Immigrant investor program comparison

To understand what the EB-5 program is and is not, it’s helpful to look at EB-5 in context of other immigrant investor programs. Last year the Migration Policy Institute published a very nice report that does just that: Selling Visas and Citizenship: Policy Questions from the Global Boom in Investor Immigration (October 2014). The report divides immigrant investor programs into two main categories and five types, as summarized (by me) in the following table.

Note that EB-5 falls within the category of private-sector business investment, and does not involve an investor-government transaction. You can give the Malta government cash in exchange for citizenship (program type #5); you can’t give the U.S. government cash for citizenship. Australia offers the option of a government investment product (government bonds) to buy in exchange for a visa (program type #3); the U.S. government does not offer EB-5 investments, leaving that to the private sector. Spain will grant a temporary visa if you purchase property (program type #2); the U.S. will not grant an EB-5 visa simply for asset acquisition. Agents trying to sell EB-5 have muddied the waters here, because potential immigrant investors like security and simplicity, and it’s not easy to sell private sector investment. Investing in a private business requires sophistication and involves risk, but that’s not such a comfortable story. So some agents try to imply that the U.S. government sponsors/underwrites EB-5 investments, and some try to peddle “secure investments” that are really only non-qualifying asset acquisitions. Do not listen to such stories. The fact is that the EB-5 and Regional Center programs fundamentally involve at-risk investment in job-creating business. You cannot buy a green card, the U.S. government does not offer or sponsor your investment (neither Regional Center approval nor project “pre-approval” constitute endorsement or underwriting by the government), and you can’t gain permanent residence simply by expending a certain amount of money. You can immigrate to the U.S. by making a qualifying investment that is spent to develop a new commercial enterprise that creates jobs. Or you can decide that the U.S. is too much trouble and go to St. Kitts & Nevis to buy citizenship.

A business investment-type program has advantages and disadvantages for governments. On the positive side (so far as domestic politics are concerned), the program can’t be criticized for simply selling green cards, and it may create jobs and spur economic growth. On the negative side, the government has a tough task in ensuring program integrity and maximizing economic impact when it doesn’t control the investment transaction. If you’re interested in this topic, I recommend reading the entire Migration Policy Institute report, which reflects thoughtfully on policy implications for each type of immigrant investor program.