Bigger risk needed for bigger returns from citizenship by investment scheme
A sad tale of ministry failure was laid out for all to see in our Thursday edition, under the headline “Citizenship programme attracts zero investors”.
Now we say failure because the Ministry in charge had more than five years to attract, secure and lock in investors through their Citizenship by Investment initiative. The scheme had been approved by parliament when they passed the Citizenship Investment Act 2015.
The scheme promised a pathway to citizenship if you were willing to invest upwards of SAT$4 million and pay hefty application fees for yourself and any family members you might wish to include in your bid for a Samoan passport.
The Ministry of Commerce, Industry and Labour admitted in their 2019-2020 Annual Report that the scheme had registered little interest since it was launched.
To be fair, 2019 and 2020 were difficult years for every country across the globe, and Samoa was not spared the wrath of the Covid-19 pandemic. This, after a disastrous few months in late December 2019 as the nation battled a measles epidemic.
Everyone knows the difficulties faced by our small island economies over the last year, with border closures, unemployment, health crises, natural disasters, the slow death of hospitality and tourism.
Across the region, it’s fairly bleak, with each country fighting to keep on top of the pandemic and economic survival.
But a precedent has been set by one of our Pacific neighbours, and it has proven to be a game-changer for their economy.
We are talking about Vanuatu. The archipelago with a population of just under 300,000 has been much more successful in their citizenship by investment efforts, with reports citing revenue of about USD$100 million in 2020.
Vanuatu has managed to turn the tide on their economic recovery during the Covid-19 pandemic as well as boost recovery efforts from a devastating cyclone last April.
In short, they sold their passports for huge amounts of money.
Although controversial and not without a few hiccups, the scheme allowed the Vanuatu government to register a surplus last year while other sectors in their economy suffered setbacks.
By contrast, Samoa is now in a recession and has managed to attract absolutely nobody to invest in a similar scheme.
So why is that?
Our two countries’ passports are both attractive in that they offer access to desirable locations around the world.
These schemes are not unusual; in fact there are more than 100 countries that offer similar pathways.
Our closest development partners, Australia and New Zealand, both offer schemes that provide a pathway to citizenship through investment activities.
So why hasn’t Samoa’s pitch hit the mark?
Could it be that nobody wants our passports, nor do they want to consider investing in our people?
M.C.I.L. lists a few benefits as enticement to potential investors. They declare convenience as the first benefit, stating “a second passport may afford visa-free travel to jurisdictions not available to country of birth”. Well this is fine, but there are plenty of Caribbean countries offering better travel/access routes to global centres in Europe and North America.
The rest of the stated benefits include tax planning, personal security and investment in the future. Again, benefits readily available through other countries’ schemes.
That’s not to say there has been absolutely no interest. Back in 2017, government released a statement declaring positive responses from interested parties.
The statement said M.C.I.L. suspects that perhaps the main reason for investors not coming forward and completing the process was because they were under the assumption that once the initial $4 million tala investment is made upfront for citizenship that means the deal has been sealed.
“There are a few mandatory requirements which include a medical and police report as well as a proven business record.”
But these are basic requirements for any application for permit or visa.
Fast forward to May 2020 and M.C.I.L. began a project to review the scheme, hoping to come to a conclusion that ticks all the boxes.
“The project aims to review the legislation relating to citizenship by investments aimed at attracting foreign investments in to Samoa and contributed to generating employment as well as sustainable and equitable human and economic development.”
These lofty goals are there for a reason – something to aspire to and aim towards. But they are rarely met in full because in what world is an investor ever going to invest $4 million in to Samoa on a sustainable venture that employs dozens of locals while providing equitable human and economic development?
We’re basically hoping for a rich, bored, green capitalist to choose Samoa out of the dozens of other options on the table.
And for what? Some petty political squabbles, terrible customer service, nationalistic pride and overzealous, misinformed internet trolls?
The problem with boxes is that they are generally difficult to see outside of.
Here’s a wild suggestion – find out how the Vanuatu government have managed to secure themselves a life raft while the rest of the region struggles to stay afloat. Find out what they have done, and do that.
If it means amending the Citizenship Investment Act’s regulations, then so be it.
If it means we need to sell some passports, under more favourable investment conditions than we already have, then so be it.
The fear mongering behind passports being sold through investment seem to be confined to our small island developing nations. Why is that?
If our bigger, wealthier palagi neighbours are doing it in some form or other, then why can’t we? Are we unable to see past our own small island mindsets, and embrace something different?
Remember, Samoa is in a recession. Our borders have been closed for thousands of hours, one of our economic mainstays – tourism – is sinking further in to oblivion and we have just lost our beloved glass Coke bottles. Anything is possible.