Malaysian Entrepreneur and Investor Migrants - Part 1

Growing up in a small town in northern Malaysia, the only people I knew who were living abroad were a handful of relatives working as nurses in Saudi Arabia and Singapore. Without exposure to the wider world in those pre-internet days, the lack of interest in emigrating was not so much due to a lack of ambition, but rather, the outside world barely existed in my consciousness, and that of most Malaysians.

My perspective changed drastically when I enrolled into a private college in a larger town, whose students had a decidedly more international outlook: everyone was primed to pursue a dream in a land far, far away from home: Australia, Canada, Great Britain and the United States. Most of the students went abroad to complete their studies and get work experience, safe in the knowledge that, once they had satisfied their wander-lust, the prospects of securing a rewarding and enduring career back home in Malaysia were extremely good.

Fast forward 15 years: How things have changed in Malaysia

First up, let’s look at the numbers. Malaysia’s GDP leaped from just shy of USD 100 billion in 2000 to USD 338 billion in 2014 and average annual income per capita nearly tripled from USD 4000 to USD 11000 in the same period, thanks to three decades of concerted and continuous efforts by its ambitious government to transform the country’s economy from agricultural to industrial, coupled with growing revenue from exploiting natural resources. Meanwhile, the population increased by less than 30% between 2000 and 2014, from 23 million to 30 million. While average incomes have increased, the impact has not been uniform across society - as in many other developing economies, the better off have got richer, but this has not trickled down throughout society.

In keeping with Asia’s long-held obsession to maximise the life-chances of the next generation through finding the best education, these newly wealthy Malaysians continue to send their children to study abroad. The difference is that the mindset of these students, and of course, their parents, has shifted quite notably. Nowadays, many freshmen board the plane with a quiet determination that they will do whatever they can to stay in their adopted country once they complete their studies.

A typical route that leads to long-term or even permanent residency is undoubtedly employment. The single most significant challenge these would-be migrants face these days is that the prevailing trend in most advanced economies is the progressive tightening of immigration policies to restrict the rights of foreign students to enter long-term employment once they have graduated. Numerous new rules and restrictions have been put in place by immigration authorities across the world to encourage companies to favour local hires, with the twin objectives to reduce the unemployment rate and constrain politically sensitive immigration rates.

Why EB-5 visas appeal to young Malaysian graduates?

For those heading to the USA, a hugely popular destination for Malaysian students, there are several employment-based visa categories. The most common are the H-1B (specialty occupation), J-1 (trainee), L-1 (intra-company transferee) and O-1 (extraordinary ability). The H-1B visa program which enables US employers to hire foreigner nationals including recent graduates is by far the most sought-after. The desirability of H-1B stems from the fact that it is one of the few nonimmigrant visa categories recognised as "dual intent" visa:  the holder’s nonimmigrant status will not be jeopardised even when steps are being taken towards obtaining a Green Card.

However, H-1B’s popularity is such that U.S. Citizenship and Immigration Services (USCIS) have in the past years and will continue to receive a very large number of filings that far exceed the annual cap of 65,000. For instance, 233000 petitions were received in the fiscal year 2015 and as a result, a random selection process (‘lottery’) had to be implemented.

This means that increasingly, many graduates from families with surplus means will be looking for an alternative route to achieve their ambitions: EB-5.

Our observation was substantiated by the overwhelming interest in an EB-5 seminar which Fragomen helped co-host in Kuala Lumpur in May 2016. It was made clear by many attendees that EB-5 is considered a favourable option by many Malaysian students and their parents, as it affords them the flexibility of continuing their study in the US while the initial I-526 petitions are being processed. They are also attracted by the convenience of their ability to adjust their immigration status to conditional permanent residence (temporary Green Card) in the country once the I-526 has been approved. Another important appeal of EB-5 is that, upon the issuance of the temporary Green Card, the holders are free to seek employment in the US without further authorisation nor the need for a sponsor.

If I may play devil’s advocate for a moment here, one can’t help but wonder, with its healthy economic growth, largely secular society and relatively low cost of living, why are there more and more wealthy Malaysians actively looking for opportunities to settle in the USA?

The exodus is no accident, particularly amongst those of Chinese and Indian extractions, what with the ongoing political turmoil, corruption allegations against those in the highest political offices and the much-criticised policy of ‘race-based affirmative action’.

Given the many advantageous features of EB-5, the abundance of wealth and the perceived long-term risks to the Malaysian economy, perhaps it should not come as a surprise that recent surveys indicate that a growing number of high net worth and highly educated Malaysians are eager to emigrate.

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Edmond Wan

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