ArmInfo.Citizenship by Investment (CBI) is a concept widely practiced all over the world. For the first time, representatives of Arton Capital, a company registered in Canada, specializing in citizenship programs through investments, spoke about it in Armenia in May 2017 at a meeting with the former head of the Ministry of Economic Development and Investments.
The company then prepared a report in which, among other issues, noted that even with a low price of an "investor's visa" of $ 50,000, within six years Armenia can earn about $ 140 million. Meanwhile, the question remains open when Armenia can enter the elite club of countries offering foreigners the opportunity to apply for citizenship by investment - quickly, profitably and legally. ArmInfo correspondent appealed to Arton Capital President Armand Arton for clarification.
Mr. Arton, in 2017, after your meeting with the Minister of Economic Development and Investments of Armenia, the ministry issued a message that cooperation with Arton Capital will contribute to attracting foreign investment. Has any progress been achieved in implementation of this idea?
The "Arton Capital" company was selected on the basis of a tender under the "Support to Migration and Border Management" program. In May 2017, representatives of the company visited Armenia at the invitation of the International Center for Migration Policy Development (ICMPD - an international organization headquartered in Vienna), which, with EU funding, implemented this program in Armenia.
In September of the same year, Arton Capital prepared a report on the "Granting citizenship in exchange for investments" project for Armenia. The document presented the key elements of the program, the strengths and weaknesses of the project, also presented strategies for mitigating risk factors. We made recommendations in order to attract foreign direct investment in exchange for obtaining permanent residence and citizenship. We also proposed the model and the form, the structure of this possible program. This was our final task for this project. By the way, Arton Capital donated the entire fee for the services to the Red Cross Society of Armenia, due to which two groups of children from refugee families were sent to summer camps in Tsakhkadzor.
A generous action, indeed! After your May meeting at the Ministry of Economic Development and Investments, there was a feeling that the concept of the "citizenship by investments" program received the support of the authorities. The ministry called your company an experienced organization with representative offices in more than 15 cities, saying that you managed to attract more than $ 3 billion of investments within similar projects. Meanwhile, today it is not known when it will be implemented and whether it will be implemented at all?
The incumbent government does not show much interest in it. At the same time, the company understands that in 2018 a "velvet revolution" and a peaceful change of government took place in Armenia, and the new Cabinet would have to decide whether to launch the project or not. We see that the "Citizenship by Investments" mechanism is not the main priority of the new authorities. At the same time, we remember that Prime Minister Nikol Pashinyan declared the economic revolution and the attraction of foreign investors to be the priority of his new government. And in this light, one should understand that the program proposed by us is an efficient mechanism for attracting a new type of investors in Armenia.
Could you explain "citizenship by investment" mechanism? Who is this type of new investor?
There are wealthy people who buy real estate, yachts, and there are those who buy citizenship for greater mobility for the purposes of tourism and business. By launching the program following the example of many other states, for example, Cyprus, Portugal and Malta, Armenia will be able to offer attractive immigration opportunities to foreigners from third countries in exchange for purchasing real estate and other investment options.
As practice shows, most of all investors come from Asian countries and 50% of them from China. The second largest market (30%) is the Middle East: these are investors from a wide geographic range - from Morocco to India. Consumers of 15-20% of the market of "visa investors" are representatives of the countries of the former Soviet Union. Regarding Armenia, we think that wealthy people from the Middle East are ready to invest in the Armenian economy for the simple reason that the republic is located not far from the region where political instability prevails. And, by the way, many of them are Christians, and will feel safe in Christian Armenia.
Countries offering such programs require that foreigners make investments of various levels to obtain citizenship. Despite the fact that the report itself does not speak about a specifically fixed price, our company offered a certain tariff range "from" and "to". That is, when entering the Armenian market it would be reasonable to focus so far on a small amount of $ 50 thousand as the minimum investment amount for a foreigner who wants to get a passport of a citizen of Armenia. According to the report, even with such a low threshold, the Armenian economy will receive additional income in the amount of over $ 100 million within 3 years.
For this, experts recommended the Armenian government to offer potential foreign investors two investment options: a direct contribution to the state fund of $ 50,000 (non-refundable), or a contribution of $ 100,000 to government bonds at zero coupon, that is, at a zero rate. An investment of $ 100,000 in "equity", that is in the authorized capital of a government-selected asset management company is also possible, with the possibility of obtaining investment benefits. In addition, the company offers Armenia to introduce two types of commission fees. The first is a non-refundable service charge of up to $ 10 thousand. And the second, without specifying the amount, must cover the costs of checking the previous activities of applicants for citizenship and their sources of income.
In order to understand how profitable it is for the state, I would say that the rate on government loans in foreign markets averages 7%, and with a zero coupon, the authorities will save on interest.
Currently, Arton Capital is also promoting the Global Citizen Tax initiative, lobbied in the EU countries, which is aimed at establishing an additional tax of 5% on investments for "visa investors", which will be further focused on solving problems with refugees. Thus, the money of wealthy clients would help less wealthy ones. In Armenia, this is also a sensitive issue given the integration of compatriots arriving from troubled Syria. Can our government, in your opinion, control this process in view of its lack of experience and practice?
The Armenian authorities should not have concerns due to the establishment of a certain tariff corridor in the form of investments for applicants for an "investor passport", as well as the existence of strict selection criteria. Of course, it is necessary to take into account the presence of a number of risks for the investor himself - closed borders with neighbors - Azerbaijan and Turkey, the conflict over Nagorno-Karabakh, corruption that has not been eliminated completely yet.
But there are also positive moments, since on the existing list of "good news" - close ties with world economic centers, as well as geographical and cultural proximity to strategic markets (EAEU, IRI), such a "brand" as the Armenian "velvet revolution" and a peaceful change of power in the country can aslso be added.
The democratic processes in Armenia allowed the international community to take a new, more positive look at the republic. This is one of the reasons why we decided to hold the Global Citizen Forum in Armenia this year. And if Armenia also agrees on a visa-free entry into the Schengen zone, the Armenian passport will drastically improve its position in the global passport index.
At present, Armenia occupies an average 63 position in the rating of countries with the most powerful passports compiled by our company, as citizens of the Republic of Armenia can visit 69 countries without visas. The neighboring Azerbaijan occupies the 60th line, its citizens can enter 72 countries without visas, but Georgia is far ahead of us, having visa-free access to the Schengen countries and thus occupying the 38th position, as the doors to 116 countries are opened for the citizens of the country.
In your opinion, which model is more acceptable for Armenia?
The choice of the program implementation model is an exclusive prerogative of the government of Armenia. For my part, I can assure you that, whatever you choose, I, as an Armenian, will be proud and happy with any scenario and role that the Republic of Armenia will define for Arton Capital. We do not in any way try to emphasize our role or monopolize the market.
The program can be managed directly by the authorities of the country, employing a reputable and professional operator with experience in the field of investment immigration who is able to ensure its successful and stable operation. In addition, we even strive for competition, because we believe that this will ensure the transparency of the whole procedure. In this context, we are currently working with European lobbyist organizations that promote the idea against the concentration of services in this area in the hands of one company. For example, verification of the data of potential clients, designed to provide the project with maximum protection against surprises, our company conducts with reputable American, British and Canadian partners, who check both the investors themselves and the sources of the origin of the funds.
Mr. Arton, you have mentioned citizens of the Middle East countries as potential players at the Armenian "blue passport" market? Are there any grounds for concern in the context of national security?
Any candidate for citizenship under this mechanism undergoes a strict "filtering", his background is studied from the moment of birth until the moment of submission of documents. His financial situation is so thoroughly verified that it is easier for a dubious person to obtain refugee status in the country than to become a beneficiary of the program. So, without a shadow of a doubt, I will tell you that there is no cause for concern.
Besides, when Arton Capital started negotiations with the government of the Republic of Armenia Moldova didn't even think about launching such a program. We advised the Government of the Republic of Moldova, and for several months now the country has launched it. We are also negotiating with the Government of Georgia about the implementation of a similar program. Already more than 10 countries, from the Pacific to the Caribbean, are currently consulting with Arton Capital on the mechanisms for implementing such programs. Recently, Arton Capital was one of three companies approved by the government of Montenegro for the implementation of its citizenship investment program in exchange for investment and its promotion in the international market. Indeed, in our rapidly developing world, the one who responds in time and concentrates resources on key areas wins.