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Chinese passports and stamps seized by Canadian border agents as part of an investigation into an immigration fraud scheme in Vancouver in 2015. Photo: Canada Border Services Agency

Revive millionaire migration to cure Canada’s coronavirus economic woes, say advocates

  • Chinese-dominated investor migration schemes were terminated or paused amid heavy criticism, but supporters are lobbying for their resurrection
  • The Investment Industry Association of Canada wants the federal investor programme restarted, but a professor who studied it called it a ‘dismal failure’

Advocates of millionaire migration in Canada are citing the economic impact of Covid-19 as they push to revive the controversial Federal Immigrant Investor Programme.

But the scheme, once dominated by immigrants from Hong Kong and then mainland China, has been linked by critics to housing unaffordability, low tax revenue, fraud and other failings.

In a recent letter to finance minister Bill Morneau, the Investment Industry Association of Canada said it recommended that the federal government “reintroduce a programme to attract foreign direct investment to Canada through a formal immigrant investor programme” as part of coronavirus recovery efforts.

Canada’s immigration department says it has no plan to revive the scheme. But the IIAC letter is part of long-term lobbying by the immigration and investment industries to restart millionaire migration in Canada.

Year after year, declared incomes of business immigrants were puny, typically lower than the incomes of multiply-challenged refugees
Professor David Ley

The Conference Board of Canada hosted two “Entrepreneur and Investor Immigration Summits” in 2017 and 2018. A report from the second summit concluded “it is incumbent upon federal, provincial and territorial governments to assess how they can better harness the qualities of [high net worth individuals] to help grow the country’s economy”.

The IIAC, a non-profit group that represents registered investment dealers, said a new IIP could “[build] on the strengths of [the previous] Federal Immigrant Investor Programme … one of the most sought-after immigration programmes in the world”.

“Before being closed, the FIIP was considered a very reputable and industry-leading programme,” the May 5 letter said.

Would-be immigrant investors hold a press conference in Beijing in 2014 to express their anger at the closure of Canada’s immigrant investor programme. About 45,000 rich Chinese had their applications scrapped as a result. Photo: Simon Song

The FIIP was indeed one of the most popular wealth-determined migration schemes in the world. From 1986 to 2014, more than 190,000 rich immigrants moved to Canada under the FIIP and its sister programme, the Quebec IIP.

The FIIP – which allowed immigrants with assets of C$1.6 million (US$1.17 million) to purchase permanent residency in exchange for a fully refundable C$800,000 (US$593,000) loan to the government, interest-free for five years – was harshly criticised and terminated by the previous Conservative government in 2014. Most of the applicants since 2000 were from mainland China, but it was dominated by Hong Kong people in the run-up to the 1997 handover.

Many users would leave Canada after obtaining citizenship, while those who stayed declared refugee-level incomes and paid little tax, on average.

According to a 2014 federal study, the average taxable income declared by the primary breadwinner in millionaire migrant households was just C$15,800 (US$11,700), 10 years after admission. They paid annual income tax of C$1,400 (US$1,000) – less than one-fifth that of the average Canadian taxpayer (C$7,500).

There was also a huge backlog of 65,000 would-be immigrants whose applications were scrapped when the federal scheme was halted, including more than 45,000 from mainland China.

The Quebec IIP, meanwhile, halted new applications last year and is being overhauled.

Special report: Canadian immigration fraud saw 860 rich Chinese blacklisted

The IIAC suggested in its letter that a non-refundable component could be demanded from immigrants under a new FIIP.

“[For example], if 4,000 immigrant investors are admitted to Canada within the next 12 months, subject to a mandatory C$1,000,000 investment, from which C$800,000 is guaranteed repayment … it will generate C$4billion in FDI with C$1billion in ‘free’ money for our economy,” it said.

The economic circumstances in Canada “are now quite different” from when the scheme was halted, the IIAC said.

“The restructured programme can play an important role for Canada capitalising on the anticipated shifts of foreign direct investment capital as investor perceptions change from the pandemic and as the global structure of commerce adjusts in coming years.

“The immigrant investor plan will contribute importantly to Canada’s economic recovery.”

Vancouver has long been a favoured destination for millionaire migrants, but critics say they have helped send unaffordability in the city soaring. Photo: Tourism Vancouver

‘The evidence for its failure is abundant’

Prominent Vancouver immigration lawyer Richard Kurland has been a critic of the way millionaire migration schemes were run in Canada.

But he said “it is time to bring back an investor programme … because we need to find ways to pay for the economic damage caused by Covid-19”.

Kurland said applicants should be made to file two Canadian income tax returns before receiving permanent resident status.

Canada needs to seriously look at ways to finance the Covid recovery. Billions are available, now
Immigration lawyer Richard Kurland

“[We] should allow a non-refundable contribution of C$500,000 to a Covid-19 recovery fund and a C$600,000 purchase of no-interest five-year Canadian government bonds under a new federal investor programme,” Kurland suggested.

He added: “Canada needs to seriously look at ways to finance the Covid recovery. Billions are available, now.”

Others are sceptical, including geographer David Ley, a Canada research chair and professor emeritus at the University of British Columbia, who has spent decades studying the process of millionaire migration.

He said the FIIP, part of Canada’s business immigration programme, had ended in “dismal failure”.

Anatomy of a scam: how rich Chinese gamed Canadian immigration

“The evidence for its failure is abundant,” said Ley, author of the 2010 book Millionaire Migrants. “Year after year, declared incomes of business immigrants were puny, typically lower than the incomes of multiply challenged refugees.”

He said the “astronaut” family arrangement – in which the breadwinner in millionaire migrant families returned to Asia, typically, to live and work, leaving a spouse and children in Canada – put a “heavy burden” on families.

And “the abundant capital” that millionaire migrants brought with them “typically was invested in real estate and contributed to house price inflation and unaffordability in Toronto and especially Vancouver where the wealthiest immigrants bought property”, said Ley.

UBC professor David Ley, author of the 2010 book “Millionaire Migrants”. Photo: SCMP

Immigrant investor schemes also featured in the biggest immigration fraud in Canadian history, in which unlicensed consultant Xun “Sunny” Wang was jailed in 2015 for helping hundreds of rich Chinese clients fake their presence in Canada to help them meet the residency qualification for citizenship. In fact, they were living in China.

In a statement, a spokesman for Immigration, Refugees and Citizenship Canada said the FIIP had been cancelled because “it was found to bring little overall economic benefit to the country”.

A new investor pilot programme – the Immigrant Investor Venture Capital Pilot Programme – was given a test launch in 2015.

“However, the demand for this pilot programme was low and it was closed that same year,” the spokesman said. “There are no plans at this time to reintroduce a new immigrant investor programme.”

Quebec’s IIP: integrity woes and low retention

Meanwhile, Quebec’s IIP is in a state of flux.

The French-speaking province has long been allowed to run its own immigration programmes, including a parallel IIP, which survived the 2014 cancellation of the FIIP, only to be frozen in October 2019 amid a spate of reports about mismanagement and fraud. The loan amount for the scheme is C$1.2 million, and applicants must be worth C$2 million.

On May 20, Quebec’s Ministry of Immigration, Francisation and Integration (MIFI) announced that the suspension of new applications was being extended until April 2021.

Federal authorities continue to work through with a years-long backlog of 19,400 QIIP immigrants already approved by Quebec.

Quebec City may be one of Canada's most beautiful towns, but few of the rich Chinese immigrants who enter Canada under the Quebec Immigrant Investor Programme end up living there, or anywhere else in Quebec province. Photo: Jean-Francois Bergeron/Quebec City Tourism

A breakdown of their nationalities was not available, but a further 2,159 applicants, including 1,355 applicants from China, are currently being processed by Quebec. Quebec’s government estimates it will take 62 months before they receive landing permission.

Like the FIIP, the QIIP has long been plagued by reports of poor outcomes, including extremely low retention rates – historically, about 90 per cent of QIIP immigrants leave Quebec after receiving permanent residence, despite pledging intent to live in the province. Most move to Vancouver or Toronto instead.

The whole concept of ‘getting the money without the body’ was not badly perceived by the Quebec government. On the contrary, they were and still are very happy with it
Immigration lawyer Jean-Francois Harvey

Quebec immigration lawyer Maxime Lapointe said there remained “a lot of appetite” for the QIIP, particularly from Hong Kong.

Lapointe said that QIIP immigrants’ retention in Quebec had recently increased. This could be further encouraged by initially giving QIIP immigrants only temporary status, conditional on proof that they were making a life in Quebec.

“My idea is to get the applicant a work permit so they can come to Montreal and start their life, then once they can show an address in Montreal, tax return in Montreal, proof of education of their child … then they would get the CSQ,” said Lapointe, referring to the Quebec selection certificate for immigrants.

A spokesman for MIFI said “it is too early to [discuss] on the nature of the changes to be made” to the QIIP. However, “the main issues are the low retention rate in Quebec … and the integrity of the programme.”

Jean-Francois Harvey, a Hong Kong-based immigration lawyer, said he was surprised that Quebec still intended to revise the QIIP. “I thought they would have simply cancelled this programme once and for all,” he said.

Hong Kong-based immigration lawyer Jean-Francois Harvey. Photo: SCMP

In 2018, Harvey fired an employee who was caught in a CBC hidden-camera report advising a person posing as a Chinese QIIP client that it was “normal” not to declare all their assets to Quebec’s government. The CBC report uncovered other firms in Hong Kong giving advice about how to defraud the QIIP.

Other reports, including by the South China Morning Post, have highlighted the scheme’s retention woes.

“I still cannot believe that they [are] still talking about finding solutions about retention,” said Harvey. “They have heard ad nauseam all the possible solutions that they could easily adopt. They simply need to put a real estate component to it or a work permit component and here you go, people will stay. They know all this.”

Canada scraps millionaire visa scheme, ‘dumps 46,000 Chinese applications’

But Harvey said it was in the interest of companies that provided financing for QIIP’s applicants’ C$800,000 loans to keep the scheme “as is, since they pretty much control it”.

“I heard it so many times during off-the-record conversation with government representatives that the whole concept of ‘getting the money without the body’ [low immigrant retention in Quebec] was not badly perceived by the Quebec government,” he said.

“On the contrary, they were and still are very happy with it. If not, how can you explain that they did nothing in 20 years about it?”

This article appeared in the South China Morning Post print edition as: millionaire migration seen as economic cure
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