WASHINGTON — Brian Dickens, an administrator in Idaho’s Department of Commerce, is busy luring Chinese investors to his state through the EB-5 regional center pilot project in the United States.
With US economy still relatively stagnant, local governments are seeking more foreign investment. One way they are doing so is the EB-5 (Employment Based Visa, Category 5) program, which some call the “green card for money” program.
“The competition among the US EB-5 regional centers is strong,” Dickens, who is in charge of setting up Idaho’s regional centers, told China Daily.
“Two years ago, there were only 19 EB-5 regional centers in the US and now we have more than 90 of them. And the number is increasing fast.”
The EB-5 program essentially makes it possible for foreigners to get permanent US residency in exchange for helping establish US businesses and creating jobs.
Under the program, foreign investors must finance commercial projects in the US by investing either $500,000 or $1 million and create at least 10 full-time jobs. They can set up a new commercial enterprise, invest in a troubled business or invest directly through the EB-5 regional center pilot program.
All investors must undergo a background check, identify the source of their wealth and maintain the 10 full-time jobs they create. The investor, as well as the investor’s spouse and children, can obtain US citizenship after five years.
At least 3,000 temporary visas for foreign investors are available through the program.
The regional centers offer a wide range of investment opportunities in various industries, including real estate, retail trade, agriculture, manufacturing, construction, technology, clean energy, professional services and the arts.
California, which has the largest number of Chinese immigrants of any US state, has 26 EB-5 regional centers so far.
Seemingly eager to catch up, landlocked, mountainous Idaho, which is home to only 1.5 million people, is setting up what will be its third regional center in less than half a year. The state’s regional centers mainly offer investment opportunities in mining and resort projects.
The Idaho state government regards China as one of its major potential markets for the program and has hired Chinese market specialists to help sell the state as an investment destination.
Dickens made his third trip to China, bringing along Idaho governor C.L. “Butch” Otter to promote the regional centers.
Idaho launched its first regional center in December last year and the second in January. It has not had any success story yet out of the program. But the centers are still new and hopes are still high.
“It will happen soon,” said Dickens.
Immigrating to the US is still a popular move among rich Chinese people, although it’s harder than migrating to Canada or Australia, other favored destinations, EB-5 program marketing expert Brian Su told China Daily.
The program kicked off in the late 1990s, loosely modeled on a successful initiative started more than 20 years ago in Canada to lure Hong Kong investors. Mainland investors became eligible only four or five years ago, Su said.
“But China is the fastest growing EB-5 market,” said Su.
Last year, China surpassed South Korea to become the largest source of EB-5 participants, with 1,979 Chinese people getting visas through the program. South Koreans got about 900.
“The US is still a huge attraction to Chinese people and is always the first pick for the most capable investors,” said Su. “And the EB-5 program can be a fast track to a US green card.”
In major Chinese cities, such as Beijing, Shanghai and Hangzhou, wealthy Chinese are often invited to glamorous EB-5 promotions events, where high-level state officials greet them.
Most of the invitees to such events are entrepreneurs who start private companies or those who made their fortune from China’s real estate bubble.
“They are not sophisticated investors,” said Dickens. “They are extremely conservative with lower risk tolerance than other foreign investors.”
Chinese investors often choose to invest in familiar industries, such as real estate and retail trade.
Potential investor’s main concern, aside from the security of the investment, is whether or not a project will be able to create the 10 jobs necessary to eventually get a green card, according to Sima Muroff, the managing partner of one of Idaho’s regional centers.
He said his center is the first to offer an insurance program designed to repay investors their original investment amount in case the projects do not generate enough profit to cover the original capital costs.
Even so, Su is cautious about promoting the program in China.
“It is a risky investment,” he said. “The number of regional centers is growing too fast and they can barely control the quality of the projects.”
Dickens agreed that only 20 percent of all the EB-5 investment projects in the US are compelling.
Immigration lawyer Zhang Runan in Washington said she also hesitates to recommend EB-5 projects to her clients, most of whom are not serious business investors but just want a quick green card so their children can go to school in the US.
“It (EB-5) is a new thing in the US, so the whole market is not well regulated and contains a mix of good and bad projects,” Zhang told China Daily.
“Even on the government administration side, they are still trying to figure out how to coordinate with different departments, which means the processing the paperwork usually takes a really long time.”
Zhang said one of her clients was involved in an EB-5 project in New York in which none of the investors received a green card.
“So investors need to be warned of the risk,” she said.