Immigrants eye US after Canada change
Tens of thousands of Chinese investors may have to find new destinations for their wealth after the Canadian government announced on Tuesday its intention to end its immigrant investor program, and one of those destinations is likely to be the US, immigration lawyers say.
The Canadian federal Immigrant Investor Program provided limited economic benefit to the country, according to a news release on the website of the Canadian embassy in Beijing.
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, according to the release.
“Our government is focused on attracting experienced business people and raising investment capital that will contribute to our economic success over the long term,” Citizenship and Immigration Minister Chris Alexander said.
The immigrant investor program, which granted permanent residency to those who committed C$800,000 ($727,850) to a five-year zero-interest loan, was very popular among wealthy Chinese people.
The program will be replaced with a new Immigrant Investor Venture Capital Fund, which will require immigrants to invest money, rather than just loan it.
Canada has been a popular destination for Chinese migrants since Ottawa opened its immigration policy to residents of the Chinese mainland in 1996. China has become the largest source of immigrants and international students in Canada, according to a report by the Center for China and Globalization.
However, Canada’s immigration policy changes may cause a lot of Chinese to lose their interest in the country and force Chinese investors to look for alternatives, such as the US Employment Based Visa, Category 5 (EB-5) program — a way of obtaining a green card for foreign nationals who invest money in the US.
“I believe that Chinese nationals will have fewer choices to emigrate from China (because of Canada’s changing policy) and that the US is a logical and desirable destination with a lower investment threshold,” said Larry Behar, immigration attorney at Behar Law Group.
With a minimum investment of $1 million or $500,000 in low employment or rural areas, an EB-5 program, grants special visas to foreigners who create or preserve at least 10 full-time jobs for US citizens.
In 2009, China surpassed South Korea to become the largest source of EB-5 participants. More than 6,000 Chinese investors obtained visas through the EB-5 program in fiscal 2013, according to Ronald Fieldstone, attorney at Arnstein & Lehr LLP.
“There is a pent-up demand for wealthy Chinese to emigrate to western countries,” Fieldstone said. “Therefore (because of Canada’s new immigration rule), these investors will now actively look to the well-established EB-5 program in the US for relief.”
Jean Chen, lead attorney at the law office of Jean D. Chen, said she believes there will continue to be a large increase in the number of Chinese investors for the US EB-5 program.
“This is not only due to the Canadian situation as you mentioned, but also because the US EB-5 system has lately had a very high approval rate with a relatively low investment threshold, so we see the popularity increasing significantly,” Chen said.
However, potential Chinese investors worry about the security of US investment. Concern is especially high after last year’s “Chicago Scandal” in which the Securities and Exchange Commission sued an EB-5 regional center, accusing its operator of defrauding more than 250 investors primarily from China out of $156 million.
“On a very basic level, the US system has more risk involved when compared to the Canadian system,” Chen said. Contact writers at firstname.lastname@example.org and email@example.com