Canada’s Immigrant Investor Program should be treated like the crown jewel of our annual immigration plan… but it’s not.
You would think that Canadians would want at least ten, or perhaps fifteen, per cent of Canada’s newcomers to be chosen for their ability to transfer large amounts of money here for the specific purpose of providing working capital to Canadian businesses.
Unfortunately, this is not the case.
Of the 252,179 immigrants Canada selected in 2009, just 2,872, little more than one per cent, were selected by our federal government for this purpose.
Prior to June of this year, applicants had to demonstrate a personal net worth of $800,000 and had to give $400,000 of it as an interest-free loan to our government. Basically, our government does whatever it wants with the money and then returns it to the investor five years later.
Contrary to popular belief, these “investors” don’t actually do any investing themselves, they simply give us a five-year interest-free loan and we give them permanent status here.
In fact, much of this money doesn’t actually come from overseas. Our rules allow investor applicants to borrow this money from an approved Canadian financial institution (i.e. BMO, CIBC, RBC, TD, Scotiabank etc.) who will give our government loan on behalf of the investor.
For their troubles, these banks, called facilitators, require the prospective immigrant to pay up front the interest that the loan would have generated for five years. The applicant cuts a cheque to the lender in the non-refundable amount of about $120,000-130,000 (depending on prevailing interest rates). The facilitator gives our government the $400,000 and collects it back in five years. The result is that the “investor” essentially buys Canadian permanent residency status for about $120,000.
In June, the Feds temporarily stopped accepting new applications in this category since they had way too many applications already pending in the pipe and because our immigration minister, Jason Kenney, felt we were shortchanging ourselves.
On Wednesday, Kenney announced that, effective Dec. 1, the stakes would be doubled. Applicants under the federal investor category will need a minimum net worth of $1,600,000 and give our government a five-year interest free loan of $800,000, either directly or through a facilitator.
The justification behind this move is that Canada is receiving about three times as many applications in this category than it is approving. Therefore, we can afford to raise the bar a bit and demand a greater financial commitment from those who can afford it and filter out those who can’t.
While this approach is completely sound, it falls short.
The question that needs to be asked is this: Why is a one of the most developed economies in the world, with vast resources and a population of about 33 million, able to approve only 2,800 investor applications a year? Stated differently, why are only 8,500 potential investors in a global population of almost seven billion people interested in making Canada their permanent home?
There are three main answers.
Firstly, we have the wrong immigration mix. We need to sharply increase the number of immigrants in the investor category that we currently accept. The current number of 2,800 is far too low in real terms and as a percentage of the 250,000 immigrants we accept each year.
Secondly, current processing times discourage many investors from even applying here. Government statistics show that most cases take between three to four years to process. Twenty per cent of these cases take even longer to finalize. Successful businessmen and women who have made a decision to emigrate from their homeland usually want to act on those plans much more quickly than we are willing to respond to, and are rarely willing to wait in our long queues.
Thirdly, our selection criteria and process including the requirement for recent business experience, full disclosure of assets exceeding the minimum net worth amounts, the endless list of documents requested, and the uncertainty of the process make the process too invasive, risky, and costly without enhancing the program’s ability to attract more dollars to Canada.
Compared to investors, each year Canada receives four times as many refugees, three times as many sponsored parents and grandparents, three times as many humanitarian cases, and more than twice as many nannies.
Our Tory government, which prides itself in making decisions that are good for our economy, needs to quickly grow and streamline this program.
Guidy Mamann, J.D. practices law in Toronto at Mamann, Sandaluk and is certified by the Law Society of Upper Canada as an immigration specialist. For more information, visit www.migrationlaw.com or email metro@migrationlaw.com
