Bill strikes the heart of Samoa

The Draft Citizen Investment Bill 2014 goes to the heart of what it means to be a Samoan.

That’s the opinion of local lawyer, Lei’ataualesa Daryl Clarke. He made the point during a public consultation facilitated by the Ministry of Commerce, Industry and Labour (M.C.I.L) yesterday.

The debate ran hot over whether or not the Bill as it stands now would be of any economic benefit for our country.

As members of the law fraternity, the business community, Samoans and foreign investors themselves deliberated on the economic benefits and legal ramifications of the Draft Bill, Lei’ataualesa said this Act was far more serious.

“As a broad brush comment, we have spoken a lot about economics and money,” he said. “It goes well beyond money.

“I think it is far more important than that, because it is talking about what sort of people have the right to call themselves Samoan.

“I think that is of interest to all of us here today. And in terms of the Bill, it does go to the heart of being Samoan.

“For instance, a significant concern that I would suggest arises from the Bill is that a person and their family, and there is quite an extended definition, need only be here in Samoa for six weeks over three years and then be entitled to call themselves Samoan.”

According to the Draft Legislation, within three months before the expiry of the investors permanent resident permit, the investor, including any family member, may apply in person, or through the person’s agent for citizenship by permanent residence.

The Bill defines ‘Family Member’ as the spouse of the investor, any unmarried children aged under 18 years or 26 years if they are attending a tertiary institution, any child aged over 18 years if they are physically or mentally handicapped, any parent of the investor or spouse or any grand parent of the investor or spouse.

That means four generations of one family can become citizens from one $1,000,000 investment.

“As a Samoan, I guess I have very strong feelings about that,” said Lei’ataualesa.

“And given that this is open to worldwide application, we could have anybody from any country that will get that right.

“And there are significant rights that come with citizenship and I would just lend some caution in terms of that step.”

Tootoooleaava Dr. Aiono Le Tagaloa from Fasitoouta also spoke of how the Bill questions what it means to be a Samoan.

“My comments will be very ethnocentric,” she told the gathering. “But I am sure you will all excuse the ethnocentricity because whenever you raise citizenship that is what you actually stir up.

“Not only aspects of ethnocentricity but also just our patriotism and nationalism.”

She said one of the questions that should always be at the forefront of any debate regarding citizenship is how Samoans view being Samoan.

“And that is that value of what it is, that in effect we are statutorily selling through this legislation,” she said. “So what is the value of being a citizen to a Samoan?

“That differs from person to person depending on the sphere and the area in which they participate and work.

“My comments are from my sphere are the things that I feel this legislation will affect with regards to what I see is being a Samoan citizen.”

She said in the legislation and in the policy paper that was provided and presented, one of the issues that was particularly noted was the fact customary land will not be affected.

“That was mentioned at the beginning of the policy document, it is mentioned in the Bill and it is also mentioned at the end of the policy document,” said To’oto’ooleaava.

“At the beginning of the policy document it says it will not disenfranchise the nationals of Samoa and also especially in relation to customary land.

“However, at the end of the document it says that we may go there if it is viable and if it is feasible.

“Now, I see that this is logical because as you know and we know Samoa has very little freehold and Government land.

“The last official figure I was given was five per cent freehold land and 15 per cent government land and then the remainder is customary land.”

She says in this regard, she sees that it was not a good study to look at the nations that were listed in M.C.I.L.’s policy document, because they do not have that large an amount of customary land.

The Document she speaks of is The Policy Guidelines Towards Development of Citizenship by Investment Programme for Samoa Consultation Draft (it is published below in full).

In the guidelines, M.C.I.L. say they looked at five other nations with similar legislation; these were Singapore, St. Kitts and Nevis, Australia, New Zealand and the Commonwealth of Dominica.

“Now if we have citizenship by investment through the purchase of property and you only have 15 per cent government land to lease or purchase and five per cent freehold land,” Tootoooleaava said.

“Then the question becomes where are you going to go when the investments that are supposed to flood in start flooding in what are they going to purchase?

“And in that regard, although a lease is permitted under the Alienation of Customary Land Act it actually opens us up to a vulnerability.

“And it is a vulnerability of something that I believe at the core of being Samoan, not in the statutory, but being a Samoan.

“Because our being a Samoa is based on the fact that we have land and titles, we have these matai titles and we have land that pertain to them and then we have our language that makes it the third pillar of our identity.

“So when these things are made vulnerable, then I do not think that it is wise nor is it favourable and as this has a very strong focus on that.

“That is where my fears come from.”

To’otoooleaava said the policy document lists a number of pieces of legislation to be considered in relation to this legislation, including the Village Fono Act.

“The Village Fono act doesn’t have anything to do with the leasing of customary land,” she said. “Instead it is the Alienation of Customary Land (Act) that should be considered.

“Furthermore, there was recent amendment to the Land and Titles act 1981 which emphasises the position of this Government that customary land should be protected.”

She says in this regards she belives the Draft Citizenship Investment Bill 2014 is inconsistent with not only the Government’s stance but also the prohibition in the Constitution on the of customary land.

“And so that is where my concerns are coming from,” she said.

The Ministry of Commerce, Industry and Labour presented a paper called “Policy Guidelines Towards Development of Citizenship by Investment” during the consultation yesterday. It is published here in full for our readers’ information:

1.0 Background

Citizenship by Investment is the granting of citizenship status to an individual (and immediate family members) contingent upon a specified and quantifiable investment in the country. Alternatively, residence rights may be offered, in which case this is often referred to as investor immigration. While residence is granted to investors and wealthy individuals in most countries, there are only a few countries now which have clear provisions in their laws that grant citizenship for economic considerations and without residence requirements. The United States of America (USA), Canada, Australia, Austria, Switzerland and Great Britain are countries which offer residency and /or citizenship to Wealthy individuals and investors.

In this category of developed countries, for one to qualify for eventual citizenship there is duration of time in which they are granted residence pending qualification towards eventual grant of citizenship. This duration often in the range of 2 to 5 years, gives the prospective applicant time to satisfy set requirements set by relevant national authorities which include, proof of net-worthiness of business and personal assets, transfer of funds, establishment of business or exploration of areas they wish to make long term investments among others.

In the developing country category, within the region, a review of l4 Pacific Island Countries (PICs) reveals that none of the countries offer citizenship based on investment or wealth of applicant individuals. Similar to current practice in Samoa, citizenship can only be obtained through birth, descent, marriage, registration, and Permanent residence. However, within the Caribbean, a region with similar geographical characteristics as those of the Pacific and compromising of Island countries with similar populations, Economic and climatic challenges similar to countries in the Pacific, some countries and specifically St. Kitts and Nevis, Commonwealth of Dominica, Panama and Antigua and Bermuda are or in the process of implementing a citizenship by investment programme as a means of boosting investment, income generation for development of critical sectors, employment creation and overall economic development. Investor citizenship has been a long established practice in- St. Kitts and Nevis and the Commonwealth of Dominica. Both countries have developed programs targeting specific branches of economic activity. Given the geographical position of these two states, their low level of GDP per capita, and the lack of competitiveness on the global market, investor citizenship programs aim to improve their overall economic performance. In St. Kitts and Nevis and the Commonwealth of Dominica the naturalized investor is presumed to have established strong economic ties with the new community of membership. However, since the investor is in possession of the passport of St. Kitts and Nevis or the Commonwealth of Dominica, but is not bound to reside therein, his or her level of political engagement in these polities is lower than that of an ordinary citizen (or a transnational migrant)2. This novel initiative to those countries implementing it also poses both benefits and challenges detailed in this paper and which are worth taking into consideration should Samoa consider initiating a similar programme. Hence, this paper containing guidelines towards development of Citizenship by Investment Programme for Samoa specifically takes into consideration the Caribbean Small Islands country perspective. A review of developments and trends in the 2010 Asia-Pacific Trade and Investment Report indicate that the amount of FDI inflows to the Pacific islands have been considerably lower compared with those of other sub regions however the FDI inward stock has increased steadily. From 2005 to 2009, the Pacific’s FDI inward stock as a percentage of GDP increased on average at 14% annually to reach a 44% share in 2009. In particular, Samoa has shown a high exposure to FDI as its share of FDI to GDP reached 133% (UNCTAD, 2010b). This is an indication that Samoa like other similar Pacific Island countries rely heavily on FDI for its growth and that it has managed to successfully promote its economy as an attractive destination for FDI inflows, although its markets are small. Major sectors attracting FDI in the Pacific islands include natural resources, primary industries (agriculture, fishery), food processing, tourism, electronics and light manufacturing (ITC, 20l0)3. This trend lends merit to the need to explore and encourage initiatives that can position a country as a unique investment location. In Samoa’s case, the graduation in 2014 from LDC status poses macro economic and financial policy challenges due to the implications of graduation on continuing access to current levels of grant aid and soft loans from development partners (grants currently represent 25 percent of Government revenues). It also means Samoa will be in a position where it needs to fasttrack other avenues for income generation in a bid to offset the eventual outcomes resulting from a deduction of donor aid. A medium term strategy to progressively increase domestic resource mobilisation, maintain current levels of external assistance, and to enhance efficiencies in budget spending to avoid any recourse to commercial market borrowings is crucial. Further, leveraging the potential use of remittances for development and investment purposes will become increasingly important in the post graduation period. Remittances represent 25 percent of Samoa’s GDP4. In moving towards remedying the shocks that will result and in a bid to further boost foreign direct investment, the Cabinet Citizenship Committee made recommendations for the need to develop this policy paper containing guidelines towards initiating the implementation of a Citizenship by Investment Programme for Samoa. In the absence of a background report examining economic benefits which may result from Citizenship by investment/permanent residency programme, this policy paper contains basic policy guidelines based on international best practice towards considerations for the development of a Citizenship by Investment Programme for Samoa. The paper also presents some comparative analysis from countries across the World applying programmes that award citizenship/permanent residence based on investments made by prospective applicants.

1.1 Utilizing Citizenship as a tool to enhance Foreign Investment. The benefits of dual or multiple citizenship range from ease of movement, where there is political strife in one’s own country to investment planning and personal security. Categorically such benefits that will prompt different nationalities to seek citizenship in other countries and is also crucial for Samoa’s proposed Citizenship by Investment initiative include the following:

i. Convenience: High net worth citizens of some countries have to invest considerable time to obtain visas from many countries.

In addition to the time involved in the process, and uncertainty, is the fact that some countries only offer single entry visas. Where travel may be required on short-notice, access to another passport may be crucial such as in the case of civil unrest. Additionally, a second passport may afford the holder visa-free travel to jurisdictions not available to his country of birth;

ii. Tax Planning: Several countries levy income tax on non-resident citizens.

Alternative citizenship has therefore become increasingly important as an effective tool for international tax planning. As a national of two or more different states, an individual generally has more planning options as well as more privacy in banking and investment; iii. Personal Security: Citizenship and a passport from a small, peaceful country is considered by some as protection when travelling, particularly in times of political unrest, civil war, terrorism or other delicate situations. Many international business executives consider an alternative passport as the best life insurance; and iv. Investment in the future: In a dynamic political and economic environment, acquiring a second citizenship may be considered an investment for the future and in many instances, there is need to give up one’s present nationality while they, along with their family, enjoy the benefits of a legal second passport.

1.1.1 Prospective Country Benefits.

On a country specific basis, implementation of a Citizenship by Investment Programme can be a mutually beneficial arrangement for applicants and the host country. Among the gains to the country can be:

i. Economic Development: Samoa is heavily indebted with very little fiscal space for infrastructure and investment; ii. Capital mobilization: The revenue stream generated by investments and processing fees can be considerable;

iii. Liquidity Replacement: Effect of grant money lost as for instance a result of Samoa’s graduation from LDC status in 2014 can be diluted through devising of other revenue generating initiatives such as a Citizenship by Investment Programme;

iv. Improve Foreign Reserve Position:

Fees and incomes generated from the implementation of such initiative can play a crucial part in boosting the foreign reserves of the country.

v. Increased Foreign Direct Investment:

The more applicants that satisfy the set requirements of implementation of such an initiative the more FDI for Samoa; vi. Increased Economic activity: In most instances where the citizenship by investment programmes are implemented, the new breed of investor citizens introduce innovative Ways of doing business hence resulting in increased economic activity. vii. Investor Confidence: The assurance of citizenship in an economy through investment boosts confidence of prospective investors and creates a sense of security towards their investments hence motivating them to even invest more in the development of their businesses. ix. Impact on Tourism: The presence of a new breed of investors as a result of implementation of the proposed Citizenship by Investment Programme is likely to have positive impact on tourism with increased presence of high net worth individuals. ix.

Impact of presence of a network of high net worth individuals: The presence of Investors through the initiative is likely to open avenues where such individuals could be encouraged to support community development projects through charitable contributions.

1.1.2 Risks Despite the above prospective benefits that the Citizenship by Investment Programme could present to the country, there are inherent risks in venturing into such an initiative. These include; i. Management and Employee Selection: ii. Deviation from established policies and procedures: There are already established policies and procedures under-which investors in Samoa are granted residence or licenses for a duration considered appropriate. The proposed programme whilst likely to be beneficial in attracting investors would mean a deviation or a need to up-grade existing policies and procedures relating to investors. This has administrative costs and training especially in investigative skills associated with it. Undetected fraud: There is a likelihood that despite measures put in place to ensure that the right investors are given opportunity to apply under the programme, undesirable investors or persons may outfox the system hence acquiring passports. Investment Options The investment environment in Samoa is relatively open with only a handful of regulated sectors under the Foreign Investment Amendment Act 2011 (Reserved activities).The Industry Development and Investment Promotion Division of the Ministry of Commerce, Industry and Labour (MCIL) facilitate, promote, approve, register and monitor foreign investment in Samoa. Under the current Foreign Investment Act 2000, businesses with foreign shareholding are required to have a Foreign Investment registration certificate from MCIL prior to obtaining a business license from MfR. A Cabinet Investment Committee has also been established to speed up the facilitation of appropriate government support under existing schemes for major investment activities. The selection criteria for any investment proposal are governed the following parameters: -Economic activities that are consistent with the priority sectors in the Strategy for the Development of Samoa (SDS) and investment policy statement; -Investments reserved for nationals including buses for transportation of the general public, axis for transportation of the general public, vehicles for hire, retailing, saw-milling and Traditional elei garment designing and printing. - As per Business License Act 1998 prohibited investments for both local and foreign investors include as nuclear and toxic waste disposal or storage; export of products that are prohibited under any law; prostitution; processing and export of endangered species; production of weapons of warfare; There are various sectors in the Samoan Economy in which substantial investments are required towards improvement of the economy.

Foreign investors could bring in the necessary business skills, experience and international networks required to successfully manage and operate businesses in these areas. It is such areas that could be considered as conditional on prospective applicants to the Citizenship by Investment Programme to make investment as a condition for eligibility to be considered for the Citizenship by investment programme.

These were identified in the Diagnostic Trade Integration study for Samoa and include:

i. Agriculture sector. Though Agriculture continues to be the major contributor to subsistence activities for the Samoan economy and plays an influential role in the development of the rural areas. Opportunities for agriculture are constrained first by access to land and second by the nature of potential markets. The domestic market is small and is catered mainly by subsistence rather than commercial production. The domestic market is steadily increasing driven mainly by the demands of the tourism industry and export opportunities. These new demands will require investment in production of local products to meet high quality and supply requirements that will be best met through a combination of enhanced subsistence and commercial farming. The competiveness of export products will require efforts in reducing the cost and logistics of transport given Samoa’s relatively remote location.

ii. Fisheries. The current fisheries port facilities in Samoa have very limited space for either the expansion of existing onshore facilities or the construction of new infrastructure to accommodate major increases in fish catches and any processing of fish products for both the domestic and export markets. The relocation of any cannery operations from American Samoa to Samoa, and particularly to Savaii Island will require major investments to upgrade port infrastructure and onshore facilities such as for cold storage and processing, as well as improvements to power and water supply.

iii. Tourism and Land Development. Introducing policy initiative (currently being further developed for early implementation) of promoting greater economic use of customary land through leasing and/or development by landowner families themselves. This will potentially enable investment in commercial developments like for tourism and farming by both local and foreign investors and creating jobs in these communities. This will also potentially encourage the development of small family or community income generating businesses such as handicraft making or fishing/farming to sell to these commercial enterprises9.The current push by Government to promote greater economic use of customary land through leasing is a step in the right direction and will assist in attracting private investment on these lands and opportunities for the informal rural economy to access financing for cash crops by utilizing their land.

iv. Information and Communications Technology (ICT) sector. Development of the ICT sector will be dictated mainly by the quality and reach of Samoa’s broadband communications capabilities through international satellite and marine cable links. The introduction in 2009 of the American Samoa Hawaii (ASH) international cable facility to augment the international satellite connections is also expected to enhance the bandwidth for international communications and further reduce the average unit costs. This international infrastructure is expected to be further developed with the operation of the South Pacific Island Network (SPIN) to augment the capacity of the ASH fibre optic cable. The estimated capital costs of the option of a Fiji- Samoa cable link is estimated around US$45 million. The investment costs are high but this is an investment in the long term future development of Samoa and its capability to remain competitive in an increasingly IT and ecommerce based global economy.

v. Biofuel Generation. While Samoa is unlikely to be able to be involved in the trade of equipment and technological knowhow, opportunities exist in the mass production of raw material for commercial production of biofuels whether locally or in neighbouring developed countries.

vi. Services sector. Samoa’s market is relatively open for investment in the services sector with only a few reserved and restricted sectors. Service industries that comprise the services sector include telecommunications, finance and business, education, health, transport, construction, and professional services such as legal, accounting, consultancy etc. The main challenge for the services sector at present is the need for reviewing, implementing and improving the existing regulatory framework across all industries in the sector. There is huge potential for some sections of this sector to be considered for the proposed investment by citizenship programme.

2.0 Comparative analysis of Existing Citizenship by Investment Programmes. New Zealand, Australia & Singapore Schemes, St.Kitts and Nevis, Commonwealth of Dominica, Antigua and Bermuda After careful consideration of the schemes employed by the above countries there are some notable differences and similarities.

- Singapore

- Singapore, is a Southeast Asian island citystate off the southern tip of the Malay Peninsula, 137 kilometres (85 mi) north of the equator.

An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the Singapore Strait to its south.

The country is highly urbanised with very little primary rainforest remaining, although more land is being created for development through land reclamation”. Singapore is relatively large country with a size of 710 km2, population of 5,312,400. Her GDP Purchasing Power Parity (PPP) per 2012 estimates is $327557 billion with per capita estimates at $61,046 whilst her GDP nominal per 2012 estimates is $270.020 billion with per-capita of $50,323. - A person can apply for registration as a Singaporean citizen if he or she has been a Permanent Resident for at least 2 years. In exceptional cases, applications may be considered after 1 year of residence.

While the Singaporean passport is one of the best in the world in terms of reputation and visa-free travel, it does have significant drawbacks. In particular, the Enlistment Act stipulates that all male Singaporean Citizens (and Permanent Residents) are liable for military service upon reaching 16 years of age. Moreover, Singaporean citizenship legislation does not allow dual citizenship. Singapore is a strict single-citizenship country and will require proof of relinquishment of all other citizenships held by the applicant. - The process for Singapore’s Capital investors (million dollar scheme) PR scheme is straight forward and Permanent Residency is granted in 3-6 months upon receipt of a full and complete application.

- Australia - Australia is a country comprising the mainland of the Australian continent, the island of Tasmania and numerous smaller islands. It is the world‘s sixth-largest country by total area.

Neighbouring countries include Indonesia, East Timor and Papua New Guinea to the north; the Solomon Islands, Vanuatu and New Caledonia to the north-east; and New Zealand to the southeast.

Australia is large country with a size of 7,692,024 km, population of 23,034,879.Her GDP Purchasing Power Parity (PPP) per 2012 estimates is $960722 billion with per capita estimates at $42,354 whilst her GDP nominal per 2012 estimates is $1.542 trillion with percapita of $65,642. - It is possible to acquire Australian citizenship and a passport after 4 years of lawful residence. Anyone who became a permanent resident on or after 1 July 2007 must have been lawfully resident in Australia for 4 years immediately before applying, including 12 months as a permanent resident and absences from Australia of no more than 12 months, including no more than three months in the 12 months before applying.

Most people are required to pass a test and meet general eligibility requirements before applying for citizenship. There are interesting conditions for investors and highly skilled professionals who wish to become resident.

Australia certainly offers a very attractive passport, but also restrictive tax laws and high taxation during the time you are a tax resident.

- New Zealand

- New Zealand is an island country in the southwestern Pacific Ocean. The country geographically comprises two main landmasses — that of the North and South Islands — and numerous smaller islands.

New Zealand is situated some 1,500 kilometres (900 mi) east of Australia across the Tasman Sea and roughly 1,000 kilometres (600 mi) south of the Pacific island nations of New Caledonia, Fiji, and Tonga. Because of its remoteness, it was one of the last lands to be settled by humans.

New Zealand is relatively large country with a size of 268,021 km2, population of 4,451,017.

Her GDP Purchasing Power Parity (PPP) per 2011 estimates is $122.193 billion with per capita estimates at $27,668 whilst her GDP nominal per 2011 estimates is $161.851 billion with per-capita of $36,642. - New Zealand permits the acquisition of citizenship after 5 years of permanent residence. If you have applied for and received permanent residence after 21 April 2005, you must have been present in the country for a total of at least 1,350 days during the 5 years immediately before making your citizenship application. Moreover, you must have been present there for a total of at least 240 days in each of those 5 years, have been issued with a Permanent Residence Permit by the New Zealand Immigration Service and fully met any conditions imposed by this Service in regard to this Permit. If you can show that there are exceptional circumstances that warrant a reduction, you may be considered as long as you have had a minimum presence in New Zealand of 450 days with a Permanent Residence Permit in the 20 months before making your application.

St Kitts and Nevis The Federation of Saint Kitts and Nevis also known as the Federation of Saint Christopher and Nevis), located in the Leeward Islands, is a federal two-island state in the West Indies.

It is the smallest sovereign state in the Americas, with size of 261 km2 104 sq mi and population of 51,300. Her GDP Purchasing Power Parity (PPP) per 2011 estimates is $895 million with per capita estimates at $1,573 whilst her GDP nominal per 2011 estimates is $715 million with per-capita of $12,728. St. Kitts and Nevis, a federation of two islands in the West Indies, runs the oldest program for granting citizenship on grounds of investment.

The program was established by the adoption of the Constitution and Citizenship Act in 1984, one year after the islands were granted independence from the United Kingdom. Chapter VIII of the Constitution of St. Kitts and Nevis regulates in detail the modes for the acquisition and loss of citizenship before and after independence (art. 90 to 95). The ordinary naturalization procedure is rather restrictive and subject to a fourteen years residence requirement (art. 92).

Yet, Section 3 (5) of the 1984 Citizenship Act of St. Kitts and Nevis stipulates that ‘any person can apply for naturalization and may be eligible for citizenship on payment of prescribed fees, if the Cabinet is satisfied that such person has invested substantially in St. Kitts and Nevis’. The investor Citizenship option thus created was heavily grounded on the economic downfall that the islands faced at the time of independence.

The weak economic performance of St.

Kitts and Nevis in the following two decades, the lack of competitiveness in the global agricultural market, the falling prices of sugar which was the island’s main industry and the devastating effect of hurricanes on the country’s GDP, are all problems that eventually sparked the two strands for acquiring the citizenship of these West Indies’ islands: the real-estate option, and the Sugar Industry Diversification Foundation (SIDF) option (Henley and Partners 2010).

The real estate option allows the prospective applicants to purchase real estate in St. Kitts and Nevis, and thus become eligible for facilitated naturalization on grounds of investment.

The program, developed to bolster the islands’ tourism sector, is highly regulated in that there is a minimum investment in real estate (currently USD 400,000.00). In addition, the real estate project may not be at the applicant’s disposal.

Rather, it needs to be selected from a list of property pre-approved by the federation’s government and it may not be resold for five years after the purchase. The current list of property includes tourist resorts, harbour developments, golf course terrains, etc.

(Government of St. Christopher and Nevis 2011, website), which reflects the aspiration of the islands to become an attractive tourist destination. In addition, any property purchased in St. Kitts and Nevis for the purpose of facilitated naturalization does not qualify any further buyers for investor citizenship.

That is, if the person is granted citizenship of St. Kitts and Nevis after having used the real estate option, the property is removed from the list, which prevents the abuse of the property for naturalization purposes.

In addition to investing in the property, the applicant is liable to pay a number of other governmental fees for him or herself and any dependants.

The Sugar Industry Diversification Foundation (SIDF) option was established in 2006, when the possibility to purchase governmental bonds in the amount of USD 250,000 in order to qualify for investor citizenship was terminated (SIDF 201l).The introduction of the SIDF option was the result of the closure of St. Kitts and Nevis’s sugar industry a year before, following the pressures on the country’s government by the European Union (EU) and the World Trade Organization (WTO). The fall of the sugar industry, which accounted for 93 per cent of the country’s agricultural production (Williams 2003: 4), was induced by high production costs and the non- competitiveness of the Caribbean sugar cane on the global market. The fact that the sugar industry employed only 8 per cent of the federation’s workforce, facilitated the establishment of SIDF, a charity aimed at ‘conducting research into the development of industries to replace the sugar industry;

funding the development of these alternative industries and providing further support to secure the sustainability of such industries’.

Unlike the real-estate option, SIDF qualifies the applicant(s) for naturalization after a lump sum donation into the SIDF Escrow Account supervised by the Ministry of Finance of the Federation. The amount of the donation required ranges from 250,000 to 450,000 USD, depending on the number of applicants.

In cases of failed applications, the donation is returned to the applicant, minus the application processing fee of 3,500 USD per person. The economic rationale of investor citizenship in St. Kitts and Nevis is further stipulated in the 1984 Citizenship Act, which notes that a person is entitled, upon making application under this subsection to the Minister in the prescribed manner and upon payment of any fee that may be prescribed, to be registered as a citizen of St. Christopher and Nevis without any rights of voting save under and in accordance with the provisions of any law governing the qualification of voters, if the Cabinet is satisfied that such person has invested substantially in St. Christopher and Nevis (section 8). Hence, naturalization by investment does not confer all of the citizenship rights to those who have acquired the citizenship of St. Kitts and Nevis but have opted not to reside there. The 2007 amendments to the National Assembly Election Act stipulate that suffrage is granted to those citizens of St. Kitts and Nevis who have been ordinarily resident in one of the islands for a ‘continuous period of at least twelve months immediately before the registration date’ (art.

42). The federation operates a re-registration system, which indeed confirms the primacy of residence over citizenship when determining suffrage. As a consequence, citizenship by investment in St. Kitts and Nevis, offers the individual full membership in the polity, and some of the privileges stemming from the formal association between the individual and St. Kitts and Nevis. However, rights and duties inherent in the concept of citizenship (such as anticipation, and taxation) are not transferred on the beholders of the country’s passport, as they depend on the establishment of a genuine link with St. Kitts and Nevis through residence.

In St.Kitts and Nervis as reported from an I.M.F Report 2013, While imports in the second quarter of 2012 weakened due to persistent sluggish domestic demand, buoyant receipts from the citizenship by investment program further reduced the current account deficit. As a result, international reserves net of IMF SBA resources declined by about EC$ 10 million during that period.

Commonwealth of Dominica. Commonwealth of Dominica, is an island nation in the Lesser Antilles region of the Caribbean Sea, southsoutheast of Guadeloupe and northwest_ of Martinique. Its size is 750 square kilometres (290 sq mi) and the highest point in the country is Morne Diablotins, which has an elevation of 1,447 metres (4,747 ft). The Commonwealth of Dominica had a population of 71,293 at the 2011 Census. The capital is Roseau which is located on the leeward side of the island.

Her GDP Purchasing Power Parity (PPP) per 2012 estimates is $1.002 billion with per capita estimates at $14,166 whilst her GDP nominal per 2012 estimates is $497 million with per—capita of $7,022. Dominica gained independence from the United Kingdom in 1978, and since then, the country’s economy has been based on agriculture, which employs around 40 per cent of the island’s population (UNDP 2010). As a result of adverse weather conditions, including frequent hurricanes and the volcanic terrain in Dominica, coupled by the decrease in the world prices of bananas, which are the country’s primary crop, the country’s economic performance has been on a downward slope (US Department of State 2010). The desire to attract investors in order to bolster the country’s economy has resulted in the establishment of the investor citizenship program, which has been running in Dominica ever since 1993.

The 1993 amendments to the country’s Naturalization and Citizenship Act provided the legal grounds for the investor citizenship program. The new rules stipulated that the government may have discretionary powers in waiving the five year residence requirement that is in place in the ordinary naturalization procedure. Pursuant to article 8 (2), ‘The Minister may, in such cases as he thinks fit — (c) waive the residence requirement in special circumstances. The amount of investment ranges from 75,000 to 100,000 USD, in addition to other processing and governmental fees. Dominica does not have specific programs (such as SIDF) targeted by the investment.

Rather, the government has the discretionary powers in allocating the funds to public projects, including ‘(1) building of schools, (2) renovation of the hospital, (3) building of a national Sports stadium and (4) towards the promotion of the Offshore Sector’ or to private sector projects dealing with agriculture, tourism or information technology (Government of the Commonwealth of Dominica 2011, website). On the one hand, such a policy allows Dominica to tackle the immediate economic concerns, such as poor agricultural performance in a certain calendar year because of hurricanes. On the other hand, it lacks consistency of a long-term program aimed at economic recovery, since it has multiple and shifting beneficiaries.

Similar to the case of St. Kitts and Nevis, Dominica does not require the investors who have obtained citizenship to reside on the island. Equally, admission into Dominican citizenship does qualify the person for certain rights of membership, but suffrage and taxation are based on residence. In particular, the House of Assembly (Elections) Act, includes an oath for the prospective electors, who declare that they had resided in Dominica for twelve months prior to being registered as electors, that they are domiciled in Dominica, and that they have resided for at least six months in the constituency whereby they are registered (Section 37).

Therefore, in both cases of investor citizenship in the West Indies, citizenship is formally conferred upon the investor, who may use those benefits of membership that are not dependent on residence (e.g., free travel). Benefits and duties of citizenship that are dependent on the individuals’ participation in the polity and the identification with it still require the establishment of stronger ties with the polity by having it become the individuals’ focus of life or business activity.

According to the IIVIF report, the overall balance of payments in Dominica registered surpluses over the past three years, boosting reserves to 3‘/2 months of imports as of 2011.

This reflected in part a significant retrenchment in the current account deficit during the postcrisis period—from 27 percent of GDP in 2008 to 12% percent in 20ll—due to a demand-driven fall in private imports, a recovery in tourism expenditures during this period, and stronger service receipts from the economic citizenship program.

It can be observed from that above review of countries that aside from the Caribbean countries, the capital Investment requirements for schemes is the high. This is reflective of the development of the countries and their focus towards attracting ‘big players’ to invest and contribute to their economies. Samoa on the other hand is significantly smaller in terms of infrastructure development, technological advancement and policy development with similar characteristics to the countries in the Caribbean in, developing country status, size and other factors. A recurring theme especially in relation to FDI is the social & economic implications i.e. how does FDI impact on the community as a whole? Taking Singapore as an example, some key indicators in terms of the social & economic impact have been highlighted. In the l96O’s Singapore opened themselves up to overseas investment and as a result: -Cumulative FDI in Manufacturing over S$l2,000 million; -Unemployment reduced dramatically to the point where labor had to be imported; -The second industrial revolution in the 8O’s saw a focus on attracting FDI from TNC’s to encourage technological advancement and capital intensive industries;

-This lead to increased wages to encourage and develop expertise in technical industries rather than the labor intensive manufacturing sector. On the flip side, some adverse effects of their opening up policy has been the elevation of the elite and increased focus in serving the interests of TNCs sometimes at the expense of the Singaporean people. Overall, in terms of social impact it is proven that foreign direct investment will result in increased competition, technological spillovers and innovations, and increased employment. It is on the host country to develop policies which promote foreign investment and at the same time serve their people’s interests at all levels. None the less as can be seen from the Caribbean countries, a citizenship by Investment Programme whilst having some benefits towards improvement of Balance of Payment receipts is not the panacea to economic problems a country could be experiencing.

2.1 Transition towards development of a Model Citizenship by Investment Programme for Samoa In moving towards Governments aspiration of developing a citizenship by Investment Programme, it would be critical that the task-force established critically review and existing programmes identified in this paper and make recommendation as to the most appropriate model for Samoa.

2.1.1 Guiding Principles. In determining the appropriate model for Samoa, the following guiding principles/aims of the programme, implemented in other countries are worth considering; a) Promoting economic growth, local entrepreneurship and job creation; b) Attraction of developments which would stimulate economic activity, new tax revenues and other forms of income which would be on-going and sustained; c) Generating significant resources of direct capital injection into the national economy; d) Development of Infrastructure; e) Attracting investors with financial competence and experience (taskforce to determine minimum net-worth of prospective applicants); t) Ensuring nationals continue to have access to affordable lands; g) The Citizenship by Investment Programme should in no way jeopardize the integrity of the national passport; h) That there be no disenfranchisement of nationals particularly with respect to ability to purchase own lands. i) Model must be based on existing similar global programs; 3.0 Salient Features for Model Citizenship by Investment Programme for Samoa. In determining a model for citizenship by investment programme for Samoa, the taskforce/advisory committee established whilst noting the comparative analysis of other countries within and outside the region implementing such a programme, would need to take into consideration the following key features of a Citizenship by Investment Programme. These are based on best practice in locations implementing citizenship by Investment Programme and include; 1. General Provisions 2. Investment Options highlighting areas in which potential beneficiaries from the Citizenship by Investment Programme for Samoa would have to make substantial investment. 3. Investment qualifying factors that would include minimum amounts and other monetary baseline for one to be eligible to benefit from the programme -Features of Passport obtained through Citizenship by Investment. Duration of validity for such Passport, -Procedures for one have to meet to be eligible for Citizenship by Investment. These could include; > Health; > Criminal record; > Amounts to be deposited by applicants to the programme; > Residence duration required prior to qualifying for the Citizenship through Investment Programme; > Age limits; > Dual citizenship; > Terms under which citizenship may be cancelled; and > Other considerations as may be recommended by the taskforce. 4. Fees Structure 5. Other considerations as may be recommended by the taskforce. 3.1 Legislations in Samoa to consider for review. In advancing towards an ideal model of a Citizenship by Investment Programme for Samoa, some amendments will need to be make within existing domestic legislations to enable the effective implementation of the programme. The legislations identified for review and consideration by the relevant legislative bodies are: Constitution of the Independent state of Samoa 1960. Allowing foreign investors to have Citizenship through Investment is likely to affect the land tenure system in Samoa, namely Article 101 which provides for the protection of customary land from sale. Foreign Investment Act 2000 This legislation is the first point of reference for any foreign investor intending to do business in Samoa. Issues that may arise include composition and role of the Foreign Investment Advisory Board, requirements for application and approvals process.

Immigration Act 2004 Review of the conditions of permit, approval of permit and validity of permit.

Citizenship Act 2004 The provisions pertaining to how a permanent resident becomes a citizen may require amendment in order to comply with other requirements of the scheme.

Labour and Employment Act 1972 Any employee matters undertaken by foreign investors will need to comply with Samoa and Employment standards as provided for by under this Act.

Business Licenses Act 1998 The regime adopted for the investment promotion scheme will be required to comply with requirements of this Act namely sections 4 to 8 Value Added Goods and Services Act 1992-1993 All goods and services operating under the investment promotion regime will have to comply with provisions of this legislation.

National Provident Fund Act 1972 Any foreign business operating in Samoa will be required to make contributions under this Act.

In particular employers will have to implement a system for contribution of employees which will be consistent with the requirements.

Companies Act 2001 All companies must comply with the provisions of this Act. For foreign companies, they must comply with Part XI.

Electoral Act 1963 Under section 19, only citizens of Samoa may have a right to vote. As such, this provision may require amendment. Note sections 5 to 13 of the Citizenship Act 2004 state the requirements of citizenship.

International Companies Act 1988 Foreign companies that wish to operate in Samoa must register, incorporate and administer their operation in accordance with the provisions of this Act.

Village Fono Bill The village fono will need to be consulted concerning the issues of leasing of customary land.

Taking of Land Act 1964 The compensation process for taking land for public purpose will need to be addressed.

Planning and Urban Management Act 2010 Provisions of this Act will need to be considered in any matters relating to the use, development and management of land in Samoa.

Land and Titles Registration Act 2008 This legislation affects registration of title to land, therefore any land that is leased or licensed or the purpose of foreign investment 4.0 Proposed way forward.

Consider implementation of recommendations of the Investment Promotion Committee meeting of Wednesday 22nd May 2013 upon review of the first draft of the Policy Paper towards development of a Citizenship by Investment Programme for Samoa in progressing the Project.