(Rohini Nambiar | CNBC) – As President Donald Trump seeks to pass immigration reform, there is another visa program that is under scrutiny: the EB-5 Visa Program.
The EB-5 or the Immigrant Visa program was introduced in 1990 as part of efforts to spur growth through foreign direct investment and creation of employment opportunities, according to the U.S. Citizenship and Immigration Services. Within this program, foreign investors qualify for a green card for themselves and immediate family without the need for a citizen sponsoring their applications if they invest at least $1 million (or $500,000 for projects in a “targeted employment zone”) and create more than 10 full-time jobs in the U.S. within two years.
Congress is set to review the EB-5 program before it expires next month. The proposed changes include a change in the minimum sum to be invested, parameters for “target employment zone” to be defined by the Department of Homeland Security instead of states and more oversight to prevent abuse of the program. Some in the Senate — such as Senators Dianne Feinstein (D-CA) and Chuck Grassley (R-IA) — have even called for the program to be repealed.
“The Trump administration has been all about creating jobs and what better way to create jobs than a program that creates as many jobs as it does,” said Abteen Vaziri, director for Greystone EB-5 — a real estate financing firm that identifies and underwrites EB-5 visa programs.
Speaking with “Squawk Box Asia” on Wednesday, Vaziri said he is optimistic about the future of the program and sees opportunities to further support Trump’s $1 trillion infrastructure development plan.
A report, released earlier this year, by the U.S. Department of Commerce estimated that “more than 11,000 immigrant investors provided $5.8 billion in capital, roughly 35 percent of the total investment ($16.7 billion), for 562 EB-5 related projects that were active in the (fiscal years of 2012 and 2013). These projects were expected to create an estimated 174,039 jobs.”
The EB-5 visa program is limited to 10,000 visas per year. More than 80 percent of the green cards under this program were issued to Chinese investors in 2015 according to the US Department of State.
Yet, the visa program has come under criticism in the recent years as there have been multiple cases of scam and misuse. A special report by Reuters in 2010 identified many real estate firms misleading foreign investors by “selling the American Dream” and looking for a quick way to receive investments to fund real estate projects.
More recently, a Chicago hotel developer was sentenced earlier last month in the largest EB-5 visa fraud scheme of $912 million for misleading 290 Chinese investors, according to Associated Press.
Vaziri said his company views cases of fraudulent projects as a small minority and sees the program as a job creation program rather than a visa program.
Still, the current proposed changes would not serve as deterrent in receiving interest from foreign investors, Vaziri said.
“There is a market out there for immigrant investors looking to migrate to countries which typically have good education programs,” he added.
While the raise in the minimum amount may not decrease interest in investing in the U.S., the time taken for the visa to be approved just might. Vaziri said his firm has seen the average application time for the EB-5 visa increase from 4 months to 18 months, and he fears that reforms might cause further delays in projects — jeopardizing the program.
The U.S. is not the only country offering investors a visa status in return for significant investments. Australia, for example, requires 1.5 million Australian dollars ($1.1 million) worth of investments into the country for a similar visa program.