Immigrants' gain could be Quebec's loss
Ottawa ready to tighten rules on investment funds
HOWARD ZHANG
SPECIAL TO THE GAZETTE
Quebec could lose its competitive edge in attracting immigrant investment if new federal regulations in the Investor's Immigration Program take effect as expected this year.
The regulations would compel other provinces to regulate the sale of immigrant-investor funds as rigorously as Quebec does.
Since the Mulroney government launched the immigrant investor program in 1986, Quebec has been the big winner in attracting investment, consistently outperforming the other provinces. Over the past 10 years, an average of 35 per cent of all immigrant investment flowed into Quebec. By comparison, British Columbia and Ontario got about 20 per cent each.
Nineteen-ninety-five was especially good for Quebec. Out of $606 million of immigrant investment in Canada, $308 million or 51 per cent ended up in Quebec. Through the first 11 months of 1996, Quebec attracted more than 40 per cent of the national total of immigrant investment.
The background is this: foreigners with a net worth of at least $500,000 who agree to invest at least $300,000 in an immigrant investor fund receive a visa to Canada. Upon arriving, they can apply for permanent residency for themselves and the other members of their family.
Given Quebec's dismal economy, political uncertainty and high unemployment rate, why has the province out-performed the rest of the country in attracting the immigrants' money?
The answer lies in Quebec's careful regulation of the immigrant-investor funds.
"Quebec funds are popular because they are safer," said Louis Leblanc, the director of Levesque Beaubien Geoffrion Inc's immigrant-investor program in Montreal.
"Quebec is the only province that has regulated the investment brokers" that do business with immigrants.
In other provinces, almost anyone can set up an immigrant investor funds for; say, a hotel-construction project. But some of these funds have suddenly folded, and the fund manager disappeared with the investors' money; In a few cases the loss amounted to hundreds of millions of dollars.
In Quebec, however; only an agency or brokerage recognized by the province can create an immigrant-investor funds. About three dozen such entities have been recognized.
Ottawa finally began to overhaul the investors' program in late 1994, after Sergio Marchi, then immigration minister; was flooded with complaints.
After a series of government studies, Immigration Canada said in late 1994 that it would regulate the industry by July 1, 1996. However, controversy over the proposed regulations forced the government to postpone the deadline.
If Ottawa wants the new regulations to take effect on July 1, 1997, said Claude Doray of Immigration Quebec, then federal Immigration Minister Lucienne Robillard "should make a formal announcement no later than in early March."
"If the brokers are regulated in the rest of Canada, Quebec will no longer be as attractive as it is now," said Leblanc, "Our business may be affected, but we don't know what kind of impact there will be."
Doray, who is director of policy and programs for Immigration Quebec, agreed that if the federal government does regulate the brokers, the investment figures for Quebec "may go down."
Immigrant investment in Quebec has topped $1.5 billion over the past 10 years. The City of Montreal got about 30 per cent of that.
But attracting investment is one thing and getting immigrants to stay here is another. While enjoying success in the investors' program, Quebec has been a net loser among the big three provinces in getting business immigrants to stay.
Quebec's share of business immigrants peaked in 1989, with the arrival of 1,998 business immigrants, for a 42.2 per cent share of the number of business immigrants who landed in Canada that year; Since the, share for Quebec have been dwindling; from 30 per cent in 1990, to 28 per cent in 1992, to 21 per cent in 1993, and to 11 per cent in 1995. In 1995, only 582 business immigrants landed in Quebec, compared to 1,558 in Ontario and 2,020 in B.C.
And the overwhelming decline seems to be continuing.
"Only about 15 per cent of my clients do stay in Quebec," said Leblanc.
Michael and Joanna, who for privacy reasons do not want their family name made public, are investors who arrived from Taiwan two years ago. They fall into that 15 per cent category. They came, invested and stayed.
"I have very little interest in politics. And besides, there are risks and business opportunities no matter where you are," said Michael, who opened a high-tech electronics company in Lachine two years ago. " I realized that (economic) things are pretty slow here, but I am well prepared to tough it out."
Michael said the other main factor that motivated them to come to Montreal is family. "My wife wants to come here to be closer to her sister. Besides, Montreal is a very warm and cultured city, nice people, a good place to family life."
Nevertheless, the majority of business immigrants have opted to live elsewhere. Over 70 per cent of last year's business immigrants to Canada settled in B.C. and Ontario.
"It may sound like a cliche, but language is an issue for many middle-age investors who don't want their children to be sent to French schools," said Linda Wang, an immigration consultant at Windsor Capital Inc. in Montreal. "And I always get clients asking if Canada and Quebec are still together."
Two of her investor clients are scheduled to be interviewed by visa officers at the Canadian embassy in Beijing. "They all applied through )Immigration) Quebec," said Wang. "But if they come, I am pretty sure they are going to B.C."
