Congress has, totally unwittingly, created an opportunity for a test-run of a modified EB-5 (immigrant investor) program. Let’s call it EB-5 2.0.
The Senate effectively did so in June, when it did not vote to re-authorize the controversial regional center part of the program, in which U.S.-based middlemen pooled (and sometimes stole) the aliens’ money. It left in place the other part of the program, in which individual investor-managers can run their own businesses, using their own money. These are called direct investments in the trade.
My suggestion to Congress is: Let’s not revive the scandal-prone, regional-center part of EB-5 for at least two years so that we can give the other part a chance to succeed or fail. If the only way that rich aliens can come to the U.S. via an investment is to start (or buy) a business of their own, we may get a totally different set of outcomes than we have seen in the former EB-5 program, which was about 95 percent involved in the more risky pooled investments.
The suggestion will be greeted with fury by the now-diminishing number of regional center operators, virtually all U.S. citizens, but it may be much better for this nation and for the individual aliens; certainly the amount of corruption and theft of the aliens’ money will diminish.
From CIS’s point of view, EB-5 2.0, has many advantages over the previous program:
- It is likely to be smaller than the old one;
- The job-creation requirements are much tougher: Each new project must produce at least 10 direct jobs; the old one allowed economists to estimate the number of both direct and indirect jobs; and
- The aliens will be in a much better position to protect their investments, as there will be no middlemen.
The EB-5 program allows aliens who have made an appropriately sized investment to collect a family-sized set of green cards; the investment minimum has varied from $500,000 to $900,000 to $500,000 again, following regulation changes and court decisions. As we noted a few days ago, there was an uptick in visas issued in China for the direct investment program when the July data was compared to the June data, while there was a near wipe-out of visas related to pooled investments.
Congress has accidentally created an experiment with a program that sets aside 10,000 visas a year for immigrant investors/managers. Let’s see how it works.