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In this page: FDI in Figures | What to consider if you invest in Canada | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information

 

FDI in Figures

According to UNCTAD's 2021 World Investment Report, Canada attracted USD 24 billion of FDI in 2020, a 50% decrease from 2019, where FDI inflows reached USD 48 billion. The inflows of FDI collapsed in the mining and quarrying sector (from USD 20 billion to USD -10 billion) and dropped by 70% in the manufacturing sector. US multinationals - the biggest investors in the country - halved their investments. The stock of FDI rose to USD 1,099 billion. Canada was the 13th largest FDI destination in the world in 2020, losing three positions compared to 2019. The U.S. and the EU are the main investing partners in Canada: half of the stock is held by the United States, followed by the UK, Japan and Germany. Switzerland, China, the Netherlands and Brazil are other major investing countries. Investments are mainly oriented towards management, manufacturing, mining and hydrocarbons, finance and insurance, wholesale and retail trade. According to the latest data from OECD, FDI inflows to Canada increased in the first half of 2021, reaching USD 26.1 billion, compared to 16.4 in the same period one year earlier.

In 2020, the USMCA (Canada-United States-Mexico Agreement, an updated version of NAFTA) came into force, with a potentially decisive impact on the inflows and outflows of investments in Canada, just as the Comprehensive Economic and Trade Agreement (CETA) signed with the EU and currently applied on a provisional basis, as the ratification by the individual EU Member States is still pending. At the same time, Canada enhanced scrutiny of certain foreign investments under the Investment Canada Act (ICA) in sectors related to public health or involved in the supply of critical goods and services. Nevertheless, in 2021 the thresholds above which foreign investors in Canadian businesses have to obtain federal government approval under the Investment Canada Act have been lowered (from USD 1.075 billion to USD 1.043 billion for investors from countries that are members of the WTO). Canada has a very favourable business climate: the country ranks 23rd out of 190 countries in the World Bank's latest Doing Business report, losing one position compared to the previous edition. Some of the strengths of the country are the ease of starting a business and getting credit, a well-educated workforce and good infrastructures, abundant and diversified energy and mineral resources, and a strong banking sector. However, Canada remains heavily dependent on the U.S. (holding half of FDI stock and accounting for around two-thirds of the country’s export) and on the fluctuations in international commodity prices, as well as having a high level of household debt.

 
Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 50,14923,17659,676
FDI Stock (million USD) 1,156,0621,235,5851,437,837
Number of Greenfield Investments* 395320373
Value of Greenfield Investments (million USD) 11,53416,53318,567

Source: UNCTAD, Latest available data.

Note: * Greenfield 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.

 

FDI STOCKS by country and industry

Main Investing Countries 2020, in %
United States 49.9
United Kingdom 6.1
Japan 4.6
Germany 3.3
Switzerland 3.2
China 3.1
Netherlands 3.0
Brazil 2.3
France 2.3
Main Invested Sectors 2020, in %
Management of companies and enterprises 24.4
Manufacturing 19.0
Mining and hydrocarbon sector 17.9
Finance and insurance 12.6
Wholesale trade 9.0

Source: Statistics Canada - Latest 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 Motors, Ford, Daimler Chrysler, Exxon Mobil (Imperial Oil), Chevron Texaco, ConocoPhillips, Bank of America, Home Depot , Walmart.
Sources of Statistics
Statistics Canada

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What to consider if you invest in Canada

Strong Points

Advantages for FDI in Canada:

  • A qualified workforce
  • A welcoming business environment
  • Large reserves of gas, oil and ore
  • A solid banking sector
  • Unparalleled market access (USMCA) and a strong anchor in international trade
  • A dynamic economy, with a market of 38 million consumers
  • Sophisticated infrastructure, as well as a very modern transportation network.
Weak Points

Disadvantages for FDI in Canada:

  • Strong exposure to the United States' economy, namely to exports to the US
  • Sensitivity to international commodity prices and to the government revenues that depend on oil
  • High household debt (186.2% of disposable income)
  • A drop in productivity in manufacturing industry
  • A decrease of the active population due to ageing.
Government Measures to Motivate or Restrict FDI
Canada offers low business taxes for companies and a very good business climate. Total business tax costs are by far the lowest among the G7 countries.
Companies investing in Canada can benefit from a range of incentives and tax credit programmes:

  • Scientific Research & Experimental Development
  • Accelerated Investment Incentive
  • Strategic Innovation Fund
  • Global Skills Strategy
  • Canada’s Pan-Canadian Artificial Intelligence Strategy
  • Innovation Superclusters Initiative

For more information, please visit Invest in Canada, which is Canada’s global investment attraction and promotion agency.
Each Canadian province and territory has agencies dedicated to the promotion of investment which list existing measures.

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Protection of Foreign Investment

Bilateral Investment Conventions Signed By Canada
Canada has signed 45 bilateral investment treaties (BITs) with several countries.
To see the conventions, click here.
International Controversies Registered By UNCTAD
The ISDS Navigator contains information about known international arbitration cases initiated by investors against States pursuant to international investment agreements. Canada is involved in 51 cases as Home State of claimant and in 29 cases as Respondent State
Organizations Offering Their Assistance in Case of Disagreement
ICCWBO , International Chamber of Commerce
ICSID , International Center for settlement of Investment Disputes
USMCA , USMCA investor-state dispute settlement mechanism
Member of the Multilateral Investment Guarantee Agency
Canada is a signatory to the MIGA Convention.
 
Country Comparison For the Protection of Investors Canada OECD United States Germany
Index of Transaction Transparency* 8.0 6.5 7.0 5.0
Index of Manager’s Responsibility** 9.0 5.3 9.0 5.0
Index of Shareholders’ Power*** 9.0 7.3 9.0 5.0

Source: Doing Business - Latest 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.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Foreign ownership and investment can be subject to scrutiny by the Canadian Government. Foreign investment is subject to the Investment Canada Act. The federal government has a mandate to screen proposed foreign investments to ensure that they are likely to produce a "net benefit to Canada" and may also review transactions on national security grounds.
Acquisition of Holdings
Possible so long as the procedure for an in-depth examination of the project is respected.
Obligation to Declare
Canada is first among OECD countries in terms of the low number of procedures (2) and the shortest time limit (3 days) required 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. Moreover, foreign investors from countries with specific trade agreements with Canada must generally file an application with Innovation, Science and Economic Development Canada.
Competent Organisation For the Declaration
Invest in Canada
Citizenship and immigration Canada - Guide 4000
Requests For Specific Authorisations
Investment in specific sectors is covered by special legislation. The federal government has exclusive jurisdiction over broadcasting (radio, television and their distribution, including some internet activity) and telecommunications. At least 75% of the voting interests of an air service must be owned and controlled by Canadians. The Bank Act requires ministerial approval (Finance Department) for any foreign investment in the financial sector to acquire or hold control of, or a substantial investment in, a Canadian bank. Non-resident ownership of uranium mining properties is restricted to 49% at the stage of first commercial production. Investment in any activity related to Canada's cultural heritage or national identity is administered by the Heritage Department.
For further information, see investment laws in Canada.

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Office Real Estate and Land Ownership

Possible Temporary Solutions
Possibiity to rent offices.
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. Although, the federal Citizenship Act permits each province to enact laws restricting ownership of real property within the province by non-residents.
Risk of Expropriation
The expropriation of real estate falls under both federal and provincial regulatory regimes. The legislation on expropriation lays down notice periods. Compensation is generally based on the fair market value of the expropriated land and, in some cases, may include reasonable costs and damages for harmful diseases. There are a few cases of legal precedents.

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Investment Aid

Forms of Aid
Companies investing in Canada can benefit from a range of incentives and tax credit programmes:

  • Scientific Research & Experimental Development
  • Accelerated Investment Incentive
  • Strategic Innovation Fund
  • Global Skills Strategy
  • Canada’s Pan-Canadian Artificial Intelligence Strategy
  • Innovation Superclusters Initiative

For more information, please visit Invest in Canada, which is Canada’s global investment attraction and promotion agency.
Each Canadian province and territory has agencies dedicated to the promotion of investment which list existing measures.

Privileged Domains
None of the federal incentives are specifically aimed at promoting or discouraging foreign investment in Canada. The incentives are designed to advance broader policy goals, such as boosting research and development or promoting regional economies.
Privileged Geographical Zones

A Foreign Trade Zone (FTZ) refers to a specific location within a country that is officially designated for eligibility for tariff and tax exemptions with respect to the purchase or importation of raw materials, components or finished goods.
There are currently nine Foreign Trade Zone Points in Canada:

Free-trade zones
none
Public aid and funding organisations
The Business Development Bank of Canada offers programs of subsidies and start up assistance.
 
 

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Investment Opportunities

The Key Sectors of the National Economy
Technology, advanced manufacturing, natural resources, entertainment and media, agribusiness, cleantech and life sciences. 
High Potential Sectors
Information and communication technologies (big data, Internet of Things, AI, cyber-security among others), biotechnologies, health (growing importance of the aging population sector), telecommunications, environment (renewable energies and environmental protection technologies), chemical industry and tourism.
Privatization Programmes
The topic of healthcare privatisation in health sector is being studied by the government. The road infrastructure sector is carrying out some PPP works - " Public Private Partnership". A total of 291 PPP projects are currently active in Canada for a total value of over 139.48 billion CAD.
Tenders, Projects and Public Procurement
Merx, Canadian Public Tenders
Tenders Info, Tenders in Canada
PODS Providers, Procurement Opportunities in Canada
DgMarket, Tenders Worldwide
Buy and Sell Canada, Public Works and Government Services Canada

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Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
Several sectors are provincial or federal monopolies in Canada. Amon them are health, alcohol imports, energy, road and education systems. 
FDI is limited in some sectors (broadcasting and telecommunications, air transportation services uranium production, banking). 

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Latest Update: November 2022