Since June 2021, those within the EB-5 investment industry, including participants of the program, such as foreign nationals, immigration lawyers, and business operators, have all been forced to adapt to the suspension of the regional center program. The program’s unique layout was designed to stimulate the domestic economy through foreign investment and had been thriving since 1992, even though it experienced a brief expiration in 2018. The EB-5 investment program as a whole has continued to thrive despite its now eight-month hiatus; investors have turned to the direct EB-5 investment model in the meantime.
Some within the industry have suggested it may not be necessary to reauthorize the regional center program. However, it would be advantageous for the EB-5 program to be able to offer more options; namely, both indirect and direct investment routes. While the direct EB-5 model offers a number of benefits to its participants, the regional center program has its own unique assets, including allowing investors to count indirect jobs towards their mandated job quota.
1. Having More Options Allows Investors to Pick the Most Suitable Investment Option
Foreign nationals approach the EB-5 program with different ideas and expectations. As a result, they should have the option of picking between two uniquely designed investment structures that would best suit their personal needs. Because the direct EB-5 investment model involves fewer intermediaries, there is a greater chance of investors gaining higher returns. Investors who are looking to have maximum control over their projects would also be ideally suited to the direct model, which requires greater involvement in daily management and general responsibilities.
However, indirect investment, which takes the form of the regional center program, may be a better fit for those looking to be minimally involved in the logistics of project management and are more focused on the immigration factor that the EB-5 program offers. In short, the two different investment methods are catered to investors with differing needs: those who wish to invest in a smaller business will probably find the direct method more conducive to their goals, and its uncomplicated proceedings can allow business owners to acquire their funding faster. Conversely, larger businesses that require more money would benefit from the regional center program. Overall, greater variety within the EB-5 program may incentivize foreign nationals to participate; this, in turn, will bolster the U.S. economy through increased capital gain.
2. The Advantages of the Regional Center Program Include Induced and Indirect Employment
Unlike the direct model, investors who make EB-5 investments through the regional center program are allowed to have indirect and induced employment count towards their mandated employment quota. These indirect and induced jobs are calculated using economic models; the former is generated through the new commercial enterprise (NCE)’s expenditure on goods and services, while the latter is generated through expenditures on the part of the NCE’s employees within the region.
3. The Regional Center Model Improves the Reputation of the EB-5 Program
That the regional center program was a financial success is certain. Ever since the economic recession of 2008, foreign nationals flocked to make EB-5 investments through the program, and in the years following, this resulted in the facilitation of billions of dollars worth of capital gain. Invest in the USA (IIUSA) asserts that the program’s suspension has jeopardized around $15 billion of EB-5 funding.
Investors should remember that the regional center program’s offering of minimum operational duties and its greater adaptability towards employment quota requirements make it a highly desirable option. It’s possible that, very soon, members of the EB-5 industry will finally see permanent legislative changes take place, as Congress will be voting on the proposed bill on March 11, 2022. If reform does take place, the EB5 investment visa program can potentially benefit significantly.