- July 7, 2021
- Posted by: Stephane Tajick
- Category: Competitive Research Analysis
Australia has one of the world’s most lucrative programs. It’s highly demanded, where it offers multiple visa slots per year. And this July, the Australian government plans to capitalize on that demand.
Investors will need an extra AUD $1,000,000 under the new regulations. This raises the total from $1.5m to $2.5m per investor.
However, this isn’t the only change to the program. A restructuring of the scheme is underway, where the government is changing the allowed paths to citizenship.
What Does the Restructure Include?
Applicants belonging to both the regular Investor Visa and the “significant” branch will need to reallocate their investments.
Specifically, they are required to invest:
- 20% as venture capital and/or private equity
- 30% as managed funds in emerging companies
- 50% as managed funds (and as defined by state requirements)
The Significant Investor branch will maintain its entry cap of AUD $5,000,000, but the allocation will also change to investing:
- $500,000 as private equity or venture capital in qualified Australian structures
- $1.5 million in qualified managed funds or in special entities that fund emerging companies
- $3 million in managed funds
As can be seen, the new reforms force investors to place ½ their capital in new companies. They aim to provide extra funding to startups and emerging companies in the private sector.
How Does the Australian Government See the Reforms?
According to Alex Hawke (the Australian Immigration Minister), this should be a boost to the Australian’ economy.
Hawke also sees that the reallocation will benefit ventures that are high-risk and high-reward but innovative. It’ll encourage research and development and the merchandizing of new products.
This should be a promising result, especially with Australia’s revenues from the investment scheme, which have amounted to $15.9 billion since 2012.
That sentiment is also shared Chief Executive of Australia’s Investment Council, Yasser El-Ansary.
El-Ansary sees the program as good cash flow into fast-growing businesses. He also sees it as directly benefiting job creation and the launch (and growth) of innovating companies. This should give the Australian economy a competitive edge in the world market.
What About the Long-Term Sustainability of the Investments?
El-Ansary hopes that the reforms will encourage applicants to maintain their investments, even after receiving their permanent residency.
He basis his hopes on the clarity of the program’s paths, especially with safe backlog and processing routes.
However, the data on Australia’s investment flow tells a different story. Investment flow from SIV (significant investor visa applicants) has been decreasing since 2016.
That might be indicative of disinterest from high net worth investors, with the values being as follows:
- 2016 – AUD $2.775 billion
- 2017 – AUD $2.025 billion
- 2018 – AUD $0.915 billion
- 2019 – AUD $955 million
- 2020 – AUD $680 million
Additionally Australia’s BIIP has seen the lowest number of visas granted to applicants (and dependents) since 2009, being 2872 compared to 4294 respectively.
But other than disinterest, this may be a sign that the Australian government is accepting limited applications from SIVs, which is not likely, especially with the new reforms in-place.