getting the very best jobs.

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Authorities have recently introduced a series of dramatic changes to visa requirements for highly expert foreigners, raising the minimum wage threshold and introducing a points system much like the UK and Canada.

Under the brand new rules announced last month, points will likely be awarded based on how a candidate’s nationality contributes to the variety of his or her company, in addition to education, skills and salary. The government can even award points if an organization hires more local staff, a part of a reform that takes effect next yr.

In February, Singapore raised the minimum wage threshold for foreigners for the second time in two years to encourage corporations to rent more locals. Companies are expected to develop a “Singapore core” of talent and prepare Singaporeans for leadership positions. As recently as 2020, 1,200 corporations were on the watchlist attributable to plenty of issues, including the proven fact that foreign staff make up greater than half of their workforce.

The city-state can be making it harder for wealthy foreigners to establish family offices by raising the minimum bar for local assets under management and other conditions for obtaining key tax breaks. Additionally, dependents of foreign staff now require a company-sponsored visa to work in Singapore, eliminating the favored option for spouses of visa holders to search out part-time work.

These moves look like working: The variety of visas issued to foreign professionals, managers and executives fell to 161,700 last yr – the bottom since a minimum of 2010, when tighter restrictions and the pandemic took their toll.

“If someone wants to be a global hub, that means they have to attract the best, so visas can’t be a problem,” said Tom Kirchmaier, professor on the Center of Economic Performance on the London School of Economics.

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The changing environment is prompting Atlantic Partners to rethink its decision to maneuver its headquarters to Singapore from Hong Kong, in accordance with managing director Arv Sreedhar, who’s considering returning to the town after expanding the firm’s European business.

“People who’ve families and who’re a bit advanced of their careers think, ‘What am I doing here?’ Why am I in a spot that’s hostile and inhospitable?” said Sreedhar, whose company has a turnover of $2 billion. “It should be the other way around,” he said. “Singapore could attract all the talent from Hong Kong.”

Other corporations are searching for solutions. A European bank executive said his company had applied for short-term visas to relocate some staff from Hong Kong because they’d difficulty obtaining permits for longer periods.

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Some international banks and skilled services firms have expressed frustration with the pressure to rent local staff at lower levels, where finding the best skills might be difficult, people accustomed to the matter said. The situation is exacerbated by a labor shortage that has reduced Singapore’s unemployment rate to only 2.4 percent, lower than half that of Hong Kong.

Singapore officials insist the republic is attempting to attract top-quality foreign staff under a brand new points-based system. At the identical time, it wants to extend local employment.

“It’s not easy to maintain that, especially in an environment where there is every temptation, especially political temptation, to turn inward and erect barriers,” Lee said. “But if we give in to the temptation to close the door, we will certainly be harming ourselves.”

The Ministry of Manpower said that if some corporations or permit holders had difficulty filling job vacancies or entering Singapore last yr, it was attributable to Covid-19 border restrictions.

“This would don’t have anything to do with Singapore’s fundamental position as an open, global, cosmopolitan city that welcomes talent from all over the world,” the statement said.

The ministry noted that non-resident employment increased for the primary time in two years within the fourth quarter of 2021 and expects the number to proceed to grow this yr.

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Still, Singapore’s response to the pandemic has also irritated some foreigners. Although measures weren’t as strict as in Hong Kong, travel and quarantine rules only began to be relaxed in October, well after cities corresponding to London and New York. For many, the easing was too little, too late.

Seasoned emerging markets investor Mark Mobius has moved his base from Singapore to Dubai after being “quite disillusioned” with the way in which the Asian nation handled the pandemic.

“Hong Kong is unfortunately in decline and losing its status as a financial center; “Singapore has obviously suffered from what has happened with Covid,” he said in an interview last month, before Singapore took further steps to ease restrictions. “Dubai is starting to take its place and will likely overtake these two in the next 10 years.”

It’s true that financial firms have began moving employees to Singapore, although the numbers are small for now. Citigroup has relocated half a dozen equity bankers to Singapore and other markets. Wells Fargo & Co., which has cut jobs in Hong Kong, is expanding in Singapore. Societe Generale SA is temporarily relocating a minimum of a dozen Hong Kong traders, people accustomed to the moves said in March.

On a recent call with investors, Credit Suisse Group AG CEO Thomas Gottstein said the Swiss bank plans to take a position more in Singapore and has relocated some teams from Hong Kong.

“Money will continue to flow into Singapore because the situation in Hong Kong is quite dire, so Singapore will inadvertently benefit from this,” said Atlantic’s Sreedhar. “I do not think credit ought to be given to Singapore, credit ought to be given to Hong Kong.”

There are other signs that Singapore is slowly gaining ground over its northern rival, at the same time as Hong Kong begins to calm down a few of its pandemic measures. Inquiries from expatriates at international schools have increased, while housing prices remain stable at the same time as Hong Kong declines.

Bank deposit growth in Singapore averaged 7.3% between 2019 and 2021, about twice as fast because the previous three years, partly reflecting overseas inflows. Hong Kong’s growth over the identical period fell by about half, to about 4.3 percent, in accordance with Bloomberg Economics.

“This place has it all – low taxes, it already has infrastructure and the rule of law,” Diggle said. “Singapore will get the prize and we didn’t even fight for it – we just needed to survive Hong Kong.”