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Canadian Firms Invest 6 Times More in Caymans Than China

April 19 (Bloomberg) -- Direct investment by Canadian companies abroad was almost six times higher in the Cayman Islands than in China last year, with a greater share in Barbados than in all of Brazil, Russia, India and China - the so-called BRIC economies, Statistics Canada data show.

The share of Canadian direct investment in Barbados last year was 7.8 percent, or C$53.3 billion ($53.7 billion) with another 3.8 percent in the Caymans, the Ottawa-based agency said today. The share of Canadian investment abroad in the BRIC countries was a combined 3.4 percent. Canada has more direct investment in the U.S. than any other country, with C$276.1 billion representing 40 percent of the total.

Bank of Canada Governor Mark Carney said earlier this month that Canadian companies should focus more on faster-growing regions of the global economy. “While the United States will always loom large in Canadian trade, geography need not be destiny,” Carney said in a speech in Waterloo, Ontario. “For many firms, the most attractive option is now to expand into emerging markets.”

Companies from the BRIC economies accounted for 5.6 percent of direct investment in Canada last year, Statistics Canada said, increasing their stake by 68 percent since 2007. Canadian investment in the BRIC countries has grown at a slower pace, 49 percent, over that same period.

Investment in Barbados, the Caymans and Bermuda has grown 39 percent in that time, with the stock of investment in those three countries four times that of the BRICs, the data show.

Caribbean Banking

Canada’s direct investment in the Caribbean has increased for most of the past 10 years, Statistics Canada said, and is concentrated in the financial services industry.

Canadian banks have a long history of operating in the region, with Bank of Nova Scotia opening a branch in Kingston, Jamaica in 1889 and Royal Bank of Canada starting its first venture in Bermuda, where there’s no corporate income tax, in 1882.

“The FDI data suggests that taxes are an important factor when Canadian businesses decide to invest abroad,” said Charles St.-Arnaud, an economist with Nomura Securities International Inc. in New York. “It also shows that businesses tends to prefer to invest in markets they know and understand well.”

To contact the reporter on this story: Ilan Kolet in Ottawa at ikolet@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Alexandre Tanzi at atanzi@bloomberg.net

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