For investors interested in other residency by investment and citizenship by investment options outside United States’ EB-5 program, what are some other country programs they can consider? What are the criteria to obtain a second passport or permanent residency in other countries? Do these other programs interfere with EB-5 at all? Philippe May, CEO of EC Holdings, chats with host Ali Jahangiri about the different options that exist today.
Philippe: The war in the Ukraine, the restrictions in China, the whole pandemic made a lot of people think what is the value of their passport? Not today that they know exactly, but what will it be in ten or in 20 years? Where will their country be in terms of access, in terms of economy, in terms of immigration, etc.? So people sometimes want something else, and that is usually not just next door. That would not be a big deal. They want something on a different continent, in a different culture, in a different hemisphere.
Ali: This is the voice of EB5 by EB5 Investors magazine. Each week we sit down with the experts in the EB5 investment space to get valuable insights and the latest EB-5 news.
Ali: Hi, everybody. This is Voice of EB-5 with your host. All Jahangiri. I am on the phone with a friend of ours, Philippe May, who is in Singapore. And today we're going to be talking about citizenship options outside of EB-5. Philip, welcome to the Voice of EB-5.
Philippe: Thank you, Ali, for having me. Pleasure to be with you tonight.
Ali: Philip, let's get a little bit of your background out to the public. I met Philippe at one of our events recently in India, and interesting enough, Philip's options for global citizenship kind of opened my eyes a little bit about what's going on in the EB-5 world and what EB-5 is really competing with. So this podcast is more geared towards the competition EB-5 has and Philip's role. Philip's worked with Arts in Capital for about five years. He headed up their program there. He left and started his own company a few years back, built it up called EC Holdings. Philippe has a lot of knowledge in the international spectrum for citizenship and residency, and I wanted to bestow his knowledge upon all of our listeners and have them learn a little bit. Philip, maybe you can add a little bit about your background. I know you live in Singapore and you're originally from Switzerland, but maybe you can give the public a little bit commentary about your background.
Philippe: All right. Background is in private banking. I started in Zurich, Switzerland in the 1990s with Credit Suisse, then moved on and worked for BNP Paribas and later in Singapore for EFG Bank. Which is dedicated to private banking wealth management. A typical Swiss setup, a pure play. And from there I moved into the investment migration space. I had a Vietnamese client who is now a friend of mine who wanted to get the second passport in Saint Kitts and Nevis. I travel to St Kitts and Nevis to check it out for him. He got his passport and I discovered a new industry. So I joined our capital, opened their office in Singapore and headed the operations in the Asia Pacific for several years and then started with nine global partners EC Holdings, which is head office headquartered in Singapore, and which has offices and government licenses around the world in the classic CBI citizenship by investment jurisdictions, as well as some other countries where you may get residence or even citizenship by residence. That is my background professionally in a nutshell. Besides that, I have been appointed the honorary Consul for St Vincent and the Grenadines in Singapore in 2011. And private wise, I'm a sports fan. I'm a hiker. I'm an ornithologist. I like the arts. And if some time is left, I like to read a good book.
Ali: That's a great background, Philip. Please give us the reasons why people look for a second residency.
Philippe: There is many reasons why people look for second residences. One reason may be that they want to move. They want to pack up and leave and go and stay in another place. That's usually the case with EB-5. People who want to go to the US want to spend their life there full time. That's legitimate. That is one of the reasons. Then there is people who don't want to move, who want to have a plan B, who live in countries which may not be stable, which may be even dictatorships or which may face other issues. But they have to stay there for business reasons, for family reasons, for whatever reasons. But at the same time, they want to have a place where they can go if need be. Another reason may be that people are perfectly fine where they are at the time being, but they want to get the second passport and they do not want to get it by investment but by residency. So they take up a residence in a country which after a few years of residence, allows them to apply for citizenship so they can get the second passport through residency over the time they are not in a hurry. They don't need it in three months or in four months. It's okay if they get it in three years or four years, sometimes five years. But they want it because they feel their own passport is okay at the time being, but may not be sufficient in the future. So various reasons physical migration, paper migration for Plan B, purpose and citizenship by residence. These are the main reasons I see why people are looking for residencies outside their home countries.
Ali: So let's talk about residency a little bit. The US program is a residency program, the EB-5. Since the exchange rate is so high right now in the US, what are you seeing with the top three biggest demand outside of the US?
Philippe: So indeed there is a lot of people who have the USA on their mind when it comes to immigration. At least those who are able to move physically and to provide the necessary documents, they often think of the US, Canada, Australia or other popular option for these types. But then there is people who cannot make it to the US because they don't have enough time to spend there, or they may not be able to provide all the documents that are required. These people would not look at Canada, Australia or New Zealand either because they would face the same problems there. So what are the alternatives? Where are they looking at? I'd say Portugal is probably the number one country today for an alternative to the US. It's a much smaller country, but it's part of the EU and Schengen zone. So once in the country they can travel visa free throughout the entire Schengen area. And once they are citizens of Portugal, they are citizens of the EU and can move and stay pretty much anywhere within the EU. Another option that we see is popular among many who ditch the idea of going to the US is in Latin America. Two countries come to my mind. One is the Panama, which has been around for quite a while with residency option, a well established brand. However, not easy to get citizenship, you need to be there five years full time. The administrative hurdles are high, and another option is Uruguay in South America, very much on the upsurge popular in Latin America itself. Tons of Argentines, Brazilians and others from the region are going there, and we now see an uptick and increase in demand from overseas people who might otherwise have gone to the US. Now look at these three countries, Portugal, definitely number one, Panama and Uruguay.
Ali: Uruguay seems like it's a popular option for residency. Is it a program for residency or to really get a passport? Where do you see Uruguay?
Philippe: Uruguay is an option for both residents and citizenship. You can apply for citizenship in Uruguay. After three years of residence. You cannot get citizenship and a passport directly immediately within a few months, like in the Caribbean, like in St Kitts or Antigua or St Lucia. That doesn't work. You have to become a resident first. So the people who take residency, they may either stick with their residency and remain permanent residents for life without taking up the citizenship, which is probably the minority. And then there are those who clearly want to become Uruguayans who do their three years of residency and then apply for citizenship. The process to get both residence and citizenship is pretty much straightforward. There is some stringent criteria. You need to have a certain minimum income in order to be able to get residence. You must not have a criminal record, etc. but it's not overly onerous. And I would say a lot of people who are unable to apply for EB-5 in the US because the paperwork is simply too much or who may not have the 900,000 US dollar required right away. They can opt for this beautiful country in South America.
Ali: It sounds like the residency program in Uruguay is for people that want to move there and it's understood that they have to stay there for three years in order to get a passport. So not everyone will do the Uruguay program for a passport. But let's just say they do. Let's say they wait it out and they'd get a passport in three years. How good is this passport from Uruguay? Tell me what countries they could go visa free. What is it equivalent to?
Philippe: Very good question. First of all, I'd like to point out that one does not need to stay in Uruguay full time, three years in order to be eligible for citizenship. A part time physical presence is sufficient. Now, the quality of the Uruguayan passport is quite good. It takes its holders visa free to the whole of Europe. That means to the EU, to Schengen, to the UK, even to Russia, and of course to countries like Switzerland, Norway, anywhere in Europe is visa free. On top of that, major countries like Japan, like New Zealand, Singapore, the UAE are visa free as well. Altogether, it's about 150 countries, including, of course, the whole of Latin America, the Caribbean. What is not visa free for Uruguayans at the time being is the US and Canada. However, remember that Uruguayans were visa free to the US at some stage. At the moment only Chile in Latin America has visa free access to the US. Chances are there that Uruguay will get it back in a few years.
Ali: Very good to know. Now, how much does part time living mean? How many days you have to be in Uruguay to get the citizenship?
Philippe: If you like to apply for citizenship after three years of residence, it is recommended that you spend six months per year in the country. The borders are porous. People come and go quite liberally. But by law it's clear you should be there six months per year if you like, to apply for citizenship. If you like to acquire economic citizenship directly and swiftly, we recommend that you go to the established jurisdictions in the Caribbean and the Pacific. Like Antigua and Barbuda, St Lucia, St Kitts and Nevis, all West Indies countries in the East Caribbean, which had program for many years as well as Vanuatu in the Pacific for those who like it somewhere in another hemisphere. These countries give you a second passport within a few months as compared to South America, which still takes three years.
Ali: So what is a good program? How much is citizenship in the Caribbean and Vanuatu?
Philippe: The cost for a economic citizenship in the Caribbean and in the Pacific depend on mainly three things. One is the country. There is small differences between the different countries. Second is the options. Different countries offer different options. In all of them, you can make a donation to the government that starts at 100,000 USD. And the third option is real estate. You may, in some of the countries, purchase a real estate in the range of 200,000 USD. On top of that comes five digit amount of fees. The real estate has to be held for a period of five years, and after five years the fees are gone. So that's a more economical option as compared to a donation. But some people, they prefer to have a lower outlay and a lower amount involved, so they prefer just to pay and walk away with their passports. So they choose a donation. In Antigua and Barbuda, $100,000 is good for a family of four, so that's in the range of an upper middle class car. So quite affordable for many people out there who wish to increase their travel mobility.
Ali: Do you think these options are competing with EB-5 at all?
Philippe: I do not think that these citizenship programs are competing with EB-5 at all. They cannot be compared in the sense that EB-5 only makes sense for people who want to move to the USA and live in the USA. But Caribbean and Vanuatu citizenship programs are for people who want to get a second passport quickly, which is not the case in the US with EB-5. You need to wait five six years anyway. So on one hand you have physical migrants who are willing to wait five six years, or who may not even be interested in the US passport, but who just want to live in the US and direct CBI programs are for people who probably don't want to live in the US, who might have the assets, who might have the funds to do that, but who want to stay where they are but hold the second passport for travel purpose, for asset protection, for whatever. So I would say the EB-5 program is probably more something for the upper middle class, while direct citizenship program is more for high net worth individuals who would probably not want to go to the US due to tax reasons. So we are seeing a very split market and EC Holdings made the decision to not touch the EB-5 programme to not offer it. Our clients are more private banking types, high net worth who would stay away from the US for tax reasons alone and therefore look for other residency programs or direct citizenships.
Ali: The tax planners give referrals to your company. Is that how you get a lot of the referrals?
Philippe: We do work at EC Holdings with tax planners. Yes, a lot of Americans who live abroad want to get rid of their US citizenship in order to not be liable for the global citizenship based taxes of the USA. But in order to renounce, in order to expatriate, they need another citizenship first. They cannot become stateless. So they turn to us often through referrals from tax planners, and we help them to get another passport fast.
Ali: So a question I have here, how and why would someone use Vanuatu over the Caribbean?
Philippe: Why would somebody choose one want to over a Caribbean country? That's a very good question. First of all, Vanuatu is at the other end of the world. So some people who have strong connection with the Western Hemisphere, who may be Canadian or American or who may live in the Caribbean already, or in Latin America or North America, they may feel that for geopolitical hatches, for strategic reasons, they want their Plan B to be at the other end of the world in the southern hemisphere, not in the northern hemisphere. So they choose Vanutatu. Other people. They choose Vanuatu because it is a little bit faster than most of the Caribbean programs. In Vanuatu, you may get your passport within two months only, and some people pay high attention to that. And then there is another group of people who are not eligible for Caribbean citizenship who then turn to Vanuatu because they have different restrictions which allow them to apply. Vanuatu is close to Australia, somewhere halfway between Sydney and Fiji. So from California you'd probably need about 10, 11 hours. If you had a direct flight there, you'd need a bit more. If you do a stopover in Fiji or in Sydney or in Auckland, New Zealand. However, in Vanuatu there is no requirement for physical presence, so citizenship applicants can apply remotely through licensed agents like EC Holdings, provide us the documents and we submit the applications on their behalf.
Ali: So what do Middle-Eastern is like Iranians be the best fit for in Vanuatu? Are they the best fit for Vanuatu, or is it different?
Philippe: Middle Eastern applicants from the Middle East, including Iran, can apply for citizenship in Vanuatu. There is no discrimination in this regard. The disadvantage of Vanuatu over the Caribbean program is that one or two is no longer visa free to the Schengen area. The rest is still there the UK, Singapore, Hong Kong, etc. And of course life is much easier on a Vanuatu passport and on, say, a Syrian passport or an Egyptian one. All these nationalities are free to apply and we see indeed a strong demand from the Middle East.
Ali: How many people live in Vanuatu?
Philippe: Vanuatu has 350,000 residents, most of them local citizens. The country is spread over 83 islands. Many of them are volcanic, which means they are. They are high. They are not low lying atolls. They are mountainous. It's a tropical country. It's very green. And the main source of income of all these people is agriculture. They produce a lot of tropical fruits, vegetables, even meat. They have a large fishing industry. And then there is tourism has a lot of cruise ships visiting similar to the Caribbean. It has a finance industry as well. It's a well recognized financial centre. So different streams of income. They started exporting rum recently. So one is a large country larger and most of the East Caribbean islands. It is far flung, it's far away. It's not just around the corner. You don't have charter flights from Miami, but it's an interesting place to visit. It's culturally rich. The Vanuatu people are very proud of their island culture, yet they are welcoming to foreigners. And you see a good number of Europeans living in Vanuatu fully integrated into society, many of them local citizens, some of them already in second, third and even fourth generation. So immigration is nothing entirely new to Vanuatu. And moreover, Vanuatu is a tax haven. So like in Monaco or in the Bahamas, where we also commend people to take up residency if they are not after the citizenship. Vanuatu does not have any income tax, capital gains tax, inheritance tax, etc. So being a citizen of Vanuatu of course allows you to establish your tax residency in Vanuatu and we recommend you to go there to do the right steps. We help you with that and then you can enjoy a tax free life in a tropical island paradise. It's something that probably most of the people in this world like to do.
Ali: That's great. So you don't have to live in Vanuatu in order to get a citizenship.
Philippe: You do not need to live in Vanuatu in order to get citizenship. Vanuatu has a direct citizenship by investment program where applicants can submit their file to the government through licensed agents like EC Holdings. You can't do it by yourself. You have to go through a licensed agent and apply remotely by correspondence. Of course, like most other countries in this world, Vanuatu also offer citizenship to long term residents. If you have stayed there for ten years, you can apply for citizenship as well. But most of the new citizens decide not to do that, and instead they go for a citizenship program which has been around for six, seven years, which has contributed about half of the government budget and which is now well known throughout the world.
Ali: So how many licensed agents are there for Vanuatu?
Philippe: I don't know the exact figures by heart. The licensed agents are published on the government website and the number of agents is in the range of 25 to 30 agents. Many of them are very small. Some of them are not active. And EC Holdings is the only licensed agent in Vanuatu, which is a global company which has physical presence overseas, which has a headquarter in Singapore. So it's fair to say that we are probably the lead agent, although of course we are not the only one.
Ali: So what country like Vanuatu the most for immigration. Where do most applicants come from?
Philippe: It is hard to say at the moment. It used to be applicants from mainland China. Mainland China was the clear number one in Vanuatu, like probably most of the other citizenship programs. But with the excessive COVID restrictions in mainland China, that has changed significantly. And today applicants are spread throughout the world. Russians make up a significant number because they are not eligible to apply in the Caribbean anymore. But in general, I'd say it is people who do have either a residency in Schengen already so that they don't need the visa free travel there or who are not that much interested in continental Europe. You see people who hold residency in Schengen in countries where getting citizenship is not easy, say in Monaco or in Latvia, but who still want to get the second passport because maybe they come from a high tax country. That's why they move to those countries. But they don't want to be citizens of only one country, at least not of only one high tax country. So they choose Vanuatu as their plan B so out of, say, a Canadian or a German who leaves tax free in Monaco for the time being on a single passport, you get the dual citizen with one or two who then has the option to renounce his original citizenship at any time. Should these countries turn to a citizenship based taxation like the US, something that Vanuatu obviously would never do? So you have historically a lot of Chinese. Now you have more Russian applicants. You had always a lot of Middle Easterners and now you have more of those tech savvy and EU resident applicants of all sorts of backgrounds.
Ali: Well, it makes sense because if you're in Europe. And you want to renounce your European citizenship or residency. It probably makes more sense to go to Vanuatu and not have to.
Philippe: You can say that if you are in Europe as a foreign resident, yes, you may want to have a second passport, obviously from somewhere outside and preferably from a tax free country. If you want to renounce any citizenship rather swiftly, then Vanuatu is a good option too. So plenty of reasons and you have a lot of people nowadays who start thinking geopolitically or geostrategically. You see the war in the Ukraine, the restrictions in China, the whole pandemic made a lot of people think what is the value of their passport, not today that they know exactly, but what will it be in ten or in 20 years? Impossible to say. Where will their country be in terms of taxes, in terms of economy, in terms of immigration, etc.? So people sometimes want something else, and that is usually not just next door. That would not be a big deal. They want something on a different continent, in a different culture, in a different hemisphere. So Vanuatu makes sense to a lot of those far, far thinking people.
Ali: Makes sense. So someone can't afford EB-5 Because of the exchange rate. Where do you think a good second and third option is?
Philippe: Well, a very good alternative is definitely Portugal. Portugal is in the eurozone. The euro is on a historic low and the financial requirements for a golden visa for a residency by investment in Portugal is only €350,000, which is about the same amount in US dollar. In some cases it's only €280,000. These amounts need to be invested in an approved real estate so the money does not have to be at risk. As in the US under EB-5, it's about one third of the amount and the paperwork is also much less. On the downside, Portugal is not an English speaking country if that matters, although a lot of people do speak English or Portugal is in Europe. I don't know whether that's an advantage or disadvantage, but that's a major difference. But it is definitely first world country. It is as developed as the US. It has a good living standard. It has a high human development index. So Portugal, I would rate number one alternative to EB-5 for those who can't afford 900,000 on an EB-5 program. Other options as I mentioned earlier, besides Europe, of course, you have programs in Greece, you have programs in Spain, but they don't make much sense because they are more expensive than Portugal and the road to citizenship is longer. Besides those European programs, Panama is a popular one in Central America. Uruguay is a popular one in South America, and the others, I would not rate them comparable. You have residency programs in Thailand, in Malaysia, which do not lead to permanent residence, which do not give a green card, which eventually don't give us it, which are basically long term tourist visas. So comparable to EB-5 in the sense that you get a green card, you can stay for good, you can settle down, you can apply for citizenship later. Ah, Portugal in the first place with a road of five years only to citizenship. Spain, Italy would be ten years each. Not feasible. Panama with five years, but some hurdles and Uruguay with three years and obviously much lower amount.
Ali: Good answer. So my next and final question for you. Do you think the future holds that residencies will be competitive and more programs pop up like Singapore and Dubai? Or do you think the trend will go the other way and there'll be less countries?
Philippe: There will be more countries, but you have to look at the quality of those residences. Dubai, the UAE, they do already offer residence to foreigners, but it's not a permanent residence. It's not for life. It's not like a green card. And you will never, ever get citizenship in the UAE. There is a very, very tiny number of people who do get it. These are big exceptions about which you you may read a lot in the media, but that's not for 99.9% of the people. You don't become an Emirati citizen. So you cannot really make the UAE your home. In Singapore, it's a bit better You can become a citizen in Singapore. I am testimony to that. But nowadays, since about ten years, it's quite difficult not just to get the citizenship, but to get the permanent residence, which you need as a condition in order to be eligible to apply for citizenship. And the hurdles for permanent residence are quite high in Singapore. You need to be physically present here. You should include your family, etc., etc. You have to be serious about it. These countries are not plan B countries. Of course, you can take up a residence of convenience in Dubai so you can operate the local bank account there. Fine. But it's in a troubled region and you may not want to stay there for too long. And as soon as you travel out of the country, you're back on your original passport.
Philippe: So these are not real residency programs, just like Thailand, like Malaysia. They want to get some long term tourists. They want people who stay there and spend money, but they don't want to treat them like locals. They don't give them access to the public hospitals. They don't give them access to the schools, they have dual pricing, etc., etc.. So don't compare Dubai, UAE, Singapore, Thailand, Malaysia to residency programs like we see them in the US with EB-5 or in Portugal or in Uruguay. It's a different ballgame, entirely different. We will see more countries, especially in Latin America, who already have laws that allow immigration but who do not have carved out proper golden visa programs. So these countries may come up with new programs, with new structures which make it more attractive, more easy for immigrants to get a permanent residence. I think there will be more there will be more outside from Europe. There will be the good ones, the bad ones. Unfortunately, in the press, you can't always tell which ones are real in the sense that they give PR for life. They give a road to a passport, to citizenship and which one don't. But if you look at it carefully, or if you speak to industry practitioners, you will figure out, yes, there is options, there will be more. There is many Pacific islands who have provisions in their law for that, who will probably come up with something.
Ali: To really helpful answer understanding this. Thank you Philippe, for all your knowledge and point of view with global immigration, your wealth of knowledge in the space and I think will help you be five listeners understand their options.
Ali: This has been the voice of EB5 by EB5 Investors magazine. To learn more about the steps, so please visit eb5investors.com/podcast to stay up to date with the latest EB-5 discussions. Be sure to subscribe to the show wherever you listen to the podcasts and if you like the show, please consider leaving us a five star review. It helps us out a lot. See you next week.