Canada Cancels Immigrant Investor Program

Vancouver, Canada

On February 12, the Canadian government announced the 2014 budget, in which the Immigrant Investor Program would be cancelled. Under the scheme, which had been run since 1986, foreign nationals could gain Canadian residency by providing the government with a CAD$800,000 (HKD$5.6million) interest-free loan for five years.

Finance Minister Jim Flaherty justified the cancellation as the program undervalued Canadian permanent residence, and there is little evidence that investors, as a class, are maintaining ties to Canada or making a positive economic contribution to the country. Public perception is that the program is a visa expressway for an increasing number of noveau riche from mainland China.

New applications for this category of immigration have been frozen since 2012 to clear existing backlog of cases. Of the 59,000 pending cases which will now be automatically rejected, more than 45,000 are from mainland China. Canada’s program was considerably more liberal than that found in many other developed countries, which normally required investments rather than loans, and has attracted six times more applicants from mainland China than similar schemes of the US, UK and Australia combined.

The program, launched in 1986, allowed overseas residents with cash and a willingness to invest it in Canada a shortcut into receiving their immigration papers. In the early days of the program, the influx of wealth from Chinese investors bolstered Vancouver’s housing market; however, the demand for luxury properties from these investors in recent years have driven Vancouver’s housing prices sky high, and out of proportion with the scale of earnings and cost of living in the city. The Canadian government is set to launch a new Immigrant Investor Venture Capital Fund plan or a business skills option for immigration later this year to replace the cancelled program.