Australia is experiencing similar problems to Canada in attracting ultra-high net worth applicants for its investment immigration program.
Since it changed the rules on its Significant Investor Visa program in July 2015, just 98 applications have been received and 10 visas issued against a target intake of 2,100.
Canada’s numbers are even worse. Since launching its Immigrant Investors Venture Capital Pilot Program (IIVCP) in February 2015, less than 10 applications have been received. The target was 60.
With rich Chinese investors the main focus of both schemes, both programs are failing because of terms that are unrealistic in a dynamic market place.
In Australia’s case, the repurposed program requires a total investment of five million Australian dollars over four years, $2 million of which must be invested in small businesses.
Goldman Sachs suggested the program could generate 10 billion Australian dollars, but the result has been a dramatic failure. The 98 applications and 10 issued visas contrasts with 1,544 applications and 590 visas during the final year of the previous program.
Andrew Martin, head of asset management at Moelis & Co in Sydney, says the investment risk is too high to attract what are often first-time investors to the Australian program. Under the previous program, investors had the option of putting all of the cash into government bonds or real estate, both viewed as safer channels.
The Canada program fails on a number of counts, including an unrealistic net worth stipulation, a long investment term, a lack of asset class composition choices and a language requirement, the only program in the world that assesses language for business immigrants.
Colin Singer, Managing Partner of Immigration.ca, recently called for Canada to return to the forefront of the investment immigration industry by scrapping its current program in favour of two programs designed to be more attractive to potential investors.
The two suggested streams, one for permanent residency and one for citizenship, would each involve strict due diligence and compliance mechanisms aimed at accepting the highest calibre of investors.
Key stipulations for both schemes would include:
Credibility: Strict due diligence and compliance mechanisms must be put in place.
Competitiveness: Must exceed or at least equal similar international programs using a variety of objective international measures.
Efficient cost to manage: Centralized processing, mandatory background checks and due diligence can be outsourced and conducted by reputable third parties. Applications must not be submitted directly by applicants or consultants but through designated intermediaries, thus ensuring standards met.
Fast processing: Industry standard is six months, achieved by limitations on the number of applications submitted each cycle.
With these overriding requirements established, the details of the two programs could look as follows:
1) New permanent residency-through-investment program
- An investment threshold of between $1.5 million and $2 million – very competitive when compared to similar international programs.
- No minimum net worth, making it more attractive for an investor and easier to administer. This is consistent with the industry.
- Asset classes to be chosen by investor. This is consistent with the industry.
- Investment to exclude residential real estate, thus avoiding concerns of real estate bubbles in popular geographical areas.
- Strict due diligence and compliance, conducted by expert third parties.
- Processing fees of $20,000, plus additional fees for accompanying dependents. Processing fees can help offset program management costs.
2) New citizenship-through-investment program
- An investment threshold of $10 million. This could be marketable, as Canada would become the only tier 1 country in North America in the citizenship-through investment industry.
- No minimum net worth, making it more attractive for an investor and easier to administer. This is consistent with the industry
- Asset classes: 50 per cent of investment allocated towards a federal infrastructure fund and 50 per cent chosen by investor, with restrictions.
- One year of permanent residence status, including a minimum of three months physical presence before an application for Canadian citizenship can be submitted.
- Strict due diligence and compliance, conducted by expert third parties.
- Processing fees of $50,000, plus additional fees for accompanying dependents. Processing fees can help offset program management costs.
- Creation of an International Refugee Fund to receive 0.0005% of investment ($5,000 per investor). This would serve as a program to provide monetary assistance to those affected by a current international migrant crisis caused by international conflicts.
The impact on Canada’s stalled economy could be significant should Canada’s immigration and international trade authorities look seriously at the overall benefits.
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