Changes in EB-5 Program a Threat to Chinese Investorsby Stephanie DiPietro
The popular EB-5 program where foreigners can gain permanent residency in the United States by investing at least $500,000 in a job-creating environment has increasingly become popular amongst Chinese citizens. Lawmakers in the United States are considering making changes to this program that will make it harder to gain permanent residency.
Supporters of the program say that the foreign investment has helped finance many projects in the country and give way to new jobs. On the other hand, critics to this program argue that this is a way for the rich and elite foreigners to buy their citizenship into the country. This debate has created some push for change into the program.
Four major ways this program can potentially change:
1) Increase in Investment amount
Currently the program suggests that investors must invest at least $500,000 or $1 million depending on the project. The investment should create at least 10 full time jobs. One of the reforms that is being suggested is to have the investment amount increased to $800,000 or $1.2 million and sticking to the same rules for job creation. The main reason for higher investment amounts is to reduce the number of people investing into the program. Due to strict Chinese currency laws that restrict the amount of cash being transferred out of China , if these changes take place Chinese investors will have difficulty transferring funds out of China for this higher level of investment.
2) More regulation on how funds are being used
The EB-5 projects being funded by the investments from visa seekers will be scrutinized in further detail to avoid fraud of any sort. For example, those working on these investments would have to undergo a criminal history check. This will be a form of protection for the investors. Additionally, investors will have to undergo further scrutiny pertaining to the lawful origin of the investment There have been recent cases where Chinese officials were arrested for fraudulently obtaining visas through the EB-5 program. Hence lawmakers want to improve the image of the EB-5 program
3) Shifting investments from urban to more rural towns (encouraging employment)
Presently, a majority of the investments in the EB-5 program are made in projects creating employment in urban areas such as New York City where unemployment is typically low. If the EB-5 program’s purpose is to create employment in areas of high unemployment, proposals by Congress recommend encouraging projects in rural areas where this problem is common. This could cause some problems for Chinese investors who may feel more comfortable investing their money in a familiar area like a big city rather than in a new small town that they are unaware of.
4) Changes can happen at anytime
At this point we are not sure when and how these changes will be put into practice. It could be put into effect right away or not at all depending on the decision the lawmakers take. These changes could also affect people who have already invested in an EB-5 project.