By Uglobal Staff
Antigua and Barbuda was rated one of the Caribbean’s best citizen by investment program in 2017, but tough regional competition has the twin islands struggling to stay on top.
Antigua’s CBI program has given the country a vital economic boost since it launched in 2013. After raising less than $33 million during its first two years, the program surged to raise $81 million in 2015 and $77 million in 2016. In total, officials said the program has raised more than $200 million for the public purse.
“In its first five years, it has made a tremendous difference in terms of government infrastructure, in terms of the development of our people, in terms of making money available to meet debt payments,” said Shefield Bowen, a lawyer and former Antiguan legislator. “It’s very important to our development.”
But in 2017, steep price cuts by rival programs such as Saint Kitts and Saint Lucia’s led to a sharp dip in demand for Antigua’s program, and in October, Prime Minister Gaston Browne warned that just three applications had been received in the previous two months.
That was a major slump: from its launch in 2013 through the end of 2016, Antigua had seen a total of 934 applications, and issued 1,016 passports. Of those, 41 percent came from China, and large numbers also came from Russia and the Middle East.
Coupled with a disastrous hurricane season, the decline in CBI applications left Antigua facing a $100 million budget deficit. This prompted officials to seek to boost interest by halving the cost of applications based on donations to Antigua’s National Development Fund from $200,000 to $100,000 for a family of four.
The cut was pitched as a temporary measure and will be reviewed after one year. The CBI program’s $400,000 real estate option and $1.5 million business investment option remained unchanged.
Industry experts said they were reserving judgment on whether the price cuts would be enough to revitalize Antigua’s CBI program. “Honestly, as this just happened very recently, it is still too early to see what kind of effect the lowering of the price has had,” said Nuri Katz, founder of Apex Capital Partners. “The problem is that the other countries have also lowered their prices, so I would not expect the impact to be too great.”
Part of the issue, Nuri said, is that the Caribbean price war coincided with Canada’s decision to revoke Antigua’s visa-free status, robbing the country of one of its main selling points. “After Antigua lost its visa-free access to Canada, it is difficult to differentiate, and, thus, has led to tactics such as the lowering of the price,” Nuri explained.
Besides slashing minimum investment levels and processing fees, Antigua has also sought to make its CIP program more attractive to agents, offering a 15 percent commission for agents who file 50 or more donation-based applications, and a 10 percent commission for agents who file fewer than 50 such applications.
That’s mostly aimed at major global CBI operators, who are in a position to steer clients to one program over another, Bowen said. “I think that is more a factor with the big agents, which have a vast amount of clients,” Bowen said. “For a person like me, who gets their business mainly from direct contact, it doesn’t make a difference.”
Still, Bowen remains upbeat about the CBI program’s prospects, saying that he’s seen an increase in interest since the price reduction. While Antigua has lost Canadian visa-free status, Bowen believes the islands can set themselves apart in other ways.
“The fact that we have faster turnaround time, and virtually immediate citizenship, may cause some people to consider Antigua above other jurisdictions that require a longer period to get citizenship,” Bowen said. Antiguan CBI applicants can expect their passports to be processed in about 100 days, he said.
The application process is relatively straightforward, although applicants can expect detailed scrutiny of their financial affairs. “It’s not so much complicated as it is detailed,” Bowen said. Gaps in residency information, or financial records that don’t square with an applicant’s claimed sources of wealth, can raise concerns and lead to delays or rejections, he warned. “Those kinds of things raise red flags very quickly.”
Antigua’s due diligence efforts are important to maintaining the program’s reputation, but some experts believe Antigua could do even more to promote itself as a high-quality investment opportunity. There’s a risk that cutting prices might undercut Antigua’s status as a best-in-class CBI program, said Brian Dobbin, founder of Citizens International, who consulted with Antigua and Barbuda officials in 2011 as they were starting to plan their CBI program.
That would be disappointing, Dobbin said, because Antigua has so much going for it compared to some of the other Caribbean programs, especially for investors who are looking to invest in business or real estate rather than simply cut a check in exchange for a passport. “My personal wish is that the Antiguan government, in particular, would value more highly what we have, and understand the value of it internationally,” Dobbin said.
So far, three-quarters of Antigua’s CBI applications have been made through NDF donations, while 19 percent have come through real estate investments; the balance has been accounted for by enterprise-related applications. That suggests that real estate and business-based deals might be a good way for Antigua to differentiate itself, and bolster its revenues, in future, Dobbin argued. “If you’re going to invest in property or business, rather than just pass the money over, some islands are stronger than others, and Antigua is the strongest by far,” he said.