Temporary halting of EB-5 American visas for China’s entrepreneurs, after their numbers rise to form the overwhelming majority of applicants.
Dating from 1990, Section 203(b)(5) of the Immigration and Nationality Act aims to encourage foreign investors to support enterprises in America, especially in less economically strong areas, and thus create jobs and boost local economies.
Officially entitled the EB-5 Immigrant Investor Visa Program rewards incoming entrepreneurs and their dependants with a residency visa – the famous and much desired “Green Card”.
EB-5 applicants don’t need to pass any English language test, and there is also no age limit or a requirement for management experience.
It’s like they say in Las Vegas: “show me the money”! Applicants must be able to prove that they have a total net worth of at least US$1m, and the required investment is US$500,000, which has to be shown to be “clean” with a fully auditable origin.
Add to this the fact that the investor and family can keep their home country passports and can live, work or retire retire anywhere in the United States, and that their children can attend any public school or university for the same cost as US citizens, you have a very attractive package.
As a result, the biggest response in recent years has been from the biggest market – China.
In 2014 over 9000 visas were issued to Chinese mainlanders, out of a total of c. 10,700, that’s a 5% increase on 2013 EB-5 applicants. Back in 2008 only 25% of the applications were from China. All in all some 37,000 Chinese have, or have applied for EB-5 investor visas.
With these numbers, and also 80% of those on the EB-5 visa waiting list it’s natural that there has been some pressure on the American government to diversify the geographical range of applicants.
Consequently, the US Citizenship and Immigration Service (part of Department of Homeland Security, has frozen Chinese applications temporarily.
This is seen as a pause for breath, not an abolition. The EB-5 Immigrant Investor Program is very valuable for the US. Each fiscal year, EB-5 accounts for about 7% of employment immigration, but punches above it’s weight in terms of inward investment. Hundreds of millions of dollars have been raised for hotel developments in California, New York and Washington plus ski resorts, bridges and alternative energy plants.
Savills Studley Chief Economist Heidi Learner authored a report in which she stated: “Given the visa backlog and number of pending applications, the 2015 allotment of EB-5 visas for mainland China applicants is likely to be reached before the end of the current fiscal year in September 2015, particularly if recent Chinese appetite for the visas is any indication” and “because investments pledged via the EB-5 program cannot have any guaranteed rate of return … from a developer’s perspective, terms are greatly preferable to more traditional bank financing and are less dilutive than equity financing”.
She concluded that the EB-5 program “has become an important source of capital for developers, particularly given the growth of foreign investment overall, and specifically from China” and that in the future “foreign appetite for US investment will remain strong.”