On November 14, 2016, Prime Minister Trudeau and nine federal cabinet Ministers met with Canadian and international investors to pitch investment in Canadian infrastructure projects. During a series of meetings throughout the day, Trudeau and his team of Ministers argued the strength and positioning of Canada’s economy, as well as the opportunity to grow in the future.
Infrastructure is becoming a big focus for the Canadian federal government lately. To fuel Canada’s economic growth, the federal government will increase spending to employ more Canadians and achieve improved transit, energy, and other types of infrastructure. In order to accomplish this, the government will need to leverage taxpayer dollars, in addition to private-sector investments.
Over 24 investors participated in these meetings, with representation coming from around the world. Potential investors included representatives of BlackRock Inc., the largest asset management firm in the world, the Canadian Pension Plan, Quebec’s pension plan, the Toronto Dominion Bank, Manulife Financial, Sunlife Financial, other Canadian asset holders, and undisclosed major international investors with a combined net worth of approximately 21 Trillion.
Why Does Canada Need Foreign Direct Investment?
International investments can have far-reaching impacts on Canadian firms and the economy as a whole. International investments inject much needed capital into companies, accelerating company growth and delivering a number of economic benefits related to job growth.
In August 2016 alone, Chinese firms invested $1.2 billion into Canadian firms. Chinese telecom giant, Huawei, created 700 research jobs in Ontario recently to fuel the development of new technologies.
“When a foreign firm purchases a Canadian company, innovative technology and new management ideas may be implemented by the foreign investor, and they can lead to higher productivity and superior competitiveness. At the macroeconomic level, foreign investment can therefore translate into increased exports and employment and, more generally, into a faster-growing Canadian economy.”
– Canada’s Library of Parliament
How Much Foreign Direct Investment (FDI) is in Canada?
Statistics Canada reports the following 2015 (latest year available) FDI totals in Canada:
Countries Increasing Foreign Direct Investment in Canada
While the United States of America accounted for 44.6% of Canadian’s total FDI in 2015, a number of countries were ambitiously increasing their investment in Canadian entities. Some of the top investors were:
- United States of America: increased FDI by 10.5% to $387.7 billion;
- United Kingdom: increased FDI by 32.6% to $92.9 billion;
- Barbados: increased FDI by 13.6% to $79.9 billion;
- Cayman Islands: increased FDI by 36.7% to $48.7 billion;
- Netherlands: increased FDI by 18.7% to $89.1 billion; and
- Spain: increased FDI by 362% to $10.2 billion.
Canadian Infrastructure Bank Seeks Additional FDI for Government Spending
Two weeks before the initial search for investors, Finance Minister Bill Morneau announced the development of a new infrastructure bank to be launched by the federal government in 2017. The bank will leverage $35 billion in government funding, and aims to secure a ratio of $4:$5 in private funding per government dollar spent.
This would create approximately $157.5 billion in private funding, or a total of over $190 billion for Canadian infrastructure projects.
Investment in Canada Hub: Projects to Be Financed by International Investors
Also announced in Morneau’s Fall Economic Update was the development of an Investment in Canada Hub. This hub will relax foreign investment restrictions and allow for large-scale international investments, such as leveraging FDI to create toll roads, bridges, energy grids, and water systems, to name a few.
Canadian Government Funding to Support Small Business Infrastructure
These infrastructure commitments mirror the federal government’s mission to provide support for innovation, job growth, and international business competitiveness. Of course, Canadian businesses may leverage government grants and loans to invest in new projects too.
Small Business Grants for Infrastructure Development
Some of the Canadian government grants available to support large-scale business investments include:
- The Southwestern Ontario Development Fund (SWODF) and Eastern Ontario Development Fund (EODF) offer Ontario business grants worth up to 10-15% of project costs to a maximum $1.5 million. Funding can be used to support new capital equipment purchases, productivity enhancements, and developing new infrastructure (building new production facilities).
- CME Smart Green offers Ontario government grants to accelerate the adoption of innovative technologies that reduce a manufacturer’s greenhouse gas (GHG) emissions. Companies improving productivity and energy efficiency may receive up to 50% of project costs to a maximum $200,000 per facility, or up to $500,000 total to implement energy efficient production systems.
Export Grants for Small Businesses
Alternately, if you’re searching for opportunities to invest in new export markets, Canadian government funding can help you access new markets and form new relationships. This can be achieved through:
- CanExport accelerates the ability for Canadian businesses to evaluate and develop new markets. The program provides Canadian government grants worth up to 50% of project costs to a maximum of $50,000 to participate in trade shows and modify marketing materials to educate and attract new international customers.
- Going Global Innovation (GGI) helps Canadian companies secure international technology collaboration relationships by covering up to 75% of expenses related foreign travel and meetings to a maximum $75,000. If developing international operations and searching for strategic partners, this is an excellent opportunity for businesses to reduce project cost/risk.
Access Canadian Business Grants to Build Infrastructure and Expand Internationally
Canadian small businesses interested in collecting government grants and loans should contact Mentor Works. In addition to confirming your eligibility for any of the programs above, we can help accelerate your application preparation/submission.