What is going on with the EB-5 Immigrant Investor program?
Under the EB-5 Immigrant Investor program, immigrants can earn their green card by investing in American companies. The program is “good for everyone,” says Ali Jahangiri is CEO and Publisher ofEB5 Investors Magazine and a board member of the organization Gen Next, Inc.
AGBeat columnist, Monica Moffitt states that “Many of China’s new rich are looking for businesses to start/run and most have a penchant for risk. Instead of solely investing in large publicly traded companies, they are looking for innovative ways to tap into new markets. Programs like EB-5 Immigrant Investor make these investment opportunities a reality.”Because of the flaws, there are several reform proposals on the table which Jahangiri says are designed to “fix the issues and make the program healthier, safer and even more beneficial for all the players involved.” In his own words below, he outlines seven of those reforms:
1. Assure Quality
The EB-5 program is getting more government attention these days. Unfortunately, even the agency in charge (USCIS) isn’t always clear and consistent when issuing and enforcing regulations. The Office of the Inspector General (OIG), part of the Department of Homeland Security (DHS), wants Immigration Services to make a checklist of quality assurance steps, which is a step in the right direction. Moreover, the DHS is calling on the agency to make sure this list is checked off consistently across all applications and petitions.
2. Work Together
EB-5 is a lot of work. The program is at the intersection of immigration, national security and economicdevelopment. With stakes this high, you want all the appropriate experts involved. The inspector general of the DHS wants different agencies to pool their resources and skills, so that all aspects of the program are covered. It’s the coming together of specialized minds that make great things happen.
3. Regulate Gerrymandering
EB-5 investors invest a reduced amount if the project is in an area with high unemployment. Because of this incentive to invest, project developers often go to great lengths to get their project qualified as being in a “targeted employment area” (TEA), drawing boundaries in increasingly creative ways. So far USCIS has yet to issue consistent guidelines, instead leaving it up to the states to decide. Over concern that big developers are taking advantage of the program, people like Congressman Darrell Issa are fighting back against this so-called gerrymandering.
4. Prevent Fraud
Not everyone plays nicely. Some business developers are willing to lie to potential foreign investors and encourage them to fund risky projects, while telling them success is guaranteed. A bad investment not only costs EB-5 investors their money, but also their ability to immigrate to the United States, while giving the entire industry a black eye. OIG, USCIS and the SEC recognize this, and want to beef up controls to prevent fraud.
5. Measure Impact
The EB-5 program does a lot of good. But exactly how much good? OIG wants to know. Economic studies have been done to show how these investments foster both direct and indirect jobs, but the federal government doesn’t publish any official numbers. The DHS wants USCIS to take charge, but USCIS wants to pass the buck to someone else. It remains to be seen who will come to be responsible for measuring the program’s success.
6. Raise Investments
Though the United States is arguably the most popular immigration destination, we have one of the lowest minimum investment amounts of similar international programs. To make sure the program is in line with market rates of consumer goods and services, Senator Patrick Leahy has proposed to base the minimum investment amount on the Consumer Price Index, ensuring that each investment is making the same relative economic impact, whether the EB-5 project is carried out in 2014 or 2054.
7. Work Faster
United States Citizenship and Immigration Services try their best to approve petitions quickly, but there’s still a giant backlog. In some cases, EB-5 investors have to wait almost two years for visa approval. This holds up the process for everyone, including the American beneficiaries of the job creating enterprises, as investors are hesitant to commit capital before they know the projected timeline of their visa application. If investors won’t invest, projects can’t build and jobs can’t be created. Such a great program shouldn’t be so hindered, and should instead be adapted to improve and grow.