• Regime reforms to ‘improve competitive edge’
• Bill to diversify qualification beyond real estate
• Aims to ‘unlock’ foreign exchange potential
By NEIL HARTNELL
Tribune Business Editor
The government is eyeing a $1m minimum for investors to qualify for economic permanent residency by making non-real estate investments in The Bahamas, a Cabinet minister revealed last night.
Elsworth Johnson, minister of financial services, trade and industry and immigration, told Tribune Business that the Immigration (Amendment) Bill 2021 that was tabled alongside the budget is designed to “improve The Bahamas’ competitive edge” by expanding the routes through which high net worth individuals and their families can qualify for permanent residency.
Explaining that the reforms are designed to “unlock” the potential that economic permanent residency has for attracting wealthy investors and foreign exchange earnings to these shores, he added that such persons will have more options through which to qualify other than the present, narrow route of acquiring Bahamian real estate valued at $750,000 or more.
The Bill’s reforms will permit investors to qualify via two other routes, one of which involves making investments “in The Bahamas of such a kind and of such an amount as may be so prescribed”, while the other involves a mix of such investment and real estate purchases.
“We’re looking at at least $1m,” Mr Johnson told this newspaper, when asked what the minimum investment will be for persons to qualify for permanent residency without acquiring real estate. He previously said in his contribution to the 2021-2022 budget debate that such “investments” would be in endowment funds targeted at education, sports, the arts and culture, and social development projects.
The minister last night said the government has yet to determine whether investments in government securities, such as bonds, or the proposed National Infrastructure Fund and sovereign wealth fund, would enable investors to qualify for economic permanent residency.
The reforms, Mr Johnson explained, were being driven by feedback from the Bahamian financial services industry and its clients, who were arguing the case for a more flexible regime to qualify for economic permanent residency, as well as the results of a “benchmarking exercise” conducted against competitor international financial centres (IFCs).
This had revealed that other jurisdictions offered permanent residency products linked to non-real estate investments, and Mr Johnson acknowledged that investors were not always inclined to acquire Bahamian real estate worth more than $750,000 - especially as a small condominium could suffice for digital economy era post-COVID-19.
“The amendments will change key sections of the Immigration Act to unlock the potential of economic permanent residence as a vehicle for investment,” Mr Johnson said of the Bill during his Budget debate contribution. “Currently, applicants who purchase a residence in The Bahamas valued at $750,000.00 or more are eligible to apply for a certificate of economic permanent residence....
“The proposed provisions of the Bill seek to expand the eligibility requirements for the acquisition of economic permanent residence by providing for the eligibility of investments of any kind at an amount to be determined. This can include investments in various endowment funds that would be earmarked for special interests such as education, sports, arts and culture, social development projects, and other relevant areas.
“Eligibility can also be based on a combination of the purchase of a home and other investments. We are essentially introducing a broader, more flexible approach to economic permanent residence that takes into account all kinds of investments - not simply limiting it to the purchase of a residence.”
Mr Johnson told Tribune Business last night: “When we did a comparative analysis of other jurisdictions, and wanting to be competitive and improve our competitive edge, we saw there are a number of other jurisdictions that have an investment component.
“There may be individuals who do not want to own a home, and all the attendant responsibilities of owning a home. It was very difficult to address their concerns where persons were not interested in buying a home. We have a lot of persons coming now, and this is a response to what we’ve been hearing from industry, and trying to diversify and improve our competitive edge.”
The minister added that an investor acquiring a $350,000 condo may bring with him some $5m-$10m in capital available for investment, and it is this market niche that the reforms are targeting. He added that “hundreds of people” had come to The Bahamas due to COVID-19, and that there had been “a serious uptick in permanent residency applications” although he was unable to quantify the amount.
Mr Johnson, during his Budget debate presentation, also said: “We are also making changes to the amount of time that must be spent in The Bahamas to be eligible for economic permanent residence. Currently, there is no mandatory period.
“The proposed Bill imposes a minimum 90-day period for which the economic permanent residence holders must be resident in The Bahamas, ensuring that the people who are receiving this privilege are people who are residing here and have a vested interest in being here.
“The provisions relating to revoking a grant of a certificate of permanent residency have been modified to mandate that holders must maintain ownership of the residence or a property of equal or greater value for a minimum of ten years. Under the current policy, the holder of a certificate of permanent residency is under no obligation to maintain ownership of the qualifying property after approval and receipt of their permanent residency certificate.”
And he added: “These measures ensure that people in receipt of economic permanent residency continue to maintain their investment in The Bahamas. we are seeking to create sustained investment in the interest of national development.....
“To facilitate the speed at which applications for economic permanent residency are processed, and decrease the existing backlog, the Bill will introduce a new rule stating that an application for economic permanent residency will be automatically approved three months after the submission of all of the requisite documents and information.
“This is done in the name of efficiency, in keeping with the Government’s plans to improve the speed of all services, especially those related to investors. To that end, we are currently prioritising the approval of any applications that are beneficial to the country as we clear out the current backlog of cases that have languished for years.
“These include significant foreign direct investment initiatives and other forms of investments that will generate employment for Bahamians and aid in the diversification of the local economy.”