The Citizenship by Investment Board (CIB) has defended its four month old Citizen by Investment Programme (CIP) following criticism by an international financial expert who said it is not well designed and suffers from lack of transparency. CIB chief executive officer, Cindy McClean, said that while her organisation respects anyone’s right to critique the programme as it provides an opportunity to re-examine and improve the programme, the CIB will “correct misconceptions and inaccuracies about CIP St Lucia”.
Managing partner of the Singapore based Henley and Partners, Dr Juerg Steffen, in an interview appearing on the company’s website, said, “The programme as it appears now is unfortunately not well designed and has a number of issues, including structural problems and the lack of transparency”.
Steffen, who has more than 25 years’ experience in the financial services industry, gave his overall impressions of the CIP launched in January, pointing to the low real estate investment requirement of US$300,000 which he said was lower than the requirement of US$400,000 in Antigua and Barbuda, and St Kitts-Nevis and US$350,000 in Grenada. “St Lucia therefore positions itself just above Dominica which has a real estate requirement of US$200,000 and is at the bottom of the market.
“St Lucia’s tourism is much more upmarket as is its real estate market, and thus it should be placed at least on par with Antigua and Barbuda, currently the most important CIP in the Caribbean. Why would you want to place St Lucia in a lower price brand? It cheapens the country’s image,” he said.
Steffen said another problem was the introduction of a government bond option which he describes as “absurd”.
“This option is only lucrative for investors and agents, but it gives no benefits to the country. Why would a country give full citizenship to someone on the basis of a loan which has to be repaid by the nation after a few years? I doubt that this is what St. Lucia currently needs. Furthermore, there is also a requirement for every applicant to submit a sworn affidavit to declare financial resources of at least three million US dollars,” Steffen said.
But McClean said the issue of requiring a minimum net worth of three million dollars “has been a topic of much debate and we have received both positive and negative feedback to having this requirement”.
“Having a minimum net worth requirement is one of the ways in which CIP Saint Lucia distinguishes itself. Given the programme is limited to 500 approvals annually, it ensures that it is indeed high net worth individuals who apply,” McClean emphasised.
She said so far there has been “tremendous interest in our real estate projects precisely because our tourism product is upmarket”.
“The US$300,000 price point is a minimum requirement and does not determine the market price set by the developers. Furthermore, our programme is targeted to the development of our tourism product rather than the sale of residential properties which further accounts for the price differential.
“We wish to clarify that CIP Saint Lucia does not award citizenship for the purchase of shares in the development company. It is expected that announcements of the CIP Approved Projects will be made shortly,” she explained.
“Whereas Henley & Partners has expressed that opinion that government bonds is a bad option, this criticism is based on a misunderstanding of this investment option,” she added.
McClean said that annually, the St Lucia government raises funds by the issuing of bonds.
“Often these issues are not fully subscribed and therefore there are shortfalls in the funding estimates. The government of St Lucia has made US$$20,000,000 worth of bonds available for sale through the CIP.
“These five-year bonds are non-interest bearing. Therefore the bonds sold under CIP Saint Lucia will significantly reduce the cost of borrowing while making the bonds more attractive,” she said.