Immigration, residence and citizenship have always been sensitive matters that have attracted strongly opposing views and generated debate and controversy. Investor immigration is, in many cases, more polarizing than general immigration.
Poor planning, implementation and regulation of investor immigration programs in the past has severely damaged the industry’s reputation. With a maligned reputation, media and the public are drawn more to negative stories and details of program failures than they are to success stories.
However, a number of independent studies have highlighted a wealth of benefits to countries operating effective investor immigration programs.
Direct Financial Benefit
The huge inflows of foreign capital as a result of investor immigration programs have benefited host countries significantly. In the last 10 years, the U.S. EB-5 program has attracted more than $9 billion in capital investment. An independent report on the Canadian program published in 2010 estimated that the program provided an annual economic contribution of around C$2 billion. Prior to its cancellation in 2015, Hong Kong’s residence by investment program attracted a total of HK$224 billion ($29 billion) in the 12 years it operated. In Cyprus, government officials say the program has contributed €2 billion to the economy. Programs in the U.K., Australia and New Zealand each attracted more than a billion dollars in investment in 2014, while programs in Hungary and Portugal attracted hundreds of millions. In Latvia, an independent report by the central bank estimated that the residency by investment program had within five years brought in more than $1.4 billion in foreign investment and added more than $40 million per year to the state budget. A separate report by Deloitte had even higher estimates of budget contribution.
The impact of investor immigration on small Caribbean countries has been even more significant. In St. Kitts, the program has been estimated to contribute 30% of government revenue, while in Antigua this figure is expected to be 25% by the end of 2015.
In St. Kitts in particular, the program has been vital to support an economy severely impacted by the closure of its sugar industry in 2006. The most popular investment route involves a direct contribution of at least $250,000 to the Sugar Industry Diversification Foundation (SIDF), a public charity aimed at rebuilding the economy and developing growth in new sectors. As of 2013, the fund had raised around $200 million, almost entirely from the citizenship program. Expenditure from the fund has allowed St. Kitts to develop its tourism industry and invest in public interest initiatives. These include spending on employment and skills training that has created 600 permanent jobs, investments in agriculture that aim to provide food security by 2017, spending on school modernization and computer literacy meaning every high school student now has a government provided laptop, and investments in renewable energy that are seeing more homes fitted with solar panels.
Indirect Economic Benefit
Investor immigration programs benefit the economy far beyond the impact of the initial investment. Of particular interest is the impact on job creation. Immigration Canada estimated that in the first 10 years of Canada’s program, 33,000 jobs were created as a result of investments. Invest in the USA estimates that 181,000 jobs have been created or saved as a result of EB-5 investments in the last five years. An independent report by the U.K.’s Migration Advisory Committee cited surveys that found that a significant number of investors who came to the U.K. through the Tier 1 Investor route had businesses that employed more than 10 people.
Attracting wealthy immigrant investors also benefits host countries through the spending they bring to the economy as well as tax income from their earnings. In addition, immigrants may go on to invest or manage business above and beyond what was required under the initial criteria for their admittance.
Raising Capital for Entrepreneurs and Businessmen
Investor immigration programs that require investments in businesses offer entrepreneurs and businessmen a source of capital, often at a lower cost than other routes. In particular, the U.S. EB-5, through the Regional Center program, has successfully funded a number of ventures. In New York, projects such as Hudson Yards, Pacific Park Brooklyn, the New York Wheel and the Four Seasons hotel in the financial district have benefitted from EB-5 investment. Other notable projects funded in part by EB-5 contributions include SLS Las Vegas Hotel & Casino, Hunter’s Point Shipyard in San Francisco, Panorama Tower in Miami.
In Australia, new rules for the Significant Investor Visa require that 40% of the A$5 million investment go towards venture capital or small companies. Canada’s new Immigrant Investor Venture Capital Pilot Program also seeks to raise funds for start-up companies.
Attracting human capital
Investor immigration programs attract wealthy individuals who have often earned their fortunes through entrepreneurial endeavors. Thus attracting immigrant investors creates an inflow of skilled businessmen who may go on to manage or invest in new ventures. Furthermore, an independent study of the Canadian program found that the children of immigrant investors were likely to go on to reach high levels of educational attainment.
Building Business Links Abroad
The majority of immigrant investors will fund their investments from income from business endeavors run by themselves or their family. Therefore they are likely to have strong business connections in their home country. By attracting immigrant investors, host countries can build strong business links with other countries.