The election campaigns, debates, and advertisements that consumed the public
for the past year are finally over. Other countries, as never before,
watched, analyzed, and voiced their opinions on what was on display for
the world to see. Now, the world watches as President-elect Donald Trump
selects those who will serve under his administration, anticipating the
consequences for people both at home and abroad.
A topic that likely sparked the most controversy was Trump’s firm
stance on immigration reform. He spoke about it often throughout his campaign,
and although he would not back down completely, he did manage to soften
the edges. However, many are asking Trump’s stance on the EB-5 Foreign
Investor Program and Employment-Based Immigration? How will his administration
affect EB-5 policy?
Congress created the EB-5 program in 1990 to encourage foreign investors
to create U.S. jobs; thereby stimulating the economy. Per the U.S Citizenship
and Immigration Services (USCIS), entrepreneurs (and their spouses and
unmarried children under 21) are eligible to apply for a green card as
a permanent resident if they:
• Make the necessary investment in a commercial enterprise in the
United States; and
• Plan to create or preserve ten permanent full-time jobs for qualified
The rules surrounding what qualifies as an investment are quite extensive.
A minimum investment can either be “General” or “Targeted
Employment Area.” In a General investment, the minimum amount an
EB-5 investor must invest in the U.S. is $1 million. For a Targeted Employment
Area, defined as either rural or another area with very high unemployment,
the amount must be at least $500K. In either case, the capital must come
directly from the investor and cannot be borrowed.
For the time being, Donald Trump has been somewhat silent on the issue
as he focuses on selecting the core components of his administration.
We do know, however, that a company led by his son-in-law, Jared Kushner,
has utilized EB-5 investors to help fund a prominent Trump-named project.
Nearly 25% of the $50 million invested in the new 50-story Trump Bay Street
luxury apartments in New York City has come from EB-5 investors, mostly
from China. These are business people who are eager for the opportunity
to not only invest in American projects but also purchase luxury homes,
automobiles, and other goods and services, which further stimulates the
The projects formed through EB-5 participation create jobs through private
investment and do not pose a burden to U.S. taxpayers. In fact, since
those who were formerly unemployed now have jobs, tax revenue increases
and the economy is stimulated. Trump frequently spoke about job creation,
especially in the rural areas and the rust belt, and EB-5 seems to be
the perfect stimulus to follow through on that promise. He expressed concern
over jobs being farmed out to other countries for cheaper labor and vowed
that he would close “loopholes” and relax regulatory burdens
to keep those jobs in the U.S. The EB-5 program has not just stimulated
urban economies on the East and West coasts. If promoted properly, the
EB-5 program can play a vital role in driving investment into commercial
endeavors throughout the country. During the period from between 2010
to 2013, the program saved or created over 2500 jobs in Ohio, and added
nearly 3,000 jobs in South Dakota.
After the havoc the recent recession caused to the real estate markets,
it was not easy for developers to obtain financing from traditional commercial
lenders. The EB-5 program filled the void and provided needed capital
to help get languishing projects completed. The program is also attractive
to investors looking to participate in the U.S. residential property market.
Strong economic indicators and a recognized stable real estate market
will continue to drive investment from overseas, regardless of the election.
Attracting investors to America with the lure of permanent residency has
already paid dividends. In FY2013, the amount EB-5 capital that was distributed
among 29 states totaled nearly $2 billion. The largest investments were
in California, New York, Texas, and Florida, with the number of state
and local jobs created or supported by these investments being over 30,000.
These jobs will increase the amount of federal and state tax revenue and
provide many other positive economic contributions.
Since FY2013, the amount invested in the U.S. economy from EB-5 has increased
sharply and in FY2015, was reported at $4.38 billion. Since 2008, over
$15 billion of Foreign Direct Investment (FDI) entered the United States
through the EB-5 investment program. If President-Elect Trump is serious
about stimulating U.S. markets and ushering in new economic opportunity,
there is reason to believe he will continue, and possibly even expand
the EB-5 program.
Trump won the election in large part by selling his economic message to
communities that were desperate for jobs. Many of these jobs can be supported
by EB-5 investments. The types of jobs created from this program include
construction, education, energy, real estate, healthcare, manufacturing,
entertainment, and assisted-living, just to name a few. With the program
expanding to include investors from different regions, opening up new
regional centers around the country, and wealth of new infrastructure
and energy projects on the horizon, the future of the program looks extremely bright.
Over the past several cycles, Chinese investors have made up the majority
of the total EB-5 immigrant visas, although there is now growing interest
from Great Britain, India, and Ireland. Other investors reported for FY2014-2015
hail from South Korea, Vietnam, Iran, Russia, Mexico, Nigeria, Egypt,
and Japan. Homeland Security has some concerns about how quickly the visas
are processed, yet with increased oversight from USCIS helping to drive
out fraud and improve the integrity of the program, we could see some
changes in order to streamline the visa and green card process.
The Trump administration is not likely to eliminate or even tinker too
much with EB-5, a form of investment that people close to him have used
in the past. The benefits of stimulating the economy and helping to fuel
new job growth outweigh any reservations some may have regarding immigration
fraud. All signs point to an expanded and more advantageous program under
a Trump administration.
Now, with the recent announcement by Donald Trump that Japan’s SoftBank
will invest $50 billion into American projects to create roughly 50,000
new U.S. jobs, all indicators are reassuring international investors that
America is open for business.
Read more about the author,
Kevin Kim by reading his bio.