May 20, 2010
Quad Cities, IA, USA

The New Zealand government just announced something that I find rather surprising… but a step in the right direction. Concerned about debt levels, both public and private, they’ve announced changes to the tax code which encourage savings and investment, and discourage consumption.

Specifically, the government is planning measures which cut and simplify income tax rates, ranging from 10.5% to 33% (down from as high as 38%). The corporate income tax rate will be cut from 30% to 28%.

Meanwhile, the changes also include an increase to the national sales tax from 12.5% to 15%. In the long run, this should be favorable for New Zealand economy because the new scheme encourages the replenishment of a large pool of savings… this is critical to long term economic growth.

Overall, I’m bullish on New Zealand and would recommend it as a place for you to consider as an expat destination.

Over the last few months, I’ve occasionally published some letters from my friend Mark who has been living there and exploring the country for his own expatriation. Mark quickly became an expert in NZ residency, immigration, and real estate, and I think his letters served our group quite well.

Mark recently returned to the United States after almost a year on the road, and he’s written a very comprehensive e-book about New Zealand that covers all aspects of living, working, and investing there.

Below is his latest letter since he returned from down under:

Since I last wrote about New Zealand lifestyle and immigration, serious macro-economic changes have begun to unfold. Simon speaks at length about these in his daily missives, so I don’t need to elaborate. What is important to us is predicting how these changes might affect New Zealand, and therefore impact a decision to relocate there, either full or part-time.

But before making the decision to uproot and take the plunge into this new lifestyle, culture (yes, it’s a bit different than where you live now) and system of law and taxation, let’s review the reasons why New Zealand is so desirable.

As a reader of Sovereign Man, our guess is that you believe the world is currently on an unsustainable path, financially and perhaps socially. We are squarely within that camp, and therefore wanted to find a place where we could ride out the storm.

In our first post herein we listed 10 reasons New Zealand was a good choice:

1. Geo-politically and physically ‘Remote’
2. Abundant and reasonably priced lifestyle type properties
3. Plenty of water. Ocean, lakes, rivers…
4. Reasonable annual sunshine hours
5. Clean environment
6. Educated, English speaking population
7. Safe, clean and readily available organic food
8. Physical safety and the rule of law
9. Fair taxation
10. Accessible, high-quality health care

These are factors we evaluated when choosing New Zealand. We said that it didn’t tick all the boxes, as taxation is as predatory here as it is elsewhere. But, now that situation seems to be improving.

As for the other criteria, NZ has those in spades. So now let’s review why it’s a good choice if the world falls apart, even temporarily.

First, you will want to live as far away from the angry masses as possible. And, make no mistake; they ARE getting angrier by the day.

New Zealand is about as geographically remote as you can get while still remaining a part of modern civilization. If Doomsday is your prediction then stay away from the cities. Thankfully you’ll have lots and lots of empty space and small towns to choose from.

Secondly, New Zealand is basically resource independent. They do import fossil fuels, but their electricity generation relies heavily on renewables like hydropower and geothermal.

In fact almost 70% of the power is generated from renewable resources. Auckland is power hungry, and grid interruptions can occur there, but the South Island, with its small population and immense hydropower resources is adequately supplied.

Third, New Zealand has ample food production to sustain its small population. Remember, without food and water nothing else matters. Think about how you would provide food for your family if the supply lines shut down in the urban centers of the U.S. and Europe..?

Fourth, the people, Kiwis are by nature, good-natured! They aren’t the most gregarious, the funniest or even the most polite at times, but they ARE kind at heart and peace-loving.

We would much rather be facing tough times surrounded by strangers in New Zealand than in almost anywhere in the U.S. Your average Kiwi is a survivor; they either live on a farm or are likely only one generation removed from that lifestyle.

Finally, we believe New Zealand is relatively safe from geo-political events. Yes, it is an ally of the Empire; however it’s more like Switzerland in this respect. Their anti-nuclear stance, in our opinion, just increases its rating as a ’safe place’.

Moreover, New Zealand is likely not a terrorist target, or a military target. And, we believe if the global situation rapidly deteriorated, we’d fare better there, than elsewhere in the world.

So, in summary, New Zealand may in fact be an ideal place to ride out a serious economic, social, or geo-political disturbance. You can learn more about how to make it your primary or secondary residence by getting a copy of our New Zealand Retirement, Immigration and Lifestyle Guidebook.

In the e-book, I discuss the reasons why you should consider residency, and even citizenship in this beautiful country. I review the legal steps, introduce you to competent professionals, provide precious metals purchase and storage options, and even show you current examples of real estate opportunities you can capitalize on right now.

Simon again. I’ve read Mark’s book and find it to be the best source of information about New Zealand out there in the marketplace right now, so if you’re possibly interested in migrating to NZ, I’d encourage you to give it a read.

April 1, 2010
Panama City, Panama

No place is perfect. There’s not a single country on the planet that is a total paradise, so prospective expats need to be willing to make compromises and trade-offs.

Naturally, it’s much better to be well-informed in advance about the challenges and limitations about a particular country… it’s easy to tout the positives, but finding objective information about a country’s negative aspects can be difficult to find.

Panama, for example, is a place that I’ve been vocally bullish on. But it’s nowhere near perfect… there are significant infrastructure challenges, corruption, and inefficient bureaucracies to deal with.

On the balance, though, the positives outweigh the negatives in my assessment; most importantly, the country is consistently maturing on an upward trend.

New Zealand is another country that gets a lot of favorable press in the expat community, but I think it’s important to balance the information with a realistic description of the country’s challenges.

As such, I’ve once again asked my friend Mark who is on the ground in New Zealand to give his take:

Simon has asked me to write a few articles for SovereignMan.com to discuss living and immigrating to New Zealand; now it’s time to talk about the bad and the ugly.

As Simon likes to say, no place is perfect…  but lack of perfection sometimes equals opportunity, and New Zealand is no exception.

So, here’s the “bad”–

Censorship: There is now Internet censorship in New Zealand.  As of February 1, 2010, some New Zealand ISPs have begun implementing a new government Internet filtering scheme.  This is bad news, but unfortunately in-line with Internet monitoring around the world.

Internet and wireless service:  In general, they are expensive compared to North America, and much less reliable. However, plans are in the works to bring fiber to the door of every NZ home.  Furthermore, the wireless duopolies of Vodafone and Telecom are starting to get some competition.

Bureaucracy: According to an OECD report, New Zealand has more government departments and ministries than any other developed country in the world.   To be fair, John Key’s National Party government has been unwinding some of Labour’s socialist agenda, but there is much further to go.

Taxation: New Zealand is not a tax haven, and depending on your line of work, you could be paying more than in your home country.  It looks like the top tax rate will be falling from 38% to 33%, but GST (sales tax) is getting a boost from 12.5% to 15%.

Now a little of the “ugly”…

Drunk driving: The local paper just ran a story about a guy who has had 17 drink driving convictions, and he is STILL on the road!  Drinking in general is a problem here; it embarrasses a lot of Kiwis, but little is being done to solve it.

Teen angst/violence: Auckland and some of the other larger cities have gang issues.  The police DO NOT carry guns, so there is little deterrent when trying to break up a drunk mob of teens in a park.  Many police officers end up in the hospital after taking beatings from civilians.

New Zealand’s “green” image: This is excellent marketing at best. The locals are totally uneducated about organics; New Zealand drops 1080 poison from helicopters to kill possums in its national parks, builds full-scale hydro dams on pristine rivers and has open pit coal and gold mines.

It’s “green” because of its low population density, period!

So, what do I think of this?  Look, New Zealand isn’t perfect, but I’m quite happy with a relatively unspoiled, empty, economically sound, English speaking, educated country.

Lack of perfection is what provides us with opportunity, and New Zealand holds a lot of opportunity for anyone with a little initiative.

Simon again. As usual, Mark’s New Zealand notes are on the money. I’ve mentioned before– New Zealand passes my ‘fundamental country test.’ When you look 10-years out, is New Zealand likely to be in a better position than today? Absolutely.

I know that Mark is working diligently on a new e-book about NZ immigration and investment with a lot of insider, actionable advice and contacts… if you have interest in something like this, or a request of what you’d like to see in his book, let me know by posting a comment here and I’ll pass it along to him.

March 25, 2010
Tokyo, Japan

About 20-years ago, many of the world’s sovereign nations started down an interesting path.  Region by region, governments formed supranational free trade blocs in order to facilitate economic growth.

Supranational organizations were nothing new… from the failed League of Nations after the Great War to the UN and NATO, large multi-country blocs had been formed in the past, but usually for political purposes or military alliances.

Conceived in 1989, the Asia-Pacific Economic Cooperation (APEC) was among the first international forums specifically designed to boost trade and enhance economic growth in the region, politics be damned.  After APEC came MERCOSUR in South America, NAFTA in North America, the EU, and finally the African Union.

A few years into the new millenium, most of the world was covered in trade blocs that were supposed to throw politics out the window… today, though, only APEC remains as a pure financial body, and the rest of the world could learn some valuable lessons from that region.

Aside from reduced trade restrictions that are standard for these organizations, APEC has come up with a few really brilliant ideas. Their goal is to make it easy for businesses to engage in commerce with each other– and by facilitating business at the individual level, more deals get done, and more wealth is created.

One of the ways that they’ve done this is by creating a program called the APEC Business Traveler Card (ABTC).  It’s literally a small plastic card that entitles cardholders to visa free travel for at least 59 days throughout the APEC sphere, as well as expedited immigration clearance at airports and other ports of entry.

At major airports in the region, for example, you’ll see signs all over the place for “ABTC FAST TRACK” which gives priority clearance at customs, immigration, check-in, and security to ABTC card holders.

Actually, in many cases, the ABTC is as powerful and useful as a diplomatic passport, but without the cost… and since APEC includes several countries like China and Vietnam that normally have a stringent visa process, the additional travel freedom is substantial.

This is a great tool for PTs and anyone who does a lot of business in Asia.

So how do you obtain one?  You need to be a passport holder from one of the participating countries– so if you’re from Australia or New Zealand, for example, I highly recommend going through the application process; check your respective country’s immigration website.

If you’re not already from the APEC sphere, you need to obtain another passport… which you should be thinking about already.  Of the participating APEC countries, the most straightforward ones to obtain are Chile, New Zealand, and Singapore, as well as Hong Kong permanent residence.

With each of these countries, the residence and naturalization process takes anywhere from 2-7 years, and in each case, the process is unmistakenly clear and leaves very little to subjective interpretation.

For example, obtaining a Hong Kong permanent residence card (which qualifies for the ABTC program) requires 7-years under one of the various residency schemes, such as the investor visa or professional worker visa.

In Singapore, citizenship can be obtained in as little as 2-years; it’s 5-years in New Zealand, and 5-years in Chile.

Frankly,I will need to write entire letters specifically on the subject of second passports from these countries; for now, though, you should definitely be thinking in that direction– and if you’re interesting in eventually planting a residency flag in Asia, those are the countries you should consider for second passports.

Stay tuned.

March 17, 2010
Pattaya, Thailand

In response to your feedback on last week’s missive about New Zealand, I’ve once again asked my friend Mark, who is living there locally now, to pen a few words about the country’s immigration policies in response to your questions:

First off, thanks to all of Simon’s readers for the feedback. I need to point out that I am not a licensed immigration professional. The government of New Zealand has strict regulations about who can disseminate immigration advice (and a lot of other things… but I digress).

So, what follows should not be construed as ‘official’ immigration counsel; rather these are my observations and opinions only.

The first thing you should understand about retiring to New Zealand is that it can be challenging, especially if you are at/near retirement age. New Zealand is not Panama, so the country doesn’t offer a retirement visa program with an income requirement equivalent to a street beggar.

However, New Zealand is also not Monaco, so there is hope!

That being said, the local Otago Valley newspaper ran an article the other day discussing New Zealand’s recently unveiled temporary retirement immigration category, which is much more reasonable, in my opinion, than previous options.

According to the article, people over the age of 66 wishing to immigrate can be issued an initial, 2 year permit.  This program requires people to be of ‘good health and character’, to invest NZ$ 750,000 in the country, have an income of at least NZ$ 60,000, and have NZ$ 500,000 in assets.

The current USD/NZD exchange rate is about .70 cents.  So, that NZ$ 750,000 is about US$ 525,000.

This new visa program stipulates that the investments must be ‘acceptable’, which basically means they need to be investments into the New Zealand stock or bond markets, and have the potential to “contribute to the New Zealand economy,” which is quite subjective.

As the government is trying to prevent a property bubble from forming, the program also specifically bans direct or indirect investment in the residential property market… though it only includes investment property, not a primary residence.

So, what is meant by “good character” ?

Like almost every country that accepts immigrants, New Zealand will ask you to prove that you are not an international criminal, fraudster or escaping from somewhere else only to plague your new home with your unsettling past transgressions.

According to the New Zealand immigration website, as long as you have not served any prison time in the last 7 years, or been convicted but did not serve a sentence in the last 3 years, you should be OK.

Health requirements are also reasonable.  The article stated that applicants should be:
1) unlikely to be a danger to public health;
2) unlikely to impose significant costs or demands on New Zealand’s health services and/or education services; and
3) able to undertake the functions for which they were granted entry.

This is a brief overview, but it gives you a pretty good idea what is expected.  Keep in mind that New Zealand changes its immigration policies regularly, so if this scheme is something you can wrap your arms around I encourage you to move quickly and contact an immigration professional.

Simon again.

For the right person, New Zealand has a lot to offer, and I’m fortunate to have a close friend like Mark on the ground who can help people navigate through the immigration and property.

When you’re selecting a country to expatriate to, your fundamental guiding principle should be quite simple: 10-years from now, will this country be a better place to live than it is today?

In my opinion, New Zealand qualifies, mostly because of the wide open spaces (and natural resources) with relatively small population to spoil it.

More to follow.

March 9, 2010
Pattaya, Thailand

First of all, thanks for all the well-wishes for my speedy recovery. I’m feeling much better today, no doubt due to this exotic root that my ladies have been giving me. I haven’t asked what it is yet, but rest assured I will be traveling with it from now on.

Since I’m still a bit groggy from my illness, though, I thought today would be the perfect time to introduce you to a colleague of mine who has kindly offered to pen a few words in my stead.

To give you a bit of background, Mark is a friend and sometimes business partner who has been traveling the world in search of a new home.  He’s traveled extensively in Latin America and Asia, and has been living in New Zealand for about 5-months to get a feel for the place.

Below are some of his recent insights from that country:

When Simon approached me to write a piece on New Zealand I was a bit surprised.

I’m just a regular guy… sort of.  Like Simon, I’m a serial entrepreneur.   I’ve pretty much always worked for myself.  I don’t have a family, but I am married.  Unlike Simon, there are no topless Peruvian sunbathers in my life…  My ‘work’, if you can call it that, allows me to travel wherever a cell phone and laptop can find a signal.

Nowadays that’s pretty much anywhere and everywhere, so New Zealand seemed a reasonably ‘safe’ bet for me.  Plus I had wanted to visit for as long as I can remember.  It’s a safe, clean, green and under-populated country where one can reconnect with nature and man’s inner spirit… and I think it lives up to its marketing hype.

So what makes New Zealand a place worth considering for an American or European expat?

Let’s start by looking at what was important to me, since my values are probably not that much different than most people, and see how New Zealand stacks up.  I’ll list my Top 10 ‘criteria’, in no particular order:

1.    Geo-politically and physically ‘Remote’
2.    Abundant and reasonably priced lifestyle type properties
3.    Plenty of water.  Ocean, lakes, rivers…
4.    Reasonable annual sunshine hours
5.    Clean environment
6.    Educated, English speaking population
7.    Safe, clean and readily available organic food
8.    Physical safety and the rule of law
9.    Fair taxation
10.    Accessible, high-quality health care

I can tell you that New Zealand checks all the boxes, with the exception of fair taxation; New Zealand is NOT a tax haven.  I believe the only ‘fair’ taxation is no taxation, but you won’t find that here, or anywhere.  Like most first world countries, taxation in New Zealand can get complicated.

Is it perfect? Absolutely not… but if it’s wide open spaces, beautiful beaches, majestic mountains, mirror perfect lakes, roaring rivers, quaint towns, empty roads, great food, cheap property (if you know where to look) and an educated, English speaking population that you seek… look no further.

I’ve been traveling the world, in a modest way, for the better part of the last few years.  I’m an American, so of course I started off in Canada, worked my way down to Panama (where I met Simon and continue to do business), Ecuador, Peru (an organic banana business gone wrong), Uruguay (where I enjoy residency), Argentina, over to Viet Nam (where I was involved with the first Vietnamese company to list its shares publicly in the US), and now New Zealand.

I’ve been here for almost 5 months, and it’s been phenomenal. While it doesn’t tick all the boxes, I’m sure that I’ll continue to live here on a part time basis unless/until I reach the point of becoming an ‘involuntary tax resident.’

Simon again. If you’re interested in hearing more from Mark about New Zealand, let me know by dropping a comment, and I will ask him to write something more customized based on your requests.

I spent a couple of days this week in a fast BMW with Matt, my friend and business partner. We had a meeting in southern Spain yesterday with a key figure in the world of second passports, and we raced at speeds up to 250 km/h so that we could make the meeting and bring you some tremendously valuable information.

It came at a price– six speeding tickets in total, mostly across the south of France and Monte Carlo. What can I say, I have a heavy foot…

The meeting was great, and it gave me quite a bit to digest.  Our host was one of the most knowledgeable people I have ever known regarding second passport opportunities.  Shortly, once I am able to work through some of the information and go through the process myself, I plan on discussing these very interesting solutions with you.

But first, though, I thought I would answer some of your questions from the last few weeks before I enjoy a nice weekend in Frankfurt with a new inductee to the Atlas 400 club.

First off– yesterday I discussed my observations on the ground here in Europe; the European tax situation makes most goods and services extraordinarily overpriced, and these prices are passed on to the consumer. Eventually, the cycle of higher wages and higher prices becomes simply another form of inflation… as higher taxes are coming to the US, similar price inflation will follow.

Based on a tax-free pricing model, however, the euro still appears overvalued against the dollar, and the dollar is undervalued against ’stuff’, that is goods and services that consumers buy. I argued that one way to play this is to short the euro against gold and silver, thus profiting from the euro’s correction as well as a rise in inflation.

How to do it? Well, Denmark-based Saxo Bank, which has no nationality restrictions for new customers, trades spot metal prices against a variety of currencies, including US dollar, euro, Hong Kong dollar, yen, etc. In other words, you can take a long position on gold or silver, and a short position against a major currency.

To take a long gold/short euro trade on Saxo, the ticker is XAUEUR, and XAGEUR for silver. I tend to look further out, though, so I’m planning an investment that is a combination of long-term currency put options combined with gold/silver call options in 2011.  I can discuss this in further detail if you are interested.

* Questions from subscribers *

1) Stan asks “Simon, regarding international brokerages- what would you suggest for European citizens who don’t want to hide their wealth, but move money out of the US and Europe? Are HK or Singapore better?”

In a word, yes. US and European officials are getting increasingly desperate for cash, and they will look in every dark corner they can find for a few pennies.  In a single day on this Europe trip, I was stopped twice in France by customs thugs wondering how much currency I was transporting in the car.

Bottom line, they need money, and they’ll find it. After all, only ‘rich’ people invest in the markets.

Asian jurisdictions are safer for western investors simply because it makes more sense to have your money in a place where you do not live– this is central to the multiple flags approach. Furthermore, while financial privacy has gone away, they are less likely to submit to western governments– especially Hong Kong which is backed by mainland China.

Try Boom Securities, based out of Hong Kong, at home.book.com.hk

2) Andrew asks: “I hear a lot of recommendations for exotic locations, but the majority of very wealthy Americans I know have half a foot in New Zealand. What do you think about New Zealand?”

New Zealand is beautiful, peaceful, slow-paced, reasonably-priced, and devoid of anything particularly interesting. The taxes are cumbersome for residents, but as a location to obtain a second passport for non-residents, New Zealand is spectacular.

3) Chris asks: “What Islamic banks, if any, allow Americans to open bank accounts online?”

Worldwide “Know Your Customer” rules require new branch banking customers to show up at least once, unless an intermediary has a very personal relationship with the banker… either way, the account is not generally opened over the internet.

4) Taylor asks “Simon, regarding foreign bank accounts, can’t US citizens side step institutions who won’t accept US clients by opening a Panamanian corporation?”

Sure, in some instances… many banks won’t work with US citizens directly as a customer, but they will work with a corporation or trust whose beneficiary is a US citizen. There is nothing illegal about this as long as the bank is made aware of the arrangement.

Lastly, as an administrative note, I want to tell you that I am planning on making the site much more interactive in the early part of 2010. I think you’ll really like what we’re doing, so stay tuned.