By Uglobal Staff
Vanuatu has amended its citizenship by investment law to give wealthy foreigners the option to invest in the republic’s real estate sector.
Previously, the island nation provided just a donation route to passports to foreign investors who had met the due diligence requirements under the country's citizenship by investment program. An individual would just have to pay $80,000 to gain a Vanuatu passport in a matter of a few months while families with up to four members were required to donate at least $130,000.
With the latest amendment to the citizenship law, foreign investors would now be able to also apply for the Real Estate Option Program on top of the donation route. The REO Program came into effect on April 26 when the Vanuatu parliament approved the amendment to the citizenship act by 27 votes.
Vanuatu reinstates real estate stream for its citizenship by investment program
The REO Program was launched once before in the country. It existed in 2014 as well but the parliament later repealed it in 2015.
In his note prefacing the text of the latest citizenship amendment act as published in the official gazette, Vanuatu Prime Minister Bob Loughman explained that the program has been brought back to make the country's CBI program even more attractive to wealthy foreign investors.
"Vanuatu exists within the global economy and, to attract the necessary major investments, it must compete with the rest of the world in offering incentives to major investors," Loughman said.
The new policy will allow foreign investors to put their money in only those real estate projects that the government has earmarked for the REO Program.
The government of Vanuatu, which has an estimated population of around 250,000 people, wants to use this money from the program to develop the country's infrastructure, enhance healthcare and education facilities, and give a boost to the country's tourism sector.
Foreign investors can only sell property, but not vacant land
The prime minister clarified in his note that the foreign investor will not be allowed to sell land under this program.
"As the aim of the policy is to maximize economic growth with a focus on providing the necessary infrastructure to cater for growth of the tourism industry, the major investor will only be allowed to sell constructed houses, apartments and condominiums, and will be prohibited from selling vacant land," Loughman said.
Moreover, the foreign investor would not have an unlimited free hold on their real estate investments; although the text of the bill and the prime minister's note does not give an exact timeframe on the lease, some media reports put it at 75 years.
Explaining what REO means, the prime minister said it "is an agreement that grants the party owning the option (“the optionee”), the exclusive, unrestricted, and irrevocable right to purchase property from the party selling the option (“the optionor”), during the specified period of time that the option is in effect.
"When an optionee buys a real estate option, he or she buys an exclusive, unrestricted, and irrevocable right and option to purchase a property at a fixed purchase price within a specified option period."
The government of Vanuatu hopes that the REO program would create employment and business opportunities in several areas, including hotels, resorts, food supply, retail, tourism as well as improvement of roads, telephones, electricity, and water networks.
The amendment stipulates that any investor applying under the program must receive a result within three months of their application.
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