Skip to main content
smart cities: attracting business

Paul Kent, president and CEO, Greater Halifax Partnership.PAUL DARROW

Paul Kent's job is to make life easier for businesses. Mr. Kent is president and CEO of the Greater Halifax Partnership, an economic development agency whose players include three levels of government and some 130 private-sector investors. He and Nova Scotia Business Inc. – his organization's provincial counterpart – recently collaborated on a pitch to a foreign company that is thinking of opening a Halifax location.

"Their concern was, 'Can you simplify the engagement model with government? Can you give me a one-stop shop?'" recalls Mr. Kent, a former senior executive with Fujitsu Canada Inc. and Internet service provider Bell Aliant. "And of course, our answer was yes," he says. "Generally speaking, we find a way."

This spring, Halifax launched a five-year economic strategy. One of the strategy's goals is to improve the local business climate, "so that we work on reducing our regulatory, tax and policy burden, and that we really create a service-oriented culture across the region," Mr. Kent says.

In an increasingly competitive world, where businesses and entrepreneurs are highly mobile, Canadian cities must welcome them. When it comes to business climate, Ottawa and the provinces make many of the key decisions. But cities can work with senior governments – and go out of their way to be helpful to potential investors.

It helps that Canada is a business-friendly country to begin with. The World Bank publishes an annual Ease of Doing Business Index that examines how conducive a nation's regulatory environment is to running a local firm. Criteria include starting a business, getting credit, paying taxes, protecting investors and trading across borders.

In this year's ranking, Canada placed seventh among 183 countries, while Singapore, Hong Kong and New Zealand claimed the top three positions.

"We are actually an extremely good environment," says Thomas Hellmann, B.I. Ghirt Family Foundation Professor in Finance and Policy at the University of British Columbia's Sauder School of Business. "We've already reduced red tape in ways that most other countries haven't."

At the city level, Canada makes a strong impression too. In its 2011 Cities of Opportunity report, PricewaterhouseCoopers LLP compared 26 global cities by looking at everything from innovation and infrastructure to livability and ease of doing business. Toronto – No. 2 overall, between New York and San Francisco – placed fifth in the latter category.

The most business-friendly cities combine flexible labour policies with openness and a culture that makes it easy to start and operate an enterprise, the survey concludes.

Hazem Galal, a Rio de Janeiro–based partner at PwC and the firm's global leader for its cities and local government network, notes that Toronto's economy has long been geared toward business services. As part of Ontario, Mr. Galal says, Toronto benefits from provincial policies that help make it relatively simple for sectors such as banking to do business.

Still, Toronto and many other cities must live with federal laws that can hurt their global competitiveness. In the PwC survey's ease of doing business section, Toronto fared poorly on ease of entry because Canada requires the citizens of some foreign countries to obtain travel visas.

Compare that with Singapore and Hong Kong, which ranked No. 1 and No. 2, partly thanks to their openness to visitors. As a city-state, Mr. Galal says, Singapore has the advantage of enacting its own travel and labour regulations. "A lot of what's good for the city is passed into national law."

Meanwhile, despite strict U.S. visa rules, five of the top 10 cities for ease of doing business were American. "That's primarily because labour laws are very flexible in terms of ease of hiring and firing in the States," Mr. Galal says.

In Canada, provincial incentives can help cities to draw investment. Sauder's Dr. Hellmann cites B.C.'s Equity Capital Program – which provides a 30 per cent refundable tax credit to investors in eligible small businesses – as a policy that benefits Vancouver.

More competitive than similar initiatives in other provinces, the B.C. program is open to angel investors as well as venture capital shops. The result is an angel investor ecosystem that supports many young companies, Dr. Hellmann says.

"I'm not a fan of all these big subsidies and cities competing with each other to attract individual companies," he adds.

Financial incentives and subsidies are not a sustainable competitive advantage, because they're easily copied, says PwC's Mr. Galal. "It gets cities into this downward spiral, and they may lose focus on creating the right infrastructure, and the right economic conditions and educational systems."

Canada may be open for business, but foreign companies that choose a particular city can find the provincial and federal bureaucracies frustrating. Saad Bashir, the City of Ottawa's economic development manager, says long and complex applications for R&D grants are just one example.

The city gets involved by talking to its federal and provincial counterparts about how to simplify things, Mr. Bashir explains. "And then from our side, we help companies navigate that application process."

A consistent message is important too. Foreign investors in Ottawa's knowledge-based economy could easily move to San Francisco and many other places, Mr. Bashir concedes. To stand out, the nation's capital tries to ensure that its government agencies, companies, universities and R&D institutions all tell the same story.

"That casts a very strong and positive impression to an outside company that if [they]were to come here, there's going to be a lot of help and resources available for [them]to succeed," Mr. Bashir says.

Ottawa reaches out

How do you make a town more business-friendly? Here are five ways that the City of Ottawa is reaching out to companies and entrepreneurs:

Invest Ottawa

Focused on key sectors, this new organization's small team will guide incoming businesses through the process of setting up shop. "Invest Ottawa is also going to help local companies who have matured enough that they're now looking to sell their products and services outside the city," says Saad Bashir, Ottawa's manager of economic development.

Entrepreneurship Centre

Besides giving one-on-one advice to entrepreneurs, the centre organizes workshops and seminars. It has satellite kiosks throughout the Ottawa region.

Regional Innovation Centre (RIC)

The RIC, which identifies and assists knowledge-based Ottawa companies with high growth potential, offers these businesses everything from mentoring to help with access to capital.

Business information hotline

This 1-800 number, due to launch in the fall, will answer callers' questions about business and economic development in Ottawa.

Business incubation centre

When it opens later this year, the incubator will house and nurture some 30 startup companies.