Okay, it is my last day in Ho Chi Minh, I'm tired, and I'm leaving for Miami at dawn tomorrow so there is NOTHING humble about this bragging: according to the final 2015 EB-5 approval tally, Vietnam came in at #2 in the world with 280 EB-5 approvals. We did the math and the average EB-5 family size for AVS EB5 has been 4, so if you are counting investors only, that means that Vietnam had about probably 70 investors approved for 2015. Without counting our Vietnamese investors who filed I-526s last year and only counting approvals, we had 12. So that means approximately 15% of all the Vietnamese EB-5 investors approved in 2015 chose AVS EB-5!!
Who's your Vietnam EB-5 Daddy? (-;
I am leaving this amazing country just days before Vietnam sees its first BIG EB-5 specific event, hosted by the good folks who publish the best EB-5 magazine in the business. Unfortunately, not ALL U.S. EB-5 purveyors are necessarily "good folks" and as someone who has spent the past six years lovingly cultivating a word-of-mouth EB-5 investor base in Vietnam, this whole "Vietnam is the new China for EB-5" thing is really bothering me. Vietnam is NOT the "new China" for EB-5. As the plague of mega-center EB-5 projects is about to descend on Ho Chi Minh for “China V.2”, here's my reality check for everyone who cares:
- Vietnam's #2 global ranking is insignificant from a marketing/focus point of view. The China market is SOOOOOO big that it is in its own category. I did the math, and Vietnam’s total of 280 EB-5 visas in 2015 is exactly 3.4% of China’s total of 8156 EB-5 visas in 2015. The potential for EB-5 in markets like India, Russia, the Middle East, and the precipitously-collapsing Brazil each have far more accredited potential EB-5 investors than Vietnam.
- Remember: I explained in yesterday’s blog entry that to get to #2 position in EB-5 usage for 2015, it took approximately 70 Vietnamese EB-5 investors (based upon the average family of four we documented.) That's $35M, guys. CHUMP change for Big EB-5; there are but a handful of us among the 700 or so approved (and still existing) EB-5 Regional Centers offering projects capped at $20M EB-5 component or less. (Note that I said “component”, as in "a small part of something larger"; our first project was already appraised at over $100M when we decided to raise the initial $10M in EB-5, even though the economists told us we could raise several times that amount, based on projected job creation. As the smattering of us who actually understand how this EB-5 stuff works, job creation is based not only on how many EB-5 dollars but on how many TOTAL dollars in revenues and expenditures. But the object of Big EB-5 is to use every possible penny of EB-5 capital they can get while reducing their own respective stakes in the project. (As they say north of Orlando, bidness is bidness.) But my point is that for most megaprojects used to rapidly hauling in $50M chunks of EB-5 money via the China migration agency network, Vietnam’s total EB-5 investment in 2015 could barely pay the Google Ads bill of some of the Big EB-5 projects.
- China is the only country with an institutionalized and all-encompassing migration agency structure designed to receive direct commissions for sending investors to EB-5 projects, commissions that would be absolutely unlawful under U.S. securities laws if said agents were subject to U.S. law. But here's the thing: according to the sharpest securities attorneys I've met, the only thing more illegal than receiving an illegal securities commission is PAYING one. So far, the SEC has not gone after EB-5 Regional Centers for paying commissions abroad to agents who are not licensed securities broker/dealers in their respective countries (the qualifier is rather silly when you think about it since the nature of EB-5 means that the only businesses which can deliver prospective immigrant investors are those in the immigration business, not those in the investment business!) But I have to wonder when the SEC will sharpen the knife and go after those entities over which it DOES have jurisdiction, i.e., EB-5 Regional Centers. (I know, I know, it sends a shudder through the Universe whenever I say this; tomorrow I’ll receive the usual misspelled threats).
- SO many EB-5 Regional Centers, large and small, have wined, dined, and paid hefty fees to Chinese migration agents able to deliver in $20M increments, but the massive EB-5 demand that made these scenarios possible is exactly why the market is all but closed (well, except for those rare investors willing to wait years for their EB-5 priority date to become current.) That scenario is simply not going to happen in Vietnam. And while the frenzy of local law firms, consultants, and agents in Ho Chi Minh, Da Nang, and Hanoi are certainly spooling up for their turn at charging EB-5 projects marketing fees in the #2 EB-5 market – good for them – forget about the notion of finding an agent who can deliver anything except one investor at a time. Horsefeathers. Baloney. To paraphrase Dorothy in the Wizard of Oz: “Toto, I don’t think we are in China anymore…”
The reality is that EB-5, through the dual machinations of gerrymandering to cobble together bogus TEAS and relying on 100% tenant occupancy for job counts, has become a very attractive commodity for Big EB-5. Cheap money and, thanks to the intricate corporate structures and insulation of true U.S. principals, about as transparent a process as an African dictator's purchase of a new McLaren in Manhattan. At the end of the day, if things go badly with that whole "risk" thing, investors in Big EB-5 will have no recourse except to litigate their way through a barrage of insulating LLCs crafted together by the brightest legal minds of America's largest law firms, all with the noble intent of protecting their megadeveloper clients.
These folks have sold EB-5 in China like sleazy con men sold Florida swampland in the 50’s, except in this case the resulting devastation to Chinese families forced to leave America after settling is all the more outrageous, as it is amply documented. Therein lies the problem with the inbound phenomenon of EB-5 marketing bombardment about to canvas Vietnam (AND Cambodia but that’s another story altogether, more ripe with China-like opportunities for the unscrupulous, for sure.) You see, except in China - and with the possible future exception of India -- EB-5 is not a commodity and it will NEVER sell as a commodity in other global markets!
In my years of EB-5 experience in this small but fascinating market, Vietnamese investors are savvy, work hard, and are NOT dumb. They DO listen with an open mind, and they are very compelling to present to after spending years speaking before very justifiably jaded Chinese markets. But rest assured that they will make their EB-5 decision the exact same way it is made by a retiring Briton cashing in on the London flat he bought 20 years ago and is selling for a small fortune. They will do their homework, they will do their due diligence, and, ultimately, it will be through their trusted relationships via which they select their EB-5 investment.
I’ve spent six years making the 22-24 hour journey from Miami to Ho Chi Minh to find our Vietnamese investors. I have a relationship with each and every one. Some are young. Some are old. Some BARELY qualified as accredited investors and have trusted us with their life savings to realize their dream of raising their child in America; some have Embraer private jets that can cross the Pacific. Some call me from college in the U.S. When the you-know-what hits the fan and they don't have a relative in the U.S. to help them, Bianca, Laura and I become their family. They have my cell phone. They get mad at me if I don’t make time for dinner with them when I visit Vietnam. A colorful bunch of folks, these Vietnamese investors of mine, but they are to me like family and their trust is something I will never take lightly.
That, my friends, is the nature of the EB-5 beast in Vietnam. So good luck, play nice, and if things don’t go as planned, let the EB-5 retreat from the “New China” be a little less disruptive than the last American retreat from this amazing nation. As for me, I’ll be sipping my next lemongrass martini in Saigon in about 3 weeks… Hẹn gặp lại , bạn bè của tôi tỏa sang! (-; J