The Louisiana International Gulf Transfer Terminal (LIGTT) is a $1.3 billion deep sea port that will be built off the coast of Louisiana. The terminal is meant to improve trade and enhance America’s competitiveness in the midst of increased shipping demand by increasing import/export capabilities, efficiency, cargo handling, and bulk handling. The port is a hub-and-spoke system for transporting goods via smaller vessels to the American market. Amazingly, this project is estimated to create over 200,000 jobs (34,000 jobs in Louisiana and 180,000 jobs nationwide.)
This massive project will be financed primarily through an unlikely medium: Immigration.
The Immigrant Investor Program, also known as “EB-5”, was created by Congress in 1990 in an effort to stimulate the U.S. economy through job creation and capital investment by foreign investors. A foreign investor can either invest $1 million for a U.S. business, or $500,000 in a venture located in an EB-5 regional center (narrowly defined rural areas or places where unemployment is 150 percent of the national average) that creates at least 10 full-time jobs within two years. In return, the investor and their family can apply for a green card. Every year, there are 10,000 visas that are set aside for this program.
The LIGTT regional center will be one of the largest approved by the U.S. Citizenship and Immigration Service (six times larger than the previous regional center.) The LIGTT project will be accepting up to 2,000 investors over the next five years which is the first time this many people are concentrated in an infrastructure project. Before this project, use of the EB-5 visa has never been this highly organized or institutionalized. Annual revenues for LIGTT once fully constructed are expected to be in the billions.
Although the EB-5 visa program has been thought of as an innovative way to attract foreign capital, it is constantly criticized for its difficulty to implement. Although the program is meant to direct foreign investment to areas where it is needed most, in practice, the program has been somewhat of a bureaucratic disaster. For example, some EB-5 ventures have allegedly lied to foreign investors and stolen their money. Also, the program has been poorly managed. Applications can take as long as 20 months to process and record keeping is subpar. The Department of Homeland Security’s inspector general reported that administrators could only “speculate about how foreign investment is affecting the U.S. economy and whether the program is creating U.S. jobs as intended.”
The LIGTT project could potentially be a blueprint on how to stimulate the economy by utilizing and implementing the EB-5 visa. The possibility of creating over 200,000 jobs in a massive and beneficial infrastructure project financed through private capital almost makes one think why this was not thought of sooner. With the help of the Department of Homeland Security, and U.S. Citizenship and Immigration Service, this could be a great project that will aid in stimulating the economy, and enhancing U.S. trade capabilities.
Despite some of the criticisms that the EB-5 visa has received, do you think that if implemented correctly, this program should be used more often in stimulating the economy? Are there any reforms that should be made to the program? Is it fair that wealthy immigrants may be buying their way into this country?
Source: USCIS, Bloomberg Businesweek, Fox Business, Thomas, EB-5 News
Photo: Maritime Executive
This program appears to have a lot of potential to both create meaningful employment opportunities and stimulate the economy. Incentivizing foreign investors by creating a “fast lane” to citizenship, in exchange for funding domestic business ventures, is both innovative and interesting. It’s a shame the problem lies in administration because it will be nearly impossible to cumulate accurate statistics on the program’s success. With that, I would like to see less speculative stats on the programs potential.
On the other hand, this program may have weighty social policy against it. There is something inherently ominous about bribing foreign investors with a citizenship-for-capital proposition. As most of us know, immigration is a hot topic in the U.S. today. Both Congress and the Obama administration are feeling an overwhelming pressure to reform immigration policy on the “path to citizenship.” Many people and organizations are fighting vigorously to make it easier to become a U.S. citizen. The EB-5 program could be viewed as a spit in the face to such efforts.
Nevertheless, if the program eventually works out the kinks, it will be easier for policymakers and proponents of the program to justify their reasoning.