Immigration lawyer Harris Gu says discretionary criteria and high decline rates are deterring people from applying for the entrepreneur visa. Photo: Screenshot / Queen City Law
The immigration industry is pushing for more attractive ways to tempt overseas entrepreneurs to come to New Zealand, and it looks like change is on its way.
Immigration Minister Erica Stanford is understood to be putting the final touches to a reform of entrepreneur visas, which have been dogged by low approval rates and dwindling application numbers.
The 'vague, uncertain' visa criteria to start or develop small- to medium-sized companies have made it a last resort for business people wanting to emigrate, according to immigration specialists.
Unlike business investor visas, which the government reformed earlier this year, it does not require $5-10 million to apply. But it does still require significant investment - and success in export potential, high growth or innovation.
But Hamilton-based immigration advisor Tobias Tohill said those criteria had been left open to interpretation, and with a $27,000 price tag for temporary and residence visas, plus advisor fees and an expensive business plan, it had become an unattractive, 'dead duck' visa category.
"New Zealand's missing a lot of opportunity in not having a policy that's workable," he said. "We've got somebody we're just signing up, an IT entrepreneur looking at the fast-track [policy]. It's a business that's likely to end up a global business and be really successful, he's a genuine entrepreneur, he's got all the skills.
"But it's still something where it's really hard to show that he's going to be able to achieve it - it's really complex to get it right. If we can't get a guy like this - who's really the kind of person we want to be coming to New Zealand - then we really need to go back to that category and change it."
Immigration figures show of 17 visas decided so far this year, eight were approved.
From corner shops to high-tech exports
Tohill said the entrepreneur visa's predecessor, the longterm business visa, finished a decade ago and was "fairly successful, but there were issues with it". Anecdotes suggested overseas families would pool their money, giving it all to one family who applied, bought a small business, and got residence. The money would then be sent back for the next family, recycling it two or three times and then selling the business on.
"The investment made no jobs for anyone except those families. And so there were quite a lot of $2 shops, corner dairies, coin laundromats under that old policy, very low value for New Zealand, not great outcomes."
When the new policy was announced there was a much higher minimum investment, he added.
"There was also a very vague kind of criteria that it has to be a high-value business. But it's not spelled out - so high growth is the principal idea - but there's no exact quantification of what it looks like.
"I have a good friend who migrated from Italy here, came under the old policy, ran a business successfully for years, employed people, moved it to a factory operation. It's now a business ready for export. And he sold it on to an ex-All Black, it's got franchisees all around the country. And what he was saying to me is that the policy that they created, they're expecting far too much investment far too early, when people don't know the country well, and it's too rigid."
Even experienced entrepreneurs with money to invest struggled with some of the requirements, and it put many people off, he said. The minimum amount is $100,000, though Immigration New Zealand could accept less for people whose businesses were in science, ICT, or other high-value export industries, with high innovation levels or short-term growth prospects.
But in reality, higher investment amounts were usually needed for the visa, said Tohill - not including working capital - and had to be spent within a year, which did not always fit with a start-up's needs.
It was a gamble for migrants in applying, but also for advisers, some of whom had been sued when the business - or visa - failed.
"We had one person come to us saying that they couldn't find any immigration advisors or lawyers willing to take them on as a client because advisors are so gun-shy of going near the policy," he said.
"If the business doesn't succeed, then they're actually losing money on the business as well as losing the opportunity to stay here. And if they don't get residence and they can't stay, they may actually not be able to realise any of that money back. So it's hugely risky."
Immigration Minister Erica Stanford. Photo: RNZ / Calvin Samuel
Government reform
Immigration advisers said a reformed policy may also help New Zealand businesses whose owners wanted to sell or retire, but had no children who wanted to take over the company. Previous entrepreneur projects have included everything from medical practices to meat processing and IT firms.
Possible fixes included a temporary residence modelled on an Australian scheme which would mean people could run their business and get settled, with their ongoing visa conditional on the business still operating profitably in five years' time. Other options included loosening nominated funds criteria and business plan targets.
Stanford indicated to a recent Law Association meeting that changes to entrepreneur visas would be coming soon.
A spokesperson told RNZ in a statement: "The Government is focused on smart, flexible and nuanced immigration solutions to help stimulate economic growth. An announcement about the future of the entrepreneur visa will be made in due course."
Ministry of Business, Innovation and Employment border and funding immigration policy manager Stacey O'Dowd said 36 applications for entrepreneur category work visa applications were submitted so far this year. Of 17 visas decided, four were withdrawn, five declined and eight approved.
"The entrepreneur category visa has seen low application volumes and high decline rates due to several factors. Decline rates have been influenced by many applicants proposing small-scale or low-value businesses that don't align with the visa's intent to attract innovative, high-growth ventures. Low application volumes are likely driven by the complexity of the category."
Auckland immigration lawyer Harris Gu said it was the discretionary criteria and the high decline rates that were deterring genuine entrepreneurs, making it "murky and confusing".
The intent of the entrepreneur visa was good, but there was a 90 percent decline rate before the pandemic, he said, and while that had improved, it was still poor. The success of entrepreneurs' eventual residence applications was also uncertain, as a company could fail if it missed a specific target or had a minor regulation breach.
Immigration adviser Paul Janssen said the pendulum had swung too far from a permissive visa to an overly restrictive one, which then had "staggering" decline rates, deterring other applications.
"There's a huge lack of certainty for applicants for putting money into this as to whether or not it will be successful. I think what Immigration has attempted to do in the past, and certainly with the policy as it stands now, is they're kind of trying to wrap that up as much as possible to minimise the risk for the applicant - which was good in some ways."
But while a firm might fail on paper by not following its business plan, it could still be hugely successful.
"They just might be successful in a slightly different way. So we need to be not necessarily backing people on the plan specifically, but we need to be backing people who have the entrepreneurial skill and spirit and the capital to give it a go. And if they give it a go and they do it slightly differently to what they propose, but they're still successful and they're still benefiting the country, those are the kinds of people we want."
He agreed the old longterm business visa was far too open. "You could turn up with a $10,000 investment and basically a proposal to run a coffee cart and you'd probably get it. Problem is that it just didn't generate the kind of businesses that we were looking to bring in or the kind of entrepreneurs that we wanted to encourage. We've now gone too far the other way, I think. We need to find a happy middle ground."
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