Entrepreneur Embarrassment

May 29, 2015
Iain MacLeod

How do you know when an immigration policy is failing miserably?

I have been looking into visa application numbers, approval, decline and withdrawal rates for the Entrepreneur work Visa category.

The policy was put in place just over a year ago in April 2014.

It has to be considered a dismal failure.

We were initially shocked by two aspects of it when it was released – how high the bar was in terms of eligibility criteria and how loopy some of the definitions were.

Those of you that have attended one of our seminars might recall this temporary class ‘self employed work visa’ is the usual pathway the self employed follow if they want to come to New Zealand and buy into or establish a business as a means of securing permanent residence.

It is also the one we advise people to only choose if they have no other options and a very credible business plan behind them.

This is simply because the threshold for entry is so high and getting the visa doesn’t mean you’ll eventually secure a resident visa – residence is only granted after at least two years having made good on the commitments contained in the business plan to employ a number of New Zealanders, invest a certain amount of capital (usually in the hundreds of thousands of dollars) and make a profit – all within three years.

A big ask by any measure and one that comes with considerable commercial and emotional risk.

We have learned that since the policy was released approximately 200 applications have been filed, a small number are sitting in a ‘managed queue’ gathering dust and just under 100 are under ‘active management’ (which means they have at least been looked at).

Only 35 have been approved and 50 have been declined.

Of the 35 approved around 50% have been approved as ‘exceptions to instructions’ which means they don’t meet the rules but INZ has deemed them to have merit.

That is an extraordinarily high percentage of exceptions.

The reason is both surprising and disturbing. According to sources the bar is simply too high and the definitions make it virtually impossible to approve most applications.

It starts with the objective of the policy which intends for these proposed businesses or investment in an existing business ‘to contribute to economic growth by enabling experienced business people to grow or establish a high growth and innovative business with export potential in New Zealand.’

Four key criteria then in one sentence.

You have got be experienced in business. Check, but how experienced? This at least is somewhat answered in the points you claim for business experience.

The business must be ‘high growth’. Okay, but what defines that?

The business must be ‘innovative’. Yeah, but what does that mean?

The business must have export potential. Check, but to what extent?

Applicants must demonstrate all three as well as whatever being an ‘experienced business’ person might mean to an immigration officer.

To demonstrate how kooky it can be here is the definition applied to ‘innovation’ – it is a business that:

‘demonstrates a high probability of succeeding in discovering and applying new ways to produce more with the same quantity of inputs’

Say what?

You need to show that the chances of your discovering new ways to produce more with the same quantity of inputs is high?

Which means proving what everyone else does now presumably (all your competitors) and how in the future you are going to discover a new or novel way of creating more of that thing with less? The weirdest thing of all is you don’t have to have made the discovery yet but show you have a high probability of doing so!

Save me from these mad people! Please.

How completely bizarre. You have to be a future inventor of sorts. And prove what everyone else in your ‘space’ in New Zealand does now.

Well, we don’t come across too many people like that.

Clearly neither does Immigration New Zealand.

What surprises me is that they must come across some because there has been something like 16 applications approved (out of 207 applications) that they have been able to approve without being an exception to the rule book.

INZ has now been authorised to take a more flexible view of the objectives of the policy.

In doing so they are advising that so long as the business meets one of the three criteria – can be ‘innovative’, can be ‘high growth’ or can demonstrate ‘export potential’ and they will consider granting the visa.

Which is pleasing but if there is still going to be decline rates of around 60% (and applicants pay thousands of dollars for the privilege of the lottery) it is hardly good policy setting. I wouldn’t mind betting here and now the decline rates will actually increase.

I am surprised they are getting any applications at all.

And who wrote this stuff? Sounds like something that came out of a conference of a bunch of nerds who have never run a business in their life.

Thankfully change is afoot. There is a review of this policy going on now and we suspect it will lead to less complex criteria expressed in a more simple way.

That at least is our hope. Until there is something intelligent on the table that we can take to market as it were in order to offer certainty to clients we cannot in good faith recommend to anyone they go down this path.

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