Lure of Visas Fails to Attract Rich Investors : Immigration: Program draws a fraction of the expected applications. Requirement of $1-million investment is cut in half for many areas of country.
A new immigration program offering permanent residency to foreigners who invest at least $1 million in America has drawn such a dismal response from the world’s rich that the U.S. government has cut the minimum admission price to $500,000.
Congress had expected a deluge of applications when it approved the program late last year, allocating 10,000 visas a year for soon-to-be-arriving “yacht people” of the world.
So far, only 177 people have applied for the millionaire visa program.
The response has been so poor that last month the government relaxed requirements that investors create at least 10 jobs for Americans. Now, in some cases, just maintaining 10 jobs will do.
“It’s kind of a sad comment on America,” said Los Angeles immigration attorney Howard Hom. “Pitiful, pitiful. (Wealthy) people used to kill for a visa, now they’re saying, ‘Forget it.’ ”
Immigration attorneys say the lackluster response is partly the result of a yearlong delay in writing the program’s final regulations and the sour economic times, which have made investors reluctant to pour money into the United States.
But some immigration attorneys say the major fault is simply that Congress overestimated the worth of being an American, especially when other countries are making sweeter offers.
“We in this country thought too highly of ourselves and now we’re seeing the effect of it,” Hom said. “For making money, there are plenty of better places. The rich have all gone to Canada.”
The millionaire visa program was created in the Immigration Act of 1990 and marked the first time that wealth alone became a criterion for legal immigration.
The United States was following the cue of countries such as Australia, Canada and New Zealand, which have reaped billions of dollars by selling visas to Hong Kong residents desperate to leave before the colony comes under Chinese communist rule in 1997. The visas have been granted for investments of as little as a few hundred thousand dollars.
For the budget-minded, there was always the island of Tonga, which has visas selling for only $17,500.
The U.S. investor visa is by far the most expensive of the lot, although many considered it the “Rolls-Royce” of passports.
The program, as outlined by Congress, required prospective immigrants to invest at least $1 million in a business that created 10 jobs. The investor would be allowed into the United States on a conditional basis and after two years would become a permanent resident.
In certain rural and high-unemployment areas, the investment requirement was $500,000, although the price was raised back to $1 million earlier this year in draft regulations.
Supporters were flush with optimism, estimating that the 10,000 visas would bring in more than $8 billion in investment and create 100,000 jobs each year.
“If the (10,000 annual) quota is already filled after six months, then there’s no need to lower the threshold amount to attract more investment to rural or high-unemployment areas,” one INS official said at the time.
Immigration attorneys and consultants geared up for an onslaught.
The former INS commissioner for the Western Region, Harold W. Ezell, began offering car washes and Der Wienerschnitzel hot dog franchises.
“The possibilities are totally unlimited,” Ezell said at the time. “This is really long overdue and there’s tremendous interest in this.”
As it has turned out, the interest has mainly been one-sided. Sellers with million-dollar hamburger stands are a dime a dozen. Investors are few.
“I’ve been disappointed,” Ezell said recently. “People aren’t jumping out of windows to join this program.”
Ezell said one of the big problems was the long delay in receiving the final regulations from the INS. Few investors, he said, were willing to commit large sums to a project when the rules could change.
The recession also has been a problem, especially since many investors come from the Far East, where economies have been relatively robust for the past few years.
“Look how strong the economy is in Taiwan,” Hom said. “People see the United States as a nice place to retire, but as far as doing business is concerned, the Far East is where it’s at now.”
Major impediments to attracting investors have been the program’s complex requirements on how much to invest, where to invest and how many jobs must be created. This has been especially problematic since residency can be purchased from some countries for nothing more than a cash investment.
Investors around the world were left confused over some provisions. What if several investors joined together to buy one business, what would each have to contribute? Could an investor use $1 million in borrowed money to purchase a business? What if an investor purchased an existing business and maintained, but did not create 10 jobs?
The final regulations, completed in November, have clarified many issues and opened up several new options that were previously off limits.
“It’s much, much better,” said Los Angeles immigration attorney Frederick W. Hong. “They know they can’t be too hard-nosed about this anymore.”
Besides reducing the minimum investment in rural and high-unemployment areas, the final regulations allow states to designate “targeted employment areas,” where investors will be allowed to spend $500,000 instead of $1 million.
They also allow investors to put up less than $500,000 cash through the use of loans, and they ease the requirements on creating 10 jobs and allow investors to simply “retain” 10 jobs if the business is in poor financial condition.
“It’s really a great liberalization of the regulations,” said Eugene Chow, an immigration attorney in Hong Kong.
Chow said he has noticed increased interest in the program since the final regulations were released. Not only has he seen more clients in Hong Kong, but also more attorneys from the United States arriving with investment proposals in hand--a sure indicator of opportunity.
Chow had been cautious in the early months of the program, advising his clients to wait for the final regulations before making any decisions.
Now he is gearing up.
“I’ve got four people coming in today,” Chow said. “I think this new thing is a gold mine.”