On February 12th, Citizenship and Immigration Canada (CIC) officially announced that the country’s Immigrant Investor Program (IIP) will be terminated, eliminating the pending applications of nearly 75,000 applicants (45,500 of whom are Chinese) and returning the fees to those who had been waiting in the longstanding backlog. In fact, the Program had been frozen since 2012 due to the enormous influx of applications at Canada’s Hong Kong consulate, which essentially paralyzed the immigration staff dealing with a backlog in the tens of thousands.
In a statement, CIC said that the move will ‘eliminate a large and longstanding backlog of applications, and pave the way for new pilot programs that will actually meet Canada’s labour market and economic needs’.
Struggles of the Canada’s Immigrant Investor Program (IIP)
Under Canada’s Immigrant Investor Program, applicants worth a minimum of C$1.6 million ($1.5 million USD) loaned the government C$800,000 ($730,000 USD) interest-free for a period of five years. Unlike the U.S. EB-5 Program, which requires that capital be placed “at risk” throughout the investment period, the relatively low investment threshold and the risk-free loan scheme brought about a range of issues in Canada. According to Citizen and Immigration Canada, “Research shows that immigrant investors pay less in taxes than other economic immigrants, are less likely to stay in Canada over the medium- to long-term and often lack the skills, including official language proficiency, to integrate as well as other immigrants from the same countries.”
Before its death last week, the Canada Immmigrant Investor Program was considered the world’s most popular wealth migration program, which brought an estimated 185,000 migrants to Canada, including more than 30,000 Hongkongers and 67,000 Mainland Chinese under the IIP.
In April, 2013, Canada initiated a new “pilot” entrepreneur visa program to ostensibly take the place of the outgoing IIP. The new program, which seeks to connect foreign entrepreneurs with Canadian venture capitalists. would these entrepreneurs to obtain permanent residence visas if they can attract sufficient investment and also meet Canada’s general immigration criteria.
How does the shuttering of Canada’s Immigrant Investor Program impact the EB-5 Program?
In the wake of the sudden interruption of Canada’s Immigrant Investor Program, many have speculated that the EB-5 Program will be the immediate beneficiary as would-be investors who were waiting in queue in Canada and direct their ambitions to emigrate elsewhere. Demand for EB-5 visas may increase in the short-term as overseas migration consultants, struggling to refund service fees to investors, may advise their clients who have been shut out of Canada’s Program to seek other avenues for investment.
Yet, as we have noted in recent weeks, including a reprinting of H. Ronald Klasko’s blogpost, “FAQs on EB-5 Quota Backlog
“, demand for EB-5 visas is finally nearing its capacity and the potential for retrogression
is a real threat this fiscal year and a near certainty for FY2015. Any mainland Chinese applicant who invests in the EB-5 Program as a result of the closing of Canada’s Immigrant Investor Program may only add to the mounting concern of Chinese quota retrogression.