Slim pickings for China’s immigration industry in Canada’s new investor visa scheme
Consultants will have to look elsewhere for the big commissions once earned off IIP applicants
For years, Canada’s immigrant investor programme was the Chinese immigration industry’s cash cow. A money tree. A goose that popped out golden eggs like a tennis ball machine.
Big commissions (more on this below) and a seemingly endless supply of mainland millionaires covetous of Canadian passports made the scheme the Chinese consultants’ favourite. So when it was axed this year, all eyes were on the promised replacement - would it offer similarly rewarding opportunities?
The new scheme has not been formally unveiled yet – expect that in coming weeks - but sources familiar with the government’s plans are now giving a good idea of what to expect. And it’s fair to say that immigration minister Chris Alexander is being crossed off a lot of Christmas card lists in China.
Two Canadian sources briefed on the government’s plans told me this week that the replacement venture capital investor scheme would be tiny, approving just 50 applicants per year - a number so low that I initially thought a couple of zeroes had been left off. Both sources said it was possible the scheme has been modified since they were briefed by Alexander’s people a couple of months ago, although they were under the impression that it was close to being a done deal. “I think it [the small size of the programme] is symbolic of the level of interest they have in pursuing this long-term. Compared to the caps on other programmes, this is nothing,” said one source.
Separately, the Wall Street Journal reported last week that the government was targeting total investments of C$120 million (HK$820 million) under the scheme, with each applicant contributing C$1 million to C$2 million. That implies an intake of 60 to 120.
Fifty, 60 or 120 – it matters not at all, compared to the vast scale of the old IIP, which brought about 37,000 rich immigrants to BC from 2005 to 2012. When it was formally scrapped in June, 60,000 would-be millionaire migrants in the years-long queue had their applications dumped too; about 40,000 of those were likely bound for Vancouver.
The new venture capital scheme looks like being so minuscule as to serve little more purpose than allowing the government to keep its promise to replace the IIP. It certainly won’t provide viable access to Canada for the bulk of the dumped IIP applicants.
Vancouver immigration lawyer Richard Kurland said that although multiple pathways to Canada still existed for someone determined, skilful and rich enough, some of the dumped IIP applicants will have already applied to other countries’ immigration programmes, such as the US EB-5 visa scheme.
“Just because they had one ticket with Canada, doesn’t mean they didn’t have other tickets, with the US EB-5, with a New Zealand programme, with an Australian programme,” said Kurland. “What was commonplace in greater China was for an agent to send multiple applications to multiple countries, and then wait to see which torpedo hits first.”
Ryan Rosenberg, managing partner of Vancouver immigration law firm Larlee Rosenberg, isn’t sad to see the back of the federal IIP. He said he had never referred any clients to it because he found it inefficient, expensive and unreliable. “I don’t think it was necessarily a bad programme, or that the people who came over on it were any less qualified, but I just think that they were duped,” Rosenberg said.
Duped? How so?
Readers of the Hongcouver blog are probably familiar with the scheme, but the way the IIP worked was this: Would-be immigrants worth a minimum of C$1.6 million loaned the Canadian government C$800,000 for five years, interest free, and received permanent residency in exchange. Afterwards, the entire $800,000 loan was returned.
Because many applicants were unwilling to tie up $800,000 in cash for five years (or were unable to transfer it, since China prohibits more than US$50,000 to be sent overseas per year), they turned to banks for financing. And this is where the consultants earned their cut: The banks would charge the immigrant to provide the loan, then split this fee with the consultant who provided the referral.
Rosenberg said many Chinese immigrants were unaware that their consultants were pocketing huge commissions from the banks. In an analysis that Rosenberg wrote when the loan amount was C$400,000, he said the banks were generally charging immigrants C$120,000. Assuming interest rates of about 3 per cent, roughly C$60,000 would cover the banks’ financing costs. The rest was profit, split with the consultants.
With the loan amount increased to C$800,000, the consultants’ commissions ranged from $60,000 to C$100,000 per client, he told me with barely disguised distaste. I’ve spoken to other immigration lawyers in Vancouver; none was a fan of the IIP.
And so it is left to the Chinese immigration industry to mourn the IIP, and lament the absence (for now) of a similarly lucrative Canadian successor.
The Hongcouver blog is devoted to the hybrid culture of its namesake cities: Hong Kong and Vancouver. All story ideas and comments are welcome. Connect with me by email firstname.lastname@example.org or on Twitter, @ianjamesyoung70