Friday, March 9, 2012

Ottawa targets ‘high-value’ entrepreneurs with new immigration program


From Friday's Globe and Mail

Ottawa plans to replace the immigrant entrepreneur program it shelved last year with a new system aimed at identifying and speeding the path for “high value innovators,” Citizenship and Immigration Minister Jason Kenney says.
The previous program, in place for a decade, “was administratively very burdensome and underwhelming in terms of the results.” When it was suspended last July, it had a backlog of nearly 10,000 applicants, and with an average of about 1,000 to 1,500 approvals a year it would have taken nearly eight years to clear, even without new applications. What will happen to the older files when the new program is launched remains unclear, Mr. Kenney said in an interview.
Potential immigrants with experience and the ability to set up a small business would still be encouraged to apply, he said. But the new program, which he hopes to officially announce by the end of the year – after consultations with industry groups – will encourage immigrants “who can do much more in terms of adding value to the economy than opening up a convenience store.”
“We want the next Bill Gates or the next Steve Jobs. We want those folks with the brilliant ideas that are going to generate sustainable jobs for a long time to come,” Mr. Kenney said. “We want to create a policy which is more likely to attract entrepreneurs in areas like technology, energy and environmental innovations. These areas have a lot more potential than just running a kiosk at the mall.”
The new program will be in addition to existing categories in provincial nominee programs, which take applications from potential entrepreneurs who want to live and set up a business in their provinces, and send them to Ottawa for fast tracking, Mr. Kenney said.
The provincial nominee programs had become an approach of choice for would-be immigrant entrepreneurs even before the federal application window was shut, said immigration consultant Deepak Kohli, of Transcend Consultants in Brampton, Ont.
For several years it had become clear that Ottawa was uncomfortable with the old program, Mr. Kohli explained. “The bar was always being raised. They were requiring more documentation and quite slow in responding. They wanted financial statements and then required audited statements and then reviews of statements by particular auditors.”
The provincial programs have been much faster, he said. “They required four to five months compared to five years or longer under the federal program.”
The new federal approach has merit, he said. “There's value in selecting business people who can create job incubators in Canada. The trick lies in making Canada attractive for these individuals, processing their applications quickly and providing the right environment for growth of ideas, including easy availability of research facilities and workers, so that they can hit the ground running.”
A change in the system that could result in greater success rates for small start-ups would be to encourage newcomers to work with an existing company before setting out on their own, said Sarah Wayland, an employment and settlement consultant in Hamilton, who wrote a study about immigrants who started businesses in Ontario.
“I’m pleased to hear there will be a new program, but I am a bit wary because my research has found that people need to be in Canada a while in order to identify with the culture and build a successful business,” she said. Of 65 immigrant business people she surveyed anonymously in a recent report for the Toronto-based Maytree Foundation, none had come in under the federal entrepreneur program. They immigrated under other categories and started businesses after getting established.
“There have been many failures under the entrepreneur class because they were expected to just come to Canada and immediately buy or open a business,” she said. “The research shows that people who tend to succeed the best had been here a while getting ‘Canadian experience’ and often finding a mentor in their field before starting their business.
“They use the time to improve their language skills, learn Canadian ways of doing business and develop a network, so that when they do start their business they are more sure of themselves and are offering something that people will want.”
Restaurants, corner stores and franchises were the most common types of businesses created by immigrants under the old Entrepreneur Program, which required that applicants have previous experience, a net worth of $300,000, and plans to open and manage a business that would create at least one other full-time job.
“That’s not to diminish that kind of business, there is value in any kind of business activity,” Mr. Kenney said. “But quite frankly, we’d like to be focusing our attention on attracting bright entrepreneurs who have been capitalized to create companies in high-tech, value-added businesses that have potential to create hundreds of jobs over their lifetime rather than two or three.”
One idea the ministry is researching is a visa program in the United States that expedites immigration of foreign entrepreneurs who are backed by venture capital or investors, Mr. Kenney said.
“The market frankly is a much greater incentive in determining who can successfully integrate into the economy. If an angel investor or venture capital firm has backed and done their due diligence on some bright entrepreneur’s business plan and they’re actually supporting it with their dollars, it seems to me to be a reasonable basis for us to approve expedited residency in Canada.”
The long backlog of applicants was the result of a policy mistake when the current immigration act came into effect a decade ago, Mr. Kenney said. “It imposed on Canada an obligation to process to finalization every application it received in every program, which was crazy given that Canada will always have surplus of applications over our capacity to admit people. Over time, this surplus led to an unacceptably long wait time.”
In a speech to the Economic Club of Canada in Ottawa Wednesday, Mr. Kenney made it clear the immigration backlog is system-wide, and he discussed the possibility of legislating away the total of more than one-million applications waiting to be assessed.
The government plans public consultations on the new approach to the entrepreneurship program in the coming months, starting with industry associations. “We want the market to play a greater role in selection, either through arranged job offers for skilled workers or Canadian investors backing foreign nationals for business ventures,” Mr. Kenney said. The government would also promote the program in a broad range of countries, according to the ministry, as the majority of immigrants under the former entrepreneur class came from just four places: China (and Hong Kong), Egypt, India and Korea.