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<html> <head> <meta name="Generator" content="Corel WordPerfect 8"> <meta name="DATE" content="10/6/1997"> <meta name="Author" content="Susan Smith Angel"> <title>MR. MARCHI - ADDRESS ON THE OCCASION OF THE RELEASE OF A KPMG STUDY ON CANADA AS A LOW-COST BUSINESS LOCATION - OTTAWA, ONTARIO</title> </head> <body text="#000000" link="#0000ff" vlink="#551a8b" alink="#ff0000" bgcolor="#c0c0c0"> 97/39 CHECK AGAINST DELIVERY NOTES FOR AN ADDRESS BY THE HONOURABLE SERGIO MARCHI, MINISTER FOR INTERNATIONAL TRADE, ON THE OCCASION OF THE RELEASE OF A KPMG STUDY ON CANADA AS A LOW-COST BUSINESS LOCATION OTTAWA October 9, 1997 This document is also available on the Department's Internet site: http://www.dfait-maeci.gc.ca Ladies and Gentlemen: I'm always happy to receive good news. This report is very good news for us all. Canada is a winner. That is something we all know in our hearts, but the KPMG report has proven that sentiment with clear-headed analysis and rigorous, bottom-line calculations. It shows just how commanding our lead is in the race for job-creating business investment dollars. I want to recognize KPMG for their hard work, and I want to thank the Royal Bank of Canada, Ontario Hydro and the Atlantic Canada Opportunities Agency for joining us in sponsoring this important study. The results are categorical -- Canada has the lowest business start-up costs among the leading European and North American economies. Any business person thinking about expansion and concerned about profitability has to take a serious look at what Canada has to offer an investor. We now have the numbers and they cannot be overlooked. And make no mistake -- those business investment dollars are critical for the future prosperity of Canadians. Each $1 billion in new investment in this country amounts to 45 000 jobs over five years. Most Canadians know that we are winning on the trade front. Canadian exports are up more than 45 per cent in just four years. And they understand the importance of those exports to Canadian jobs. But we have not done as well on the other side of the international business equation -- that of attracting job-creating investment. In an increasingly globalized economy, long-term prosperity is as dependent on winning the investment war as it is on being out front in the trade race. The Government of Canada is committed to leading the effort to get the message out to investors. The message we have to deliver, ladies and gentlemen, should find a ready audience. After all, the mark of a good investor is to seek out opportunities that are undervalued. As this report demonstrates, a business that chooses to expand internationally in any location but Canada has undervalued what this country has to offer. Some of the savviest European investors have already compared Canada to the rest of the world and come to the conclusion that Canada is the best in the world. Stora Group of Sweden, Pasteur Mérieux Connaught of France and Swedish giant L.M. Ericsson, to name only three companies based in Europe, have recently committed to invest more than $1 billion in Canadian operations. But Canada is still an undiscovered bargain for far too many European and APEC [Asia-Pacific Economic Co-operation forum] decision makers. We have a powerful message to deliver about Canada's attractiveness as the most cost-competitive base for companies expanding their operations abroad, especially into the NAFTA market. Effective economic management by the current government allows us to offer potential investors an unbeatable combination of low interest rates, minimal inflation, shrinking deficits and forecasts for strong economic growth. And the KPMG study is just more good news for business investment in Canada. The message that I will be taking to business decision makers around the world could not be more positive. Canada has, in effect, become a global brand name for quality and low cost in international business. It's a message that I hope all Canadian business people will repeat within Canada and abroad. Let me highlight for you how this new study will help me make the winning case for our country with potential investors. The KPMG study evaluates a number of key business costs that almost every new enterprise must consider. Canada comes out at or very near the top in all categories of start-up and operations costs such as: initial capital costs, including land acquisition and building construction; annual labour costs, including wages, statutory benefits, employer-sponsored benefits and labour; electricity costs; transportation costs; and telecommunication costs. Lower start-up costs mean that Canadian businesses can offer overall lower labour costs than the United States and most European locations, that interest costs offer a significant Canadian advantage, and that our research and development incentives make Canada a winner in this increasingly critical area of modern business success. And let me draw special attention to a bit of cost analysis that will blow one myth about doing business in our country clearly and cleanly out of the water -- taxation. Along with Sweden, Canada offers the lowest overall corporate tax burden. It seems counter-intuitive to many business people that Canada and Sweden have the lowest corporate tax burdens, but it is the kind of myth about doing business in our country that makes some investors wary, and so it has to be exposed and put behind us. When you combine the effects of all these cost elements, Canada ranks number one. We have a slight edge on Sweden (1.7 per cent), but a substantial lead over the United States (5.4 per cent)-- a critical advantage when we're selling Canada to investors in Europe and the APEC nations who want a North American base to expand their manufacturing operations into the NAFTA market. To take a stark example from the KPMG study -- a European business setting up a typical 100-worker plant in Canada will save, on average, nearly US$1 million annually, over a similar site in the United States, on sales exceeding $10 million. This is a message that sells! That winning overall performance for Canada is consistent across a wide range of industries. In fact, in all eight industrial sectors reviewed by the study, Canada leads the field. In all sectors our cost advantage is substantial. In a few, such as software manufacturing, our edge is phenomenal. In fact, our average advantage over the United States is nearly 10 per cent, and we're ahead of the most expensive European location by almost 16 per cent. Happily, our winning advantage is most impressive in industries requiring high levels of knowledge and advanced technological capacity. These are precisely the sectors where we most want to be able to demonstrate to foreign investors that Canada is competitive globally. The KPMG study gives us the resources to do that. But that knowledge has to be turned into investor dollars in local Canadian economies. And that takes hard work. The time for modesty is past. Canada offers an investment environment second to none, and now we can prove it. Canada's economic house is in order, and this study demonstrates that future investment will find a profitable home in Canada. Over the last four years, the world has come to understand that Canada consistently leads all other nations on the United Nations Human Development Index. Now add to that message a new reality -- not only is Canada the best country in the world in which to live, Canada is also the best country in which to invest. Truly, Canada is number one. Thank you. </body> </html>

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