This article was written by J. Andrew Davison.

Expats have seen significant changes over the years, both in the degree of hardship they endure living here as well as the size of their expat compensation packages. Perhaps equally revealing is the increasing number of expats who want to extend their stay in Malaysia.

With most developed countries seeing increasing unemployment and the implementation of various austerity measures, life in Malaysia is looking more and more attractive. While historically expats were attracted by a combination of the adventure and opportunity to increase their savings today they are motivated by the desire to experience new countries and often the dismal economic outlook in their own country.

The adventure element has decreased, as many Asian countries including Malaysia have developed their infrastructure so much that in many cases the facilities are at a similar level to those in expats’ home countries. The lifestyle offered in Singapore is often better than that which the expats enjoyed back home and Kuala Lumpur is moving in the same direction.

The generous expat packages, however, are becoming a thing of the past. When I first came to Asia, forty years ago, the compensation packages were very attractive including first class travel even on annual home leave, generous housing allowances, extra vacation days, paid education for children, hardship and cost of living allowances and various other benefits.

Approximately every five years, during the period I worked with a major multinational, the head office human resource team conducted a study to determine the total cost of all the expats and review their packages. Inevitably, they concluded that expats were a lot more expensive than their counterparts back home and they appeared to be enjoying a much better lifestyle than their head office peers. Naturally the recommendations were always the same – cut back or eliminate some of the perks.

Of course, we were quick to explain all the hardships and deprivations we suffered being so far from home and made a big deal about the various risks we took by living in Asia! It rarely worked. When they threatened to reduce the hardship allowance given for working in Malaysia, I was quick to point out the risk of dengue fever, snakes, driving and anything else I could think of to support my case. They still decided to reduce it. Today very few companies (or expats if they are honest) consider this a hardship posting.

As expats moaned and groaned about the loss of benefits, multinationals discovered that not only were there plenty of talented Asians, but many were more than happy to take assignments in other countries without the full packages. This was an appealing option to many multinationals. Western expats found themselves replaced by Asian expats who were less fussy about the packages. Over time even that dynamic changed as many western expats also decided they were willing to work on local packages.

A recent survey of 200 multinational companies in Singapore revealed that 21% of their expat employees were on local packages. Many more companies offer a local-plus package where the base salary is commensurate to that paid to locals and then the expat receives some cash contribution toward other expenses such as housing or kid’s education. This trend has also been observed in Hong Kong and other countries.

Today Malaysia has a growing number of expats wanting to extend their stay here and willing to accept local packages in order to do that. There also appears to be more expats setting up their own businesses as a means of staying on here and taking advantage of the improved economic environment.

Given the Malaysian Government’s more liberal attitude to expats wanting to work here, we can expect a growing number to come here with either a straight local salary or some cash contribution. Very few expats will enjoy the full packages which were once the norm.

However, based on our research most expats are not complaining too much, and with the options in their home country often looking distinctly depressing, Malaysia becomes that much more attractive.

This article was written by J. Andrew Davison ([email protected])
Source: The Expat February 2012
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This article has been edited for ExpatGomalaysia.com