TORONTO — Net foreign investment in Canada this year is setting records, reversing a trend and providing the first success for a key part of Prime Minister Brian Mulroney's economic strategy.
According to Statistics Canada, the government record keeper, Canada achieved a net gain of $803 million for the first quarter of the year--nearly twice the previous record, which was achieved in the last quarter of 1979.
This was in sharp contrast to 1985, when Canadian investment abroad exceeded foreign investment in Canada by $2.1 billion.
Government officials and private experts say that net foreign investment for the rest of this year should be even higher as major projects by American, Japanese and British firms get under way.
Two years ago, when Mulroney led his Progressive Conservative Party into power, he promised a large increase in foreign investment.
"Canada is open for business," he told American business leaders in December, 1984, and he promised to dismantle the nationalist economic programs designed by his predecessor.
Mulroney sought new foreign capital to bolster Canada's currency and to pay for an industrial base that had been unable to attract enough Canadian money to compete in world markets. Until now, though, cautious overseas investors were reluctant to enter Canada. They were waiting to see if Mulroney had the political will to override his nation's traditional wariness about foreign involvement.
Already, well over half of the country's economy is controlled by outsiders, mostly in the United States.
In 1984 and 1985, Canadian investment flowing out of the country outstripped foreign investment coming in by nearly $4.9 billion. The turnaround is due largely to spending by Japanese and American auto manufacturers.
Toyota and Honda are putting $438 million into new assembly plants in Ontario, and South Korea's Hyundai Motor will spend $220 million on a new facility in Quebec. American Motors is building a $470-million factory in the Ontario city of Brampton to produce a mid-size car by next summer.
Much of the new interest is in Canada's oil and gas sector, where buyers perceive bargains in the Western provinces' large oil reserves.
But beyond oil and autos, other sizable investments have come from Allied-Lyons of Britain, which is working out a $1.9-billion purchase of Hiram Walker, the distillers. And when Primo Foods, a Toronto producer of pasta and tomato products with annual sales of about $95 million, went on the market earlier this year, 35 non-Canadian firms submitted bids.
Investment Canada, the government agency charged with attracting foreign capital, says that overseas applications for establishing new businesses or acquiring existing firms are up 15% for the first six months of the year.
"Canada, I believe, is the best place to make an investment right now," said Brad Griffiths, a vice president of Canadian Imperial Bank of Commerce.