2018 EB-5 Cutoff Date for Vietnam? What You Need to Know
If you are a Vietnamese investor thinking about EB-5, you’ve probably heard about the potential of a so-called “cutoff” which could leave new investors facing long delays. I’ve told you several times that I thought this was more marketing hype but now that the mighty Charles Oppenheim, Director of Visa Control, US Department of State has gone on record and predicted that Vietnam could hit the cutoff by late 2018, it’s time to pay attention. This article is to explain to prospective EB-5 investors in Vietnam what all this means and what they need to do NOW to make the right decision regarding their family’s EB-5 decision.
For the past two years, the threat of an EB-5 backlog has been primarily communicated by EB-5 marketing firms and Regional Centers trying to find a new EB-5 market which could generate the number of investors China traditionally has. But after descending on Vietnam en masse and countless seminars, the EB-5 Regional Center industry now understands that Vietnam, most definitely, is NOT “the next China” for EB-5. (Frankly, I remain stunned that EB-5 seminar marketing groups managed to convince very powerful EB-5 megacenters of this myth for as long as they have.)
In reality, Vietnam could not be more different than China as an EB-5 market. Yes, there are migration agents in Vietnam and immigration is a big business, and yes, there are some as shameless as the worst ones in China. What’s fundamentally different is that Vietnamese investors are engaged in their EB-5 process. In contrast the Chinese migration industry is dominated by giant firms targeting huge number of poorly-informed investors, fundamentally relying on sheer volume. In China, there is a deep-rooted fear of the future driving the exodus of the rich and educated, while Vietnamese EB-5 investors have no such immediate phobias. Our Vietnamese investors are doing well in a booming economy which is, IMHO, MORE “capitalist” than that of the U.S. Despite its socialist government, Vietnam’s leadership is sensible enough to encourage entrepreneurship without the intimidating superstructure exercised by the Chinese Communist Party. But the greatest distinction is even simpler: China is HUGE! The sheer population numbers which drive Chinese EB-5 demand do not exist in Vietnam or in any other EB-5-viable country in the world…except, maybe one day, in India (which I’ll discuss another day.)
Times are changing, and it’s time for Vietnamese investors to commit to EB-5. If you haven’t seen my earlier blogs on the continued violation of US SEC rules by the vast majority of EB-5 Regional Centers when it relates to paying unlawful kickbacks to foreign agents who are not securities broker/dealers, read them. Slowly but surely, the SEC is catching up with all these cheaters, most significantly reflected in the subpoena issued in August by the U.S. Attorney against the Kushner Companies for their EB-5 shenanigans in China, just see https://www.nytimes.com/2017/08/03/business/kushner-eb-5-china-green-cards.html?_r=0
If you look at EB-5 usage statistics for the past three fiscal years (which, for the U.S. government, runs from October 1 through September 30), It is a fact that Vietnam has ranked as the second highest consumer of the EB-5 visa after mainland China. With processing times for I-526 petitions now projected at about two years, that means that the Vietnam investors who will be getting their I-526s finally adjudicated will be folks who invested back in 2015. Based on USCIS processing delays and this continued demand in Vietnam, it now appears probable that Vietnam will indeed hit the country cap for the 2018 fiscal year, which began on October 1st of this year, as predicted by Mr. Oppenheim.
The real question every potential EB-5 investor from Vietnam is simple:
“How do priority dates work and how can we predict future backlogs accurately?”
Simple…yet not so simple. This is my 30th year (first as a U.S. consular officer then as an immigration attorney) trying to figure out how priority dates really work; one would think that I’d be in pretty good shape to make accurate predictions, right? WRONG!. To even the most veteran U.S. immigration attorneys, the calculations associated with visa usage, allocation, and priority date retrogression lie somewhere between quantum physics and quicksand. We all blog about it, but, truthfully, the only predictive judgment I’d bet on is that of Charles Oppenheim…and he’s made his call that, next year, Vietnam will be Country #2 with an EB-5 waiting period. (In reality, even if Mr. Oppenheim is right and Vietnam hits its EB-5 cap in Fiscal Year 2018, it will be temporary: with demand from #2 EB-5 user Vietnam still being tiny compared to that of China, when the new allocation of EB-5 visa numbers is released on October 1, 2018, there will be enough visas to immediately clear the backlog. But it will get worse with each passing year.) So what should a Vietnamese investor thinking about EB-5 for their family do? Here’s my best advice:
- The consensus of hundreds of conversations with our AVSEB-5 investor families in Vietnam has led me to conclude that since the number one reason cited for considering EB-5 is “the kids’ future”, the parents need to take a good look at their long term plan. If life and business are good in Vietnam and you don’t want to immigrate to the U.S., it might be best to simply secure EB-5 for your college-bound child instead of petitioning for the whole family and then worrying about how much time you need to be in the U.S. to keep your residency valid. In 5 or so years your son or daughter will be eligible for U.S. citizenship, meaning they can petition parents as “immediate relatives” with no queue. Put simply, you CAN defer selling your business or quitting your job in Vietnam without abandoning a possible future in the U.S. by simply sending your child as the family’s “emissary” via his or her EB-5 visa.
- While the threat of visa cutoff for Vietnam is very real for 2018 and this is a compelling reason to decide on EB-5 now, I would say that the PRIMARY reason to invest in EB-5 NOW is to avoid the almost-certain increase in investment amount we’ll be seeing at some point in the near future. By investing $500,000 in a TRUE “TEA” project like those offered exclusively by American Venture Solutions Regional Center now, you’ll likely save hundreds of thousands in at-risk capital when the price of admission goes up
We don’t know what lies ahead with EB-5’s future, but we DO know these things:
- The China market, where the bulk of EB-5 capital has been raised and the greatest number of investors defrauded, is “scorched earth” at this point. Unless India somehow leaps to substitute it – impossible, in my opinion, for reasons I’ll discuss in the near future – raising money in $100 million dollar chunks is not going to happen, and megaprojects will NOT be able to fund fully. The means today’s NEW EB-5 investors should invest only in small, managed projects with close investor communications and pragmatic U.S. partners.
- TEA abuse is being reigned in and the current consensus is that the next round of reform will eliminate the vast majority of projects in places like downtown Manhattan and Hollywood which are using “gerrymandering” to fake targeted employment area status. That means that NEW EB-5 investors should ONLY invest in projects which are either rural or, like AVSRC’s EB-5 projects, in legitimate TEA’s where new jobs make a real difference.
- The price is going up soon. The price of admission is still the same whether you bring your entire family or just gift your U.S.-college-bound child.
American Venture Solutions is the only U.S. EB-5 Regional Center with a full time office and dedicated staff in Ho Chi Minh; we’ve been working in Vietnam consistently since 2011 and it is our primary market. We have no other offices outside of the U.S. except here in Vietnam, where our commitment is permanent. We are here for the long term and our investors know that. It’s time for those of you on the EB-5 “fence” to commit; contact Vietnam@avseb5.com and let our team answer your questions.
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