Journey of an SIV Investor

In 2012 when Australia introduced the Significant Investor Visa (SIV) migration program, many were skeptical it would provide the expected economic benefits.

In the reportImpact of the Significant Investor Visa program: A long-term proposition for Australia,” launched at the June 2019 Australia China Business Council Canberra Day, Deloitte Access Economics provides their assessment of the program to date. The conclusion is this group of high net work immigrants will have a tangible impact on the Australian economy.

Investment Migration around the world

Economic citizenship programs are not new. There are investment migration programs in nearly 100 countries including Canada, the US, UK, NZ, European Union and the Caribbean. These programs provide the host country access to foreign direct investment to potentially boost growth and employment.

For the wealthy, economic citizenship programs provide greater global mobility, family security and lifestyle, investment, tax and estate planning opportunities.  For Australia, our key attraction is our enviable lifestyle, stable political climate, investment opportunities, as well as children’s education.

Australia’s SIV program

Of all the visa categories in Australia, the SIV program only accounts for around 0.1% of visas granted. However, with the minimum complying investment of $5 million, this visa category has generated more than $10 billion of investments into Australia from the 2,022 temporary visa’s granted to June 2018.

Whilst key beneficiaries to date have been investment managers, the capital has enabled them to make further investments and has resulted in $90M into the venture capital and private equity (VCPE) sector under the updated complying investment framework.

Further, applicants have engaged business and professional services starting with migration advisors to accountants and tax advisors with some seeking advice in corporate finance and succession planning.

Additional Investment in Australia

Many of these investment migrants would like to invest more into Australia, but understandably they want to wait until permanent residency has been granted which can take up to 6 years. Whilst Australia has investment objectives for the program, these HNWI’s have their own interests and agendas. Many are interested in passive investment in residential and commercial real estate and fixed income generating high yields.

Some SIV applicants have already invested in businesses and sectors they know. This has included industries such as manufacturing, accommodation and food services as well as professional, scientific and technical services. One venture capitalist has invested an additional $10M across medical services, the Barangaroo casino and a winery in Adelaide which now exports to China.

However, it takes time to build business networks and to gain an understanding of Australia’s investment landscape, legal and taxation frameworks. Other impacts on the level of additional investments to date have been general uncertainty of the global economic environment and regulatory constraints including tighter capital controls out of China.

Where to from here?

The journey of the SIV investor is not over. These entrepreneurial individuals will not only start to make additional investments, but will play more of a role in our economy, sharing their skills and experiences in our local workforce and communities. Many have already undertaken philanthropic activities including volunteering and impact investing in areas such as the environment, youth, health, the arts and culture.

Australia is a country of immigrants and with our relatively small economy we need access to foreign capital. Many Australian businesses are seeking investment not only for expansion but to access new markets and distribution channels. Cultivating business networks both formally and informally are essential to facilitate trade and investment across borders. The SIV program has increased those international linkages, particularly with China, which has attracted the majority of SIV applicants, who is our largest trading partner.

For more detail you can view the Deloitte Private paper here.