20 February 2019
The right approach is to further increase the threshold for investment visa to attract super-rich immigrants. Photo: AFP
The right approach is to further increase the threshold for investment visa to attract super-rich immigrants. Photo: AFP

Why Hong Kong has given up on luring the super rich

In an ideal world, all are equal.

However, in the economic world, realities are cruel just as in the Animal Farm. Everyone has a different economic value. A billionaire immigrant could bring in 10 times more economic value than the average immigrant.

That’s why countries like Britain, the United States, Australia and those in Europe have launched various investment immigration schemes to lure the super-rich.

In late 2014, for example, Australia rolled out the Platinum Visa program, which allows immigrants to obtain permanent residency within 12 months if they make a A$15 million (US$12.35 million) investment. The price tag is 19 times more than the ordinary investment immigration plan, which has also substantially shortened the waiting period from six to eight years.

The UK, meanwhile, has launched an ultrafast-track plan, which allows immigrants with investment of 10 million pounds (US$15.2 million) to obtain permanent residency within two years, and those who invest 5 million pounds to get their visa in three years. Those investing 2 million pounds under the traditional investment immigration scheme need to wait five years.

It’s quite clear that many nations are vying to attract the super-rich. But not Hong Kong. It has suddenly halted its investment visa scheme.

The program appears to have come into conflict with the city’s desire to attract talents. For example, given that Hong Kong’s housing supply is extremely tight at the moment, immigrants under the Capital Investment Entrant Scheme may worsen the shortage and hamper the city’s efforts to lure talents.

However, there is no fundamental conflict between seeking investors and trying to attract talents. 

In the first place, what kinds of talents does Hong Kong need? Certainly not IT professionals or scientists as the city lacks the proper infrastructure to give full play to their expertise.

Instead, what the city badly needs are high-end service professionals, such as wealth management experts, executives and professionals, as well as consultants who can help the nouveau riche to improve their taste for the finer things in life.

These services all target rich people. But now that the Hong Kong government is suspending its investment visa program, these service providers will struggle to find clients.

That said, the government has to balance social issues and economic benefits. The right approach is to further increase the threshold for the investment visa, and follow the suit of western nations and roll out schemes to lure super-rich immigrants.

The suspension of the investment visa scheme comes as a surprise as it does not make any sense.

Some believe the move is related to Beijing’s crackdown on corruption. It is said that a number of corrupt Chinese officials have obtained Hong Kong visa through the scheme in recent years, complicating the anti-graft campaign.

This article appeared in the Hong Kong Economic Journal on Friday.

Translation by Julie Zhu

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Hong Kong Economic Journal columnist

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