Promoting, attracting and retaining FDI - A key component of DFAIT’s mandate

1. A Prosperous Canada Through Global Commerce:An Overview of Foreign Affairs and International Trade Department’s (DFAIT)Foreign Direct Investment Promotion and Attraction Strategy

2. Promoting, attracting and retaining FDI - A key component of DFAIT’s mandate DFAIT is responsible for fostering the expansion of Canada's commercial relations internationally FDI Mission Promote and attract international businesses to Canada to increase productivity and generate higher living standards for all Canadians. FDI mandate Invest in Canada Bureau’s mandate is to: • market Canada as the location of choice for international businesses • attract new investors to Canada • facilitate expansions by existing investors • work with partners on retention • identify FDI impediments and advocate for policy changes • Industry Canada is responsible for: • Administering the Investment Canada Act • Reviewing significant investments • Regulating the legal responsibilities of • non-Canadians investing in Canada

3. FDI contributes directly to our economicgrowth and long-term prosperity The benefits of multinational firms (MNES) are well documented FDI plays a major role in shaping the Canadian economy Multinational firms… Foreign controlled MNEs in Canada account for… • are more innovative and productive • are more export oriented • allow transfer of latest technologies • stimulate domestic competition • offer higher wages • connect Canadian industries to global value chains (GVCs) • 45% of merchandise exports • 32% of R&D business expenditures • 26% of corporate profits • 30% of operating revenues • 19% of capital investment • 21% of assets Source: Based on data from Statistics Canada and OECD: Corporate assets (2006), Corporate revenues (2006), Corporate profits (2006), R&D expenditures (2006), Investments (2006), Exports (2002) Capital investment (2007-2009 average). Enables higher productivity and living standards

4. Canada faces competitive pressures on the FDI attraction front Canada competes against the US, the world's most attractive FDI location Current capital markets are seeking stable opportunities Emerging markets are capturing higher shares of FDI Key pressure points Competitors are rapidly improving their business climate and increasing efforts to attract FDI Economic slowdown puts downward pressure on new FDI projects and expansions FDI barriers in service industries impede investment in Canada

5. FDI Inflows and Outflows Top Sources Top Destinations

6. Strategic approach: Objectives of DFAIT’s FDI program • The department seeks to attract, expand and retain FDI projects - greenfield or expansion - that directly contribute to: • the production of high value-added goods and services in Canada • the promotion of skilled employment and high wages • the introduction or development of new products and process technologies • the globalization of Canadian industries Objective Proactive sectors • where Canada has clear competitive advantages; and • proactive promotion will make a difference The program focuses on: • major sources of FDI worldwide for our proactive sectors • where sector’s experts think we should be • targeted by our partners Key markets Dynamic firms • which demonstrate high propensity to invest in the near term • Mergers and acquisitions are not proactively targeted but information and pathfinding services are provided. Note:

7. Strategic approach: priority sectors • Agrifood • Food processing • Life Sciences • Biopharmaceutical • Medical devices Plastics and Chemicals • Clean Technologies • Renewable energy technologies • Environmental technologies • Advance Manufacturing • Aerospace & Defence • Automotive • Machinery equipment • ICT • Wireless communication • Software • Digital Media • Services • Business Services • Financial Services 14 key sectors that offer the best prospects for FDI attraction

8. Strategic approach: key markets Asia/Pacific Region Europe The Americas • Finland • Sweden • Norway • Italy • Denmark • Spain • Israel • Austria • UK • France • Netherlands • Switzerland • Germany • Belgium/ Luxembourg • Japan • China/HK • South Korea • Taiwan • India • United States • Brazil 8 21 Key Markets accounting for 94% of Canada’s Inward FDI Stock in 2009

9. 4 3 2 5 1 Strategic approach - Key elements of the FDI program Sales Investor Engagement After-sale Services Strategy Development FDI aftercare services Systematic prospecting Strategic Orientation Refine priority sectors/markets, improve investment climate and benchmark performance Proactive marketing Follow-up and back-to-back outcalls Target key companies in proactive sectors & key markets Raise Canada’s visibility as a competitive FDI location Built on strong partnerships

10. Strategic approach - Canada’s FDI attraction partnership International Network Domestic Network Other Govt. Departments (IC, AAFC,NRCan, etc.) Posts Abroad Regional Offices Canadian Locations DFAIT (Ottawa) Foreign Investors Provinces & Territories Proactive Prospecting in 21 key markets & 15 sectors • Examples: • Invest British Columbia • Investissement Québec Municipalities Opportunistic servicing in all markets & all sectors • Examples: • Montréal International • Calgary Economic Development • Invest Toronto 10 10

11. ICCI Background • Launched in 1998 • Objective: to help Canadian communities in attracting, retaining and expanding foreign direct investment (FDI) • ICCI annually provides matching funds of up to 50% of eligible project expenses • Between 2004 and 2007, ICCI likely contributed to attracting $840 million of FDI and creating more than 4,600 jobs • Delivered across Canada by regional offices of Foreign Affairs and International Trade Canada Invest Canada – Community Initiatives (ICCI)

12. ICCI allocated $3M in 2011-12 for 93 Adjudicated Projects NT & NU $20,000 BC & YT $380,000 NL $60,000 AB $3750600 MB $125,000 SK $125,000 QC $585,000 ON $1,058,000 PEI $22,000 NS $125,000 NB $125,000

13. Who Can Apply • Smaller communities with limited economic development resources, primarily interested in obtaining assistance to offset costs associated with developing tools aimed at foreign investor servicing. • Mid-sized regions and communities with some professional staff and existing economic development programs requesting assistance for specific marketing-oriented activities. • Larger regions and communities with active foreign investment programs interested in assistance to develop and implement multi-year attraction and retention strategies.

14. What Does ICCI Support? • ICCI supports community initiatives that promote and sustain FDI, and the development of tools needed to attract and retain investment. • Typically, a community begins by undertaking basic research to determine: • strengths • identify key sectors • existing levels of FDI

15. Community Investment Attraction and Retention Readiness Continuum

16. Capacity Building Examples of Project Activities: Research e.g. SWOT analysis Economic Data e.g. Collect data and develop community investment profiles Investment Training e.g. EDAC and/or advanced CEDAP courses Strategy Development & Implementation Examples of Project Activities: Strategy e.g. Creation of a targeted investment strategy Planning e.g. Development of business cases for targeted industries Implementation e.g. Translation of materials, web site development Eligible ICCI Projects

17. ICCI Eligible Activities • Research, studies and economic data collection • Strategic FDI planning • Website development • Translation (documents or website content) • Promotional/Marketing tools and material (print or electronic) - design and layout only • Investment Training • Travel costs to investment training • In-Canada meeting room rental (meetings with potential investors)