Shifting away from the EB-5 Program
In recent news, our government’s EB-5 Immigrant Investor Program (or Employment-Based Immigration: Fifth Preference EB-5) as gained even more traction and appeal.
So what is this magic program? Well, for a capital investment and proof of substantial job creation in the US, the US government will grant the investor and his/her family green cards which they can later trade up to permanent resident status.
As a businesswomen who used to market these cool opportunities, I have had a look into the other side of this seemingly great program. While many see it as a great way to get investor funds, they tend to overlook not only the length of time it can take to secure these funds (upwards of a year) and the job creation requirement (at least 10 permanent jobs – not to include the construction or ancillary workers).
While shopping/marketing a few Texas based projects around China, here are the three main issues my company ran into and why we made the decision to shift focus from marketing EB-5 projects.
3 main issues I’ve run into abroad:
- The Chinese especially want sound investments. So if your project includes commercial building like schools, hospitals, or government buildings, they’re interested. Also, they have a regional focus and are looking to invest in Texas and Florida mainly for easy access to land and neighboring countries.
- The Chinese government is cracking down on how much currency can flow out of the country. I’ve been able to identify quite a few millionaires abroad, but the biggest concern is “How do I get the money out of China?” Some are turning to neighboring lands such as Hong Kong to filter money out while others are looking into what I call “tangible investments”. Many are buying artwork, boats, and even rare watches in an attempt to smuggle the funds out. This causes problems later in terms of paper work as the guarantor has to prove the legitimacy of the funds.
- This EB-5 program garners much interest outside of US in the following countries: Japan, Korea, Brazil, Mexico, and Spain. These countries are more willing to participate in the EB-5 program than most.
All in all, I support our government’s offering and hope more immigrant investors will participate. In the same vein, we should be aware of the affects to the home country. From a human capital management perspective, a home country will have more to worry about than just brain drain.
The new phenomenon that this can of worms will expose is the millionaire drain. And I don’t think many governments are too keen on their millionaires gaining residency in another country.