[This article was first published here on The Huffington Post]
The jury is still out on the cost of providing fast-track residency to affluent foreigners
There are many ways in which modern societies are getting shaped across the world. Australia cast its vote recently in favour of crafting one by handpicking well heeled citizens from other countries.
On May 25, Australia’s Immigration Minister Chris Bowen unveiled a new visa scheme that offers wealthy migrants a fast-track residency provided they invest around $5 million into either government bonds or Australian companies.
In the normal course of the procedure, migrants are ranked according to criteria like age, qualifications and English language skills, along with a requirement to reside in the country for a specified period of time before they qualify.
Terming the initiative as an ‘investment visa’ aimed to address shortages of skills and capital and boost job-creation in the country, Bowen said, “People who are willing to make a significant investment in Australia through various investments will receive concessional treatment when it comes to permanent residency.”
“The significant investor visa will provide a boost to our economy and help Australia to compete effectively for high net worth individuals seeking investment immigration,” he added.
The minister said that Australia expects to hand out 7,000 new investment visas through this fast track system, which will come into force on July 1.
The scheme would see Australia join the ranks of Asia-Pacific’s New Zealand, Hong Kong and Singapore, which provide for migration on the basis of investment of a specified size and conditions.
Under New Zealand’s Investor Residence Scheme, immigrants can gain residency rights in the country by investing NZ$ 1.5 million (US$ 1.1 million) for a period of four years. This program requires the applicant to be under 65 years of age and have three years of business experience.
The Investor Plus Residence Scheme goes a step further and offers permanent residency to anyone who makes an investment of NZ$ 10 million in New Zealand for 3 yrs. No age, business or English language proficiency is required under this program.
In Hong Kong, millionaire migrants can earn residency rights via the Capital Investment Entrant Scheme (CIES) by investing HK$10 million.
But nowhere in the world is the phenomenon more pronounced than in Singapore, which, as per a new report from global management consulting firm Boston Consulting Group (BCG), had the world’s highest density of millionaire households in 2011. The report, released this May, revealed that more than 17% of all households in the Southeast Asian city-state had private wealth of US$ 1 million or higher during the year.
What provides a telling perspective to the ‘badge of honour’ is that according to Singapore government statistics from 2011, Singaporean citizens make up just 63% of the country’s population – implying that more than one in three residents of the city-state are foreign-born permanent residents or temporary residents. Merely 11 years ago the figure was 74%, while in 1980 it was 91%.
Helping the rise of percentage of foreign nationals are government schemes like the Global Investor Programme (GIP), which allow wealthy foreigners to attain permanent residency status if they invest a minimum of $2.5 million in a new business or an expansion of an existing business, and have an annual turnover of at least US$30 million or more.
Permanent Residence visa is highly valued in Singapore among expatriates as the city-state has one of the world’s highest standards of living and is one of the nerve centres of Asia’s economy.
On the other hand, the small population of Singapore, quite like that in Australia, New Zealand and Hong Kong, make it necessary for the country to invite foreign entrepreneurs to create new businesses, new products and new jobs – especially in tough economic times such as the present. According to government statistics, Singapore’s fertility rate of 1.2 is well below the replacement rate of 2.1 – implying that the country’s workforce would shrink drastically if more foreigners are not allowed in.
But the upsurge in the ratio of foreign nationals – both permanent residents and foreign workers – has led to a corresponding rise in the disaffection among the locals on the issue.
Many Singaporeans believe that permanent residents come to their country to reap the benefits without any obligations. A prevalent sentiment among the critics of government policies like the GIP is that foreign-born residents take jobs, push up property prices and add new strains on the city-state’s infrastructure. The impression is said to be responsible for the worst ever showing by the ruling party in last year’s elections.
Reacting to popular dissatisfaction, Singapore recently canceled a scheme that allowed wealthy expatriates to gain permanent residency (PR) in the Southeast Asian city-state if they brought in a minimum of S$10 million ($7.8 million) into Singapore for five years including using up to S$2 million on buying a property.
The Financial Investor Scheme (FIS) was brought to an end in April as it was believed that the scheme was used by many expatriates to buy property at inflated prices and fuel the country’s booming property market – thereby pricing locals out of the market.
The decision is seen to be in tune with the government’s decision of imposing an additional 10% property tax on foreigners last year to avoid Singapore becoming a place for only the rich.
But beyond concerns about rising property prices, the red carpet for foreign entrepreneurs has led to people like local Singapore journalist Jaya Prakash believe that the government is biased towards foreigners, allowing them to sweep up jobs that should be given to locals and fill places in schools meant for Singaporeans.
Some groups have even claimed that a large expat population – and its highly visible alternate culture – is threatening their sense of national identity.
Clearly, financial benefits travel only as far as they are allowed to by the socio-political costs of a policy.
Australia may want to learn from Singapore’s experience on the subject and pick the best path ahead for itself.