Trends. Citizenship for sale

Willing to invest a tidy sum in another country? Investor programmes in different countries offer an alternative route to the ultra wealthy who are seeking a second residence or citizenship.

These programmes can help you fast track your way into a new country, be it the US, the UK or Australia.

Over 25 countries have an investor visa category wherein you have to invest a certain amount of money to enjoy certain privileges. In the UK, you are given a visa which allows you to stay for three to five years.

In the US and Bahrain, you are granted residency status — this means even more rights than holding a visa and there is no expiry.

Residency also opens the door to becoming a citizen after living in the country for a certain number of years. Other countries such as St Kitts in the Caribbean directly grant you citizenship and passport.

In general, there are three separate categories for investment. The first is through property ownership. Another way is to invest in a new or existing business in the country. Yet another option is to donate funds to a Government-authorised agency or trust.

Besides investments, you also have to meet a few other requirements such as language proficiency. In Australia, to qualify for the programme, the investor must be less than 45 years of age.

The approval process can take anywhere from six months to two years depending on the country and your personal situation. At the end of it, you can immigrate to the country.

There are many reasons why the rich may opt for an alternative citizenship or residency in the first place.

One popular reason is better options for their children’s education. Take the case of Gowtham and Sandhya Jalal (name changed), gynaecologists who run a medical centre in North India.

Their extended family have been residents in the US for over four decades; their son is studying medicine in the US and their daughter has joined a university in the same country.

“Foreign students cannot enrol in many educational institutions, especially for a medical degree, without permanent residency”, says Jalal. They feel that permanent residency is the safest, most conservative approach for the long term.

Investor programmes have gained popularity as they are quicker than the customary procedure for citizenship or residency. Gowtham and Sandhya Jalal opted for EB-5 visa — an investor programme to gain residency — and applied in June 2014. It typically takes 12-18 months to get residency approval through this route, compared with over five years for many categories of applicants under the normal process.

Besides children’s education, many professionals and business families choose this route says Pankaj Joshi, MD NYSA, an advisory and finance management consultancy group for the US EB-5 programme.

“A green card status is preferred over a work permit due to advantages such as access to bank loans and eligibility to do business”.

Also, residency status has no expiry period, unlike work or study visas that are valid only for a certain number of years.

Another reason is ease of travel. Those who love to travel enjoy the freedom that comes with holding a passport that gives them hassle-free entry to many destinations. For example, if you are a citizen of Dominica, in the Caribbean, you can travel to 50 countries including Switzerland without a visa. All this for just $100,000.

Likewise, if you are citizen of St Kitts, you can get visa-free entry into 100 countries, including 26 Schengen Visa countries. All it takes is investing $250,000 in the country’s Sugar Industry Diversification Fund or purchasing property worth $400,000. You also enjoy tax benefits — no capital gains, gift, wealth and inheritance taxes.

If you are wondering what’s in it for these countries, they have a lot to gain. Attracting investments from abroad can be a good source of funding for Governments, especially those saddled with debt. Latvia, for example, charges 5 per cent of the investment amount as donation to the State. Two, it can help attract investments to boost their ailing local economy and generate employment. Austria, Germany and the US are among those that have job creation as a prerequisite for granting visa.

Investment route may be faster than other immigration processes but there are many steps to be followed. Take the case of EB-5, the US visa programme that was started in 1990 — the upper limit of 10,000 visas was exceeded in 2014.

Visa applicants must first identify a business project to invest in. Projects that qualify include hotels, agriculture development including winery and farms and manufacturing. The key requirement for the project is that it must create or preserve ten jobs for US workers.

You need to make a capital investment of $1 million, but it may be reduced to half ($500,000) if the project is located in regions identified as Targeted Employment Areas. The fund is kept in an escrow account during the 12-18 months it takes for the application process to be completed.

Other countries follow a similar process with variations on the amount, business type and approval time. For instance, Bahrain requires that you submit investment proof along with your application.

This can be in the form of ownership of property valued at over 50,000 BD ($133,000); or proof of investment of at least 100,000 BD ($265,000) in a company.

Additionally, you require health insurance certificate issued in Bahrain, fixed deposit with commitments of at least six months and income source of not less than 500 BD ($1,330) per month.

You may find that the investment visa process is a breeze in many countries, but there are pitfalls. One, the stability of the programme needs to be checked.

Take Canada for instance. The country’s immigrant investor programme was launched in the 1980s to fast-track visas for high net worth individuals willing to invest in the country. But the waiting period increased to over five years and the country cancelled the programme last year.

Two, the minimum threshold limit for investment could be brought down substantially after you pay a steep price to enrol in such programmes. This happened in Cypress, where the amount was slashed to drum-up interest in the programme.

Three, you may find that your investment only gives you a temporary foot in the door. In Australia, investor visa, which requires an investment of AUD $1.5 million, only allows foreign immigrants four years of temporary residency after which the visa holder may have to apply for other visas to become a resident.

Four, you may find yourself treading into grey areas or illegal channels. “The world of visa and immigration is mired with horror stories and fraud primarily due to the small scale nature of the typical immigration consultants and agents”, warns Joshi. So look for consultants with specific country focus and do due diligence before selecting an agency.