Canada Offers Top Talent, Low Costs and Trade with 51 Countries

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Why is foreign direct investment important to Canada’s future economy and to Canadians?

Foreign direct investment (FDI) makes Canada stronger by generating significant growth in both revenue and employment. When we talk to global companies about investing in Canada, our aim is to direct investment in communities, production, jobs and facilities across the country.

Several major business enterprises have made FDI injections in Canada. For example, LNG Canada – comprising Shell, Petronas, Mitsubishi, PetroChina and Korea Gas Corp. – announced a $40 billion investment to build a major liquefied natural gas (LNG) project in Kitimat, British Columbia. This project represents the largest private-sector investment in Canada’s history and will create 10,000 jobs at the height of construction; generate billions of dollars in direct government revenues; as well as jobs, revenues and contracts for First Nations communities and businesses.

“FDI makes Canada stronger by generating significant growth in both revenue and employment. When we talk to global companies about investing in Canada, our aim is to direct investment in communities, production, jobs and facilities across the country.”

And there are more. Google recently announced a significant expansion in Toronto, Montreal and Waterloo that will create jobs for Canadians and opportunities for local suppliers and start-ups. Another is Piramal Pharma Solutions, which is expanding its Canadian presence to meet demand for integrated solutions across North America and in Europe. Synergy World Energy is building a state-of-the-art facility that will convert biomass and plastic solid waste to renewable energy. 

These are just a few examples of how global investment activities represent fundamental opportunities for Canadians. Companies like LG, Amazon, Microsoft and others are exploring how they can expand their operations in Canada, and it excites us to see them meet and discuss partnership opportunities with Canadian companies to commercialize 21^st century solutions.

“Canada has some of the best schools in the world and they churn out graduates that are world class, and for decades our governments have been supportive of investing in critical research.”

FDI also speeds up the commercialization of products, especially when matched with a strong and high-quality education system. Canada has some of the best schools in the world and they churn out graduates that are world class, and for decades our governments have been supportive of investing in critical research. This is the baseline for start-ups that receive a lot of global investment coming into Canada since they leverage that research with the goal to commercialize products based off it.

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The availability of top-quality talent and the ability to bring it in from abroad is one of the most important considerations for companies looking to invest abroad. What advantages does Canada offer on this point?

Talent is understandably a focus and rising key decision driver for international companies and investors. An important factor in Canada is that we have a very diverse, multicultural population with really broad diaspora from a number of key countries around the world who have communities and relationships in Canada.

“Companies that operate within Canada can access global talent and have new recruits on site and working within a two-week period. It’s a game changing value proposition.”

Also, for years our governments received inquiries from business leaders and investors on talent acquisition, such as “I want to do more business here but I need access to the best talent both in Canada and abroad.” In response, our governments planned and implemented the Global Skills Strategy to update Canada’s previous immigration framework. In the improved strategy, Canadian and international companies that operate within Canada can access global talent and have new recruits on site and working within a two-week period. It’s a game changing value proposition.

Canadian universities have also been pursuing top-level international students to come here and study graduate and post-graduate degrees. In 2018, there were around 570,000 international students studying in Canada—which is a record. In the past, students who completed their schooling here could work in Canada for a short period. However, they would then have to return to their home country and begin the visa process to return to Canada. This hugely disrupted their careers and the companies that hired them. 

“Canadian universities have also been pursuing top-level international students to come here and study graduate and post-graduate degrees. In 2018, there were around 570,000 international students studying in Canada—which is a record.”

An efficient and robust pipeline of talent will fuel the growth of companies in every sector across Canada. Therefore, our governments have improved policies that can fast-track the integration of many of those international students into the Canadian economy after they finish school. For those who want to stay in Canada, they can now give their employer certainty that they can stay for the long haul. 

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How does Canada compete in terms of its tax rate and overall cost of doing business? 

Canada now has the lowest Marginal Effective Tax Rate (METR) in the G7. Canada’s METR is 13.8%, which is 5 points below the tax rate in the United States. This is important because the METR is one of the key determinants that companies consider when they deploy investment capital. 

“Canada now has the lowest Marginal Effective Tax Rate (METR) in the G7. Canada’s METR is 13.8%, which is 5 points below the tax rate in the United States.”

Another tax measure is the accelerated Capital Cost Allowance (CCA). The CCA is an annual deduction in the Canadian income tax code that can be claimed on depreciable assets. This tax measure allows companies to speed up their write offs on their investments, such as buildings, plants, equipment, and so on, within a year of the investment, as opposed to being staged over severalyears.

“The twin benefits of the METR and the CCA are signatures of the cost advantages of doing business in Canada.”

The twin benefits of the METR and the CCA are signatures of the cost advantages of doing business in Canada. In addition, several reports completed by KPMG and other reputable accounting firms show the comparative costs of doing business in Canadian cities and American counterparts. These costs include the salaries of senior talent in management, engineering, financial support staff and administration, as well as the cost of leasing a first-class office space. On these metrics, Canada cities are more affordable than virtually any of their comparisons in the United States.

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What about Canada’s potential market and the ease of investing here?

Canada holds a dynamic, innovative and diverse economy with some of the brightest minds in the world leading each and every sector. It is almost impossible to fathom how a country of our size could have emerged as a top 10 economy in the world. We are a trading nation that pursues free trade deals with key markets around the world—more than any other industrialized economy. While our population is 37 million people, Canada has a consumer market of about 1.5 billion people. That is the addressable market that global companies can tap into from Canada.

Successive governments in Canada have recognized that we need to broaden and diversify our trading and investment relationships, and that is what we are fulfilling. Fourteen trade agreements, including the Trans-Pacific Partnership (TPP), the Canada-United States-Mexico Agreement (CUSMA) and the Comprehensive Economic and Trade Agreement (CETA), now provide companies with unfettered access to trade with 51 countries. 

“While our population is 37 million people, Canada has a consumer market of about 1.5 billion people. That is the addressable market that global companies can tap into from Canada.”

Finally, Canada offers a seamless and fast approach to getting all the answers CEOs and investors need when making an investment decision. Our mission at Invest in Canada is to guide companies looking for information, connections, partners and resources. We have the capabilities to streamline key discussions, meetings and events among partners, relevant departments in government, regions and cities across the country. We also connect teams and leaders to Canada’s robust network of investment promotion platforms and economic development agencies. We are excited to show international leaders why Canada is a world-leading investment destination. 

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Why do you think now is the best time to invest in Canada? 

Canada is one of the most open economies with a predictable and stable policy environment. For several decades, Canada has put in good and improved policies on education, research, liveable communities, world-class universities, and an immigration framework that allows people from around the world to establish themselves here and work in our economy. 

“Canada’s value proposition is undeniable, compelling and clear: diverse talent, access to large and growing markets, sound banking systems, low business tax rate and strong geographical and sectoral clusters that make it a great place to invest, innovate and grow.”

Canada’s value proposition is undeniable, compelling and clear: diverse talent, access to large and growing markets, sound banking systems, low business tax rate, and strong geographical and sectoral clusters that make it a great place to invest, innovate and grow. And companies from around the world are responding. 

Over the last two years, FDI flows to Canada have grown. In 2018, when FDI inflows into developed economies dropped 27%, FDI into Canada increased an incredible 65%. And the trend continues with global investment flows at almost $67 billion in 2019. That is a $10.5 billion increase over the previous year and 42.5% higher than the 10-year average.

“Over the last two years, FDI flows to Canada have grown. In 2018, when FDI inflows into developed economies dropped 27%, FDI into Canada increased an incredible 65%.”

The fundamental advantage of a stable and transparentgovernment landscape is that we reassure the markets—there is no uncertainty, which means companies can focus on increasing profits.