The 2019 CBI Index: FDI for the people
Citizens should benefit from programme-generated foreign direct investment. Yet some nations have been more successful than others
Transparency and accountability of investment funds take centre stage in the 2019 citizenship by investment dialogue.
Further reading
In the Caribbean, citizenship by investment programmes provide the option to contribute to a government-held fund or to invest in pre-approved real estate. Malta requires applicants to donate to a national fund, invest in bonds or similar instruments, and purchase or rent property. As of May 2019, Cyprus requires two donations and offers three investment options, the most popular being real estate. Under its Development Support Programme, Vanuatu is donation-only, while in Cambodia contributions to the restoration and rebuilding of the nation’s economy are encouraged by a lower minimum threshold. Jordan, Turkey, Bulgaria, and Austria do not require donations. The first two incentivise investments in property, while Bulgaria does so in government bonds. Austria affords flexibility for applicants to show ‘outstanding economic achievement.’
Irrespective of the specific formula, the guiding principle remains the same: citizens should benefit from programme-generated foreign direct investment. Yet some nations have been more successful than others.
The pre-approved real estate option has had mixed results. St Lucia currently features only one approved development on its official website, has cancelled highly publicised projects, and has been involved in damaging disputes with developers. Grenada, which lists numerous approved projects, closed its Sustainable Aquaculture Project after funds never materialised. In St Kitts and Nevis, certain agents have been accused of abusing the real estate option to obtain greater shares of revenue.
But strides have also been made. In May 2019, Grenadian developers were given the opportunity to advertise a lower application cost if they first contributed an “equity of 20 per cent of the total cost of construction as proposed.” In St Kitts and Nevis, agents found guilty of mishandling applications had their licences revoked. And at the opposite end of the spectrum, Dominica’s real estate option has flourished, with some four of seven approved eco-conscious hotels and resorts having already opened – or planning to open – for business in 2019.
Dominica is also an industry leader in its transparent and effective use of citizenship by investment donations. In a bid to become “the world’s first climate-resilient nation,” it has directed funds towards sustainable projects, such as a 7MW geothermal plant capable of covering 90 per cent of the island’s energy needs and a ‘Housing Revolution’ project to provide 5,000 hurricane-resistant homes.
Similar public housing models have been replicated by Malta and Cyprus. This year, Malta announced that €50m would be used to build 550 social housing units, while Cyprus introduced a mandatory €75,000 affordable housing donation to the Cyprus Land Development Corporation.
2019 has shown that a programme’s integrity is founded on more than longevity and due diligence. Communication of how funds are used to benefit locals is also key, boosting trust and appeal for investors.
