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Four Crucial Things To Consider When Contemplating Vanuatu’s Many CIP Options

VIMB
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The modern investment migration landscape has more citizenship by investment programs (CIPs) than ever. This all-time-high number of programs suits investors looking to elevate their mobility and status as global citizens. Still, the increased optionality brings a challenge: How do you choose the right CIP?

The world currently has over ten CIPs, and that number may continue to grow. Some countries, like Vanuatu, have multiple programs to choose from, so investors must conduct thorough research to understand which program is right for them and which others operate on subpar frameworks that—while they may work—do not yield the same financial and qualitative benefits and may carry hidden risks.

This article will discuss the four significant aspects of Vanuatu’s CIP landscape that an investor must consider. With the recent launch of the investment-linked Capital Investment Immigration Plan—the “CIIP-Crude Coconut Oil (CNO) Future Fund,” this article focuses on this CIP as an example of a program devised with the specific objective of creating a “gold standard” amongst Vanuatu’s CIP options.

However, the considerations and points here could apply equally to any governmentally regulated CIP globally.

Licensing and Management

    It goes without saying that any official CIP must fall under governmental regulations – which should be publicly available for scrutiny 

    The government must actively participate in managing, maintaining, and overseeing the CIP, and licensing/approving its agents (and sub-agents)  is one of the most critical aspects of that job.

    CIPs without licensed/approved agents are more vulnerable to scams and misselling. Some programs directly license local and international agents, while others appoint a “master agent” to oversee the program’s distribution and ensure streamlined operations.

    CIPs with appointed master agents, such as those of Vanuatu, should have a robust architecture represented by an effective, professional master agent who not only controls quality and maintains program integrity and government-mandated fee structure but is also accountable for any appointed sub-agents in their representation of the program.  

    Sub-agents appointed by a master agent should be screened and approved by the government to ensure the integrity and consistency of program representation. A sub-agent should be able to provide evidence that acknowledgment and registration with the government have been obtained.

    However, not all master agents are equal, and investors need to dig into licensing specifics to ensure they choose not only the right program, but also the right program representative.

    Ask the question, for example, of the duration of the license issued to the master agent – for some, it might be a decade, and for others, it might be just twelve months.  This is a fundamental distinction, as it reflects the program’s sustainability and long-term profitability for both the country and the investors (in the case of an investment-linked program).

    If an agent designs a program and obtains a one-, two-, or even three-year master agent license, what happens to the investment component of the CIP after that period? Who is going to take responsibility for the investor? There is likely no easy answer, and the reality is that the “investment” component is, in the end, a donation along with the rest of the fee. 

    By choosing a program with a master agent that has long-term certification, investors ensure that they are working with a governmentally regulated body that legally has to maintain the CIP and its promises to investors for the entirety of its license.

    At VIMB, when we created the CNO-CIIP in Vanuatu, we obtained a ten-year license to ensure our commitment to investors regarding processing, benefits, and ROI.

    Laws and our own sense of responsibility have bound us to ensure that the CNO-CIIP operates at the highest level and that our clients receive their ROI dues on time.

    The Money Trail

      Another important factor investors must consider is how the program will utilize their funds. This transparency is vital, ensuring the sustainability of the investment and the CIP itself. 

      In this respect, the first question to ask is whether or not a real investment is being made with the funds committed. If so, what is the detailed process of structuring the investment, the ongoing management, reporting, and governance?

      Transparency among CIPs may seem rare, but in some cases, it is the norm. To learn about a program’s financial structure, investors can request detailed information such as a comprehensive Investor Prospectus, periodic audits, and, in the case of an investment going to a fund, the latest Net Asset Value Report (NAV).

      Audits are crucial, and a   CIP must employ a qualified third party to conduct them. This puts the money trail in view for the public, allowing anyone to check and scrutinize the process to ensure its validity.

      The NAV is also a critical aspect of fund-based CIPs. NAVs highlight the fund’s performance and standing within the economy, and they provide prospective information for investors (as well as program observers) who want to obtain a second citizenship while making an ROI. 

      The CNO-CIIP recently published its first NAV report. Although initial NAVs typically highlight a decrease in a fund’s net asset value due to its introductory stage, the CNO-CIIP’s NAV highlighted a slight increase in value, a promising sign for any fund worldwide.

      The CNO-CIIP is committed to audits by a qualified third party, ensuring that current and prospective applicants have complete insight into where their investments are going. 

      Investors need to inquire about the money trail, the financial structure, audits, NAVs, and any other relevant fiscal matters to ensure that their CIP investment is put to authentic use and will yield ROI.

      Not only that, but flimsy financial structuring can spell the end of a CIP and, even worse, opens up the potential for criminal investigation where fraudulent misrepresentation has taken place. The recent launch of a RICO lawsuit in the Caribbean is a case in point – with incendiary implications for those involved.  No self-respecting investor (or agent) wants to be caught up in, or associated with a faulty program, even if it does not directly impact them. 

      As we are seeing in the case of St Kitts – the Prime Minister has already stated a willingness to revoke citizenship obtained by fraud – which encompasses illegal undercutting of prescribed minimum fees.  Vanuatu has experienced rampant price manipulation in its CIP programs, which has greatly impacted the Program’s international reputation.  CIIP – CNO Future Fund sticks rigidly to government-mandated fee structuring – including that governing minimum investment fee amounts.

      The Backend

        The core concept of citizenship by investment is actually quite simple, especially if a country’s laws and regulations already accommodate the practice. Hence, creating a CIP can seem straightforward on the surface, but the intricate details of its framework complicate things.

        Investors who want to apply to robust CIPs must understand how they work. Some programs worldwide are not well-defined and create problems for their agents, the government, and the applicants.

        Others, like the CNO-CIIP, have a complex, comprehensive framework that accounts for every aspect of the program and ensures streamlined processing and optimal benefit for everyone involved.

        When considering a specific program, an investor can request detailed information about the CIP’s structure, operational procedure, and regulatory foundations. 

        If a master agent or government cannot provide a comprehensive overview and comprehensive explanation of the details regarding how they designed and are operating the program, then that is a warning sign to exercise caution.

        With the launch of the CNO Future Fund dedicated website, investors and observers will have access to a wealth of information about the CNO Future Fund program. Investors will also have additional access to financials, reports, and other information through a log-in to an investor-only section on the site.

        The Investment Sector

          CIP investors typically consider four things when looking into a program’s investment framework:

          • The asset class
          • The industry or sector
          • The potential returns
          • Socioeconomic impact

          The investment aspect of CIPs is just as important as the global mobility asset. Investments should benefit everyone involved: The government, the community, and the investors.

          By choosing the right option, investors ensure their money positively impacts their lives and their new community.

          Some CIP investment classes sadly lack in this regard, while others shine.

          VIMB decided to base the CNO-CIIP investment in the Crude Coconut Oil industry after an extended period of thorough research, financial forecasting, and direct industry sector involvement.

          The Vanuatu government has continuously endorsed the CNO-CIIP because it understands the massive potential of the Crude Coconut Oil industry and how it can positively impact the country.

          This issue is essential not only for the government but also for investors. If investors seek an ROI, they need to ensure their investment is going into a profitable, sustainable, and scalable industry.

          Investors can confirm this by requesting the data and research from the government or master agent of any program and comparing it to other potential programs.

          The master agent’s ability to produce this information and the level of detail should give investors an indication of how their investment will perform.

          The link between the Fund and its investees must also stand up to scrutiny.  In the case of CIIP-CNO Future Fund, there is close linkage between the fund, a professionally architected strategic plan, and the company in charge of executing the plan.   The fact that the domestic coconut oil market has been quantified and is an as-yet an untapped demand puts the CNO Future Fund in a very strong operational position.

          Vanuatu’s CNO-CIIP Setting the Standard

          When VIMB worked with the Vanuatu government to create the CNO-CIIP, we focused on creating a robust legal and financial foundation for the program.

          The CNO-CIIP aims to set the standard of excellence in CIP performance and management, and years of research and studies show that it will have a remarkable impact on the country and its investors.

          Investors looking for a second citizenship should consider the CNO-CIIP at this time, especially since talks with the UK and EU regarding re-establishing Vanuatu visa-free access are well underway.

          The program is simple on the outside but comprehensive and detailed on the back end. It is the epitome of what a CIP can be.

          To learn more about the CNO-CIIP, visit our website  https://vimb.vu/links.