Socio-economic and political drivers behind the growing demand for 2nd passports: recent developments, trends and case studies. Introduction Background Investor-class emigrant definition

SECTION A. THE DRIVERS 1. Political instability Dangerous flashpoints across globe 60 million refugees worldwide 2 million refugees/migrants in EU Insurance against risk

2.Event- driven political drivers The 2016 American Presidential election “How can I move to Canada?” I million American citizens live in Canada, 10,000 more each year Brexit 1.3 million British expats in Europe 2.4 million European expats in the UK Illegal immigrants overnight?

3. Socio-economic & financial drivers A better standard of living: healthcare, education and environment Corruption Personal security/violent crime Tax incentives Retirement incentives Weakening currency Capital controls

a) Corruption Two-thirds of the demand for 2nd passports from five BRICS countries at the bottom half of the corruption index South Africa: weapons deal kickbacks, Guptas, Nkandla, South African Airways, SABC Brazil: Petrobas, 60% of federal legislators China: 300,000 corrupt officials 2015 Russia: 50% GDP

b) High rates of violent crime 60% of South African emigrants list violent crime as main driver World average murder rate 7/100,000: South Africa 36, Brazil 25, Mexico 19 Contradiction: China and India: 1 and 3/100,000

c) Retirement incentives Retirees seek affordable host countries Low housing cost & affordable healthcare Safety Good climate Basic comforts Tax havens/incentives

d) Weakening currencies & capital controls Makes it difficult to accumulate sufficient foreign currency The expectation of further declines increases the urgency Examples: Zimbabwe, South Africa, Russia Major capital outflows could lead to capital & forex controls Expectations of further controls incentive to circumvent or pre-empt controls

4. Powerful passports & visa-free travel Powerful passports offer visa-free convenience, mobility and insurance Weak Passports (visa –free travel out of a possible 218 countries) South Africa 94 Russia 95 India 52 Iran 40 China 44 Afghanistan 25 Pakistan 29 Iraq 30 Syria 32 Powerful passports Germany 177 Canada 172 UK 175 Portugal 172 Malta 163 U.S. 174

SECTION B. RECENT TRENDS AND DEVELOPMENTS 1. The 2nd passport industry under pressure Tightening Schengen borders Passport controls re- introduced Greater demand for non-EU passports? 2 nd passports issued indiscriminately hurt integrity of such passports & discredit the industry Examples

2. The wealth effect Henley & Partners: processed $4 billion in direct investment programs by 2014; Arton Capital: $2.5 billion Canada suspended 65,000 investor-visa applications in 2013 worth C$52 billion St Kitts and Nevis programs contributed 15% of government revenue in 2014 Australia: A$4 billion since 2012 to 2015 Portugal: €1.25 billion to January 2015 Spain: €2,1 billion to 2015 Hungary: €125 million to date Latvia: €1.1 billion since 2010 – 2015 New Zealand: at least US$3.7 billion (min. investment of NZ$1.5 million x 3,500 investor-class immigrants) U.S.: US$5.5 billion (EB5 Green card investment requires US$500,000 x 11,000 people per year) Quebec: C$1.5 billion in 2016 (1,900 investor-class immigrants x $800,000). Three of the larger programs, U.S., New Zealand and province of Quebec equal to US$10 billion p/a. Plus totals of the other 47 countries?

3. Growing numbers Close to 50 countries have some form of investor-class programme Latvia: 14,000 investor class visas since 2010, about 2,000 per year Portugal 6,000 between 2012 and 2015, about 2,000 per year Spain’s 11,400 between 2011 to August 2015, about 4,000 per year Hungary 502 Residency Bonds for 15 months to February 2014 U.S. 10,692 EB-5 investor visas in 2014 U.K. issued 1,00 investor-class visas in 2013 Malta 585 visas to May 2015 Hong Kong issued about 22,000 investor class visas between , about 2,000 per year. New Zealand issued 3,100 visas to Chinese investor-class immigrants 2015 – 90% of total?. Australia issued 900 visas 2012 to 2015, with 1,300 pending Mauritius attracted 10, 400 investor-class immigrants 2006 to 2012, about 1,700 per year Quebec 5,000 investor visas 2014 and when Canada suspended its program in 2013, 65,000 on waitlist Above 12 countries alone responsible for 30,000 investor visas per year: estimates for the combined total of all 50 countries?

4. Millionaire Emigrants 2015: 39,000 millionaire emigrants from nine countries 18,000 from five BRICS countries: China (9,000), Russia (4,000), India (2,000), Brazil (2,000), South Africa (950); 21,000 from Italy, Greece, France and Spain Plus the U.S. Middle East, South-East Asia, Africa and South America? Plus ‘less-wealthy’ investor-class emigrants worth $500,000 - $999,999? Assume that % use citizenship-by-investment option

5. Changing demographics China US$450 billion - US$1.2 trillion capital outflows from China 2015 Largest source of foreign cash in U.S. and Canadian residential property market 568 Chinese billionaires - 56 emigrated 1.3 million Chinese millionaires - 9,000 left China in ,000 intend to leave within five years Chinese share of investor class visas issued in selected countries – average of over 80% Possibly stricter capital controls? People’s Republic of Offshore

South Africa 1.5 million predominantly-white expats 20,000 to 30,000 emigrants each year 38,500 HNWI by 2015 About 8,000 left since year 2000 (ave. 570 per year), but 950 in 2014 alone - trend up Investor-class emigrants: to UK 36%, Australia 15%, U.S. 11%, Canada 8% 20,000 settled in Mauritius , including 400 millionaires Drivers Socio-economic challenges South Africans allowed two passports Capital controls relaxed - -emigrants allowed foreign allowance $670,000 per adult Currency decline negates relaxed capital controls

Russia, Brazil & the Middle East Five times more Russians emigrated during Putin's 3rd term than 1 st 2010: 33,000 Russian emigrants : 186, : 2,000 Russians millionaire emigrants Russian preference for Europe - examples Brazil 30 billionaires, 10,300 multi- millionaires and 137,000 millionaires – huge 2 nd passport potential Arton Capital - 60% of clients from Middle- East in 2014 Greek investor visas: 15% to UAE citizens, 5% to Egyptians U.S. EB-5 visas in Middle-Eastern applicants the 2 nd largest group Iran: end of sanctions, 32,000 HNWI, estimate of US$8.8 billion prop. Invest. within decade