As we enter year 2 of the COVID-19 Pandemic, we’ve become painfully aware of the economic impact that 2020 alone has had on Canada which is projected to continue into 2021 as well. With tens of thousands of businesses closing their doors for good and trillions of dollars being poured into economic relief and COVID health and safety measures, economic recovery will be at the forefront of what post-COVID Canada will look like. As early as August 2020, talks of big economic recovery plans sparked but as the pandemic looms at least until 2022, it’s time to think bigger and more creatively.
Ultimately, Canada has a cash flow problem that just isn’t going away. So, the question is, how do we access global cash flow with countless countries across the world vying for the same thing? What is Canada’s competitive edge?
The answer is crystal clear: immigration – Canada’s secret economic magnet.
The Success of the US EB-5 Program is a Lesson for Canada
Immigration has long been a driver of economic growth with several economic programs existing specifically for this purpose. With border closures and subsequently reduced immigration, this economic growth has been significantly jeopardized. It won’t be enough to simply resume regular immigration practices if we want to climb out of this recession. Now is the time to think more innovatively and proactively. Canada sorely lacks any meaningful investment-based immigration programs. This gap in the system costs Canada billions of dollars in lost opportunities and capital annually.
Put simply, Canada needs a federal investment-based visa program like the United States’ EB-5 Visa Program to truly recover economically in a post-COVID future.
The US EB-Visa Program was introduced in 1990 as an investment-based immigration program that offered immigrants and their immediate family members permanent residence in exchange for a substantial investment in domestic businesses and the creation of at least 10 permanent full-time jobs. Building on this, Congress later introduced the Regional Centre program in 1992 to further direct economic stimulus and development beyond major urban hubs and focus on underdeveloped or harder economically hit areas of the country. Each year, the US Citizenship & Immigration Service (USCIS) makes 10,000 EB-5 Visas available to prospective investors and carefully selects successful applicants to come to the US on conditional permanent residence visas.
However, the EB-5 program did not gain popularity in the US until the “Great Recession” in 2008 when it became a source of low-cost (almost free) capital with a high return.
This program has been widely successful in the US, with over $11 billion in capital investment generated between 2014 – 2015 in the Regional Centre program alone. This program doesn’t just provide a quick, one-time cash injection either, that $11 billion turned to nearly $34 billion in investments and related expenses, and 207,000 American jobs sustained, accounting for 4% of total job growth in the US’ private sector in those 2 years. What’s more, the $2.7 billion federal tax revenue contributed by the Program was equivalent to 634% of the total amount of funds that the federal government allocated for economic development programs through the U.S. Economic Development Administration (EDA) between 2014 and 2015, all at no cost to the American taxpayer.
The program has worked so well in fact that there is a backlog of applications worldwide for the EB-5 Visa.
To be eligible, prospective investors must make an “at-risk” capital investment in a for-profit American business. At a minimum, prospects must be prepared to invest either $900,000 in a regional program project or $1.8 million through the regular stream.
EB-5 Investor applicants are put through a rigorous application process to verify their capacity to invest and the sources of their funds. This detailed 2-year petition process works to ensure that only clean money is invested. Once this petition is approved, they become eligible to apply for a conditional 2-year Permanent Resident Visa to begin investing and sustaining the economic and employment conditions they commit to. During this conditional period, they are free to live and travel anywhere in the US provided they maintain their economic commitments to the for-profit business they chose.
At the end of this conditional period, their investments are evaluated and if they have fulfilled the program’s requirements – namely to invest the amount they have committed to and to create and fill at least 10 permanent full-time jobs – they are granted a permanent green card.
Canada is no stranger to investment-based immigration programs, like our very own Treaty Investor Program, we just haven’t explored their full potential. The US has already established a highly successful model that we can modify to meet Canada’s specific needs.
The Canadian Investor-Class Permanent Residence Program can be developed to target areas that have been hardest hit by COVID-19’s forced unemployment and economic recession, and more broadly, areas that generally have higher unemployment rates and lower levels of immigration. Further, unlike the EB-5 Visa, this model can require investors to live and remain within the provinces they invest in at least until they receive unconditional permanent resident status to ensure continued economic stimulus and investment within the region. The Canadian model may even go as far as to assign projects to investors based on their professional experiences and available investment funds.
COVID-19 has presented an opportunity for greater, long-term economic investment. Where this immigration program may be developed to combat the economic effects of a global pandemic, it can grow to become Canada’s security against economic instability or a route towards more rapid scale development of underserved areas. The possibilities are endless.
How the Process Should Work in the New Investor-Class Immigration Program?
Ultimately, a Canadian model would have to engage in 4 phases:
- Selecting specific target areas that need to be developed on a provincial basis. This level of data collection already exists and is already being compiled to prepare for post-COVID recovery.
- Selecting specific businesses or industries in need of investment. In addition to federal and provincial industry assessments, businesses can apply to become eligible for-profit companies or projects to be matched up with a foreign investor.
- In-depth financial evaluations and selection criteria to verify prospective investors’ sources and accessibility of investment funds. All available Canadian business immigration programs require a financial evaluation to assess the feasibility of foreign investment. Programs like the LMIA programs go as far as to defer to the expert assessment of the ESDC, a practice that can be similarly adopted by the new Investor-Class Immigration Program.
- After the conditional PR period, investors and their businesses must be evaluated to ensure that they have complied with all the conditions of their particular investment program and their immigration program more broadly. This is par for the course for any immigration status extension or renewal and would be based upon specific criteria provided to investors when they receive their conditional status and evaluated based on the evidence they can provide to support their compliance.
These mechanisms all exist and are currently in use across different programs, departments and ministries on both provincial and federal levels. Bringing them together to formulate an economically advantageous Investor-Class immigration program is the most obvious solution.
Canada’s on the cusp of a perfect storm. We are in a recession; unemployment is the highest it’s been since the 1970s and there is clear and consistent global interest in an investor visa of this kind. All that’s left to do is act fast. A Canadian Investor-Class Permanent Residence program is not only promising but also within our grasp.
Frankly, Canada cannot afford to return to the status quo, we need an option like the US EB-5 Visa. Read our continuation, here.