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WINDOW ON CANADA


CANADA: Number One

for Investing - KPMG Study

      

 

Canada has finished first for the second time in a row in an international ranking of investment destinations, beating the other major industrialized countries.

 

The study looked at the cost of investing in G7 countries, Austria and the Netherlands. It was conducted by consultants KPMG and sponsored by 45 international agencies and governments and is to be released today.

 

The last KPMG report, issued in 1999, credited the low dollar and cheaper labour costs for Canada's advantage over the United States and other countries, provoking criticism from the opposition.

 

The then-Reform Party said it was shameful that the best the country could offer foreign investors was a shrunken currency, while the Liberal government replied the opposition should celebrate that Canada was on top.

 

This year's report will also cite the low dollar as a factor in Canada's placement, but will say the result would have been the same even if the loonie were at a higher value, a government source said. The 1999 study said the country would lose its advantage once the dollar hit US79. The source would not say what the latest study identifies as the currency level at which the Canadian competitive advantage disappears.

 

The dollar, which finished trading yesterday at US62.39, has come under fire in recent weeks from the government and the Bank of Canada. Jean Chretien, the Prime Minister, Paul Martin, the Finance Minister, and David Dodge, the governor of the central bank, have all said repeatedly over the last week that the currency is undervalued. KPMG officials declined comment.

 

Canada finishes first in seven of 12 business categories as a place to invest in the report, including biomedical research and development, advanced software, electronics assembly and specialty chemicals.

 

Overall, Canada finished in the top four in all 12 categories. The study analyzed 27 cost components -- from the value of currency to transportation, labour, health benefits, taxes and facility costs -- across the 12 business sectors. It examined 86 cities in Germany, France, Japan, the United States, Italy, Canada, the United Kingdom, the Netherlands and Austria in achieving its rankings.

 

The KPMG model uses what it says are the typical costs for a medium-sized business with sales of close to $20-million and at least 90 employees.

   (Source: National Post, Toronto: Survey ranks Canada First as a place to invest- January 29, 2002)