OTTAWA — Trade Minister Ed Fast spoke with The Vancouver Sun about Canada’s opportunities in emerging markets, just before heading off for his latest Asia visit. This is an edited transcript of his remarks:
On the expected impact of emerging markets:
“The economic balance is shifting very quickly in the global economy. For Canada to simply sit back and say, ‘We’re going to continue to rely on our traditional markets to drive economic growth’ is a losing proposition.
We are obviously not going to forget our largest trading partner, the U.S., and we obviously are very close to negotiating a trade agreement with the European Union, but that’s not where the most significant growth opportunities lie.”
On China’s aging population, and Canada’s new focus on southeast Asian countries like Indonesia, Thailand and even Burma:
“We’re certainly not going to abandon China, as our second largest trade partner. But when we look at Southeast Asia and how young their population is, how rapidly their economies are growing, clearly there are huge opportunities for Canadian companies, given the fact we’re leaders in many of the areas that could benefit that region of the world, like infrastructure, energy and mining.”
On the growth of Canadian financial services sector in Asia:
“Wherever I’ve travelled in that region, people have taken note of fact that the way we regulate financial services is the model they want to emulate. They trust our services companies such as Sunlife and Manulife, and institutions like the Bank of Nova Scotia. All of them are starting to put down roots in the region.”
On a federal government-commissioned study that warns of risks for Canadian businesses, including in the area of corruption, in Southeast Asia:
“That’s an intriguing study. In the area there is a very broad range in terms of levels of corruption. Look at Singapore, one of the least corrupt countries in the world, and some of the others have very high levels of corruption. When you look at the level of social and economic development, that drives the degree to which they’ve been able to address corruption.”
On Burma, which is just emerging from military dictatorship:
“I visited Burma and saw (opposition leader) Aung San Suu Kyi and also President Thein Sein. This is a country that is appallingly poor but is a country that is making a sincere attempt to turn around its fortunes, to become democratic, to develop sound social and economic policies.
“But you still have significant challenges not only with corruption but also a lack of institutions, a lack of infrastructure, that all hamper its social and economic development.”
On how Canadian companies can avoid being victims of corruption, scams, political instability and bureaucratic red tape:
“We always say, ‘Listen, make sure you do your due diligence, and the first thing I do is point them to the trade commissioner service (that has) has won kudos from across the business community as being a valued partner. They’re able to provide the on-the-ground intelligence about the legal, regulatory and business environment, and they can also point Canadian companies to possible trusted local partners.
“Obviously there’s going to be a higher level of caution but at the same time there are tremendous opportunities there to grow exports and investment.”
On what companies must do to succeed:
“In my travels throughout the region, and it didn’t matter whether it was Indonesia, Burma, Cambodia or Thailand, it was very clear on the ground — even from the governments of those countries — that their preference is that when foreign businesses come in that they partner with local companies. Same thing is true in South America. If you go to Brazil frankly you can’t do business unless you partner with a local company, because if you do you benefit from local tax advantages, you get the benefit of having someone on the ground who understands the business culture.”
On statistics showing Canada’s weak performance in penetrating emerging markets:
“Let’s not forget Canada has for many, many years had the advantage of being right next to the largest economy in the world. Many of our export-focused companies have focused on the U.S. and have done very well. One of the challenges I’ve had as trade minister is to highlight to the tens of thousands of small- and medium-sized enterprises across Canada that there are very significant opportunities beyond Canadian and U.S. borders.
“Canadians tend to be very cautious. We’re a very cautious lot. And often it takes a bit of a nudge to get our companies to step over the line and explore markets around the world and especially emerging markets.”
On whether this excessive caution worries him:
“I’m confident our companies are well-positioned to recognize the opportunities.”
On Vancouver’s opportunity, as suggested by McKinsey’s Richard Dobbs, to be the North American home base for a disproportionate number emerging Asian multinational corporations:
“We know we have a geographic advantage in terms of shipping. When it comes to China, Korea and Japan we’ve got about two days closer sailing time. We’ve invested heavily in our infrastructure, our roads, bridges and inland ports, to really ensure when people do business through Canada they see Vancouver as preferred gateway to North America, and anything we can do to simplify the process for foreign companies to establish a presence in Vancouver is obviously going to serve our economic interests as well. Vancouver is the most Asian city in North America.
On government measures to encourage this:
“I have had discussions with shipping companies, there’s a sincere desire among some shipping companies to make Vancouver their headquarters. There are some tax issues and a couple of other issues they’ve identified as problematic. We continue to dialogue with various industries to try to put Vancouver in a position where it can attract these companies.”
On two countries on Canada’s radar, Thailand and Burma:
“They are at opposite extremes, Thailand has a very well-developed economy. It has, next to Singapore, the most liberalized economy when it comes to trade and investment, which is probably why Canada’s No. 1 trade relationship is with Thailand in Southeast Asia.
“Burma is one of the poorest countries in the world, there’s a complete lack of infrastructure and institutional structures in place, they’re still trying to come to grips with what democracy and the rule of law mean. So that’s why the degree of caution that a Canadian company would have to bring to the table is much higher in Burma.
“But that said, Burma represents some amazing opportunities for Canadian companies. It’s chock-rich in resources. It’s a big country, at least a big country relative to surrounding countries. But beyond that, telecommunications are quite underdeveloped. This is an opportunity for Canadians. They’re begging for us to engage them on the education front and I expect Canada will do much more in terms of economic and social development.”
source: The Vancouver Sun
http://www.vancouversun.com/business/Emerging+Markets+conversation+with+Trade+Minister+Fast/8969145/story.html
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