Planned federal government reforms to the ‘significant investor visa’ program risk making the scheme unpalatable to potential migrants, according to 888 Fund managing director John Garland.
Planned federal government reforms to the ‘significant investor visa’ program risk making the scheme unpalatable to potential migrants, according to 888 Fund managing director John Garland.
The SIV is designed for high net worth individuals seeking investment migration, with interested parties investing a minimum of $5 million able to apply for permanent residency after a four-year period.
According to a briefing document created by Austrade, proposed changes include an explicit provision to ban direct investment in residential real estate, while indirect exposure through managed funds would be capped to 10 per cent of a fund’s net assets.
Other mooted changes include a mandatory investment of at least $1 million in an Australian venture capital fund and $1.5 million into a small to micro-cap fund.
With the exception of venture capital funds, managers would need to maintain assets under management of at least $100 million to comply with the new regulations.
Federal Trade Minister Andrew Robb said late last year that the government would consult with stakeholders on enhancing the SIV and introducing a new visa, the premium investor visa.
“Our objective is to see greater investment from the SIV in areas where there tends to be thin capital flows,” Mr Robb said.
But Mr Garland, who built a career in property investment through family group Garland International, said the changes would risk the closure of a number of funds that had opened exclusively for the purpose of the program.
“If Mr Robb is keen to see the SIV being used to help business startups in Australia, he’s starting the process by closing many who have invested hundreds of thousands of dollars setting up their operations in response to a government initiative,” he said.
“I think the commercial realities and the practicalities of it will prove that this will almost be the death knell of the SIV in the long term.”
Mr Garland said the program worked best when investors were able to enter the country with money flowing into low-risk assets, then building networks and relationships in Australia.
The government could include venture capital as a complying, rather than mandatory investment option, he said, rather than risk making the program unpalatable to potential migrants.
Property Consultants Australia chief executive Mark Butler, who formerly led Otan Property Funds Management (now Pindan Capital), agreed that the changes would be problematic.
“The choice of having 2.5 per cent in a company does not interest (SIV investors),” Mr Butler said.
“Would you imagine Kerry Stokes going to take a 2.5 per cent share in a fund?”
Mr Garland said only 19 visas had been approved for investments into Western Australia, with eight into private companies and two into managed funds such as 888.
