Consider Canada City Alliance Impact of COVID-19 on FDI activities in Canada
Consider Canada City Alliance Inc. | www.considercanada.com
Proposal to Government of Canada from Consider Canada City Alliance on the impact of COVID-19 on FDI activities in Canada
Hon. Bill Morneau, Minister of Finance
Hon. Navdeep Bains, Minister of Innovation, Science and Industry
Hon. Mary Ng, Minister of Small Business, Export Promotion and International Trade
Hon. Melanie Joly, Minister of Economic Development and Official Languages
The Consider Canada City Alliance Inc. (CCCA) unites twelve of Canada’s largest Economic Development Agencies to promote investment around the world where upwards of 85% of all net new GDP growth is occurring in the major urban centres in Canada. The members stretch from the Atlantic coast in the East to the Pacific coast in the West and include Halifax, Quebec City, Montreal, Ottawa, Toronto, Waterloo Region, Hamilton, London, Winnipeg, Calgary, Edmonton, and Vancouver.
The members strongly believe that metro regions/cities play an increasingly critical role in global economic flows and that a nation’s value proposition for trade and investment is best presented through an integration of the efforts at the national and regional levels. Ultimately investor decisions are made by the company at a local level. CCCA is unique in the world in its capability to have twelve regional/city level economic efforts and the national government collaborate and cooperate in presenting Canada’s value proposition to foreign investors. We emphasize Canada’s financial and political stability, and cost competitiveness and the talent and innovation capacity in our member.
Issues & Anticipated Impacts:
The coronavirus (COVID-19) outbreak has and will continue to have a significant impact on investor confidence, directly impacting the mandates of CCCA members in attracting foreign investment. According to a UN Conference of Trade & Development report published on March 8th, COVID-19 has been estimated to reduce foreign direct investment (FDI) by 5%-15%. The UN trade body warns that flows may hit their lowest levels since the 2008-2009 financial crisis, should the pandemic continue throughout the year.
All CCCA members are experiencing immediate effects of COVID-19 on their FDI programs and anticipating long-term effects that will impact annual metrics by 50% or more with many active projects put on hold or halted altogether and members expressed concerns sustaining long-term opportunities in their pipelines. Competition for FDI has become increasingly intense; the post-pandemic reality will heighten the level of competition as our international counterparts look to ignite their recovery process in a vastly changing global market setting. Consider Canada City Alliance Inc. | www.considercanada.com
Our membership has developed a set of recommended measures for consideration:
1. Local Direct Investment
As the global impact of COVID-19 unfolds, there are actions that will assist in driving stimulus in the domestic market space. This focus on local will make Canada significantly more globally competitive. Three recommendations are:
- Eliminating Inter-provincial Trade Barriers – The Conference Board of Canada indicates a potential GDP growth of 4% by developing Canadian supply chain opportunities for SMEs. With less than 15% of Canadian companies established as exporters, the potential for regional business growth is strong.
- Infrastructure – Labour Force slack is a significant concern. Infrastructure projects need to be focused on mass employment which may mean pivoting labour from one sector to others with higher needs. It also means investing in what will make Canada more globally competitive to attract investment: traditional investment; in airports, ports (coastal & inland), rail and road (twinning the entire trans Canada as an example); and, future need such as 5G or 6G networks.
- Accelerating SuperCluster Activation – We support the Federal call and the recent enhancement to the Advance Manufacturing SuperCluster (NGen) to accelerate the activation of the SuperClusters. We support the consideration of additional net new SuperClusters. This will result in enhancing the Value Proposition globally in Investment attraction by building more regional capability.
2. Creation of FDI/Trade Steering Committee
Coordination with the federal government’s, respective departments, agencies and staff will be critical in the economic recovery of our country. CCCA members represent over 85% of Canada’s economic activity; with the collective strength and coordination of Canada’s 12 largest economic regions, the federal government can benefit from having a direct line into recovery efforts and investor confidence. We recommend regional representation from CCCA membership in addition to staff from PCO, ISED, Health Canada, Ministry of International Trade, Global Affairs Canada and Invest in Canada, as members of this committee, virtually meeting initially on a weekly basis. With a mandate of navigating the post-COVID19 stabilization and recovery efforts and a strong return to international markets.
3. Enhancing the Federal Impact
Successful foreign investment deals are strongly dependent on close collaboration with all levels of government. CCCA members continue to play an integral role in Canada’s efforts to increase investment and trade globally. At the core of its values, our members believe that regions/cities play a critical role in the Consider Canada City Alliance Inc. | www.considercanada.com
global economic flow and are the best representative of the unique value propositions for inbound investment and trade in Canada, represented by each of these regions. The federal government has a few tools available in supporting these efforts; below is a list of recommended modifications, enhancement of existing tools and creation of new ones: i. Re-directing approved CanExport funding
With outbound travel suspended indefinitely, lead generation and travel activities related to CanExport funding will not be fully activated. Members would like to see approved program funding re-directed to other project components, such as research, travel, training or marketing material with consideration given to waiving the requirement of matching funding.
- FDI retention funding
Redirect CanExport funding or create a new support system to support FDI retention within member regions. As the economic hardships resulting from this pandemic begin to spread globally, there is concern amongst the members that established multinationals may look to reduce their global footprints and shutdown satellite sites.
- Further Investment in remote tools
Programs to provide training and a better understanding of how to fully use new tools for remote FDI activities that could better position our members and their staff once international attraction activity resumes. Purchasing FDI data and recruitment tools are a costly expense to organizations, CCCA has been in contact with Invest in Canada previously to act as a wholesaler for these data sets.
- Investment in creating Marketing & Communication tools
Our members believe a united Canadian front will continue to be key for the success of this alliance and continued investment into Canada. This crisis can act as an opportunity for creation of a harmonized Canadian message. In collaboration with in Invest in Canada create digital marketing material will allow members to push the investment message and Canada as the best destination for investment.
- Canada Emergency Wage Subsidy
Most foreign companies CCCA members attract to Canada tend to incorporate as a non-Canadian Controlled Private Corporations (non CCPC) we need clarification on the whether non-CCPC will be eligible for the recently announced wage subsidy. If they are not included it would be counter intuitive to our joint efforts to attract these companies, and upon an unforeseen global pandemic they are not captured by any country – either their home country or Canada – for financial assistance. We would strongly recommend including non-CCPC companies, particularly those with North American HQ located in Canada, into the Canada Emergency Wage Subsidy program. Consider Canada City Alliance Inc. | www.considercanada.com
Supporting FDI in the post-pandemic economy:
Members would like to work with the Government to build a better understanding of the new “normal” for FDI and to address adapting existing FDI funding programs to provide greater flexibility on the use of funds while reducing reporting administration. Discussions should also include alternative FDI funding programs specifically focused on supporting investment attraction activities during the recovery period. These pan Canadian programs could include incentives, training, marketing support and targeted competitive measures. BRE programs and investments become critical in stabilizing and rebuilding our economy by holding and developing the interests of foreign multinationals in Canada.
Canada has always been a safe and prosperous nation for foreign investment. We believe the state of FDI in Canada will depend on how we commercially pivot from the COVID-19 pandemic with clear emphasis on domestic economy to restore and build on the confidence of foreign investors who have already made commitments to our economy while pursuing new investment opportunities. CCCA provides these recommendations to open an urgent dialogue to work together and activate the right blend of deliberate measures to ensure a bright future for Canada.
Wendy Luther, President and CEO | Halifax Partnership
Carl Viel, President and CEO | Quebec International
Stéphane Paquet, President and CEO | Montreal International
Mike Tremblay, President and CEO| Invest Ottawa
Mark Cohon, Chair | Toronto Global
Tony La Mantia, President and CEO | Waterloo Regional Economic Development Corporation
Norm Schleehahn, Director| Invest in Hamilton
Kapil Lakhotia, President and CEO | London Economic Development
Dayna Spiring, President and CEO | Economic Development Winnipeg
Mary Moran, President and CEO | Calgary Economic Development
Malcolm Bruce, CEO | Edmonton Global
Eleena Marley, Acting CEO | Vancouver Economic Commission
CCCA contact: Niloo Boroun, Executive Director | email@example.com | 416-689-2304