Canada is seeking to attract $1 trillion in new capital under a plan led by Prime Minister Mark Carney to reduce the economy’s reliance on the United States by directing investment into energy, transport, mining and artificial intelligence projects.
Carney is due to host about 200 senior financial-sector executives in Toronto next week. They manage global assets worth 120 trillion Canadian dollars, equivalent to about 86.6 trillion US dollars.
Increasing Investment Allocations to Canada
The plan is based on persuading investors to increase their allocations to Canada by one percentage point and channel the funds into 167 projects, including pipelines, nuclear power, mining, railways, ports and artificial-intelligence data centers.
The initiative follows the collapse of trade talks with the United States last month, as Carney seeks to expand Canada’s ties with middle powers and diversify its economic relationships beyond the US market.
Ottawa is relying on its AAA credit rating and financial stability to attract capital amid volatility in the United States.
Institutional Investment Expected
Deborah Orida, chief executive of the Public Sector Pension Investment Board, which manages assets worth 320.6 billion Canadian dollars, equivalent to about 231.3 billion US dollars, said international investors have less exposure to Canada than to other markets.
The institution expects its investments in Canada to exceed 100 billion Canadian dollars, equivalent to about 72.2 billion US dollars, in the coming years, an increase of between 30% and 40% from current levels.
The government is also seeking to attract investors from Wall Street, the Dangote Group and China Investment Corporation, which manages assets worth $1.57 trillion.
Taxes and Productivity Pose Challenges to the Plan
Business leaders warn that financial stability alone will not be enough to attract more capital, pointing to the need to cut taxes, speed up the issuance of permits and improve the regulatory environment.
Canada is facing a productivity crisis and slow progress on reforms, while the forestry, oil and gas, and automotive sectors complain of bureaucracy. The International Monetary Fund estimated the impact of interprovincial trade barriers at the equivalent of tariffs of about 9%.
Concerns Over Takeovers of Domestic Assets
Increased foreign investment is raising concerns about asset ownership, after two-thirds of foreign investment last year was linked to acquisitions of domestic companies.
Carney is counting on targeted investment to strengthen Canada’s role in the energy sector and increase its exports to Asia and Europe. The plan’s implementation, however, depends on Ottawa’s ability to diversify its economic relationships and address productivity, tax and bureaucratic challenges.
