By Marco Gantenbein, Managing Partner, Henley & Partners Dubai, Head of Middle East
A growing number of countries in Europe and the Caribbean offer citizenship-by-investment (CBI) programs, and wealthy expats currently living in the United Arab Emirates (UAE), particularly those from South Asia, have been taking advantage in increasing numbers.
For South Asians, it is becoming increasingly clear that wealth alone is not an adequate insurance mechanism against the complex set of economic, ecological, technological, and geopolitical risks posed by the current century.
Instead, global connectivity is emerging as the new competitive edge. A family may be wealthy, but if they are not globally connected they will remain constrained by the particular policies, resources, and limitations of the country where they are citizens, unable to respond with agility to new threats or opportunities that arise.
But what exactly does this industry entail, and what is driving the increased demand for CBI amongst expats living in the UAE?
Risk-hedging for discerning citizens
There are many good reasons for investing in an alternative citizenship. In the unpredictable times in which we live, acquiring a second or even a third nationality is seen as an astute move — a sort of wholesale insurance policy that provides the comfort of a ‘plan B’ for individuals and families, hedging them to a great extent against the risks associated with an uncertain future.
Other than the Maldives, which is ranked 56th globally, countries in South Asia fall between 82nd place (Bhutan) and 102nd place (Afghanistan, the bottom-ranking country) on the Henley Passport Index which is a ranking of all the world’s passports according to the number of destinations their holders can access without a visa. India is ranked 78th globally, with visa-free access to only 59 countries. Indian nationals are unable to access key international business, lifestyle, and career destinations such as the US, the UK, Hong Kong, China, Russia, the UAE, and Europe’s Schengen Area.
South Asia-domiciled passports, then, have fared poorly on the Henley Passport Index and have seen their relative strength diminishing over the past decade, in part because they have not gained access to the 26 countries in the Schengen Area. Every single country in the region has moved down the ranking since 2008, which means that the strength of South Asian passports is declining relative to that of other passports. Investment migration enables wealthy individuals from the South Asian region to transcend the constraints imposed on them by their passport and country of origin, tapping into financial, career, and educational opportunities on a global scale.
As the number of available programs expands year-on-year, potential clients in the UAE are confronted with a wealth of options. Europe is highly desirable owing to its solid social and legal infrastructure and excellent security. The Caribbean offers an appealing — and more economical — alternative, with all Caribbean program-countries offering visa-free access to Europe’s Schengen Area.
The two key destinations for citizenship in Europe are Malta and Cyprus due to their combination of regulatory accessibility and cost and the reasonable demands that they place on applicants. For residence, the Portugal program is extremely popular. In the Caribbean, Grenada offers attractive and unique benefits, including visa-free access to China.
Asia is also developing a strong suite of programs: the Thailand Elite Residence Program allows qualified foreigners to live in Thailand for up to 20 years, depending on the residence option chosen, while both Singapore and Hong Kong offer appealing residence alternatives for businesspeople looking for a base in some of the most advanced societies in the world.
A brief history of citizenship-by-investment
Citizenship-by-investment denotes the process whereby qualified, vetted candidates are granted full citizenship in exchange for their substantial economic contribution to the passport-issuing state.
The industry began in earnest in 1984, when the Caribbean island of St. Kitts and Nevis launched the world’s first citizenship-by-investment program. Dominica followed suit almost a decade later, and since then the number of countries offering similar programs has risen exponentially.
In 2014, EU member state Malta introduced its Individual Investor Program, which is the only program of its kind that is recognized by the European Commission. Earlier this year Moldova and Montenegro also entered the CBI space with unique offerings of their own. Today, for those with the means, there is a healthy diversity of investment options to choose from, especially when one takes into consideration the residence-by-investment programs offered by the UK, the US, Singapore, Australia, Portugal, Ireland, Greece, and Spain, to name but a few.
The global citizenship industry has entered a period of unprecedented evolution and growth, with thousands of people applying for second citizenship each year. Citizenship-by-investment is today a roughly USD 3 billion industry.
CBI programs allow individuals to drastically improve the strength of their passport and, in turn, their global access. By participating in these programs, individuals are also able to make an exceptional economic and knowledge-based contribution to often smaller nations that require foreign direct investment in order to support their populations and remain competitive and sustainable in the long-term. It is, therefore, a mutually beneficial exchange, and very much in line with the direction the world is heading, as globalization becomes an undeniable feature of modern life, and people seek ever greater freedom to create the lives they dream of.