By Bill Mann, MarketWatch
VANCOUVER, B.C. (MarketWatch) — As investment clubs go, it’s one of the
more unusual ones around — the money you spend to join isn’t really an
investment and it’s not really a club. But more and more people are
trying to join and it could soon become one of the more expensive
memberships to have.
The Canadian government has had an Immigrant Investor Program for years.
Not that long ago, when my wife and I checked into it, it would have
cost a C$250,000 interest-free investment to get a permanent-residence
card from the Canadian government. The government would use your money
for five years, then give it back. A pretty good deal. Plus, it would
save months of waiting and a lot of the Canadian government paperwork.
But Ottawa has kept raising the bar. It’s now up to an C$800,000 investment and about to get higher — perhaps a LOT higher.
Thanks to the immutable law of artificial scarcity, when Canada
announced last year that it would only issue 700 of the Investor Class
visas (talk about a small class size) from the thousands it had
previously accepted to help manage demand, some deep-pocketed foreigners
(most Chinese) chartered jets to Canada to get their applications in
first. Good thing: The program was closed to new applicants after 30
minutes.
Some non-investor immigrants currently wait years to get into Canada,
but now the wealthy are going to have to pay more for fast-tracking
their way in.
Immigration Minister Jason Kenney says the current C$800,000 cost in the
investor program is too low, and he’s going to revamp it, perhaps even
rescinding giving the money back to applicants altogether. Ottawa
doubled the requirement from C$400,000 to C$800,000 in 2010, which
didn’t slow applications much. So it decided to cap openings because of
application overload.
Time for change?
In a recent interview, Kenney said making the money a permanent
contribution to Canada rather than just a loan might make more sense.
He’s right. One national Canadian publication recently suggested a cool
C$5 million might be more like it. After all, right now, C$800,000 will
buy an average family home in Vancouver, where many of the immigrants —
largely from China — are landing. For many wealthy immigrants, C$1
million (or even C$5 million) is chump change.
Today, C$800,000 for permanent residency isn’t a bad deal to get into a
place hundreds of thousands have waited years to enter, says one
prominent Canadian columnist. It’s hard to disagree with that. It’s a
good place to live with a stable economy and government.
Two of the Canadian provinces that have opted into the federal program
are Ontario and British Columbia. Ontario, incredibly, has been sitting
on nearly C$1 billion of that immigrant money — despite having over C$15
billion in debt, and has come under fire for it. (Maybe it’s worried
about making the interest payments?).
Kenney says the new program and new financial requirements will be in place by the end of the year.
Both Australia and the U.S. have similar programs, with the buy-in at $1
million, another reason many are saying Canada’s C$800K is way too low,
too good a deal. Plus, the U.S., program requires actual investment,
not just a deposit. The U.K. requires immigrant investors to cough up
the equivalent of about C$1.6 million CDN, another reason Kenney says
Canada needs to raise its “price point” for permanent-resident visas.
“To be honest,” he said in a recent interview, “it’s not an investor
program, it’s a permanent residency for a loan.” He added that what
Canada really needs is a real investor program, one that brings in
actual capital to help create jobs in Canada.
Chinese favro U.S., Canada
Meanwhile, the China Daily is reporting that a “wealth exodus” is
ongoing in that country. It says the top two immigration destinations
for Chinese are the U.S (40 % of all immigrants) and Canada (27%).
Wealthy Chinese investors are often cited as the cause for Vancouver’s
skyrocketing real-estate prices the past 10 years. Reading the home
prices listed here in the Vancouver dailies reminds me of how I cringed
when I saw the exorbitant home rices listed when I was a renter living
in San Francisco. Call it real-estate listings deja vu.
One Beijing-based immigration lawyer told the paper she expects that
when Kenney re-opens the program later this year, 2,000 more wealthy
Chinese will get permanent residency in Canada.
By the way, of those 700 applications that were accepted before the
window closed last year, 697 were from China. So it’s little wonder the
Canadian immigration minister is raising the price. Because China’s
where the big money is these days.
Kenney says Canada needs to get more bang for its buck on its
wealthy-immigrant program, that it’s been “underselling itself.” True
enough.
I can’t blame Canada, which has been a magnet for immigrants the past
few years — most of them low-income earners — for wanting to squeeze a
few more bucks out of those at the high end. After all, they’re not the
ones who’ll be waiting on tables or driving trucks in Toronto and
Vancouver. A few hundred thou is pocket change for many of them.
To say nothing of what all this new wealth in Canada has done to the price of hockey tickets.
A lofty $125 to see the lowly Columbus Blue Jackets play in Vancouver’s
Rogers Arena? Not a good investment. I passed.
Tatiana Townsend married an Ottawa man 10 years ago and moved to Canada from Moldova after meeting him online. (CBC)
Stephanie Lomatski says stricter rules for foreign brides could lead to more violence against women. (CBC)
