Senior Research Associate and
Senior Network Manager, Immigration
Canada was once the world leader in attracting immigrant investors.
Following its launch in 1986, Canada’s federal Immigrant Investor Program (IIP) welcomed more wealthy immigrants than any program of its kind. But then Canada terminated the program in 2014. While the Quebec Immigrant Investor Program (QIIP) continues to operate, its intake is small, and most immigrants arrive to Canada under federal programs.
So, at a time when Canada is perhaps the most open country in the world toward immigrants, now welcoming over 300,000 immigrants per year, industry stakeholders and potential immigrant investors want to know: will the federal government launch a new investor program?
To answer this question, we need to consider three factors.
First, investor immigration is politically sensitive in Canada. The federal government is aware that the launch of a new investor program could undermine public confidence in immigration.
According to a Environics spring 2017 poll, 78.0 per cent of Canadians believe immigration benefits the economy. However, investor immigration is often portrayed negatively by the Canadian media. Some media reports frame it as being bad for the country and these reports likely reflect, and impact, public opinion. The negative reports often argue that the IIP and QIIP advantage wealthy immigrants who are not really interested in building a new life in Canada, but merely want the convenience of Canadian citizenship. Because the IIP and QIIP suffered from cases of fraud, some media continue to link investor immigration with fraud even though Canada addressed these issues in both programs in the 1990s. In addition, rapidly increasing real estate prices in Toronto and Vancouver have made homeownership less affordable for many Canadians, while non-resident buyers and immigrant investors are viewed as part of the problem.
Second, Canada does not need an investor program. It is a wealthy country and even at the IIP’s peak, the amount of investor capital arriving to Canada was small relative to the country’s GDP. Compare Canada’s economic situation to other countries with investor programs. Canada can afford to close its doors to immigrant investors, while other countries may not have that luxury. Also, when the global boom in investor programs over the past decade coincided with the 2008–09 world financial crisis, financially distressed countries turned to investor immigration to help stabilize their economies. Canada on the other hand was able to handle the crisis better than most countries due to its strong financial regulations and sector.
Third, it is difficult for Canada to design a new program that is both globally competitive and meets its policy goals. This was proven after the IIP’s termination, when, in 2015, the federal government launched the Immigrant Investor Venture Capital Pilot Program only to close it later that same year. The global boom in investor programs has put Canada in a tough spot. The IIP required an $800,000 loan that was returned to the immigrant (without interest) after five years. Due to its status as a tier 1 country, Canada could justify increasing the investment amount under a new program, and would likely need to do so anyway to boost the program’s economic impact. But, doing so might undermine the program’s global competitiveness. Given that several tier 1 countries now operate investor programs, Canada can no longer assume that investors will line up in droves to enter the country, like they did between 1986 and 2014. For instance, why pay C$800,000 or more for Canadian permanent residence when you can get a green card for US$500,000?
In short, the federal government’s policy goals are: 1) a program with a manageable intake to allow it to conduct robust due diligence while avoiding backlogs; 2) immigrants who will stay in Canada to contribute economically and socially; and 3) a program that will have a measurable impact on economic growth and job creation. The third objective has proven challenging over the past decade due to historically low interest rates, which are likely to be sustained. When interest rates fell nearly a decade ago, Canada was unable to use IIP funds for job creation activities since it had to return the entire loan amount after five years. Thus, any new program would need to be sensitive to the low interest rate environment and might need to go as far as requiring a non-refundable deposit.
None of the above challenges are insurmountable. A well-designed program could benefit Canada and win public confidence. But at present, the federal government appears to be in no rush to launch a new program, believing no program is better than a bad program.
To help stimulate dialogue on this topic, The Conference Board of Canada is hosting the country’s only Entrepreneur & Investor Immigration Summit. Join hundreds of delegates November 27–28, 2018, in Ottawa, as they explore the future of investor immigration in Canada and around the world.
Canadian Immigration Summit 2018