November 21, 2013
Today I’m in Miami at a conference on Global Residency and Citizenship where I’m slated to speak this afternoon as part of a panel.
So far it’s been really interesting; there are several Presidents, Prime Ministers, Finance Ministers, Ambassadors, etc. from a number of countries– Malta, Cyprus, St. Kitts, Antigua, etc.
Each of them is here for the same reason; they’re trying to convince a room full of investors and attorneys to invest in their country.
Bear in mind, most of these countries are near fiscal straits. St. Kitts & Nevis, for example, has one of the highest debt levels in the western hemisphere as a percentage of GDP.
And you probably recall what happened in Cyprus— the government and banking system were in such bad shape that they had to ‘bail in’ the banks by stealing customer deposits.
They’re desperate to raise cash. And they’ve had to resort to innovative methods.
Many of them are now ‘selling’ residency. For example, Hungary has a program where you can invest in government bonds. And in exchange, you can become a resident.
Portugal has a similar program called the Golden Residency program, whereby you can simply purchase a property or some other such investment in exchange for a very tax efficient class of residency. After six years, you can even apply to become a naturalized Portuguese citizen.
Then there are other countries that are selling citizenship. Malta has a program whereby you can invest 650,000 euros (about $875,000) in exchange for citizenship. Cyprus and Antigua also both have similar programs, though at different price points.
These programs are undoubtedly controversial. Political opposition groups are hammering home fears about how criminal terrorist masterminds will be able to acquire Maltese citizenship and use it for nefarious purposes.
You’d think they’d be happy that some foreigner is willing to pay almost a million dollars for a travel document… money that the government desperately needs to pay down its sizeable debt burden. But I suspect the fearmongering will quiet down once the money starts rolling in.
This is the future. Rather than treat people like dairy cows and work horses, governments are going to have to position themselves to attract talented, productive residents and citizens.
As The Economist wrote in October last year: “The world’s most valuable resource is talent. no country grows enough of it. Some, however, enjoy the colossal advantage of being able to import it.
Fortunately, this is already happening.
Panama has a very popular program to attract retirees to move to the country; it’s been so successful for them that the program has been copied throughout the region.
Many European nations, from Spain to Ireland, are now providing residency to any foreigner willing to bring capital into the country and help them mop up all their excess housing inventory.
Places like Singapore and Chile have been rolling out the red carpet for entrepreneurs and businesses, providing all sorts of subsidies and tax incentives.
This is a good thing. When governments compete, people win. And those who refuse to compete will eventually run out of dairy cows…
In our modern times, we can be mobile. We’re not chained to the land as if we’re living in the feudal system. There’s nothing stopping a family from uprooting and heading overseas if the lifestyle, business opportunities, and tax environment would provide a better quality of life.
And I’m pleased to tell you that, even though there are a lot of serious economic storm clouds on the horizon, there are more and more governments starting to realize that they have to become competitive.
I’m following this trend closely and will have more to report as the opportunities unfold.