Investing in a foreign country in exchange for citizenship

Dear Sven,

I am a 40-year-old South African who’s been working in Vietnam for the last three years. I have been an expat for the last 10 years and have around 40 percent of my wealth sitting in South Africa and the rest is held offshore. My contract with my current company will come to an end in 22 months. I am not interested in moving back to South Africa after my contract expires and am interested in permanently immigrating to another country. I have a high net worth and have been told that certain countries would offer me permanent residence in exchange for investment into specific projects. Is this true and, if so, could you explain?

Yes , it’s possible to obtain residency in certain countries through investment into their designated projects. Many governments, in the quest to attract foreign investment, have instituted programs where foreigners, in exchange for citizenship, can invest into projects designated by a state with the express purpose that those funds will be used to create jobs (usually 10 or more) and contribute to the economic well-being of the region. Popular programs are: the US EB-5 program, Portugal’s Golden Visa, Australia’s provisional investor and investor retirement visas, and I believe that Canada has a similar program. Additionally, many European nations offer residency in exchange for purchasing a certain amount of government bonds. You will also be happy to know that as a South African there is a service run by a company called Cashkows who will assist you with full financial emigration from South Africa, as well as your tax returns, while you are living abroad.

Since you are an English speaker, and for the sake of simplicity, I will provide brief details of the US EB-5 program as well as the Australian provisional investor and retirement visas. The US EB-5 program allows an immigrant investor to qualify through a USD1 million investment into a commercial enterprise in the US. If the investment is made into a targeted employment area (an area suffering from considerable unemployment), the minimum investment will drop to USD500,000. Basically, you will have to invest into a property development or, in some cases, a business center. Because it’s the US, the process can be quite stringent and you will be given a “conditional” green card upon initial investment, which will be upgraded to an “unconditional” green card, which gives you permanent residency (i.e. the rights belonging to all US citizens except for the right to vote) approximately two years after the initial investment. You will be able to apply for citizenship five years after the issue of the unconditional green card.

A great project set aside for this specific program is the Brooks City Base in San Antonio, Texas. The project is an old air force base that is being converted into a community with apartment complexes and hotels. A company facilitating these investments is Hong Kong-based Ironwood Advisors who make trips to see investors in Vietnam on a regular basis.

Australia has two similar programs, one designed for retirees (aged 55 or older) and one for individuals 45 years old or younger. Australia’s provisional investor visa offers a gateway to permanent residency, and after a minimum of two years after initial investment you will be eligible to apply for a permanent business skills visa. You will have to prove that you are able to invest AUD1.5 million within a reasonable amount of time into a designated investment. The big bonus is that your family will be able to accompany you and will have access to work and study rights.

Australia’s investor retirement visa requires you to be 55 years or older, have no dependents, and you will need AUD750,000 which will need to be transferred to Australia within two years. You will also need to prove you have access to net income of at least AUD65,000 annually. I couldn’t find any information relating to how this will provide a path to permanent residency, but you will be able to extend the visa after the initial four-year term upon proving that a designated investment of AUD200,000 can be maintained.

The most important fact about the programs discussed above is that these are not investments in a traditional sense. What I mean is that when you invest the required capital you cannot expect a return of say 10 percent per year with the option of selling and realizing profits whenever you please. The liquidity of many of these projects is often ambiguous. You are trading a certain amount of capital with a state in exchange for residency and a path to citizenship, so you will have to think about residency first and returns on investment is secondary.

BIO: Sven Roering is a Managing Partner at Tenzing Pacific Investment Management. He holds an Economics Degree from Rhodes University in South Africa, and is a candidate in the Chartered Financial Analyst (CFA) program, having successfully completed level 1 and is currently working towards the level 2 exam.