HK$10 million price tag in revamped Hong Kong residency scheme will scare applicants away, economist warns, as Paul Chan says people with ‘financial power’ wanted
- Chinese University’s Terence Chong cautions increased capital requirement could deter potential investors
- Amount under new scheme to be ‘in multiples’ of the old HK$10 million threshold, finance chief says
Hong Kong authorities should lower the threshold of a revamped investment scheme that allows overseas individuals to gain residency in the city, an economist has said, adding a reasonable capital requirement will make the programme more attractive and effective.
The Capital Investment Entrant Scheme would exclude property deals and mainland Chinese residents, according to Financial Secretary Paul Chan Mo-po, who announced the initiative in his annual budget blueprint on Wednesday.
During a meeting of the Finance Committee at the Legislative Council on Thursday, Chan reiterated that the amount in the new scheme would be much higher and “in multiples” of the former programme’s HK$10 million (US$1.27 million) threshold.
“We hope to attract people with a certain level of financial power and most of them are in the business sector. They can promote our business and economic development as well,” Chan said.
“We will require part of the investment to be devoted to industries that we would like to promote, such as the innovation and technology industry, supporting start-ups, and sectors with a long-term horizon of investment.
“Investment immigrants are welcome to buy residential and commercial properties to start their own business, but they will not be counted towards the amount of the investment threshold they are required to meet.”
But Terence Chong Tai-leung, executive director of Chinese University’s Institute of Global Economics and Finance, warned the increased capital threshold could deter potential investors.
Hong Kong residency scheme to involve ‘multiples’ of old HK$10 million threshold
“People usually put 10 to 15 per cent of their assets when they invest overseas. No one will go all-in on their assets just for emigration,” Chong said, urging authorities to lower the amount to HK$5 million to test the waters first.
“You need to lure people to come to the city first, regardless of what industries they are investing in. It could be an innovation business or a restaurant, as long as individuals you attract here make an employment implication”.
He added authorities could review the scheme and ramp up the required amount if interest in the offer was significant, adding they could introduce a measure restricting investors to living in Hong Kong for a certain period of time instead of letting them plough money into the city and then leave.
A similar scheme was first launched in 2003 after the city was badly hit by an outbreak of severe acute respiratory syndrome, allowing entrants who invested at least HK$10 million, including through buying property, to obtain residency.
Willis Fu Yiu-wai, immigration director of Hong Kong-based consultants Goldmax Associates, said the new scheme seemed less attractive than ones offered overseas.
“A similar programme in the United States allows individuals to get a green card in three to five years by investing a smaller amount and staying for a shorter period of time, compared with Hong Kong’s scheme,” Fu said. It will take applicants under the city’s scheme seven years to become a permanent resident.
The EB-5 programme, administered by the US Citizenship and Immigration Services, allows investors, their spouses and unmarried children under 21 to apply for a green card if they invest US$800,000 in a commercial enterprise and create or preserve 10 permanent full-time jobs for qualified US workers.
Singapore allows those who are interested in starting a business or investing in the city state to apply for permanent resident status through its Global Investor Programme.
Hong Kong aims to grow I&T sector by doubling up on talent, start-ups and unicorns
Individuals must possess at least a three-year business or entrepreneurial track record and invest a minimum of S$2.5 million (US$1.9 million) in a new business or expansion of an existing operation, or an approved fund that invested in local companies.
John Hu, founder of John Hu Migration Consulting, said he believed Hong Kong’s new scheme would be more appealing for investors in the financial industry.
“We don’t have capital gain tax in Hong Kong which could be a huge incentive for people who make money by trading stocks and funds,” he said.
“The scheme can also be attractive to those who want to use Hong Kong as a medium to get into the Greater Bay Area market.”
