Canada's economy is rebounding strongly from the Covid pandemic and the outlook for foreign investment is positive. The country was one of the global leaders in fully vaccinating its population and this was reflected in how it managed to weather the coronavirus storm. Improving relations with the US - partly due to the election of the Biden administration - have also served to instil confidence for future growth.
The US is the top purchaser of Canadian goods and supplier of imports to Canada. Past uncertainty over the future of the North American Free Trade Agreement (NAFTA), due to the Trump administration's plans to renegotiate terms, had raised concerns for those interested in investing in Canada, as some foreign businesses use the country as a springboard for launching into the US. These concerns have largely been mitigated since NAFTA was replaced by the United States-Mexico-Canada Agreement, which came into force in July 2020 and is not due to expire for 16 years.
Investment
Before the Covid pandemic, the Canadian government took steps to attract investment and accelerate economic growth. In 2017, it established an infrastructure bank to use federal dollars to leverage private investments to finance large infrastructure projects such as mass transit. It proposed to invest CA$35 billion, but to date only a small proportion (CA$1.7 billion) of the dedicated funds have been spent. However, as of July 2021, the bank's approved investments are increasing, now adding up to about CA$4.3 billion, having attracted approximately CA$5.7 billion in private and institutional capital. The projects with investments approved by the Canada Infrastructure Bank have a total estimated capital cost of CA$14.3 billion.
The government has targeted three areas for investment: public transit, trade and transport, and green infrastructure.
The bank is part of a broad government plan to invest about CA$100 billion in the nation's ageing infrastructure. For engineering and construction companies, that is a siren call. An example of the proposed investment is the Réseau express métropolitain project, which involves the construction of a new automated light rail network to serve the greater Montréal area and is estimated to cost CA$6.3 billion.
Business environment
Canada is already well known for having one of the world's friendliest business environments. The advantages of building a business in Canada include:
A highly educated workforce: Canada has the most educated talent pool in the OECD: more than half its population aged 25 to 64 has received tertiary-level education.
Ease of starting a business: Canada ranks third for "ease of starting a business" in the World Bank's Doing Business 2020 report, making it the best country in the G20 for doing business.
A strong banking system: The financial sector has a tradition of conservative lending practices and strong capitalisation.
In TMF Group's Global Business Complexity Index 2021, which ranks 77 jurisdictions for the complexity of their business environments, Canada ranks 57th, having been 54th in 2020.
The government is not taking its business-friendly culture for granted. It is also positioning the country to compete in the 21st-century global economy.
Canada is encouraging innovation by supporting private-public collaboration through its 'Supercluster' programme in five industry-led sectors, for a total of CA$950 million by 2028.
The Strategic Innovation Fund, established to support high-growth sectors and create jobs of the future, includes CA$3.4 billion in contributions and CA$7.2 billion in new funding from 2021 to 2027, supporting large innovation projects valued at more than CA$10 million.
The future
Of the three million jobs lost between February and April 2020 because of the Covid pandemic, 83 per cent had been recovered by the end of April 2021, with nearly 67 per cent in full-time positions, demonstrating Canada's economic recovery. With a commitment to further invest in infrastructure and the economy as a whole, investing and doing business in Canada remain attractive propositions.
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Understanding local laws, regulations, processes and requirements is at the heart of what we do. No matter which country you are based in, our network of offices around the world can help launch your entry into the Canadian market, helping you to control costs, reduce risk and simplify multijurisdictional operations.
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