Related to the focus of the issues at the event, I will do a series of detailed posts explaining them. Participating as a conference panelist, as well as my active involvement in the discussions of the issues after the various panels, I would like to share my knowledge of the topics and some of the details that resulted from the dialogues of participants and attendees.
The topics from Shanghai (the first of three summit city locations) included the following:
- Major concern over visa cap and market effect of retrogression.
- Currency restrictions in China and time delays in having funds transferred to bank accounts offshore.
- How to cope with the fact that there are so many projects being offered in the marketplace today.
- Increase in migration costs due to extreme competition and demand from sub-agents for more funding due to the oversupply of projects compared to the availability of funding.
- General concern about the new legislation concerning timing and ultimate effect on the market.
- Focus on SEC involvement and enhanced investigations. Concept of increased due diligence and heightened concern over safety of projects.
- The fact that the investors seem to be more educated and sophisticated in EB-5 matters and seem to be taking a more active role in the process.
Now, I will tackle a few of the above-referenced issues to give you some takeaways from the Shanghai event.
- Concern over visa cap and retrogression. Clearly one of the major priorities in the Chinese market due to the uncertainty as to the potential delay in receiving visa appointments and ultimate availability, combined with the aging out of children who may now face serious risk joining in on a parent’s application and that otherwise having the visa issued at the time the child turns 21 (otherwise referred to as “aging out”). I just found out from one of the major agents in China that 25% of their applicants are actually F1 students and/or minor children who are filing under an account to avoid the retrogression/aging out issue since the child becomes a petitioner and therefore is protected from aging out in the process.
- Currency restrictions in China. As a result of these currency restrictions, I have been informed by agents that the funding process to complete the aggregation of funds to transfer monies to the escrow agent is taking from 4-5 months compared to 2-3 months before.
- Too many deals in the marketplace. It is quite obvious that due to the popularity of the EB-5 program in the United States there is a substantial increase in the availability of projects in the Chinese market thus resulting in substantial competition for EB-5 funding. Agents are aware of the issue and so are the investors. Therefore, given the multiple choices available, agents and investors can become choosier, thus resulting in only the superior projects having ease of funding at this time. That is not to say that other projects will not get funded but given the competition, the choice projects will receive priority in funding and the potentially less desirable projects will have to work harder and potentially pay more money to agents to get their projects funded on a timely basis.