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Residence and Citizenship by Investment

Investment Migration: A Gateway to the Global Economy

Dr. Christian H. Kaelin

Dr. Christian H. Kaelin

Dr. Christian H. Kaelin is Chairman of Henley & Partners. He is a global leader in investment migration and the inventor of the passport index concept.

Alternative citizenships and residence rights have become an invaluable asset class in an international investor’s portfolio, providing a gateway to financial opportunity and a buffer against economic and geopolitical uncertainty. Supplementary passports grant improved travel mobility, but at the same time, they can also unlock access to a larger proportion of the world’s economy. Far more than just a travel document that defines our freedom of movement, a strong passport also provides significant financial freedoms in terms of international investment and business opportunities. 

Passport strength and economic power 

While we do not usually associate our passports with financial affairs, recent research by Henley & Partners affirms that a powerful passport is a conduit to economic opportunity and well-being. And the converse is also true: international families with weak passports and poor visa-free access are effectively shut out of a shockingly wide breadth of opportunities for economic mobility and growth.

Stock exchange trading floor with business traders in suits betting on international markets

By combining Henley Passport Index data and World Bank GDP data, our research ranks all 199 passports in the world in terms of what we refer to as the Henley Passport Power (HPP) score, a term that indicates the percentage of global GDP each passport provides to its holders’ visa-free. The results reveal that only 2.5% of the world’s countries provide their passport holders with visa-free access to over 75% of global economic output. And only 17% of countries give their passport holders visa-free access to more than four-fifths of the world’s 227 destinations.

The top-ranked Singapore passport on the Henley Passport Index, for instance, gives visa-free access to 192 destinations (85% of the world) that collectively account for nearly 74% of the global economy (with Singapore’s own GDP contribution being around 0.4%). By contrast, at the bottom of the ranking, the Afghanistan passport provides visa-free access to only 12% of the world and less than 1% of global economic output.

Our analysis shows predictive power flowing from the Henley Passport Index and the Henley Passport Power ranking to economic growth. Moreover, these links are mutually reinforcing and agglomerative. Skills and talent go where there is the ability to work, invest, and travel, attracting others wishing to do the same and creating a positive loop.

Unlocking access to the global economy

A large proportion of investor migrants are either self-made entrepreneurs or generations-old family business owners. Regardless of the origins of their successful enterprises, many business leaders are seeking additional citizenship solutions as they provide greater financial freedoms, enabling them to conduct their business with greater ease across a range of jurisdictions, mitigating country or regional specific risks and protecting their capital from volatility at home. 

An Indonesian passport, for instance, can access close to a third of the world’s 227 destinations visa-free (with an HPI score of 73), which does not look too bad. However, assessing the number of countries one can freely access is not a sufficient measure of mobility. The 73 destinations that an Indonesian passport can access account for only about 14% of the world’s GDP, which completely changes the picture.

South Africans sit somewhere in the middle of the global mobility spectrum with access to 106 destinations visa-free, which seems relatively high at almost 50% of the globe, but their passports give them access to only 15% of global GDP. Entrepreneurial Nigerians have a passport with access to just 46 destinations visa-free and a far lower Henley Passport Power score of a mere 1.5%. Filipinos have a visa-free score of 66 and a Henley Passport Power score of just 9%, while Indians are even worse off with a visa-free score of 57, giving them access to only 7% of the global economy.

Through strategically selected investment migration options, global high-net-worth investors can effectively clear a pathway to greater security and prosperity by increasing their visa-free access to a greater proportion of the world’s economy. Take Malta, for instance, its investment migration offering provides successful applicants with access to over 80% of the world visa-free as well as nearly 75% of global GDP.

The value of additional residence and citizenship rights 

By designing and investing in a portfolio of additional passports and residence permits, tailored to their specific requirements, entrepreneurs can open the doors to more of the world’s leading wealth hubs and unlock lucrative business opportunities in other jurisdictions. One of the inherent advantages of this is that it enables them to expand global footprints by promoting their goods and services in new markets that potentially have a stronger consumer buying power than those they can reach with just their own passport in hand. In a similar vein, they are guaranteed easy access to jurisdictions where they can grow business and personal networks and connect with influential industry leaders, partner with more companies, dip into larger pools of talented experts, and as a result, enhance the viability of their own operations.

The global banking ecosystem is intrinsically tied to politics and economics and hence it is imperative that affluent investors also mitigate their risk exposure to potential banking crises. A decade and a half ago, the system’s fragility was exposed when Lehman Brothers’ demise created havoc in global markets. More recently, we saw seven Russian banks being expelled from the SWIFT international payment messaging system and heard alarm bells ringing across the banking industry when distressed US and Swiss banks made the headlines for all the wrong reasons in quick succession in March this year.

Business owners born in countries that have limited visa-free access and economic mobility can use citizenship by investment programs as tactical tools to run their transactions through top-tier international banks and ease their business operations. They can trade across borders and invest in ventures in jurisdictions that are more stable and secure, and where their capital can flourish safely. This particular motivation has driven a growing demand for European investment migration offerings in Malta and Portugal among many others, and further afield in respected international financial hubs such as Singapore and the UAE.  

More possibilities  

Investment migration is attractive to wealthy businesspeople who want to maximize and stabilize their profits by diversifying their activities across bigger and more reliable economies. Jurisdictional diversification also makes good business sense. Through residence and citizenship by investment programs, entrepreneurs have the opportunity to establish corporate entities in places like Europe, opening the gates to all 27 European Union member states, or in the UAE — one of the world’s fastest growing regions.  

By diversifying their domiciles, business owners can choose where to locate themselves and their companies, opting for those jurisdictions that best serve their business interests and offer the most attractive tax incentives. Investors with multiple residences and citizenships can tap into a greater pool of goods and services, as their permits and passports are tickets to a larger proportion of the global marketplace. Even small island nations such as Grenada have citizenship by investment programs that grant successful applicants visa-free access to jurisdictions that equate to well over 50% of the world’s gross domestic product. 

Compared to what can be gained through international trade alone, the options that arise by having unrestricted physical and personal access rights to multiple jurisdictions are far greater, as they include unique benefits that cannot quickly or easily be replicated elsewhere, such as banking, and access to state-of-the-art infrastructure, premium education, and top-tier healthcare. Securing greater access to the world’s main markets by investing in additional residences and citizenships significantly extends the range and choice of what is available to us and our families.

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