A photo of Hudson Yards in New York City, which solicited well over $1 billion in EB-5 construction money and has been actively recruiting Vietnamese investors. (Photo: Ivan SMALL)

Complex Calculations: Vietnamese EB-5 Investments in the United States

Published

Many wealthy Vietnamese are making use of America’s EB-5 investment visa programme as a pathway to a green card and, eventually, a US passport. But there are many other reasons why they would consider settling Stateside.

Significant financial flows from Vietnamese Americans to Vietnam have made Vietnam quite visible as one of the world’s top remittance recipient economies. In total, such flows amounted to US$17.2 billion in 2020. Much less, however, is known about remittances from Vietnam to the United States. Bi-directional financial flows, including investments, have nonetheless long been recognised by Vietnamese community-based remittance services that help to facilitate growing demands for them.

As Vietnam’s economy continues to grow, wealthy Vietnamese are increasingly uncomfortable about parking their capital in Vietnamese banks that may be subject to scrutiny by tax authorities and other oversights. Capital controls imposed by the government also limit the ability of Vietnamese to move their money out of the country. Yet, there is a strong demand for outward remittances from Vietnam, especially to the United States. 

Vietnamese wish to get their money out for a variety of reasons. For example, Vietnamese number in the top ten sending countries of students to American universities, and need to transfer money to pay tuition. While there are some legal mechanisms to do this, other situations requiring transnational capital transfers, including supporting globally scattered transnational family networks and businesses, are more difficult to navigate. 

Much has been written about growing bilateral ties between Vietnam and the United States, particularly in the economic realm. One relatively new area is the tendency of Vietnamese people to leverage on EB-5 investment visas as a pathway to a green card allowing permanent residency in the US. The visa programme requires Vietnamese to move their money from Vietnam to the US. The EB-5 visas are offered in return for a minimum of US$500,000 of investment in economically disadvantaged areas, plus the creation of ten permanent full-time jobs for American citizens. Over time, new EB-5 and other economic migrants from Vietnam may realign common perceptions that Vietnamese Americans are primarily former war refugees whose community politics have sometimes been an obstacle to smoother US-Vietnam relations. They also reflect a growing awareness of Vietnam’s burgeoning global economic influence.

Since 2014 the US has regularly distributed the maximum number of 10,000 allowable EB-5 visas. Chinese investors have by far been the largest group; Vietnamese are in the top three along with India and growing. For these groups, there are more applicants than available visas. Projects funded by such investors are often in the real estate sector, including housing, shopping centres, casinos and amusement parks. Vietnamese EB-5 investment strategists plan projects ranging from condominium construction in Las Vegas to coffee shop chains spread from New England to Florida. Some of the new construction projects in new Vietnamese American suburban districts outside of Houston and other cities with growing “ethnoburbs” (suburban ethnic clusters near metropolitan areas) can trace their capital investments to EB-5 money.

In 2019 there were 716 visas issued to Vietnamese through the EB-5 programme, reflecting at least US$360 million in investments. Given prevailing push/pull explanatory frameworks that emphasise migration as a response to economic shortfalls at home, it may seem counter-intuitive that wealthy Vietnamese with over half a million dollars to spend may want to immigrate to the US. However, for those that pursue EB-5 visas, part of the draw is not only to gain an official channel to permanent residency in the United States. A green card builds a pathway to American citizenship and a passport that is more globally versatile than Vietnam’s.

Over time, new EB-5 and other economic migrants from Vietnam may realign common perceptions that Vietnamese Americans are primarily former war refugees whose community politics have sometimes been an obstacle to smoother US-Vietnam relations. They also reflect a growing awareness of Vietnam’s burgeoning global economic influence.

There are also a plethora of reasons why EB-5 visas are attractive to Vietnamese. Many Vietnamese, who often have trouble getting travel visas to other countries and are frustrated by their experienced lack of mobility, feel that the investment is well worth it. They can raise their children in the US and avoid the high costs of private international schools in Vietnam’s metropolises. They can enjoy the freedom to travel globally as well as a shuttle to and from Vietnam. There is the cultural familiarity of diasporic communities (as of 2019, there was an estimated 2.2 million Vietnamese Americans resident in the US). To top it off, they can enjoy the security of maintaining a legal status outside of Vietnam and transferring profit earnings made from business operations in Vietnam to more secure US asset holdings.

In Vietnam, there is a growing industry to support such investments. Transnational law, investment and consulting firms have been set up, especially in Ho Chi Minh City, where the majority of investors originate. Such firms facilitate the EB-5 visa application process, as well as identify potential projects and designated migrant investment regional centres. Many also help facilitate transferring the investment money, which may have to travel a somewhat circuitous route to reach the United States via investments in third countries due to Vietnam’s complex capital controls. Even if charging a seemingly low 1-2 per cent transfer facilitation fee, there is significant money to be made in providing legal and financial bridging services. The expectation by EB-5 visa applicants for investment returns is also relatively modest, as their primary goal is to attain legal immigration status.

During the Trump administration, there was a push back on immigration to the United States. This affected Vietnamese, including those in the EB-5 investor category. In 2019 the US government raised the minimum investment to US$900,000. This has since been successfully challenged in court. Congress has been pushing for reforms to address regional centre fraud, transparency and urban investment bias issues as a condition of the programme’s renewal. 

In recent years, there has been some circumspection about EB-5 visas. Many potential migrants now consider the US a less attractive place, given the rise in racism against Asians, and the economic, educational and migratory disruptions caused by the Covid-19 pandemic. EB-5 investment visa applications from Vietnam have grown rapidly in the last few years, but with changing immigration and investment patterns and the programme temporarily in limbo as of the beginning of July, it remains to be seen how the trend evolves going forward.

2021/179