It looks like a taste for high-risk investments is set to become a new default criteria for prospective applicants under the Significant Investor Visa scheme should the draft investment framework released by the Abbot Government yesterday, take effect.

The reforms are aimed at “better directing investment through the visa schemes into more dynamic areas of the economy, including venture capital and small emerging companies,” noted the joint release from the Minister of Trade, Andrew Robb and Assistant Minister for DIBP, Michaelia Cash.

The release states that the proposed complying investment framework for the SIV scheme includes:

• Specifying that at least 20 per cent ($1m) of the applicant’s $5m investment must flow into early stage, growth capital investments, through approved venture capital funds.
• Specifying that at least 30 per cent ($1.5m) of the applicant’s investment must flow into emerging listed companies, through managed funds investing in small Australian stock exchange listed companies
• Reinforcing the existing rules banning direct investment into residential real estate, and introducing new measures to clamp down on indirect investment into residential real estate.  A portion of funds will continue to be permitted to flow into commercial real estate, via managed funds.
• Enhanced measures to improve protection for investors.

Media reports suggest that while venture capital fund managers have supported the idea, others indicate the measures may well kill off the SIV program given the conservative nature of SIV applicants who are largely looking for a safe place to park their funds whilst waiting on their permanent residency visa.

Since its launch in November 2012, the SIV has attracted almost 600 migrants out of almost 1500 applications lodged with 90 per cent of successful applicants coming from China. SIV investments into Australia now sit just below $3 billion.