Canada: A Marriage Made In The Heavens

First published in Gulf News, Dubai.

Canada Claims It Offers A Rare Combination: Great Investments, And A Tradition Of Welcoming Foreigners

Although Canadian winters may be cold, the investment climate is almost always warm. There would be no other way for a country of 33 million people to maintain its relative wealth and G8 status without strategically and effectively engaging the world in the areas of trade and finance.

Canada is well positioned to become an important global Islamic finance market.

It has one of the world's most transparent and investor-friendly foreign-investment regimes, world class investment opportunities in sectors ranging from natural resources to hightech, a banking system that has recently been referred to as the most sound in the world, a rapidly growing and highly educated Muslim population as well as a historical commitment to multiculturalism, and a need to remain an attractive destination for foreign investment.

In a recent government report, a panel charged with assessing the country's global competitiveness found that, contrary to some commonly held notions, Canada benefits from openness to the world and that attracting greater foreign investment is in Canada's economic interest.

With the global recession now showing signs of recovery, investors from around the world, in particular those from Muslim nations, are taking a hard look at Canada as a place to invest.

As a result, in order to invite, and accommodate, important foreign investments to Canada, it is becoming increasingly necessary for the country to be able to facilitate Islamic finance transactions and potentially become a hub for North American Islamic finance.

While the pillars of Islamic finance find their roots in religious principles, properly approached, they are in effect a form of "back-tobasics" banking practices that have become the trend throughout the Muslim and non-Muslim financial world in the wake of the most recent financial crisis.

A key principal of Islamic finance is the prohibition of interest and an emphasis on partnership/ shared-risk model which helps create the necessary discipline in financial transactions. This sentiment has been reiterated by many recently including Secretary of Treasury Timothy Giethner, and White House Director of the National Economic Council Lawrence Summers, when they wrote that to avoid future financial crises, it was necessary, among other things, to "require the originator, sponsor or broker of a securitisation to retain a financial interest in its performance". In addition, a partnership/sharedrisk model is consistent with other marketdriven and democratic ideals such as the efficient allocation of resources including money to and from the most productive hands. Such an approach ultimately facilitates positive things within societies such as economic meritocracy and wealth recirculation, to mitigate against the risk of excess concentration of wealth.

Notwithstanding the prohibition on interest, there are methods of structuring a transaction in order to provide a competitive and profitable return relative to the conventional global markets — which are driven by interest based returns — without violating Islamic restrictions.


Other pillars of Islamic finance include a need to avoid excessive risk, along with an emphasis on transparency, certainty of terms, and ethical or socially responsible investment objectives.

As a result, in many ways, the growth of Islamic finance today is also a part and a reflection, of an overall movement towards these more "back-to-basics" financial practices.

Most would agree that better adherence to these principles, whether couched in Islamic finance or just sound conventional finance terms, would have likely helped avoid many of the recent excesses in the financial world in which many institutions came perilously close to collapse and had to be put on life support by extraordinary government measures.

Islamic finance, while not immune to the global slowdown, has nevertheless shown signs of resiliency with impressive growth results during this tumultuous period.

As a result, it has attracted increasing attention from investors and governments.

In fact, Islamic bonds, international sukuk and GCC Islamic bonds were largely unaffected by the 2008 banking sector upheaval and even saw a significant increase in the latter half of 2009 after an initial drop in volume. Not surprisingly, it is projected that the sound investment practices espoused by Islamic finance will allow, for the first time, total Islamic financial assets to break the US$1 trillion dollars mark in 2010.

With the ability to pick and choose the best opportunities in the world, global Islamic finance investors are asking themselves where they should invest next. Although Canada has not necessarily been at the top of everyone's radar in recent years, the global recession has allowed its sound fiscal policies and diversified economy to stand out. In addition, over the past several years, Canada has demonstrated impressive capabilities in Islamic finance including the development of Islamic financial products for Canadian consumers.

Moreover, there is a increasing supply of well versed professionals and experts in the fields of law, tax, accounting and operational processes, who are available to help investors wanting to explore the growing opportunities in Islamic finance.


Some of the most attractive investment opportunities in Canada can be found in the areas of natural resources, energy, and infrastructure.

Canadian natural resources are not only plentiful, but well developed with specialised industrial manufacturing, sophisticated transportation and delivery networks. They are readily available, as is qualified labour.

With a growing demand for commodities driven by growth in BRIC countries (Brazil, Russia, India and China) and other emerging economies, experts have predicted that commodity prices will soar and remain high in the near future.

Canada remains a leader in the production of crude oil, tin, nickel and wheat, all of which will be in high demand now that the global economy is poised for a recovery.

Similarly, the mining sector, which plays an important role in the Canadian economy and which is responsible for more than one-quarter of total exports, presents many interesting opportunities. Nickel, potash, diamonds, cement, sand, gravel, bismuth, cadmium, cobalt, lead and coal production increased sharply in recent years, often in double-digits. There have been increasing levels of exploration in the Yukon, the Northwest Territories and Nunavut with reports of promising results of significant mineral deposits. Canada's importance and leadership position in the mining sector is reflected in the fact the TMX Group lists more public mining companies than any other exchange in the world with almost 60 per cent of the world's public mining companies listed on the TMX Group exchange.

Moreover, with more than $50 billion in North American index securities, Canada claims to offer the best access in the world for capital.

In the energy sector, in particular the oil and gas industry, Canada — being the third largest natural gas and eighth largest crude oil producer in the world — is very well positioned to meet rising global energy demands.

To meet this demand, the Canadian government and businesses say they have been working hard over recent decades to lay a foundation to allow oil sands production to reach 2.6 million barrels per day by 2015.

While the Canadian oil and gas industry is comprised of some 2,300 firms and is considered to be mature and sophisticated, the fact remains that it has one of the largest oil reserves in the world.

With technological advancements reducing production costs, the potential return on investment in the Canadian oil and gas industry makes it an attractive proposition.

The oil and gas industry has said there is an immediate need for capital for this sector to continue growing and meeting global energy demand.

The government has estimated an investment of roughly $50 to $120 billion dollars would be required in Canada in the next few years. Federal and provincial governments have been seeking foreign investors willing to fund various publicprivate partnership ("P3") projects. The need stems from a well developed national infrastructure needing modernisation and governments being unable to finance these projects singlehandedly. P3 projects that have been launched or for which partnerships are being sought include bridges, utilities and highways. Partners are also sought to help build new schools, hospitals, and the justice sector, for a growing Canadian population.

Canada also claims that it is set apart by its tradition of welcoming foreign investors and investments. Canada prides itself on having one of the most liberal regulatory regimes with a predictable and transparent process whereby foreign investments can be assessed. By taking note of the important role that stateowned enterprises ("SOEs") play in the global economy and by adopting a principle-based approach to foreign investments by SOEs, Canada has sent a clear signal that it remains open for business and that it will ensure a level playing field for all.

Investment opportunities in Canadian natural resources, energy, and infrastructure projects should be of particular interest to investors who wish to structure transactions in accordance with the principles of Islamic finance.

Outside of the Middle East, several financing projects have now begun using Islamic financing structures for various projects.

For example, in 2009, General Electric issued a $500 million sukuk issuance which was based on an ijara structure with aircraft assets as its underlier, and involved some aspects of commodity murabaha.

The sukuk offering held a five-year maturity and guaranteed fixed distributions of 3.875 per cent a year. Another example includes the financing of a $50 million pipeline in Pakistan using a five-year ijara facility.

The idea is that by using Islamic finance structures such as ijara, musharaka/mudaraba, murabaha, istisna'a and sukuk, investors can structure transactions and invest in the Canadian natural resources, energy and infrastructure sectors, all of which are in compliance with sound Islamic principles.

While it is true that investors who adhere to the pillars of Islamic finance have many options, Canada claims that it offers a rare combination of great investment opportunities, a tradition of openness to foreign investors and investments, and a proven track record of sound economic and banking practices.

Canada, as John Maynard Keynes once said "is a place of infinite promise".

Dany H. Assaf is a partner at Bennett Jones LLP and Daud Vicary is Deloitte's Global Islamic Finance Leader.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions