A Business Immigration Lawyer’s Take
The US established the EB-5 visa program in 1990 to facilitate increased investment in its economy.
The investment under the EB-5 program can lead to a green card for the investor to permanently live and work in the US with their dependent family members. Later, the investor and his/her family may also become eligible and apply to become US citizens.
The EB-5 program requires investors to invest in a domestic commercial enterprise a significant amount of legally obtained (and not borrowed) money and create at least 10 permanent full-time jobs in the US.
In short, the EB-5 program has brought in billions of dollars to the US economy, created hundreds of thousands of new jobs and brought in a flow of immigrants to the US since its inception.
As Canada is battling to overcome the COVID-19 pandemic and spending billions of dollars, it must seriously consider attracting qualified investors who are willing and able to invest. Foreign investment will help us to rebuild the Canadian economy better and in a more sustainable way.
Looking at the success of the US EB-5 program, It’s time for Canada to create its own new and long-overdue investment immigration program.
What Should the New Canadian Investment Immigration Program Look Like?
Before delving into this question, let’s focus on what Canada wants to achieve overall through its various immigration programs.
On a very high level, by running immigration programs on federal, provincial and regional levels, Canada wants to achieve the following 3 main goals:
- A continuous increase of the younger population that works, pays taxes and contributes to a large fund that is used for many purposes, including providing adequate retirement income and services for its retiring population.
It’s very important and simple. We have one of the highest average life expectancies in the world. We have one of the lowest and declining fertility rates in the world. Canada is in great need of more young, working and income-earning taxpayers.
This goal is partially achieved by attracting foreigners to come to Canada temporarily or permanently through various immigration programs. A glance at Canada’s permanent immigration programs tells us that Canada wants working-age, skilled and educated permanent residents and pays much attention to this category of immigrants.
The graphs at the end of this article give a snapshot of these issues.
- Creating more new jobs and preserving existing jobs have been the focus of any level of the Canadian government. Small and medium business owners want to retire and sell their businesses to new owners; otherwise, the businesses will close down and jobs will be lost. Various levels of government are trying to launch big infrastructure projects and, thus, create new jobs.
However, currently, Canada does not have a “passive” investment immigration program that would allow it to raise free money to finance such projects.
- Attracting and retaining the best talent from around the world is a priority of several Canadian federal and provincial immigration programs. The availability of good-paying jobs, affordable university tuitions and prospects of straight-forward immigration can help attract talent from many countries. Having attracted such talent, the other challenge is to keep them in Canada and not lose them to the US.
So far, Canada was successful in attracting such talent, but once the “hunt for talent” is back after COVID-19, we must do our best to retain the talent in Canada. Again, the infrastructure projects will come in handy to accomplish this task.
Keeping all these goals in mind, can a new “passive” investment immigration program help Canada achieve them? I believe that it can and here’s how.
The Main Features of The New Passive Investment Immigration Program
Although very successful, the US EB-5 visa program had its pluses and minuses. Canada has to take the best features of the EB-5 program and avoid its worst features such as discrimination based on the citizenship of the applicant and per country limitations on the number of EB-5 visas.
The table below will outline the main 11 features of the desired investment immigration program and provides why certain features are important.
|1.||No requirement to show the net worth of the investor. If the investor is financially able to set aside and invest the required amount, then there’s no problem.||Asking the investor to show they have a net worth higher than the actual investment amount is not necessary. Maybe the investor wants to put all his/her money into this immigration program. The absence of such requirements will widen the pool of eligible candidates.|
|2.||No requirement of "active involvement in managing a business" in Canada. Just invest the required money and get a conditional 2-year work permit that can lead to permanent residence, if all conditions are fulfilled.||Those who are willing and able to invest large amounts of money should have the liberty not to be involved in the day-to-day of the business.|
|3.||Process all those who have met the necessary investment amount and encourage more-than-minimum investment by adding more points to those candidates who can invest more.||This encouragement mechanism will result in more investment from those who want to become permanent residents faster, i.e. in less than 2 years.|
|4.||No caps based on the citizenship of the applicant.||More than being un-Canadian, discriminating based on the citizenship of the applicant is not effective, because the applicants can “purchase” the passport of an island country and apply as its citizen. In turn, this means that a part of the available capital flows to that island country and not to Canada.|
|5.||The investor immigration program becomes a new category - “Investor Immigration Class” - under the existing point-based Express Entry program.||As the qualifications and investment of the applicant can add more points and, thus, bring him/her closer to the Canadian permanent residence, running the new program under the Express Entry program makes sense.|
|6.||The applicant and his/her immediate family can act as a team to collect necessary points faster.|
Getting more points for:
- advanced language skills
- applicant’s and family member’s Canadian education and working experience
- time/each day spent in Canada
- creating or purchasing a new business which creates more jobs other than the jobs created under the new immigration programs
- doing so in rural and small cities would give even more points
- paying taxes based on higher declared income
- an extraordinary contribution to Canada (a separate application and assessment is required).
|All these “encouragement points” will allow the investor immigrants to invest more and commit more to Canada, and become permanent residents faster than others.
These points may encourage (not force) the applicants to adopt a more active approach to their immigration.
|7.||Processing speed compatible with the Express Entry program. All applications must be processed and finalized within 6 months after the application. A dedicated office with the Canadian immigration authorities may be created.||Faster processing time means more applicants for this new program.|
|8.||Options to leave the invested money in the relevant project for more than 2 years and turning the investor applicant into a shareholder in the project using the Public-Private-Partnership models. Additional bonus points may be considered for those applicants who subscribe to become the shareholders at the end of the 2 years and fulfil all requirements of the investor immigration program. The investor/shareholder can sell the shares if he/she wishes later on.||This would encourage continuous support to the Canadian projects after the applicant obtains permanent residency in Canada. It will also increase the applicant’s sense of belonging to Canada and sense of ownership of Canadian projects/companies.
|9.||The program has one federally-approved organization and one provincially-approved organization in each province that will receive and administer the investment money given by the applicants.||Government-approved projects are preferred to those administered privately. That was the case with the EB-5 Regional Centres when compared to independent projects.|
|10.||Because Canadian government bodies (federal & provincial) will be receiving the investment and administering the projects, the applicants need not worry about the eligibility of the project under this new investor immigration program.||Such a unified approach will give significant peace of mind for the applicants.|
|11.||The minimum investment amount should be less than what’s required under the US EB-5 program and should be one single amount regardless of the actual location of the project. The task to invest the received funds in the right locations across Canada should be for the Canadian authorities to complete.||Such an approach will be more equitable for foreign applicants who don’t know much about Canadian needs. Also, as noted above, if the applicant invests more in other locations (on top of his/her initial investment), then the applicant can collect more points.|
So, How Can A New Investor Immigration Program Help?
In the post-COVID-19 world, Canada needs to be more realistic. There are many needs that Canada could address by attracting the right investor immigrants and their families. Many potential investors are willing and able to invest their money in exchange for the opportunity to live in Canada.
A new investor immigration program that is significantly improved than the US EB-5 visa program can bring that necessary boost to reignite Canada’s economy and demographics once we successfully tackle the COVID-19 problem.