Approximately 13,000 high-net-worth individuals will leave China and Hong Kong this year, which is almost as many as the 15,000 anticipated to leave Russia, according to investment mobility consultant Henley & Partners. According to The Toronto Globe and Mail, "They will take with them billions of dollars in assets, with Portugal, Singapore and a number of Caribbean countries among the top destinations, thanks to generous residence or citizenship programs."
WealthBriefing reports that Singapore, Israel, Australia, and the UAE are among the countries gaining popularity as places for billionaires to live as the UK and the US have lost their appeal. According to the survey, "America is notably less popular among migrating millionaires today than before the pandemic, perhaps owing in part to the threat of higher taxes."
The top 10 nations in terms of net inflows of millionaires this year will be the UAE, Australia, Singapore, Israel, Switzerland, the US, Portugal, Greece, Canada, and New Zealand, stated on the report, which suggests the USA is losing ground as a global leader in doing so. Which is more likely—a long-term trend or temporary?
The United States has been the Pioneer
Foreign investors have always had access to the most lucrative consumer market in the world via the United States, which also provides a predictable and transparent legal system that protects property rights, low taxes, excellent support for transportation and infrastructure, and a stable and welcoming market. America offers foreign investors political stability, lower manufacturing costs, simple communication, favorable host country policies for foreign investment, and a decent currency rate. It is simple to understand why America has historically attracted so much foreign investment when considering that the country has a history of fostering entrepreneurship and a culture of tenacity and motivation.
What Took Place?
What exactly has changed, especially in light of the strong currency we currently have, the expanding GDP of the United States, and the large number of job openings in the American economy right now? By considering what has occurred with the EB-5 foreign investor immigration program in the last few years, one may be able to find solutions.
First off, a substantial departure of senior American bureaucrats occurred after Donald Trump's inauguration as president. 500 senior officers reportedly fled the Department of State alone. The epidemic, staff ailments, and other factors combined to hold down the overseas processing at U.S. consulates. The migration and the pandemic affected the Department of Homeland Security, as employees had to work from home and reported ailments. Processing slowed to a stop as a result.
In the meantime, the EB-5 program ended politically in June 2021. Because the regional center component of the program was separated from its regular reauthorization as part of the Congressional budgeting process, it was terminated as of June 30th, 2021. Since regional centers handled well over 90% of the program's investment activities, its shutdown from June 30th, 2021, until its eventual reopening on March 15th, 2022, resulted in a slowdown of EB-5 foreign investment into the United States.
Uncertainty around the minimum investment amounts needed from investors to be eligible for a green card and the conditions under which regional centers must function under new laws passed by Congress had an impact on the program as a third reason. Over time, the amounts changed. Initially, just $ 500,000 was needed to invest in a regional center. Later, $ 900,000 was needed due to a regulatory change by the U.S. Citizenship and Immigration Services (USCIS). Finally, after legal action, the cost was reduced to $800,000, which is still needed today. Amounts allocated for direct investment Amounts for EB-5 applications also changed, going from $1 million initially to $1.8 million and now down to $1,050,000. The question of whether existing regional centers had to re-qualify under the new EB-5 regulations to accept investors complicated matters further. Now everything seems to have become clear.
When it comes to the EB-5 program and emigrating to America, there have long been complaints about the lengthy processing timelines and priority dates that investors from nations like China and India must meet. However, things have been present for a while and change as Washingtonian events develop. Due to these factors, they were less likely to be the main causes of the recent fall in interest from international investors.
More generally, there is some anecdotal evidence that recent events have influenced foreign investors' perceptions of how desirable investing in the United States is. The unrest on Capitol Hill on January 6, 2022, the recent rulings by the US Supreme Court regarding the Second Amendment's right to bear arms, and the overturning of Roe v. Wade, which dealt with abortion rights, are a few examples. These events may also be influencing how international investors view America and have increased interest among Americans in relocating abroad, such as to Canada. It is unknown what effect they will have down the road.
Taking Up Leadership Again
The obstacles to foreign investment under the EB-5 program have, however, mostly diminished and been temporary. The problems that caused worry will be resolved over time. Ideally, America will be able to reclaim its position as the industry leader and once more encourage investors to fund projects started here.
Note: This website's content is meant to be general; it does not constitute legal or financial advice. Only a licensed expert with a total understanding of all the information and circumstances of your specific situation can provide legal or financial advice. Before enrolling in the EB-5 program, you should contact a visa attorney with legal, immigration, and financial knowledge.