Comment: EB5 HUA Is Over

EB5 HUA Is Over

  • IIUSA recently published an article Calculating Demand and Supply for Reserved EB-5 Visa Numbers: Data, Factors, Knowns, Unknowns, and Estimateswhich commendably uses a proper mathematical approach to tackle a thorny problem. However, it reaches an erroneous conclusion due to a simple calculation error.
  • Kudos to IIUSA: Firstly, kudos to IIUSA for using a proper approach to the problem of estimating visa wait times; here is why IIUSA’s approach is both correct and commendable.
    • IIUSA’s analysis uses ranges as opposed to point and line graphs, which is the right way of grappling with a problem with considerable unknowns and interplay of variables.
    • One point projections do not capture the reality of the demand and supply data. Dealing with such problems requires not arithmetic or algebra but mathematics considerably higher than that. Simplified versions of the modeling are well attacked through use of ranges. Identification of multiple interacting variables, their respective ranges and their impact on each other is needed, which is what IIUSA has done, hats off to IIUSA for using ranges.
    • Here is why estimating visa wait times involves significant uncertainty: As only 3 countries (China, India and Vietnam) are backlogged, the use of EB5 quota by the Rest of the World (ROW) is critical to determining waiting times for the backlogged countries. This problem is inherently mind-numbingly complex, because ROW includes dozens of countries each with its own supply and demand patterns. For example, recently published AIIA data shows that ROW accounted for 25% of EB5s--there would be a massive difference in waiting times for China, India and Vietnam depending on whether ROW accounts for 10% or 50% of EB5s being applied for. The range of uncertainty is so large that point and line graphs can’t adequately capture the patterns. Simplifying some of the variables by use of ranges, as IIUSA has ably done, enables revealing of the basic patterns. We encourage all those who opine on visa wait times to follow IIUSA’s lead and use ranges. 
  • Data and Analysis
    • IIUSA’s graphs of family size (figure 4 on page 7 of the article), show a variation in family size between 2.4 and 3. However IIUSA’s Table 2 on page 8 of the article erroneously uses a range of family size between 1.5 and 3, instead of the range of 2.4 to 3.5 based on IIUSA’s own data. This makes a significant difference to the conclusions, see below.
  • Consequently, the lower bound of the demand ranges is artificially reduced for both urban and rural reserved visas. Based on IIUSA’s own data of family size the lower bound of the demand for urban TEA would be 2622*2.4/1.5 = 4195 and for rural TEA would be 1312*2.4/1.5 = 2099. See the corrected bar charts below based on IIUSA’s own data. This shows that for urban TEA demand exceeds supply of HUA visas already, whereas the range of demand for rural TEA is significantly below the supply of rural visas. 
  • Conclusion: 
    • After correction based on IIUSA’s own data, families still persisting in investing in HUA projects as of April 2024 should be prepared for a significant wait for their green cards (We estimate it to be 5 to 10 years).
    • Congress has made its will crystal clear by allocating 2/3rd of set asides to rural and 1/3rd to HUAs; therefore EB5 investors should prefer rural projects to urban ones by a ratio of 2 to 1. Furthermore the HUA EB5 sector is a victim of its own success because HUA EB5 projects have already sold 5 to 10 years of HUA quotas, creating a significant backlog for any investors investing in HUA now. It is not wise to be deaf to both Congress and market realities. (See ILW’s analysis of visa numbers here and AIIA’s article on visa numbers here)
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