The expiry of the US EB-5 Regional Centre program has led to a lot of speculation about the program’s future.
Is this the end of the Regional Centre program? Will all EB-5 investors have no option but to use the direct investment route to qualify for the US green card? Or is this the beginning of the end of the EB-5 visa program itself?
The Regional Centre program’s lapse is neither unprecedented nor is it likely to be permanent. Instead of worrying about the future of the EB-5 visa, investors should use this time to prepare for the likely reauthorization of the RC program.
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Understanding EB-5 Regional Centre Program’s Expiry
The EB-5 visa was created by the Immigration Act of 1990. Originally, this program had just one investment option where the applicant invested directly into a new or existing business in the US and created at least ten direct jobs to qualify for a green card.
In 1993, the Immigrant Investor Pilot Program was set up to offer investors the option of qualifying for the EB-5 visa through Regional Centre investments.
Multiple investors would contribute equity capital to Regional Centres, which allocated the funds into New Commercial Enterprises and Job Creating Enterprises. The NCEs and JCEs create jobs, including indirect jobs, and this would enable investors to qualify for unconditional permanent residence.
The Pilot program was structured to expire after a specific period of time, and the program’s validity depends on continual reauthorization by the US Congress. The program was last extended until June 30, 2021. The US Congress’s failure to agree upon a further extension has led to the program’s expiry.
Why the Regional Centre Program is Unlikely to End
That the Regional Centre program was allowed to expire is certainly disconcerting. However, it’s too early to presume that the RC program is dead.
For starters, more than 90 percent of all EB-5 petitions are filed under the RC program. Over the years, just a handful of Chinese, Indian, and Vietnamese investors have opted for the direct investment option.
Termination of the RC program will, for all practical purposes, end the EB-5 visa program itself. Whether the US is ready for such a major decision on its investor visa program, especially considering the pandemic’s impact on the global economy, is doubtful.
Further, there’s no real reason for the end of the RC program. The EB-5 Modernization Rule, implemented the long-overdue increase in minimum investment limits and measures to prevent abuse of the Targeted Employment Areas investment route.
Although these rules have been invalidated by the courts on a technical ground, it’s unlikely that these positive measures will be rolled back.
In such a scenario, terminating the RC route simply doesn’t make any sense.
The Way Ahead
Unless there is an official announcement to the contrary, investors should use this gap to finetune their EB-5 Regional Centre investment strategy. With new applications on hold, this pause will lead to faster clearance of the existing backlog, which means the path to the US green card may be faster and easier once the Regional Centre program is reauthorized.