Numerous countries worldwide offer golden visas and golden passports, which grant citizenship rather than just residency in exchange for investment. The OECD has identified over 100 countries that have some form of investment-based residency programs.
In the wake of the COVID-19 pandemic, countries have been exploring ways to boost foreign direct investment (FDI), especially considering the decline in cross-border investment. Golden visas have emerged as a means to attract FDI, as entrepreneurs and business owners are often more inclined to establish companies in countries where they have the right to reside.
The United Arab Emirates (UAE) is expanding its own golden visa scheme. In 2021, it introduced golden passports for the first time, departing from previous policies that made it challenging for non-Emirati individuals to become citizens. In September 2022, the eligibility criteria for golden visas will be extended.
The program is now open to investors, entrepreneurs, scientists, outstanding students, and highly skilled professionals from all sectors. The salary thresholds for applicants have been reduced, and restrictions on the maximum duration of stay outside of the UAE to retain residency have been eliminated.
Abdulla Abdul Aziz Al Shamsi, acting director-general of the Abu Dhabi Investment Office (ADIO), has conveyed that the UAE’s golden visa program is creating opportunities for businesses and entrepreneurs to pursue high-growth ventures within a world-class innovation ecosystem. He emphasized that these new visa rules align with Abu Dhabi’s diversification strategy to promote the private sector and attract foreign investment.
The effectiveness of golden visas in attracting FDI has been a subject of debate. Research conducted by Kristin Surak of the London School of Economics revealed that residence-by-investment schemes generated €3 billion for EU countries in 2020, while the UK raised €2.2 billion through golden visas that year.
Surak’s research indicates that countries tend to implement these programs in response to economic declines or crises. In Latvia and Portugal, these schemes have accounted for 10% of FDI over time, and in Greece, it’s been 7%. However, in the broader context, these numbers may not be as impressive. Surak points out that “FDI is only a small proportion of the overall economy,” and in none of the countries studied did program revenues exceed 0.3% of GDP.
For instance, in Ireland, where FDI contributes to 14% of GDP, golden visas make up just 0.32% of that total, according to Surak’s findings.
While the UAE has achieved robust FDI numbers in recent years, the objective of golden visas may not solely be to increase FDI. The UAE is heavily invested in diversifying its economy, reducing its reliance on hydrocarbons.
Denison, a beneficiary of the UAE’s golden visa program, emphasizes that setting up a company is not the only contribution his residency will make to the UAE. He highlights the importance of contributing to the local economy, such as collaborating with universities for internships and guest lectures.
The UAE is increasingly viewing Golden Visas as a crucial tool for reshaping its talent pool and diversifying its economy.