By Nadine Goldfoot
Heading towards 2019, there is a rejuvenated approach to investor migration with an increased interest in entrepreneur options from both applicants and governments alike, with governments looking to increase foreign direct investment (FDI) in new trading climates. What has happened in the industry and how may 2019 look when it comes to investor migration?
UNITED KINGDOM ANNOUNCES NEW OPTION FOR ENTREPRENEURS
Trading partnerships are evolving globally. As the United Kingdom negotiates the terms of its withdrawal from the European Union, it is already looking at a new trade environment, and targeting entrepreneurs and those bringing inward investment and employment into the UK. There has been increased focus on inward job creating investments, with easing of requirements seen across Tier 2 categories already. For example, businesses posting from an overseas firm in connection with the relocation of a high value business to the UK or a significant new inward investment project, involving new capital expenditure of 27 million British pounds or the creation of at least 21 new UK jobs, enjoy incentives. In early 2018, the government effectively doubled the quota for the Tier 1 Exceptional Talent category for world and future world leaders in fields such as tech and science and more recently announced a new start-up visa.
The United Kingdom’s new start-up visa, expected to be in place early next year, will be available to foreign nationals who seek to start a business in the United Kingdom. Full details have not yet been released, but it is expected that applicants will no longer be required to have earned a bachelor’s degree in the last two years (as they are under the current Tier 1 Graduate Entrepreneur scheme), among other changes that should ease the visa criteria. A UK business sponsor can be an accelerator – an organization that facilitates start-ups and is endorsed by the UK Department for International Trade. Under the new visa, the Home Secretary has said that qualifying entrepreneurs should benefit from a faster and smoother route, open not only to graduates but a wide pool of talented business founders.
CANADA ON A MISSION TO ATTRACT FOREIGN ENTREPRENEURS
Canadian authorities are also looking into amending some program criteria to attract entrepreneurs at the provincial level, as well as retain foreign students, currently studying and contributing to the Canadian economy. The Canadian government is also attracting French entrepreneurs to all of its provinces. While there is no passive investment scheme envisioned by the government, changes are anticipated at the provincial level to facilitate the entry and path to residence of entrepreneurs and foreign students.
PORTUGAL AIMING ENCOURAGING ENTERPRISE INVESTMENT
The use or directing of investment funds flowing through migration programs to boost certain arms of the economy, or encourage employment of local populations, is of course not of itself new. Portugal has followed the ‘targeted areas’ idea reflected in the United States’ EB-5 program, directing investment into a specific area of need geographically, with enhanced options for investment in particular areas. Portugal has spoken too of introducing additional investment options to directly encourage investment into small and medium-sized enterprises (SMEs). Although these have yet to be introduced, they would include 350,000 euros invested in the incorporation of a new Portuguese company, or as additional share capital investment in an existing Portuguese company – in both cases also creating a minimum of 5 permanent jobs; or providing additional capital to a Portuguese company, with an economic recovery plan in place.
COUNTRIES DRIVE TO ATTRACT ENTREPRENEURSHIP
The newly renamed Cyprus Investment Program now allows investors to set up a new company instead of investing in an existing company. The company must employ five persons a business plan must be provided and regular progress report of the investment and its outcome are expected by the Ministry.
In the Caribbean, Dominica is looking to use CBI funds to boost employment hit by natural disasters. Elsewhere, Jordan has introduced a Citizenship by Investment Program, which as well as including the more traditional deposit and bond based investment options, encourages investments into SMEs with citizenship options including a $1 million investment in SMEs for at least five years, a $2 million investment in any location in the country that creates at least 20 job opportunities and remains operational for at least three years, or $1.5 million if the project is registered in any Governorate other than Amman.
As the drive to attract entrepreneurship and job creators grows, so too does interest from entrepreneurial applicants. In the first half of 2017 for example, Antigua & Barbuda’s Citizenship by Investment Programme1 received 27 percent more applications – 187 compared to 147 – than in the first half of 2016. Looking at the breakdown of options selected by applicants, 38 percent of applicants – 71 out of 187 – chose the NDF contribution option, a figure drastically lower than the 114 seen during the same period a year before. The number of applicants choosing real estate investment, meanwhile, rose from 20 during the first half of 2016 to 38 in the first half of 2017, making up a fifth of the total. Most interestingly however, business investment, ordinarily the least popular of the program’s three investment options, rose by 600 percent, from 13 in the first half of 2016 to 78 in the first half of 2017, thus becoming the most popular option.
Looking too at Malta’s Individual Investor Programme (IIP) statistics for naturalized applicants in 20172, the majority – 57 percent - declared that they were self-employed. This constitutes an increase from the percentage recorded during the previous 12 months, which was 51.8 percent. The educational level of naturalized main applicants remained extremely high with around 69 percent, which is an increase of 7 percent from the previous year, reaching a degree level, Masters level or PHD level.
In this new landscape, investor migration should be seen as part and parcel of any foreign direct investment drive, and perhaps there should be increased focus on how best to apply and divert monies invested by foreign investors for public benefit, as well as ensuring the highest regulatory standards are in place.