December 2, 2020
Investment Migration, once a niche industry, has now evolved globally, with more than 100 countries now offering some form of residency or citizenship program. These include the wealthiest countries in the world such as the United States, United Kingdom, Australia, Canada, Germany, Italy, Spain, Portugal and UAE. Out of the over 100 countries, at least 60 countries promote their programs actively, while programs of approximately 30 countries are amongst the most popular attracting the largest share of applicants. It is estimated to be a USD 20 billion industry, with programs representing anything between 2% – 30% of GDP in some countries.
Across the world, investment migration programs have been a catalyst for major infrastructural projects such as resorts, harbors, airports, hospitals office buildings and luxury residential developments, which in turn have had a multiplier effect on the respective economies. They provide a vital source of funds for many countries. While these programs present a golden opportunity for many countries, international organizations are pointing out that governments need to be stringent in ensuring that the acquired funds from such programs are channeled towards productive investments that will pay dividends in the future.
With the growing wealth in many of the source countries for these investment migration programs, demand from “High Net Worth Individuals (HNWI)” has ensured that the industry continues to grow at a robust pace. The International Monetary Fund (IMF) and World Economic Forum (WEF) have described investment migration as one of the fastest growing economic enablers of modern times for many small states.
With the pandemic causing so much economic disruption, a number of new trends are being seen – Investor priorities, for one, are changing. Many new and innovative ideas are emerging that have the potential to transform investment migration into a tool for sustainable & inclusive development. However, as the sector grows scrutiny of its functioning from international institutions & governments is rising. In particular, the European Union (EU) has risen to the fore as one of the industry’s harshest critics. It is more important than ever that the investment migration industry comes together to address those concerns that are genuine and jointly fight forces that wish to impose unfair restrictive practices on this industry. In addition, all industry stakeholders need to commit to the highest standards of transparency and good governance.
Investment migration, in its modern avatar, was first introduced by the Caribbean island of St. Kitts & Nevis which launched its Citizenship program in 1984. Since then, it has evolved & developed into a global industry. It is estimated that over 5000 primary applicants apply for a Citizenship-by-Investment programs, whereas those applying for Residency-by-Investment programs are in the tens of thousands. By far the greatest number of Residency & Citizenship programs were established in the years following the 2008 financial crisis, when governments were looking for new sources of income. Will this unprecedented pandemic lead to a new wave of residency or citizenship programs? The answer is most probably. Nations across the globe are in precarious economic situations. Investment migration offers them access to capital & talent that is only going to get more difficult to attract.
A relatively new phenomenon is now emerging with the introduction of Start-up, entrepreneur and nomad visa programs, which are looking to entice global innovators and remote workers.
What will people value most in a post-pandemic world. One theory is that the relatively weak COVID-19 response of traditional immigration countries such as the US & UK could negatively affect their attractiveness. Another theory is that residency programs will grow at the expense of citizenship programs. Yet others are of the opinion that though some programs will be negatively impacted over a 2-3 year horizon, people will return to migrating to their traditionally chosen destinations over the longer period.
Whatever be the future trends, one thing that is a certainty is that the pandemic will devastate & shrink world economies due to resulting demand & supply shocks. This will pave the way for a further expansion of the supply side as more investment migration programs are expected to emerge. Governments around the world will be looking for new revenue sources to aid economic recovery, and just like after the 2008 financial crisis they might turn to investment migration programs to attract fresh capital and fuel investments.
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