By Walter S. Gindin
Visa retrogression, backlogs, and oversubscription. These are unwelcome terms for any foreign national seeking to immigrate to the United States. These concepts are often used interchangeably to describe situations where the number of visa applicants for a specific category or country is higher than the number of available visas. The employment-based fifth preference (EB-5) visa category—as well as several other family-based and employment-based visa types—has faced visa retrogression. In May 2015, the Department of Homeland Security (DHS) applied an EB-5 visa waiting list for investors born in Mainland China for the first time in history, and most recently, Vietnam became the second country to experience this EB-5 queue. For Vietnamese citizens wishing to pursue an EB-5 visa, the time to invest is now, as the situation in China has demonstrated that EB-5 visa backlogs can progress very rapidly.
Why is there an EB-5 visa backlog?
The Immigration and Nationality Act sets a limit on the number of EB-5 visas that can be issued annually at 10,000. It is worth noting that this figure includes the principal investor, their spouse, and unmarried children under the age of 21. Thus, if each EB-5 petition includes three family members, the entire 10,000 EB-5 visa quota would be exhausted by only 3,300 EB-5 petitions per year.
In addition to the overall annual limit of 10,000 EB-5 visas, there is a per-country limit of 7%, or 700 EB-5 visas. When there are signs that the 10,000 EB-5 visa limit will be reached in a given fiscal year, and a country is simultaneously set to exhaust its individual 700 EB-5 visa allocations, the U.S. Department of State (DOS) will establish a cutoff date for immigrant visas from that country. Immigrants whose EB-5 petitions were filed before that cutoff date (and approved) can expect to receive an EB-5 visa from that fiscal year’s allocation. Conversely, immigrants who file an EB-5 petition after the cutoff date must wait until their priority date (i.e., the date their EB-5 petition was filed) becomes current for visa issuance. Cutoff dates for preference immigration categories and the list of chargeable countries are published in the Visa Bulletin issued monthly by the DOS.
Historically, the overwhelming majority of the 10,000 annual EB-5 visas (often over 90%) were issued to immigrants from Mainland China, regardless of the 7% per-country limit. This occurred because global demand for EB-5 visas outside of China was relatively small; therefore, any “leftover” or “unused” visas from other countries were allocated to Chinese immigrants. As the popularity of the EB-5 Program surged in China over the past five years and increased significantly in other countries such as Vietnam, South Korea, and India, global demand for EB-5 visas exceeded the 10,000 annual limit, leading to the imposition of the 7% quota for Mainland China starting in May 2015.
Retrogression has occurred in Vietnam
In May 2018, Vietnam officially faced EB-5 visa retrogression when the DOS imposed an EB-5 visa priority date for Vietnam similar to that of China. Why did this happen? EB-5 visas are allocated on a first-come, first-served basis; therefore, any “unused” visas from other countries are fully allocated to China for the remainder of the current fiscal year, leaving no visas set aside for Vietnamese investors. Consequently, the EB-5 priority dates for China and Vietnam will remain the same for the next few months—in other words, whatever the situation in China, Vietnam will follow suit. However, at the beginning of each new fiscal year, 10,000 new EB-5 visas are issued, and a new quota of 700 EB-5 visas is again allocated to China and Vietnam. At that point, we can expect the EB-5 visa priority dates for China and Vietnam to diverge until Vietnam exhausts its 700 EB-5 visas for that fiscal year, at which time the priority dates for the two countries will align again for the remainder of the fiscal year.
From China to Vietnam: Lessons Learned
When the DOS first applied an EB-5 visa cutoff date for China in May 2015, the Visa Bulletin at the time stated that the expected wait time was approximately 2 years. Some potential investors initially thought they would wait and see what happened on October 1st when new EB-5 visas were issued. However, in the following months and into 2016, there was an unprecedented surge in EB-5 filings by Chinese citizens who felt uncertain about the future of the EB-5 Program. Thus, even a slight initial hesitation to wait a few months before filing an EB-5 petition meant that thousands of Chinese EB-5 petitions were filed after that surge; currently, the estimated wait time is 10 years or longer.
Although the number of Vietnamese individuals interested in the EB-5 Program has increased sharply in recent years, the volume of Vietnamese EB-5 petitions has clearly not reached the levels seen in China. Furthermore, we have not yet seen a massive surge of EB-5 filings in Vietnam over a very short period that would contribute to a significant visa backlog like China’s. However, it should be noted that as more Vietnamese citizens file EB-5 petitions, the 700 new EB-5 visas issued each fiscal year will become increasingly small relative to Vietnam’s demand, leading to a growing backlog. In May 2019, the DOS estimated that Vietnamese citizens starting the EB-5 immigration process today would have to wait approximately 7.6 years to obtain an EB-5 visa. Notably, this estimate includes the approximately 2-year wait for I-526 petition approval and is essentially half the wait time for Chinese citizens in a similar situation. Therefore, Vietnamese citizens should take note of the Chinese experience and invest now, filing their EB-5 petitions as soon as possible to lock in their priority date. In short, a decision to wait just a few more months to file could delay visa eligibility by many years due to pent-up demand at USCIS, significantly extending the wait time.
Another critical reason for a Vietnamese citizen to file an EB-5 petition as soon as possible is that worsening retrogression can cause their children to “age out.” For immigration purposes, a child’s age is “frozen” while USCIS reviews the petition; however, as soon as the petition is approved, the age is no longer frozen. Therefore, if an EB-5 visa is not immediately available at the time of approval due to retrogression, the child’s age begins to increase. If the child’s age at the time the EB-5 visa is issued minus the USCIS petition processing time is greater than 21, the child will have “aged out” and will no longer be able to immigrate as a dependent on the parent’s visa application. This has become a major issue for investors in China because, with an estimated backlog of over 10 years, they face the real possibility that their children will age out before an EB-5 visa is issued. Accordingly, Vietnamese investors wishing to immigrate to the U.S. for the benefit of their children should file their EB-5 applications as soon as possible before Vietnam’s backlog grows large enough to cause their children to age out while waiting for an EB-5 visa.
As restrictions on various immigration options increase, the EB-5 visa remains a viable choice for many foreign nationals and their families to live and work in the United States. Accordingly, Vietnamese citizens wishing to obtain lawful permanent residency through the EB-5 Program should seek to do so now, before Vietnam’s EB-5 backlog worsens further.
