What’s in store for the Vanuatu Citizenship By Investment Program in 2022?

In recent years, the Vanuatu Citizenship By Investment Program (formally known as the Vanuatu Development Support Program) has gone from strength to strength. According to data released by Vanuatu’s Ministry of Finance and Treasury, the program generated around $132.6 million in 2020 alone.

As it stands today, the Vanuatu CBI program accounts for a whopping 42% of all government revenue, enabling the country to meet both its domestic and international spending commitments in a sustainable manner.

This places Vanuatu in a “revenue trap”, rather than a debt trap, with the implication being that the country must do everything it can to ensure the program’s long-term sustainability – even if it does occasionally come under fire from domestic critics.

While the Vanuatu Contribution Program (VCP), another legacy stream of Vanuatu’s CBI Program, is seemingly being phased out, the government has in recent months been investing significant time and effort in addressing a number of challenges facing the program.

One such challenge stems from the legally defined naming convention of “honorary citizenship”, which industry observers for some time have flagged as problematic.

While use of the naming convention has been discontinued, the jury is still out as to whether legislative amendments have sufficiently eradicated this definition and the potential implications of CBI applicants not receiving “actual” Ni-Vanuatu citizenship.

Another issue stems from the program’s perceived fast and perfunctory due diligence processes, which has served to make the program both massively popular among applicants, and unpopular among both many local Ni-Vanuatu and a host of international critics.

Consequently, the Vanuatu Government has been a lot more forthcoming with historic program statistics since 2020, and have been engaging with key international stakeholders to address any residual concerns around the program’s legitimacy and processes.

 What does 2022 hold for the Vanuatu Citizenship Program?

While the Vanuatu Government appear to be continually working to enhance the program’s due diligence processes and ensure it remains both attractive and reputationally defensible, another key program change appears to be in the offing for 2022.

The much-vaunted addition of a Citizenship By Real Estate Investment option, or REO, appears to be gaining traction: On 3 April 2021, the Vanuatu Citizenship Commission’s Chairman issued a statement confirming that Vanuatu will be submitting a CBI Real Estate Option Bill to parliament during April 2021.

While details remain sparse, it would appear that Vanuatu intends to add a real estate investment option similar to those offered by its Caribbean CBI competitors with a view to raise its competitiveness within the investment citizenship market.

At the time of writing, it is not know what the minimum investment requirement for the proposed new real estate option would be.

As has been seen with programs such as the Portuguese Golden Visa, allowing any open-market property investments to serve as the basis for applying can cause unintended consequences such as sky-rocketing property prices in large urban centres.

Hence it is highly likely that the real estate option will emulate that of other Caribbean programs, being government approved off-plan property projects only. Yet as things stand today, the framework for screening developers, and appraising the suitability of such developments, is yet to be developed.

This is a developing story, and we’ll be updating this article with more details as and when they become available.