For the newly-wealthy in China who covet western residency visas, the Republic has become a top destination. A report last summer on worldwide residency-for-investment schemes, by Chinese research group Hurun, concluded that "Ireland is becoming the dark horse" of the visas-for-sale industry. How should this State react?
The Republic's light-touch Immigrant Investor Programme, which affords visas in perpetuity to wealthy non-nationals and their families in exchange for €1 million of investment in certain properties, businesses or bonds, has shot up Hurun's rankings and is now seen as the third best in the world by the Chinese, after the United States and the UK.
Should it matter that Ireland is now seen as a soft touch in the global visas-for-sale industry? The label may grate with State officials but, in essence, that’s how the programme is set up: a simple transaction, a sale, with a visa as the end product.
Simply make the investment, visit Ireland once a year, and you and yours are entitled to an Irish residency permit for five years, renewable – with almost no questions asked – forever.
‘Philantropists’
Chinese citizens now account for 97 per cent of all applications for Irish visas under the programme,which has spawned a mini corporate finance industry in this State, funding everything from nursing homes to hotels. In recent weeks, housing campaigner David Hall even floated the idea that Chinese "philanthropists" could use the scheme to invest €50 million in endowments to fund social housing.
There is a housing crisis in this State and €50 million could build enough homes to take perhaps 200 Irish families off waiting lists or away from the ignominy of trying to raise their children in B&Bs. Does it really matter that the cost of it is 50 Irish residency permits for Chinese millionaires who want the status of a western visa, and perhaps another one for their spouse and child?
Or is there some hidden cost to this State that has not yet been fully considered?
The Immigrant Investor Programme raised at least €500 million for the economy in the six years since its 2012 launch, but it is debatable how much of that cash served only to displace local investment as our economy recovered.
The programme was conceived at the bottom of a slump, as the Government desperately sought foreign investment when the State was on its economic knees. Ironically, the scheme was barely used at all during the austerity era. In recent years, however, as the good times have rolled once more and the need to tout visas for foreign cash has arguably waned, the programme has taken off like a rocket.
Increased fivefold
Last year, there were 320 applications to the scheme, almost all of them Chinese. The vast majority were approved. As recently as 2015, there were only 66 applications, and just 33 in 2014. Something fundamentally changed in 2016, however, when the numbers seeking visas under the investor programme increased fivefold.
The State appeared to take notice of the scheme’s burgeoning popularity in 2016, and, in January 2017, it raised the minimum investment threshold from €500,000, as it had been conceived, to €1 million as it is now.
Some Irish business people with strong Chinese links, such as Bartra property developer Richard Barrett, warned of a "catastrophic effect" on investment levels under the programme if the threshold was raised. This never came to pass, however. The spike levelled off, but the number of applications remained roughly the same throughout 2017. The total amount raised, meanwhile, rose exponentially due to the higher thresholds.
Last year, State officials appeared to once again shift uncomfortably in their seats over the scheme. An interim report suggested the programme had created 1,100 full-time jobs, but with the caveat that it was impossible to tell how many of those jobs would not have been created anyway by domestic investment.
Buy on credit
Applicants under the programme are supposed to have a net worth of at least €2 million – the State will happily dish out visas, but not to those who risk becoming a burden – but last year, officials cottoned on to the fact that many Chinese applicants were borrowing the €1 million to be invested. The investment is meant to be equity, and the State had never intended to allow Chinese citizens to buy Irish residency on credit.
The Irish Naturalisation and Immigration Service, which operates the Immigrant Investor Programme, warned the cottage industry of promoters that had sprung up around the scheme that anybody who applies with borrowed cash will be refused.
The State has commissioned a full review of the risks and operation of the scheme, which is due to be undertaken early this year. This week, the Department of Justice, which oversees the immigration service, also said “enhanced control checks” of applicants under the programme are being implemented, ahead of the outcome of the review.
The scheme’s burgeoning popularity has raised the concern of local officials, but this State is not an outlier in having such an incentive. Almost all western countries have their own versions, and almost all of those are dominated by Chinese investors – the international average is that they account for about 80 per cent of applicants.
The State appears alive to the risks of the Irish scheme being used for nefarious purposes, such as money laundering or visa queue-jumping on borrowed cash.
But on balance, it should probably just fix the programme after the review, and then keep it in place. Now is the time to build more economic links with the East, not hack them back. Especially when you look at the insane mess bubbling up to our west.
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FOOTNOTES
- The sun might not set on Ireland's China-friendly cash-for-visas scheme, but it has well and truly come down on Ryanair Holidays, the airline's package sun-deals offering, which it killed off this week.
The airline wanted to take on the big tour operators, such as Tui. Ryanair Holidays was launched in December 2016, offering its customers full packages including flights, hotels and ground transportation.
Other budget airlines have tried the same, although innovation in the sector's marketing departments when it comes to choosing names is clearly in short supply – Easyjet Holidays was launched in 2007, while Vueling Holidays entered the market last August. The Vueling offering is being sold via the Expedia online platform.
The US travel behemoth Expedia may, therefore, be doubly interested in the demise this week of Ryanair Holidays. It is counter-suing Ryanair in the US in a bitter competition case, in which it has accused the Irish airline of trying to “destroy” competition in the package holiday sector by leveraging a “monopoly” position on certain routes to advance Ryanair Holidays.
Now that Ryanair Holidays is no more, where does that leave Expedia’s competition suit?
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- I have long been sceptical about Supermac’s owner Pat McDonagh’s strategy in allowing his firm to become embroiled in European trademark case after European trademark case against McDonald’s. Sceptical, but admiring at the same time.
This phoney war has been bubbling up in different guises for years now. During that whole time, Supermac’s has never once put forward a serious plan to expand its operation to continental Europe. And if he wanted to expand in the UK, he could apply for a separate trademark there; he wouldn’t need a Europe-wide version.
McDonagh has, however, always enthusiastically lapped up all of the David-versus-Goliath free publicity the rows have engendered. And that publicity has always looked, to me, like the biggest advantage of it all, beyond inflating the value of the business should an ambitious buyer ever come along. Good luck to him.
Lo, the Supermac’s name was everywhere in the media this week, at home and abroad, when he defeated McDonald’s in a European case over its Big Mac trademark. The wily McDonagh must have thought all his Saturday night pub closing times had come at once.
