Canada: ABA Business Law Section Spring Meeting: Business Law Q&A With Michael Li
Last Updated: April 17 2019

ABA Business Law Section Spring Meeting, we interviewed Michael Li, an associate in our Corporate Commercial Law group.

We asked Michael a series of questions about why Western Canada is the best place to invest or expand your business.

Read the full interview immediately below:

Q: Why is Western Canada the best place to invest or expand your business?

A: Gateway to Asia. Western Canada, and British Columbia in particular, is the nation's gateway to markets in Asia. According to data provided by the Asia Pacific Foundation of Canada, in 2018, Canadian exports to Asia increased by 15.6% and imports increased by 6%, and total trade between Canada and the Asia/Oceania region increased by 9%. In addition, Central 1 Credit Union reported that strong tourism in B.C. continued into 2019 with near-record high number of international tourists, driven by a 7.3% increases in visitors from Asia, as well as those from Australia and New Zealand.

Strong Tech Sector. B.C.'s tech sector continues to outpace the rest of Canada in terms of growth. The most recent KPMG's British Columbia Technology Report Card (published in November 2018) concluded that B.C. is "a clear leader in Canada in regards to growth", ranking first with a 7.3% annual growth rate, more than doubling the national average of 3.5%. The tech sector remains a "Top 5" sector, contributing more to the B.C. economy than traditional resource sectors (forestry, mining, oil & gas) with $17.2 billion GDP in 2016. The B.C. tech sector exhibits one of the fastest GDP and revenue growth rates in Canada.

Future LNG and Public Projects Investment Growth. While B.C.'s overall economy is anticipated to slow down over the next few years, the $40-billion liquefied natural gas (LNG) investment in Kitimat, British Columbia, is expected to trigger a slew of economic spinoffs, including growth in non-residential construction, housing sales and construction, regional spending and employment opportunities. Accordingly to the latest report from Central 1 Credit Union, LNG Canada's massive LNG project is expected to be built-out at the same time as other major public works projects across the province, which will cushion and absorb negative labour market impacts in other sectors. Various investment projects in B.C. are expected include construction on the LNG plant, the associated Coastal Gaslink Pipeline and Site C dam in northern B.C., Pattullo Bridge construction, Broadway subway construction and major hospital construction.

Competitive Labour Market. While it is widely reported (and acknowledged) that the policy-induced housing market downturn will weigh on B.C.'s economic growth, the economic conditions remain firm outside of the housing market as the available talent pool in B.C. remains competitive for employers. In February 2019, B.C. added 2,300 full-time jobs and 1,400 part-time jobs, bringing the province's unemployment rate down to 4.5%, being the lowest in Canada during the month of February. B.C. Stats' official population estimates project the province's population will increase from a total of 4,865,907 in 2018 to 6,178,287 in 2041, and it is expected that the B.C. population will grow at a rate between 1.2% and 1.0% in each year before slowing down in 2034.

Special Tax Incentive Programs. British Columbia provides provincial tax credits and exemptions to encourage business investments and innovation. Certain incentives target specific industries, including film and television, mining, natural gas, life sciences and clean technology. For venture capital investments, B.C.'s venture capital programs (operated under the Small Business Venture Capital Act) provide tax credit incentives to encourage early-stage investment in small businesses throughout the province (for instance, corporations that invest in a registered venture capital corporation or a registered eligible business corporation may receive a 30% non-refundable tax credit on their investment). For film production and digital media, specific targeted tax programs support B.C.'s vibrant creative industry through refundable corporate income tax credits if certain criteria are met. For the mining industry, grassroots mineral exploration conducted may be eligible to receive a 20% provincial tax credit and a 15% federal tax credit, and provincial tax credits increase to 30% for exploration in areas affected by the mountain pine beetle infestation. Just to name a few examples.

Q: What is the best tip you can give a client who wants to invest in or expand into Western Canada and the North?

A: Business owners should understand the Western Canada market and strategically brand their businesses so that they can differentiate from the competition in order to expand their presence and to attract top talent in the province's tight labour market. In addition, employers ought to strive to develop a strong corporate social responsibility (CSR) program to retain the right employees and to attract the best candidates. CSR accomplishments and future project ideals should be featured in various marketing efforts, and business owners should strive to develop a sustainable business that maintains (or even enhances) profit while embedding social and environmental considerations in the business, and making corporate social responsibility part of the company's overall brand.

For business owners wanting to expand into Canada's North, knowing the landscape of commercial, Indigenous and governmental actors is essential to successful investing in the North. It would be critical, at an early stage, to engage advisors with long-term experience working with communities in the North and who have a solid understanding of the needs of Northern life.

Q: What is your top resource on information about conducting Cross-border business?

A: Having the right set of advisors (legal counsel, accounting and tax advisors) with cross-border experience and who can help set up the most favourable structure to meet current and future business objectives, including obtaining advice on global mobility services, transfer pricing considerations and U.S. and domestic tax services.

Q: What is your favourite spot in Vancouver for dinner or happy hour?

A: Sardine Can in Gastown serves up Spanish tapas in an intimate and casual atmosphere – there are not many places like this in Vancouver, and it is a great place to hang out after work (or at any time).

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