The decision has left “tens of thousands of Chinese millionaires” facing an uncertain future, the South China Morning Post reported, since Hongkongers and mainland Chinese have been the biggest users of the scheme since it was set up in 1986.
According to the SCMP, 45,000 mainland Chinese currently in a queue for the visas “will have their applications ‘eliminated’ and their fees returned”.
The scheme has been suspended since July 2012, owing to concerns that it was not working well and had become increasingly unpopular in parts of Canada, such as Vancouver, where a large proportion of the Chinese investor migrants have ended up, and in the process, contributed to inflated house prices. A similar programme, aimed at encouraging entrepreneurs to relocate to Canada, has been suspended since July 2011, and has also been scrapped.
The announcement of the plan to scrap the immigrant investor programme coincided with the presentation of the 2014 budget by Canadian finance minister Jim Flaherty, last week.
Although the ending of the visa programme isn’t mentioned in the budget itself, a separate “Economic Action Plan 2014” issued by Flaherty explains that Canada's “ineffective Immigrant Investor" scheme, along with the entrepreneur programme, will be replaced with “an Immigrant Investor Venture Capital Fund pilot project”, which would "require immigrants to make a real and significant investment in the Canadian economy”.
“For decades, [the current Immigrant Investor Programme] has significantly undervalued Canadian permanent residence, providing a pathway to Canadian citizenship in exchange for a guaranteed loan that is significantly less than our peer countries require,” the Action Plan notes, in explaining the thinking behind the scrapping of the scheme.
“There is also little evidence that immigrant investors as a class are maintaining ties to Canada, or making a positive economic contribution to the country.
“Overall, immigrant investors report employment and investment income below Canadian averages, and pay significantly lower taxes over a lifetime than other categories of economic immigrants.”
Flaherty's Economic Action Plan says that the Canadian Government will launch a consultation on a potential Business Skills Pilot programme, which, along with the proposed new Immigrant Investor Venture Capital Fund pilot, "will test new and innovative approaches to business immigration that will better fuel the continued growth of the Canadian economy". It also pledges C$14m over two years, and C$4.7m "per year ongoing" to another scheme, the so-called Expression of Interest system, aimed at targeting "highly skilled immigrants".
Under the Canadian Immigrant Investor Programme, foreign nationals were able to gain Canadian residency by loaning C$800,000 ($726,720, £433,770), interest-free, to any of the country's provinces for five years. According to one press report last week, as many as 99% of the applicants in some Canadian provinces were mainland Chinese.
In a recent novel about life among wealthy Singaporeans and Hong Kong residents, Crazy Rich Asians by Kevin Kwan, a Canadian Permanent Resident Card is described as being "perhaps the ultimate membership card" among upper-crust Chinese Hong Kongers, owing to its potential use as a "safe haven in case the powers that be in Beijing ever pulled a Tiananmen again".
Passports for sale trend
Canada's decision to end its millionaire visa scheme comes as Malta's residents and politicians have been locked in a fierce debate over whether that country should offer Maltese citizenship to wealthy foreigners, and as other countries have adopted their own programmes aimed at trading passports for money. In January, the question as to whether EU member states should be allowed to offer citizenship to non-EU nationals in exchange for money was the subject of a debate by the European Parliament.
At least five EU states – Spain, Cyprus, Portugal, Latvia, Greece – already have programmes in place that grant residency rights to non-EU nationals in exchange for financial considerations. They have taken on added appeal in recent years, as hard times have depleted government coffers.
The UK has a scheme as well, which is aimed at deriving income from wealthy foreigners who are looking to reside in Britain, known as the Tier 1 Investor Visa programme.
The Tier 1 programme allows individuals with at least £1m to invest in the country to remain resident on a long-term basis, which is seen as a stepping stone to British citizenship, although it is not automatic.
The visas were introduced in 2008, and their take-up increased sharply in 2011, when the rules were changed to encourage more people to apply.
