Canada: Investing

FDI in Figures

After stagnating in 2009-2010, foreign direct investment (FDI) in Canada started rebounding in 2011, a trend that should continue in 2012. Canada's economy is perceived as more stable than other major Western economies.

Canada’s main attractions are its highly-skilled population, its abundant natural resources, its commercial dynamism and fiscal incentives, its competitiveness in key sectors (communications, transit, financial services), as well as its geographic proximity to the world’s number one economy, the United States.

Foreign Direct Investment	2008	2009	2010
FDI Inward Flow (million USD)	55,270	21,406	23,413
FDI Stock (million USD)	441,638	523,197	561,111
Performance Index*, Ranking on 141 Economies	73	100	-
Potential Index**, Ranking on 141 Economies	11	-	-
Number of Greenfield Investments***	215	254	-
FDI Inwards (in % of GFCF****)	16.2	21.7	-
FDI Stock (in % of GDP)	29.5	39.3	-

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

FDI Inflows By Countries and Industry

Main Investing Countries	2010, in %
United States	54.5
The Netherlands	9.2
United Kingdom	7.5
Switzerland	3.6
France	3.4
Japan	2.8
China	2.5
Brazil	2.4

Main Invested Sectors	2010, in %
Energy and metal ore industry	34.3
Finance and insurance industry	24.0
Services and retail	8.4
Machinery and transport material	8.2
Logging and paper industry	2.6

Source: OECD statistics - Last Available Data.

Form of Company Preferred By Foreign Investors: Corporations (private joint-stock companies identified by Ltd or Inc or Co. Public or Private)
Form of Establishment Preferred By Foreign Investors: Subsidiary
Main Foreign Companies: General Motor, Ford, Daimler Chrysler, Exxon Mobil (Imperial Oil), Chevron Texaco, ConocoPhillips, Bank of America, Home Depot, Wal Mart.
Sources of Statistics: Statistics Canada

Why You Should Choose to Invest in Canada

Strong Points: Canada's main advantages are a qualified workforce and an easy access to raw materials. It is one of the most dynamic economies in the world, with a market of 30 million consumers and sophisticated infrastructures, as well as a very modern transportation network.
Weak Points: Canada's weak points are its excessive dependance to the United States and a currently damaged financial system.
Government Measures to Motivate or Restrict FDI: Canada applies a high taxation rate on companies. It is currently the country that applies the lowest payroll taxes in the G7 countries.
Companies establishing their headquarters in Canada get tax benefits, higher than those offered in the United States. In addition, the government announced a euro 24.6 billion two-year recovery plan.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Canada: On 1 June 2007, Canada had signed bilateral agreements with more than 25 countries. See the list of the countries.
To see the conventions, click here.
Canada is a signatory to agreements and arrangements with more than 70 bilateral partners in the aviation sector.
It has concluded FTAs with the United States and Mexico (NAFTA), as well as with Chile, Israel, Costa Rica in July 2007 and Panama in August 2009 (elimination of tariffs in sectors of industry, agriculture, forestry and fishing).

Canada, Peru and the countries of the European Free Trade Association (EFTA: Iceland, Liechtenstein, Norway and Switzerland) signed a free trade agreement on 26 January 2008 at Davos, in Switzerland.
International Controversies Registered By UNCTAD: A controversy with the United States about lumber has been registered.
Organizations Offering Their Assistance in Case of Disagreement: ICCWBO , International Chamber of Commerce in Rio
ICSID , International Center for settlement of Investment Disputes
Member of the Multilateral Investment Guarantee Agency: Yes

Country Comparison For the Protection of Investors

	Canada	OECD	United States	Germany
Index of Transaction Transparency*	8.0	6.0	7.0	5.0
Index of Manager’s Responsibility**	9.0	5.2	9.0	5.0
Index of Shareholders’ Power***	8.0	6.8	9.0	5.0
Index of Investor Protection****	8.3	6.0	8.3	5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Procedures Relative to Foreign Investment

Freedom of Establishment: Yes, on condition that the company follows the directives required by the Canadian government.

Foreign investment is subject to the Investment Canada Act.
Acquisition of Holdings: Possible on condition of observing the in-depth procedure of examination of the project.
Obligation to Declare: The foreign investment promotion bureau in the country gives information about the necessary authorizations for setting up a company. Canada is in the first rank of OECD countries as regards the low number of procedures (2) and the shortest time limit (3 days) imposed for setting up an industrial or commercial company. A foreign company can set up in Canada by creating a distinct legal entity or a subsidiary under Canadian federal law or a provincial law governing companies. A subsidiary is treated in the same way as a branch office. It must have a commercial permit or be registered with the province where it does business.
Competent Organization For the Declaration: Investment Canada
Citizenship and immigration Canada - Guide 4000
Requests For Specific Authorizations: There are particular restrictions in the communications and transport sectors. All requests must be sent to the Ministry of Foreign Affairs.
For further information, see investment laws in Canada.

Office Real Estate and Land Ownership

Possible Temporary Solutions: There are several solutions: domiciliation of the company at the private address of the owner, in a business center, at the office of a Chamber of Commerce, at the office of a Local Development Center, or company "nurseries" or renting professional premises.
The Possibility of Buying Land and Industrial and Commercial Buildings: It is possible to buy freehold or leasehold, to build industrial and commercial premises or to buy through a real estate company.
Risk of Expropriation: Canada wanted to make a clear distinction between expropriation with compensation and a measure taken in the normal exercise of government power, which would not involve any compensation (zoning regulations, environmental standards, etc.). There are a few cases of legal precedents.

Investment Aid

Forms of Aid: The Canadian government offers several programs of fiscal incentives:
- Canadian Manufacturing and Processing Profits - Reduced Rate of Corporate Tax
- Investment Tax Credit
- Flow-Through Share Programfd
- Canadian-Controlled Private Corporation
- Federal Corporate Tax Rate Reductions.

The provincial governments also offer fiscal incentives; consult the websites of the 10 provinces or 3 territories: Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia, North West Territories, Yukon, Nunavut.

Invest in Canada also provides useful information.
Privileged Domains: The privileged sectors are those of processing, life sciences, advanced technologies, agri-food, plastics, and any sector with a strong potential for creating employment.

For further information, click on the following links: Scientific Research and Experimental Development (SR&ED); Mining-specific tax incentives ; Film or Video Production Services Tax Credit (PSTC) Program.
Privileged Geographical Zones: At the level of both federal and provincial governments, investment is encouraged especially in zones affected by large-scale unmployment or when economic development is slow.
Organizations Which Finance: The Business Development Bank of Canada offers programs of subsidies and start up assistance.

Canadian Chartered Banks can grant loans for purchasing equipment. Provincial investment centers, Local Development Centers in each province and territory can offer programs of subsidies and professional start up assistance.

Investment Opportunities

The Key Sectors of the National Economy: Hydro-electricity, mines, agri-food, agriculture, aerospace, advanced technologies, etc.
High Potential Sectors: Biotechnologies, telecommunications, information and communication technologies, environment, etc.
Privatization Programs: At the present time, the health sector is talking of privatizing healthcare. The road infrastructure sector is carrying out some PPP works - "Partnership, Private, Public".
Tenders, Projects and Public Procurement: Merx, Canadian Public Tenders
Tenders Info, Tenders in Canada
PODS Providers, Procurement Opportunities in Canada
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors: Several sectors are provincial or federal monopolies in Canada, among others: health, alcohol imports, energy, road and education systems.
Sectors in Decline: All manufacturing sectors, particularly the clothing industry and furniture making.

Finding Assistance For Further Information

Investment Aid Agency: Business Development Bank of Canada
Foreign Affairs and International Trade Canada
Invest in Canada
Other Useful Resources: Investissement Québec (Investment Quebec)
Ontario Immigration - doing business
Manitoba Trade and Investment
Investment in the community support programs
Invest in Alberta
Invest in British Columbia
Invest in New Brunswick
Invest in Nova Scotia
Invest in Prince Edward Island
Invest in Newfoundland and Labrador
Doing Business Guides: Industry Canada - Trade and investment
Canada Business
CIDA - Industrial Cooperation Program Guide
Canada Commercial Guide 2010 - Buy USA

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