Cold shivers doubtlessly ran down the spines of many EB-5 stakeholders on Wednesday night European time as the US Senate passed the Fairness for High-Skilled Immigrants Act (formally; S.386, the Senate’s version of the House’s HR 1044). The bill, which first passed the House last summer, aims to amend the US Immigration and Nationality Act to “eliminate the per-country numerical limitation for employment-based immigrants, to increase the per-country numerical limitation for family-sponsored immigrants, and for other purposes.’’
The amended version of the bill, explains executive director of IIUSA, Aaron Grau, “now returns to the House of Representatives for review and vote on the amended text.” Should the House approve the Senate’s amendments, the bill would proceed to the President’s desk for signature before it becomes law.
Why the prospect of eliminating per-country limits is causing such ado
The EB-5 program is allotted some 10,000 visas in a typical year (in 2021, the program will, exceptionally, receive nearly double that number), no more than 7% of which may go to any one source-country. This drives what in EB-5 parlance is known as retrogression (backlogs, in plain terms) among applicants born in countries that oversubscribe to their annually available 700-or-so visas, notably China, India, and Vietnam. Applicants from countries in retrogression risk having to wait for their visas for upward of a decade.
Among smaller countries with annual application volumes below the 700-threshold, however, there is no retrogression, and the only wait-time involved is that directly related to processing capacity.
The removal of per-country limits, however, would have the effect of eliminating the advantage now afforded to applicants born in smaller countries and treating all applicants, regardless of provenance, as equal, processing them on a first-come-first-served basis.
“If country caps were eliminated,” explains EB-5 expert Suzanne Lazicki on her blog, “visas just get issued in order of the oldest applicants first, regardless of country.”
Right now, more than 83,000 EB-5 applications remain pending with the National Visa Center (NVC) and the United States Citizenship and Immigration Services (USCIS) combined. That backlog was never a problem for, say, Lithuanians, but it has been for the Chinese, whose outstanding applications now amount to 68% of the global total.
Under a program without per-country limits, the way to calculate wait-times for EB-5 applicants filing today, Lazicki illustrates, would be to simply “divide the grand total applicants by the annual visa quota,” bringing the average wait-time for applicants – regardless of provenance – to more than 8 years.
“For people already in the EB-5 process, your visa wait time would be less than nine years, with how much less depending on how long ago you filed I-526,” continues Lazicki. The 57,000-strong Chinese backlog, the bulk of which consists of applications submitted in the peak years 2014-2017, would effectively see their waiting time massively reduced at the expense of applicants from smaller countries who file applications in the future.
“The FFHIA change would have most benefit for those oldest Chinese applicants–those with filing dates from 2015 to early 2017–who could expect most available visas for the coming three to five years, based on their early filing dates,” says Lazicki.
US$900,000 invested and remaning at-risk for a decade
The EB-5 program has, to a large extent, fallen out of favor among the Chinese in the wake of absurdly lengthy wait-times. Vivid though the American dream might have been, having to put off realizing it for 15 years or more has catalyzed Chinese investor interest in the alternative dreams offered in Europe, Canada, and the Caribbean.
Those who would make a living from the promotion of EB-5 investments found they faced an increasingly uphill battle in the Chinese market and have, over the last 2-4 years, begun to target markets unburdened by retrogression.
Should per-country limits cease, however, they would see the handicap of decade-long backlogs extended to all markets equally. Add to that a much higher price tag than before, and any regional center representative attending a conference where a diverse set of global programs are on offer would find, commercially speaking, a steep hill to climb.
Christian Henrik Nesheim is the founder and editor of Investment Migration Insider, the #1 magazine – online or offline – for residency and citizenship by investment. He is an internationally recognized expert, speaker, documentary producer, and writer on the subject of investment migration, whose work is cited in the Economist, Bloomberg, Fortune, Forbes, Newsweek, and Business Insider. Norwegian by birth, Christian has spent the last 14 years in the United States, China, and Spain.