Could the current worldwide economic crisis and uncertainty be an unprecedented opportunity for the RCBI industry?

Thought Leadership by Hangama Wanner, Founder and Managing Partner, KayHan Swiss

2020 will forever be synonymous with the COVID-19 pandemic. This virus tore through the fabric of the globe, impacting all aspects of society. The hysteria left behind by the virus highlighted the frailty of our world order, with our interdependency and interconnection laid bare for all to witness. Governments scrambled to react with no plan in place for a forced global shutdown. Those lucky enough to have options were able to counter the health and economic devastation, while second citizenship and/ or residency proving to be the ultimate factor in giving people leeway to combat the global shutdown. Consequently, watching the world dangling on the brink of collapse, residency and citizenship by investment (RCBI) experts are compelled to shift from standing on the sidelines to taking action and identifying new opportunities.

AN OUNCE OF PREVENTION IS WORTH A POUND OF CURE

The versatility of RCBI, with the health crisis accompanied by an economic downfall, was clear to all. While mobility and financial gains have always accompanied RCBI programmes, health care and government efficiency have now entered the fray as vital factors.

OUT OF CRISIS, ARISES OPPORTUNITY

The investment migration industry is set to undergo a facelift as major changes may come into play. Changes will be incurred by the apparent global need to refocus efforts in a more risk-averse structure. The past decade has seen the introduction of many start-up visas, innovation visas, and pilot programmes focused on tech, fintech, and development funds (social, health, or socioeconomic). As countries most affected by the COVID-19 pandemic battle an economic cataclysm, it would be astute for countries to entice investors to aid in economic recovery. With a growing focus on health and environment, it would be wise of RCBI countries to keep the UN’s 17 Sustainable Development Goals in mind and rebrand their offerings to address critical issues. Real estate has largely been the prevailing investment option for RCBI, but impact investment options will benefit the country on a greater socioeconomic and environmental scale. Countries like Portugal, Singapore, and Greece could utilise their handling of the pandemic as a brand-booster. This must be accompanied by innovation and offering options (global health insurance etc) that address the issues the world needs the most. Many RCBI countries are in a pole position to offer something more for their citizenship. Antigua & Barbuda can optimise its recent legislation (2018) of medical cannabis (CBD), a multi-billion dollar industry that is yet to be introduced into the investment migration world. A fund to develop this sector could have colossal effects on the economy while providing investors with a good ROI. St Lucia has been investing in new clinics - why not employ the funds of investors into further boosting the health sector in the country? Thus making it a hotspot for medical tourism, and in the case of a future pandemic, a haven for all its citizens.

RCBI IS A TWO-WAY STREET

Most countries reacted to COVID-19 by lowering the prices of their RCBI programmes. I advocate they remain constant, as RCBI should not be a bargaining market. RCBI countries should focus on reassuring investors and providing them with incentives to contribute to their economy. The Caribbeans could, instead of constantly waging a price war, unite and standardise their offerings; rebranding themselves on what they offer rather than price. There is always the issue of accepting more nationalities; with the US accepting Iranians, why shouldn’t other countries?

RCBI countries should focus on reassuring investors and providing them with incentives to contribute to their economy.

Investment options are not the only matters to consider, as the COVID-19 pandemic highlighted shortcomings in banking and finance. RCBI countries must streamline procedures, through digitalising banking and money transfers; finally solving the issue of biometrics that went haywire with the travel ban, or simply offer sophisticated banking solutions. Cryptocurrency could also be introduced as a valid method of payment, with blockchain technology a long-term and safe solution to complicated banking procedures. Any potential second citizenship must come with reassurances of solid financial stability and fiscal policies.

EU COUNTRIES MAY YET INTRODUCE NEW PROGRAMMES

Investment migration has undeniably played a gargantuan part in economic growth in EU countries. It is probable that other EU countries will follow suit. We could see new programmes popping up to shore up that economic gap created by the pandemic. New programmes, such as Greece’s recently announced seven percent flat tax rate route for pensioners could aid in recovery. Flat tax programmes are transparent solutions that bring with them great benefits. Some fine-tuning of existing EU programmes, and the introduction of new ones, could expedite recovery. The EU Commission may yet change its view of RCBI as it aids in the economic recovery of one of the hardest-hit continents in the world. The pandemic has opened a path of unprecedented opportunities to explore. The future of this industry is now, and it is up to all players to determine how we want to shape it.