Wednesday, October 1, 2014
A growing number of countries have created immigrant investor programs offering citizenship or residency rights in exchange for a sizeable financial investment, as demand from wealthy immigrants from China and other emerging economies increases. Yet even as more countries jump into the ring, some governments with more experience have questioned the programs' economic benefits and are looking for ways to increase their impact, a new Migration Policy Institute (MPI) report finds.
The report, Selling Visas and Citizenship: Policy Questions from the Global Boom in Investor Immigration, examines the increasing mix of players and types of immigrant investor programs, their policy design, benefits and other considerations. During the past decade, the number of countries with immigrant investor programs has increased dramatically, and about half of all European Union member states now have dedicated routes. Demand has increased as well, with the U.S. EB-5 program, for example, nearing its annual cap of 10,000 visas this year for the first time, after two decades of relatively low uptake.
"Cash-for citizenship" policies have not been without controversy, however, as Malta experienced in 2013. Its plan to sell passports for 650,000 euros (later upped to 1.15 million euros in cash and investments) sparked an outcry in the country—as well as in Brussels, since a Malta passport grants immediate access to EU citizenship.
"In theory, the benefits of investor programs are straightforward: investors obtain new residency rights, while destination countries gain revenues or job-creating investments," authors Madeleine Sumption and Kate Hooper write. "In practice, policymakers have often found the results disappointing."
The report explores the two primary models: (1) investment in private-sector assets, such as the business investment programs used in the United States, Singapore and the Netherlands, or the purchase of private property, as seen in Greece, Latvia, Portugal and Spain, and (2) providing funds to the government via non-refundable fees, low-interest loans or bonds, as occurs in the Caribbean as well as Australia, Malta and the United Kingdom.
The report argues that the clearest economic benefits come from programs that encourage cash payments to the government or national development funds, though it notes that these are the most controversial as they accentuate public concerns about whether it is appropriate to sell citizenship. Programs requiring private-sector investment—such as the U.S. EB-5 program—are promising in theory but raise some thorny compliance issues. In particular, the government may have little control over where and how the money is invested, as well as whether investments actually create the expected number of jobs.
Citing concerns over economic benefits, Canada earlier this year scrapped its federal program. And the United Kingdom's Migration Advisory Committee has argued that the country is giving away residence rights in return for a government bond investment with no economic value. Australia, meanwhile, has adjusted its program to target investors who will make clearer economic contributions.
The report provides a global overview of immigrant investor initiatives, examines residency requirements and upfront costs.