Investment migration industry grows wings
30 active programmes, 80 of them available worldwide
THE investment migration industry is growing at a faster rate than ever before. Each year, thousands of wealthy individuals apply for citizenship and residence in foreign countries, and by the end of 2017, there were more than 30 active and successful programmes in existence, with a total of 80 programmes available worldwide.
The range and breadth of programmes is constantly expanding, with residence and citizenship options now available in most of the major world regions, including the Caribbean, North America, Europe, South East Asia, Oceania, and even, most recently, Central Asia.
Citizenship-by-investment has grown into a roughly $3 billion (R40bn) industry, while residence-by-investment – slightly more difficult to approximate – most likely encompasses tens of billions of dollars.
Rather than mysterious, rarefied topics off-limits to ordinary citizens, as was largely the case in the industry’s early years, citizenshipand residence-by-investment are slowly becoming household names. But for those still new to the industry, what exactly do these terms mean?
What is investment migration all about, and why should you care? A brief history of investment migration In its most basic form, citizenship-by-investment denotes the process whereby qualified, vetted candidates are granted full citizenship in exchange for their substantial economic contribution to the passport-issuing state. Residence-by-investment denotes a similar process, but candidates in this case are granted temporary residence, which can be extended to permanent residence or, in some cases, citizenship.
Citizenship- and residence-by investment began in earnest in 1984, when the Caribbean island of St Kitts and Nevis launched the first citizenship-by-investment programme in the world. Dominica followed suit almost a decade later, and since then the number of countries offering similar programmes has risen exponentially.
In 2014, EU member state Malta introduced its Individual Investor Programme, which is the only programme of its kind that is recognised by the European Commission. Today, for those with the means, there is a healthy diversity of investment options to choose from, including the UK, the US, Singapore, Australia, Portugal, Hungary, Ireland, Greece, Spain, and most recently, Kazakhstan.
What is driving the increased demand for alternative residence and citizenship in recent years? The contributing factors are wideranging. In the unpredictable times in which we live, acquiring a second or even a third residence or nationality is seen as an astute move — a sort of wholesale insurance policy that provides the comfort of a “plan B” for individuals and families, hedging them to a great extent against the risks associated with an uncertain future.
Another major pull-factor is, of course, the prospect of expanded global mobility. The need for greater visa-free access to key business and lifestyle regions has grown in tandem with the rapid globalisation of the world economy. Being able to travel easily and extensively is now less a luxury than a basic requirement for modern businesspeople.
Investment migration enables wealthy individuals to transcend the constraints imposed on them by their passport and country of origin, tapping into financial, career, and educational opportunities on a global scale. Perhaps most importantly, an additional passport can quite literally save a person’s life in times of political unrest, civil war, and terrorism, or in other delicate political situations.
Investment migration is not a one-way transaction. Those who are critical of the industry tend to focus exclusively on the benefits to private clients: they are concerned by what they perceive to be the undue “marketisation” of citizenship, and they are distressed by issues of tax evasion and money laundering.
While the former concern is rooted in an increasingly old-fashioned attachment to arbitrary determiners of nationality such as birthplace and marriage, the latter concern is usually overstated: due diligence mechanisms within the industry are incredibly rigorous and strict, with hundreds of exceptionally qualified and upstanding individuals vetted and accepted into programmes each year.
Regrettably, the rare, highly publicised exceptions to this norm tend to cloud public perception. For those with concerns about the ideological underpinnings of “selling citizenship” to potentially unsavoury characters with their ill-gotten riches, the developments coming out of the migration investment industry should offer some reassurance.
Despite being a relatively new field, with all the attendant teething problems that go with that, the landscape is shifting to ensure that appropriate checks and balances are in place. Indeed, a strong culture of self-regulation and due diligence is essential to the industry’s continued success.
An important first step in this direction was the formation of the Investment Migration Council (IMC) in 2015.
The IMC has two main mandates: on the one hand, establishing and maintaining professional standards and codes of conduct within the industry, and on the other hand, improving public understanding of the intricate processes and systems involved in citizenship and residence programmes.
More pointedly, industry sceptics typically disregard the transformational effects that inflows from residence and citizenship programmes can have on receiving economies, which become more competitive and internationally relevant as a result.
Foreign direct investment brings in capital to both the public sector – in the form of government donations, tax payments, or treasury bond investments – and the private sector – in the form of investments in businesses, start-ups, or real estate.
The economic benefits are cumulative: receiving states tend to experience rapid growth in the real estate sector, accompanied by growth in the construction industry and among local businesses, plus increased liquidity in the commercial banking system and job creation.
There are also various intangible benefits tied to granting citizenship to people from other countries, who bring diversity, scarce skills, and rich global networks. As the number of available programmes expands year-on-year, the opportunities for potential citizens-by-investment are also set to increase.
Currently, Europe is highly desirable owing to its solid social and legal infrastructure and excellent security; however, it is more expensive to acquire citizenship in Europe than in the Caribbean, for example.
The Caribbean offers an appealing – and more economical – alternative, with all Caribbean programme-countries offering visa-free access to Europe’s Schengen Area.
Many South Africans choose to acquire residence or citizenship elsewhere without actually physically relocating. For those interested in relocation, there are also considerations of culture, climate, and cuisine, which differ from region to region.
FOR THOSE WITH THE MEANS, THERE IS A HEALTHY DIVERSITY OF INVESTMENT OPTIONS TO CHOOSE FROM, INCLUDING THE UK, US, SINGAPORE AND