Canada’s decision to cancel its Investment Visa Program could be a mixed blessing for the U.S. EB-5 program, at least in the short term. The rather obvious positive side is that the Chinese investors who were already in the middle of the Canadian process might generally be inclined to continue their quest to relocate somewhere. One of their most likely choices is the United States. Their original choice of Canada might be an indication of their desire to immigrate to the Western Hemisphere. Their original capital will become unencumbered, so they will have cash readily available that had been heretofore “invested” in the Canadian program.
On the other hand, there are other considerations. One of the primary reasons given for the cancellation of the Canadian program was to “eliminate a large and longstanding backlog of applications.” Therefore, it is reasonable to assume that, whether the Canadian government processes those applications forward (which they are not going to do) or processes them backward (returning deposits to program applicants and close their files), it is going to take quite some time to complete either task. If they can’t get the applications out of the mire, it doesn’t matter direct they try to flow them, they are still stuck in the bureaucratic red tape. It will take time to process. For that reason, I do not see an impending tsunami of EB-5 investors hitting the U.S. west coast.
Nonetheless, should Canada take an inordinately lengthy amount of time to implement a new program, the number of Chinese seeking to participate in the EB-5 program could increase substantially. To my previous point about the Western Hemisphere, it may equally be assumed that some may have chosen Canada, not for its location, but because it belongs to the British Commonwealth. If that was an investor preference, it is unlikely that they will seek residency in the U.S.
It is also important to note that the EB-5 program puts their investments at risk. The Canadian program did not. That program required immigrants to invest in the Canadian economy at large by requiring a loan from applicants to the Canadian government. Exactly as it implies, the government would repay that loan to the immigrants after a period of time. The EB-5 Program requires a minimum $500,000 investment with no guaranteed return.
None of us can know how significant that was for those Chinese investors choosing Canada over the U.S. in the beginning. It could have been significant to all of them. We need to remember that the number of applicants for the EB-5 program may not be as much of an issue in our case as the U.S. limitation on the number of visas we are willing to issue. There are, without a doubt, far more interest investors than there are visas available. Which leads us to remember our own bureaucratic backlog with processing EB-5 applications. That backlog alone has the power to make the question of whether or not more Chinese investors will be attracted to the U.S. through the EB-5 program a moot point.
One of the biggest problems with government is that policy makers all too often do not count the costs of the programs that they birth. When a woman becomes pregnant, she and her husband do not plan just for the ensuing nine months. They plan for the next 18 to 20 years. Our government – indeed, most governments – should plan far into the future just as the expectant family does. We are already learning the primary lesson that the Canadians have learned. There is much more to the process than there are resources allocated to processing it.
The EB-5 program represents a golden opportunity for both the U.S. economy and the Chinese EB-5 investors. It is truly a win-win program, but, if the processing remains as stagnated as it has been, neither the U.S. nor the Chinese investors will reap the full potential and benefits of the EB-5 program.
The primary concern for the U.S. should be to get our EB-5 program operating with much more efficiency and integrity. We cannot afford to offer an incentive like EB-5 to foreign investors and then allow months to pass with little or no progress toward bringing their investment to fruition. Developers cannot afford to wait on EB-5 processing while they are trying to move forward expeditiously on their projects. And we can ill-afford to allow scamming of investors through EB-5 to continue. How the government addresses these issues is up to them. In the meantime, my focus will continue to be to help people involved in all aspects of the EB-5 program become highly successful.
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