Several dozen Chinese immigrants in Australia did something they would never do back home: they staged a public protest.
The group, all applicants under Australia's Business Innovation and Investment Scheme (BIIP), were demanding action on their applications for permanent residency. Since Australia’s Labour Party came to power a year ago, it has shifted priority to skilled worker immigration rather than investors, slowing processing times for other visas.
Over 3,000 Chinese immigrants and their families are now in limbo.
Like similar visas around the world, the BIIP is premised on the idea that foreigners can make a net positive contribution to the economy by investing in an existing business or opening a new one.
But a government analysis published in March showed that the net financial contribution from migrant investors was less than that of native-born Australians. BIIP Immigrants contribute about AUD600,000 (Australian dollars) over their lifetimes, less than half the AUD1.6 million contributed by natives.
Australia joins Canada, Britain, and Singapore as governments who have concluded that business investment visas do not create sufficient economic returns to justify them. Given that they’re a prime target of speculative abuse and even espionage, that makes them more trouble than they’re worth.
Like Golden Visas based on residential property, investment visas like Australia's appeared in the aftermath of the global financial crisis of 2008. Western countries whose property markets and budgets were under strain flung open the doors to foreigners, promising long-term residency in exchange for an economic contribution.
The financial crisis is long gone. It’s been replaced by global inflation and a reorientation of supply chains. And in the meantime, “digital nomads”—workers or self-employed people who can operate from anywhere in the world—have emerged as a potential replacement.
From the perspective of a government, digital nomad and retiree/independent means visas are more attractive than small-scale investor programs for two reasons.
First, it's notoriously difficult to ensure that investments by visa recipients will create new economic activity as opposed to displacing activity that would happen anyway. Under Australia's program, for example, many applicants opened small businesses like laundromats and corner retail stores. These are hardly the stuff of international capital flows, and easily doable by Australian citizens.
The second issue involves the source of an immigrant's economic contribution. Once a business investor has set up shop in the country, any economic value they add comes from within the local economy. By contrast, digital nomad and independent means visas, including retiree visas, bring new money into the economy from outside. As that money is spent, it boosts gross domestic product, and improves the country's balance of payments.
More than anything else, then, the raw economics of long-term residency programs are driving the sea change we are seeing this year, with countries like Ireland, Portugal, and Greece eliminating or tightening conditions for their own long-term residency permits.
The COVID pandemic created two years of pent-up demand for residency visas. It also taught many people how important it is to have a backup when countries begin closing their borders. That led to a spike in demand for golden visas, including business investment visas. But global financial conditions are very different from what they were after the global financial crisis.
Instead of solving a policy problem, in other words, the continued operation of investment-based visas created new ones, like residential housing market distortions in Europe and inappropriate investment incentives in Australia.
For anyone considering applying for a long-term residency permit in a foreign country, however, all is not lost.
In fact, the environment is arguably more suitable now for people of independent means than it ever has been. Most countries will always welcome people bringing in money from outside the country on an ongoing basis—if their contribution exceeds the cost to the public fiscus of having them there. "Independent means” doesn't mean you have to be rich. Even if you are earning an income as a digital nomad, you're still bringing that money into your new home.
But there's a significant difference between the post-financial crisis system of international migration and the one that's emerging. Whereas earlier programs were primarily intended to bring in money rather than investors themselves, the new emphasis is on people who genuinely want to move to another country and live there long term.
I'd say that reflects the goals of nearly everyone I speak to in my work at International Living. And as I get ready to launch a new product designed specifically for such people, I'll be taking deep dives into specific countries to explore these opportunities in the months ahead.
Ted Baumann is International Living’s Chief Global Diversification Expert. He's traveled to nearly 90 countries and is a dual citizen of the United States and South Africa. Ted has been published in international research journals, as well as in media outlets such as Barrons, Forbes, and Cheddar. Learn more about Ted Baumann here.
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