Hong Kong suspends immigration program for wealthy investors

A man in a suit stands at a street crossing in the business district of Central in Hong Kong

Hong Kong is putting on hold an investor immigration plan that has granted residency in the city to more than 20,000 mainland Chinese in the last decade.
The Capital Investment Entrant Scheme, which takes applications from foreigners investing more than HK$10 million (USD1.3 million), will be suspended starting today, Chief Executive Leung Chun-ying said in his annual policy address yesterday. The government will continue to process the applications it currently has on hand.
Hong Kong is cutting the program at a time when tensions with China have increased, underscored by pro-democracy protests that ended last month. It was introduced in 2003 when the government sought to boost an ailing economy and in the same year relaxed its border to mainland Chinese tourists.
“It hasn’t been effective in bringing in productive money,” said Joseph Cheng, a political science professor at City University of Hong Kong. “It attracted investors but Hong Kong doesn’t need more hot money.”
Real estate investing was removed from the program in 2010 to curb investor demand as home prices surged in the city. The number of mainland Chinese buyers, who have helped drive up home prices in recent years, has declined since Leung announced an additional 15 percent tax on foreign buyers in 2012.
A total of 24,481 people were approved for residency under the plan as of Sept. 30, of which 21,822 were Chinese nationals, according to immigration data. Investments made totaled HK$205.8 billion.
The suspension came as a surprise and will hurt business for immigration consulting companies such as Midland Immigration Consultancy Ltd. and Goldmax Immigration Consulting Co.
“I’ve been receiving phone calls from our business partners and customers all day,” said Benny Cheung, a director at Goldmax, which derives about 80 percent of its customers from China. “We expect to lose at least 20 percent of business. We are still thinking about what to do.”
About 30 percent of Midland Immigration’s revenue may be affected by the scrapping of the program, according to chief executive officer Thomas Kut. The company is a unit of Hong Kong-based realtor Midland Holdings Ltd.
“We’ll reallocate our resources to other areas, such as immigration to the U.S. and European countries such as Portugal,” Kut said. Michelle Yun, Bloomberg