Economics: Digital Nomads, Visas, Foreign Currency | Freelance Lifestyle, Finance and Entrepreneurship Blog

This is a slighted edited version of my comment to someone asking about countries that have laws specifically detailing digital nomads are allowed to work on tourist visas. My background is in economics and investing based on economic understanding.

The question of digital nomads working encompasses legal questions (do I need a special visa etc.), regulatory realities (regardless of what the law says how is it enforced at the ground level?) and economics (I am talking here about the benefits to the country economically from having digital nomads).

I like the economic thinking that should drive what the government’s wish to accomplish. The prohibition against work on tourist visas makes sense when work is defined as it was historically (being hired by a company in the country that otherwise would have hired a citizen). So when I am thinking about it I find thinking about the macroeconomic level view and how that is manifest in laws and policy. From a practical standpoint of being a digital nomad what really matters is how that all gets filtered down to the government employees on the ground making decisions.

Few laws say what is legal, they normally say what is not. I would imagine few countries specifically say it is legal to do work from another country (as a digital nomad, as a employee answering an business email on their vacation, as a private investor reading the news and using the internet to buy or sell a stock, as a writer writing a book that will be published back home, an entrepreneur refining ideas to launch a new business back home or whatever).

Buddha statue at Borobudur temple in Java, Indonesia. See more of my photos from Indonesia.

The laws usually are pretty clear you can’t apply for jobs and get hired by a company inside that country to do work in that country on a tourist visa.

“Thailand” has said it is ok to work as a digital nomad (work for some company outside the country) while on a tourist visa. But these pronouncements by officials don’t carry much weight with other officials so they are not worth much.

What is helpful is knowing the prohibitions against working are primarily about not having foreigners take jobs of the citizens. Digital nomads don’t do that. So they are not meant to be prohibited anymore than the other examples (an executive participating in a conference call from work while on vacation etc.).

But since it isn’t clear cut it can be confused by officials as something not allowed. It is much easier not to have to get low level officials to comprehend the intent of the laws. They think of it as tourists can’t work in the country and that is essentially true. But how “work” is defined is the issue; and digital nomad work doesn’t fit the description of work in that context.

To stay in that context you certainly shouldn’t do any work for a business in the country (don’t create a web site for a business in the country etc.). If you do that type of thing you pretty likely need a business visa.

Another factor of enforcement is not really related to the intent of working-in-the-country-laws but the desire of the bureaucracy to stop certain people from staying too long. If the country is tired of acting out by long term backpackers (for example) they then try to find reasons to kick people out or not let them in.

Part of this is driven by the idea these people likely have hidden jobs – or how could they stay so long. Rather than find every time one of these people breaks the rules and kick them out, just kick people out that might have illegal jobs. Another is if they just don’t like how backpackers have overtaken certain areas and they start kicking people out.

I suppose countries could get tired of people staying at the 4 seasons too long but that doesn’t seem to happen. Partially because people probably don’t do that too much. And also those people are bringing in so much foreign currency that most countries would like that so much they don’t care about whatever else is going on as long as it isn’t too illegal or destructive.

Most mid or low income countries are in desperate need of foreign cash right now. Go look at charts of their currency versus the USA $ to get an idea. If it is collapsing vs the $US they likely desperately want foreign $ that digital nomad and any tourists… bring.

Their central banks and heads of government know this need of foreign currency right now. And it is bad enough that most countries that have decently well functioning government have made the heads of border patrol organizations aware of this. But getting that message down to the border guards is very difficult in most places.

I am confident that those at the top of most countries with lots of digital nomads love them and would love to attract many more. But how they can implement that desire in the current bureaucracy is not so easy.

In addition in countries with a lot of corruption larger businesses (even just 1 factory) concentrate enough cash that there is plenty to pay out to corrupt individual to avoid bureaucratic annoyances. In general, digital nomads don’t fit well into the you should be paying us or we should be making your life difficult mindset.

Another issue is countries with the most competent governments generally are so rich that digital nomads bring in not nearly enough cash to matter at all and usually add to already overcrowded places (Singapore is a good example).

My guess is a few countries are going to figure out how to roll out the welcome mat for digital nomads and help their economies (not hugely but you have realize bringing in foreign currency has benefits that far surpass the absolute $ involved). And with a large digital nomad presence there a significant benefits to owners and workers in very much the same way as found with tourism.

There are even bigger benefits to designing a smart program to attract digital nomads. These benefits don’t come from having a few digital nomads but if you can create a healthy community you can have your citizens benefit from this dynamic learning environment and entrepreneurship that a strong digital nomad community can provide. This will take work but the benefits could be large.

Chile seems to understand this idea with their strong efforts to lure startup founders to incubate in Chile. Building on that idea with a digital nomad effort would be wise. Encourage things like meetups and hacker spaces. I would encourage organizations to fund community spaces for these events or make their space available. If you are doing good things to aid business development and technology entrepreneurship it should be easy to get some having success to give back (and if you have problems getting that cooperation you can make it visible how important this is to you with government action).

Countries spend large amounts trying to attract tourists. Digital nomad numbers used to be tiny. Digital nomad numbers are still small compared to tourism. But they have actually reached a point of making a difference (helped by the long term nature of nomad stays). Thailand has a good shot at being one of the countries that may to this, Chile and Honduras maybe others. If Malaysia was smart they would be – they may be the most desperate for foreign currency right now due to heavy debt load (and lots of it held by foreigners – though some of that has been dumped are foreigners flee) and reliance on natural resources which have been clobbered.