Expert spies holes in Samoa's proposed investment scheme

Transcript

An international immigration and tax lawyer says Samoa's proposed citizenship for investment package is not competitive enough in an increasingly crowded marketplace.

The Citizenship Investment Bill gives citizenship to foreign investors injecting at least two million US dollars into the local economy.  

David Lesperance represents high net worth clients around the world looking for a second passport.

He says if Samoa wants a credible scheme lowering the investment threshold substantially would be a good start.

DAVID LESPERANCE: Samoa in entering this has to recognise that they are in a competitive situation and they have to offer a programme which is attractive not only domestically in trying to achieve the economic goals that they're trying to reach there but which is internationally competitive. If it is uncompetitive the result is that they will sell no units or they will only be attractive to the types of marginal candidates that they really don't want to have there.

SALLY ROUND: So when you say competitive what do you mean by that? Are you talking about thresholds of money they have to invest for instance?

DL: Well there's a number of elements to being competitive that people don't really stop and appreciate. My clients for example, their number one concern is they do not want to acquire citizenship or travel on a passport which is well known as that of criminals. The last thing they want to do is to be flying into Heathrow Airport, open the Herald Tribune and see that there are five Colombian druglords that were arrested with the passport they're about to present at Heathrow. So making sure that security checks are properly done. The second thing is that these are business people who are executing and often cases a very complex plan. They're leaving a particular jurisdiction by a particular date and want to enter another jurisdiction, tax-wise by another date, so the consistent processing of applications. And then of course there is pricing which is another part of the equation and if you look at Samoa, purely on a visa-free travel basis, they do not for example have access to the Schengen, or continental Europe, visa-free. They do have access to Canada, they do have access to the United Kingdom. So the competitors who are in a similar situation are really looking at about US$200,000 in government fees, total cost for a similar product so why on earth would somebody spend ten times that amount for similar visa free travel?

SR: So $2 million is way above what you think some of these people will pay?

DL: Yes, in fact, if they did establish it at two million, I would have the reverse which I would say, why would a logical person pay $2 million for this, when they could get an equivalent or better travel document for one tenth of the price. And the reason that they may spend ten times the price is that they can't pass the security checks of the other jurisdiction.

DR: So then this is not going to be very effective, if you don't think it's going to be attracting people.

DL: In order to be attractive, in order to be effective, you have to get all of these elements correct. The problem is a lot of these programmes are developed by domestic officials, domestic politicians, who are only looking at it from their viewpoint, what would we like to get? And they have to understand that it has to be a win, win, win situation. It has to be a win for the country, it has to be a win for the person purchasing it, it has to be a win for the international community. If they just say, you know, we'll take care of what we want, they'll find that they will have a programme which is out there and that nobody else wants. And as a result they will pay the political price, and there is always a political price, to using this as an economic tool, without getting any of the economic benefit. Not very smart.