Immigrant Investors

Asking for something does not create a right to it. That is a truism, but Justice Mary Gleason of the Federal Court of Canada last week said just that, about Canada’s troubled immigrant investor program.

The federal government was right in last February’s budget to end the program, after 28 largely futile years. In the aftermath of the cancellation, more than a thousand people who had sought permanent residency under the program, most from China, sued the government.

According to the Immigration and Refugee Protection Act, a visa officer may grant a foreign national a visa to enter Canada, and may select a foreign national as a member of “the economic class” – such as an immigrant investor. There is a great deal of discretion. Justice Gleason’s reasoning turns on the word “may.” As she wrote, “There is no absolute right to the issuance of a visa following the mere fact of having made an application.”
The backlog for the investory program came in part because its criteria were too easy. An investor could become a permanent resident if he or she had a net worth of $1.6-million and was willing to give a five-year, interest-free loan of $800,000 to a provincial government. At current interest rates, that loan was effectively worth a mere $100,000 or so. That’s how little Canada was selling citizenship for.

Such a transaction is hardly an investment, and such an investor is hardly an entrepreneur. Some of those who settled in Canada under the IIP may have engaged in some real capital formation in this country, but if so, it would almost have been a coincidence. The terms of the program did little or nothing to create economic value. It has often – and fairly – been described as “cash for citizenship.”

The IIP is not quite dead. A new pilot program is expected in the fall. The word “pilot” is encouraging. It suggests that the government is willing to try it out on a limited number of applications, and then assess the results. But higher net worth and larger loans would not be enough of a change. Any new program should be directed at real business projects that actually add something to the Canadian economy.

With the above in mind it would appear that newly developed programs such as the Citizenship By Investment Program in Antigua and Barbuda are becoming increasingly attractive. With a donation of $250,000 USD or a real estate purchase of $400,000 USD (plus applicable fees) would give the applicant access to full citizenship with a passport that can travel to more than 100 countries visa free which includes the UK, France, Germany, Switzerland and Canada.

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