Does Foreign Investment Benefit B.C.?

British Columbians are split over the benefits of foreign investment in the province

Are Canada and B.C. attracting enough foreign capital? Are foreigners buying up too much of our homegrown businesses? Few issues divide the business community as much as foreign investment, and no question is hotter than whether or not this province and country are doing enough to encourage it. Our survey respondents split themselves almost equally into one of three camps: too much, too little and just right.

Perhaps it’s fitting that there is little consensus, given the enormous stakes involved. On one hand, B.C. has ambitious projects that will need massive inflows of capital to get off the ground. Stifling foreign direct investment could cost jobs and economic growth. On the other hand, there are real concerns that foreign stakeholders could gain control over Canada’s resources while delivering little payoff.

 
HSBC Canada’s chief economist David Watt says Canada has plenty of potential to attract more foreign direct investment. “Just look at LNG in B.C., and the wide array of companies, especially from Asia, that are willing to invest in order to develop these resources,” he says, noting that companies from Japan, Malaysia, India and China are all eager to make investments in the industry.

Yet there are downside risks to be mindful of before opening the doors too far. “Traditionally there has been two concerns,” says Watt. “In the manufacturing sector of Canada we’ve had concerns about the hollowing out of leadership as a result of foreign direct investment.” Watt says that’s also a concern in the natural resources sector, along with a worry that foreign, state-owned enterprises would gain too much control over Canada’s energy, mineral and forestry assets.

Foreign, state-owned enterprises and sovereign wealth funds have become bigger players in the global economy in recent years. Do these countries share Canadians’ interests with regard to local jobs and the environment? China’s HD Mining International Ltd. drew legal challenges and political controversy last year when it sought to import 201 workers to its coal mine near Tumbler Ridge in northern B.C. It’s just one foreign firm among many which have come under similar fire.

Watt says concerns about the risks of foreign investment are not going away, but they must be balanced against potential growth. “We are going to need a lot of capital going forward. And much of that is going to come from foreign investors,” he says.