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.

February 12, 2010
Pattaya, Thailand

I’m happy to report that I seem to be in the final throes of my Asian jet lag– I finally managed to go to bed and wake up at a reasonable hour.

I appreciate the emails that I received giving me advice about how to deal with it more effectively… honestly though, I think time is the best remedy for everything.  With jetlag, I take a “sleep when you’re tired, eat when you’re hungry” approach, and it will work itself out eventually.

Anyhow, as I am out the door and headed to the beach in a few minutes, I’d like to spend some time addressing your questions this week:

Kevin asks: “Simon, I want to purchase a round-the-world plane ticket in order to get a sense of which country I would feel most comfortable living in / retiring outside the US.  Do you have any recommendation on how to find an open-ended round-the-world ticket on the cheap?”

“Round the world” fares are a flexible, cost-effective way to explore the world. Each of the major airline alliances (Oneworld, Star, and SkyTeam) has an around the world program, and the rules are generally the same.

You have to establish your route in advance, i.e. start in Vancouver, travel to Tokyo, then Singapore, then Mumbai, then Abu Dhabi, then Istanbul, then Kiev, then Krakow, then Madrid, then Miami, then Los Angeles, and finally back to Vancouver.

The nice part is that the dates for each flight are completely flexible. If you start in Vancouver and fly to Tokyo first, you can spend as much time as you want in Tokyo. When you get tired of it and are ready to move on, you just call the airline and they will book your next leg of the journey (to Singapore).

There are a few rules– the entire journey can only take up to 1-year, and there’s usually a maximum of 16 stops in total.

Now… here’s how you save money: If you live in North America, try to start your journey in South America. Buy a 1-way ticket to Colombia or Brazil, for example, and begin the routing from there. You will save about $1,000.

Peter asks: “Simon, I’m really interested in Panamanian property; given where I see my country headed, Panama seems like a great place to set up, and I want to get out while I can. I bought the Black Paper, and I am considering going to this International Living conference in April. Do you think it’s worth it?”

Yes. I was friends with most of the IL staff in Panama over the last few years, and I knew the conference organizers quite well. They routinely put on informative events, and if you’ve been strongly thinking about buying property in Panama, the conference is a great way to pack a lot of objective exposure into a short period of time.

Incidentally I may be back in Panama by April, in which case I might attend the conference myself to meet with some subscribers and old friends.

Helen asks: “Simon, when can we hear back from you about the sustainable community, and on the second citizenship programs?”

We have about 750 survey responses from subscribers telling me what they would like to see from a sustainable community in Panama. Clearly this is something that needs to be done. My partner Matt and I are digesting the data and strategizing how we would execute this. I will provide details next week.

In regards to second citizenship opportunities– I plan on rolling out quite a bit of information later this month, probably the week of the February 22nd. Stay tuned.

“LookingToLeave” asks: “Simon, do you have any suggestions for someone who plans on possibly using physical gold as a way to move their wealth out of the U.S.?”

Transporting gold is a great way to move wealth– a mere six pounds is over $100,000. There are three things you need to keep in mind:

First, the US government (and Canada too) does not consider gold to be a monetary instrument, so technically it would not be reportable… but be prepared to tap dance in case some Neanderthal government agent becomes suspicious about it.

I say this because in my travels recently, nearly every border guard I’ve come across has wanted to know one thing: “How much money are you carrying?”

Second, don’t forget to check the regulations on your destination country. Some places, like Uruguay, require you to declare gold upon arrival.

Third, do not underestimate security. If you’re confident, you can carry it yourself, but consider engaging a company like ViaMat to securely transport it for you.

Have a great weekend, and we’ll talk again on Monday.

Seriously… isn’t it time the investment community stopped listening to the rating agencies?

Moody’s, Fitch, and S&P– these are the usual suspects who completely missed the boat on the US sub-prime debacle.  Back in 2005, they gave pristine credit ratings to risky mortgage portfolios stuffed full of borrowers who are notorious for not paying.

The recent debt crisis in Dubai underscores their irrelevance once again.

As I discussed earlier this week, Dubai’s flagship holding company announced that it had run out of cash and put a temporary stalemate on all debt payments.  The announcement sent markets reeling and once again caught the rating agencies with their pants down.  

It’s mystifying how these three groups, each with a long tradition of getting it completely wrong, are still considered relevant by the financial community.

Meanwhile, amid Comrade Bernanke’s reconfirmation hearings, the job summit, the estate tax extension, and the Afghanistan rollout, it has been quite a week. 

These four events underscore some significant problems that are faced the United States: reckless monetary policy, inappropriate fiscal stimulus, a government budget crisis, and a disastrous war effort.  

As I mentioned in this week’s letter on the conflict in Afghanistan, though, nothing will actually be accomplished other than more summits, hearings, and motivational speeches. 

Sure, it would be nice to affect the system, but is it really worth spending one’s life fighting against a corrupt bureaucracy? Especially when so many ‘fellow citizens’ embrace the status quo, and most others are too uninformed to care? Ssssh… American Idol is on.

I’ve spent a great deal of time setting up a system that keeps me largely free of these headaches.  I still close my eyes and shake my head on occasion, but it’s mostly like watching a bad sitcom. With a multiple flags approach, you have the ability to pick up the remote and change the channel.

On the subject, I received several questions from a letter I wrote earlier this week, outlining my top picks for Asia and Latin America (Chile, Panama, Colombia; and Malaysia, Philippines, and China). 

The biggest question– why weren’t Uruguay and Thailand included on the list?

Thailand is a fantastic country, and I will be spending more time there next year. The problem is that it is difficult to reside in Thailand for the short-term and long-term.

Neighboring Malaysia gives 90-day, extendable tourist visas upon entry; Thailand is good for 15 to 30. Malaysia makes it easy to establish residency; Thailand only issues 100 permanent residency permits each year. 

The property market in Thailand is also quite cumbersome, with significant restrictions on foreign ownership and a lot of sharks who will take advantage of foreigners.

Overall Thailand is a wonderful place, and there are ways around these challenges. But comparing price and hassle, I think Malaysia is a better value.

Uruguay is also great country and would probably be #4 on my list.  I wouldn’t dissuade anyone from buying property or living there. In terms of value, available services, and lifestyle, though, I would pick Chile, Panama, or Colombia, mostly because Uruguay can be exceptionally sleepy.

And although I did not mention it in the original letter, I really like Ecuador as well.
The country is poor… very poor, but its local agriculture is spectacular– “all natural” is the only way they know how to produce.

This is of vital importance to me; I’m very careful about what I put in my body and think that the poison and hormone-filled foods in North America significantly contribute to poor health… and health, after all, is our most important asset.

We’re fortunate that world class physicians are available in places like Panama and Thailand for the price of a steak dinner, but as someone who has a natural aversion to doctors and hospitals, I tend to focus more on staying healthy.  To me, this has a lot to do with food.

Aside from Ecuador, I’ve also noticed that Laos, Chile, New Zealand, and surprisingly China have a vast stock of organic and all-natural food products.  Meanwhile I’m highly suspect of foods in Buenos Aires and Eastern Europe, especially at restaurants.

Of course, the hardest place to have a restaurant meal that isn’t served with a side of poison is in the US– probably the impact of corporate chains.

I recently bought an e-book though, for the whopping price of $29.95, that is the most comprehensive guide I’ve ever seen for all-natural restaurants in the US.  I was really impressed, especially given the price– about 200 pages of listings, reviews, and pricing of just about every place you would want to eat, coast-to-coast.

If you travel frequently or just want to eat some good, poison-free food, you should check it out…  as far as I can tell, the information simply isn’t available anywhere else– www.healthyeatshere.com

After a hard afternoon of jet skiing yesterday, my friends and I came off the water right as the sun was descending in the horizon over the ocean. The sun sets in Thailand in a more vibrant, distinctive way than most other places in the world that I have seen, and quite honestly it can be intoxicating.

As we collected our belongings and paid the 1,300 baht fee (roughly $40) for the afternoon rental, we started talking about travel– my friends are returning to Europe tomorrow on Abu Dhabi’s Etihad Airways, which was recently voted ‘the world’s best air carrier’ at the 2009 World Travel Awards.

Our conversation made me realize that I had not touched on travel secrets in a while, so I thought I would make a few suggestions if you are considering some holiday travel.

It’s no secret that most airlines are short of cash. They’ve come up with creative ways to raise money through checked baggage fees, ticketing fees, increased change fees, and of course, the fuel surcharge.

My favorite was Bratislava-based Sky Europe’s ‘payment fee,’ which as the name suggests, charges a fee for the passenger to make a payment.  It makes me wonder if they were planning to charge a fee for someone to pay the payment fee… No wonder they went out of business.

The newest cash-raising craze for airlines is to sell miles or points within their award programs.  Points can subsequently be accumulated and traded in for free tickets, and even extend beyond the airline to the rest of their alliance.

American Airlines, for example, is a member of the ‘One World Alliance,’ which is also comprised of British Airways, Royal Jordanian, Japan Airways, Malev Hungarian, Mexicana, Spain’s Iberia, Hong Kong’s Cathay Pacific, Finland’s Finnair, Australia’s Qantas, and Chile’s Lan.

Miles accumulated on American Airlines can be used across this entire network, which is quite convenient.  American now has a special for buying miles– 80,000 total miles will cost $1,642.50 including fees and federal excise taxes, which works out to be roughly 2 cents per mile.

Let’s do some quick math.

Purchasing a roundtrip domestic economy ticket with miles will require a redemption of 25,000 miles. At 2 cents per mile, that’s the cash equivalent of $500… plus the airline will still charge the 9/11 security fees and a ticketing fee on top of that, so let’s say roughly $540.

If you plan ahead, you can easily beat $540 for any domestic route in the continental US or Canada. As I do a quick search, for example, a cross country Seattle-Miami trip is a mere $346.40 including taxes and fees.

Naturally, using miles for this sort of ticket doesn’t make any sense– why pay $540 for something that costs less than $350?

I fly business or first, especially internationally… and using miles for these tickets is a much, much better deal.  A roundtrip business class ticket from North America to South America, for example, can be awarded for 100,000 miles. At $0.02 per mile, that’s a cash equivalent of around $2,100 including taxes and fees.

If you were to actually pay for this ticket– let’s use a sample route of Miami to Buenos Aires, Argentina– it would cost around $5,000.  In this case, buying and using miles gets you 60% off the fare, an absolute steal.

I’ve also noticed some great business class fares from North America to Europe for the holidays; Lufthansa, Continental and Air Canada all have advanced-purchase fares starting at just over $2,000 to Europe.  Normal fares are well over $5,000.

If you have been thinking about kicking the tires in Asia to see what opportunities are here for you, I’ve also found that Philippine Airlines has some really great deals from LA, San Francisco, and Vancouver connecting through Manila.  Business class is running around $3,000, which is less than half the cost you would normally pay.

I’m sure there are plenty of other holiday deals out there, so if you know of any, don’t hesitate to post a comment.

Here’s the scene… you’ve just landed and are making your way through immigration. Bleary-eyed and a bit disoriented, the portly fellow behind the desk singles you out for ’secondary screening,’ and you are whisked away to the catacombs of the Customs service.

At this point, it really doesn’t matter what country you’re arrived to… until you clear customs and immigration, you’re in no man’s land.  For customs officials, anything is fair game, including laptops and personal effects.

I have written before about this practice by the US Customs and Border Protection agency, but frankly just about every government in the world reserves similar powers to protect its borders against the terrorist and criminal elements.

Computers can be confiscated, inspected, and even copied in order for immigration agents to make a determination whether or not to let you in the country. It doesn’t normally happen very often, at least in civilized places… but the mere possibility is enough to make me want to take some precautions.

One very elegant solution that I have discovered is through diplomatic channels.  There are nations, for example, which actually sell appointments to official diplomatic posts, such as Ambassador or Honorary Consul.

According to the 1963 Vienna Convention on Consular Relations, an official diplomatic bag, which would include a laptop briefcase, shall not be opened or detained by foreign inspectors, even when the diplomat is merely in transit.

In other words, the convention allows diplomats with official credentials to enjoy freedom from unreasonable searches and seizure, even in immigration no-man’s land.

Official diplomatic programs are perfectly legal… though not exactly well-advertised. Prices range from $25,000 to over $100,000, depending on the post and the country of issuance.

Get in touch with me if this sounds interesting and I can point you in the right direction.

Another solution to protecting your information is to use a software package that will lock down your hard drive against unauthorized access.

I recommend TrueCrypt (www.truecrypt.org), which comes in both a Mac and Windows version.  It’s free, and one of the best encryption platforms out there.

TrueCrypt will create a ‘virtual encrypted disk’ that will completely secure your hard drive, or an external device like a USB drive.  It even has the ability to create a ‘hidden’, encrypted operating system so that when you turn on your computer, a ‘dummy’ system will be displayed, and the real system will be hidden beneath it.

If this sounds scary, try TrueCrypt out on a external device like a USB memory stick. You can back up important files on this device and lock them down like Fort Knox.

He was brown.

A few inches shy of 6 feet tall and well-dressed in a tailored suit, my guess was that he was of Lebanese origin given his easy command of French, English, and Arabic… but regardless, he was standing in the US citizen line at the airport immigration checkpoint.

I don’t know exactly what was said between the man and the border patrol agent, but the encounter was brief; within 30-seconds he was being escorted to the secondary screening room.

Given that I had briefly chatted with this gentleman on the plane from Tokyo while waiting for the lavatory in the business class cabin, I considered him to be a ’single-serving friend’ and felt comfortable enough to approach him later when I saw him later waiting for his wife.

“What happened back there?”

“Oh, typical. He asked me how long I was gone and if I had purchased anything while abroad… I said ‘6-weeks’ and ‘no,’ which must have set something off, so they sent me to the back room.”

“Yeah I’ve been there… it’s big fun. But you weren’t in there for too long.”

“No- it was quick. I hadn’t sat down for more than 2 minutes before they called my name, asked me some questions, and said they would need to search my laptop. Naturally I complied, you have no rights in there, and I just wanted to get home as quickly as possible.”

“So did they seize your computer?”

“No, they told me to log in to my computer. I did…. then one guy, he was really fat, disappeared with my laptop for about five minutes. When he came back they escorted me down to baggage claim, sent me through the ‘red line’ to inspect my checked bag, and that was it. The whole thing was over in 15-20 minutes.”

I was floored.

Not because the US government is detaining its own citizens and inspecting their most private possessions without reasonable suspicion of wrongdoing, but because of the speed and efficiency with which they are now doing this.

I have long believed that in the United States there are two places where civil liberties do not exist– tax court and the airport.

In the former, the IRS has the full authority to put the habeas grabbus on whatever assets they feel like with a ‘presumed guilty until you go broke proving your innocence’  burden of proof.

Airports though, in my opinion, are even more draconian.

Under the catch-all auspices of anti-terrorism, the government’s border and airport security agencies have been dealt an enormous amount of authority to go along with their intimidation tactics; thanks to a recent ruling by US Court of Appeals, border agents have nearly unlimited latitude over personal effects, including laptops:

“The authority of the United States to search the baggage of arriving international travelers is based on its inherent sovereign authority to protect its territorial integrity. By reason of that authority, it is entitled to require that whoever seeks entry must establish the right to enter and to bring into the country whatever he may carry. . .  Therefore, we are satisfied that reasonable suspicion is not needed for customs officials to search a laptop or other personal electronic storage devices at the border. “

Subsequent to this ruling, US Customs and Border Protection issued its own policy regarding search authority:

• Officers may, without reasonable suspicion, detain documents, electronic devices, or copies thereof for a ‘reasonable’ period of time to perform a thorough border search, which may take place on-site or at an off-site location;
• In the event that contents are unreadable or encrypted, officers may enlist the support of other agencies for translation and/or decryption assistance;
• Content that may constitute trade secret, commercial information, or even attorney-client privilege are still subject to search and seizure.

The singular exception to this rule is ’sealed letter-class mail’, the international equivalent of First Class– sealed letters that are presently within an international postal system (NOT including private carriers like FedEx or DHL) cannot be searched or seized without a warrant or consent.

I will also be discussing some savvy encryption solutions in future letters; in the meantime, though, be mindful of what you bring along during international voyages– except for the ‘mail loophole’ I mentioned above, just about anything you bring into the country can be searched and seized without reasonable suspicion.

I’m going to let you in on a few secrets.

I’ve learned through a great deal of experience over the last several years about travel.  People often ask me about my travel habits because I do so much of it… and one of the common questions I get is “How much do you spend each year on travel???”

Honestly… quite a bit. But I recognize that my travel breadth and frequency is abnormal.  Also, as a sharp investor myself, I detest needlessly squandering money… and as such I’ve picked up a few tricks along the way for paying substantially less than everyone else, and to me, that’s like buying an undervalued stock.

The truth is, you don’t need to blow a lot of money to travel well and see the world.  And as I happen to be sitting on a plane as I write this having just enjoyed a nice nap, a great meal, and an endless supply of Tuscan wine, I’d like to share a little-known tip for flying well:

For long-haul international flights, economy seating can simply be too painful… a lot of airlines are now offering substantial discounts on business class fares (a few weeks ago I mentioned Finn Air’s roundtrip from JFK to Helsinki for under $2,000), but there are some even better deals out there:

American Airlines is one of the largest carriers in the world and part of the well-established “Oneworld Alliance” that has routes and hubs on every continent.   Each year, as a reward for its most valuable customers, the airline bestows 8 system-wide vouchers that can be used to upgrade any flight.

The vouchers are only good for one year, and if unused, they expire.  Most of these elite passengers who are granted the upgrade vouchers do not use all of them, and in order to make a few extra bucks, they post them for sale on eBay or Craigslist.

The average price range is around $200, which covers the cost of a 1-way upgrade to business class from economy.

Here’s how you do it (this works for American Airlines but other airlines have similar programs):

1) Find a potential supplier on eBay or Craigslist; you can even google “American Airlines upgrade site:craigslist.org [or ebay.com]”  You will have to search around for a bit, but they’re out there, especially towards the end of the year.

2) Once you find a willing seller, plan your itinerary online… say you want to go from Chicago to Mumbai and back. Pick a few dates, then put the itineraries on HOLD. Do not purchase yet.

3) CALL the airline (1-800-433-7300) and ask the agent the following question: “I have a friend who wants to let me use his VIP upgrade—is there upgrade availability for my flight?”

If the answer is yes, buy the ticket that you have on hold and write down the 6-character confirmation number.

4) Notify the person that you purchased the upgrade from to call the airline immediately and request the upgrade on your behalf. You will have to supply him with the confirmation number.

It’s important to note that this tactic is technically a violation of airline policy.  Frankly I don’t really care, just be sure that you don’t call the airline and say something like “Hey I just bought an upgrade from some guy I never met on eBay…” because they will not honor the upgrade.

So… for the additional price of about $400 roundtrip, you can be up front in the lay-flat seat snoozing away the entire trip.  To me, that’s well worth the price of admission.

** Disclaimer: the last time I did this was several months ago, and as airlines are constantly changing their policies, make sure you execute step 3 before you buy.

I’ll be sharing more specific tactics I use to travel well (and inexpensively) in future articles, but I’d really like to hear from you.   If you like this topic, let me know and share your personal tactics to high quality, low cost travel.