EB-5 tougher for Chinese rich if investment bar goes up
The EB-5 immigrant investor program, popular green card route for Chinese rich investors, may pose tough time for potential investors from the world's second largest economy if the changes under consideration come into force. The US government grants permanent residency to foreigners who invest $500,000 in the US economy creating employment opportunities.
The US government is receiving mixed reaction to the permanent residency program EB-5. A number of reform proposals have been put forth for Congress debate. The EB-5 program is likely to be more expensive after the new changes take place. The higher investment level will pose a hurdle for rich Chinese investors owing to capital controls in the dragon country.
As part of the existing rules, foreign investors need to invest $500,000 or $1million depending upon the project to get EB-5. Foreign investors need to prove that these investments helped in creating more jobs. Now, one of the proposals before legislation is to increase this investment level to $800,000 or $1.2mn. However, the job creation clause remains the same.
The EB-5 program has been in place since 1990 and it's very long time the investment limit needs upward revision. If the investment bar is raised to $800,000 or $1.2mn, it'll be a tougher time for rich Chinese investors because of stringent capital controls imposed by the dragon country. China has been implementing stringent capital controls on outflows more particularly after the devaluation of Yuan.
The US government's popular permanent residency program for those who invest $500,000 in North America is under consideration for changes. Supporters to this program say that this system is helping the US receive an alternative source of financing.
This is also benefiting real estate investment as well including Brookly's Atlantic Yards and smaller projects including North Dakota factory that makes biodegradable food containers. For instance, the $20-bn Hudson Yards project is one of the major ones in the US and it's been completed with funding from 1,200 Chinese rich investors, who received permanent residency by investing in that project.
The US government has stopped issuing EB-5 permanent residency program for the time being as a number of proposals need to be discussed in Congress. The US government keeps the current program for permanent residency EB-5 until early December as against its scheduled expiry on 30 September.
The number of applications for EB-5 reached the cap of 10,000 in 2014. The US government has also approved collective applications put together giving an investment of $2.5bn. The applications numbering 12,453 with an investment proposal of $6.2bn are still awaiting approval.
However, those who oppose the program, criticize that global elite people are buying US citizenship. But, it's resulting in more red-tapism and several instances of misutilization of this program.
Higher investment plan means, Chinese investors will have to plan well in advance for EB-5 in future, observes an analyst. Experts consider that even after the upward revision in investment bar, the US permanent residency program will be attractive and cheaper when compared with similar programs of other nations.