Category Archives: Canadian investor program

Immigration Minister to Visit Silicon Valley to Promote ‘Start Up Visa’

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Waterloo, Ontario, sometimes called Silicon North, is one of Canada’s major tech centres. Citizenship and Immigration Canada hopes the new Start Up Visa encourages foreign technology entrepreneurs to start companies in the country

Canadian Citizenship and Immigration Minister Jason Kenney will be visiting California’s Silicon Valley on Friday for a four day trip intended to promote Canada as a place to live for the region’s entrepreneurs.

According to an article in San Jose’s Mercury News, a billboard is currently appearing near Silicon Valley advertising Canada to foreign tech workers struggling with H-1B visa restrictions:

On Tuesday, just days before Kenney was set to tour San Francisco and the South Bay to promote his new visa for startup entrepreneurs, a giant red maple leaf emerged on a billboard off Highway 101 on the route from San Francisco to the heart of Silicon Valley, part of a Canadian advertisement encouraging tech workers here temporarily to migrate north permanently.

Modeled on an idea first introduced but never passed in the U.S. Congress, Canada’s new “startup visa” grants permanent residency to entrepreneurs who can raise enough venture capital and start a Canadian business.

“H-1B problems?” asks the South San Francisco billboard, referencing America’s temporary visa for skilled foreign workers. “Pivot to Canada.”

Citizenship and Immigration Canada (CIC) hopes to capitalize on the frustration tech companies in the U.S. are feeling over immigration restrictions on foreign technology workers and encourage them to relocate to and invest in Canada.

The eventual goal is to help foster the development of a Canadian equivalent to Silicon Valley.

One challenge that CIC faces in this mission is the country’s top marginal income tax rate, which is significantly higher than that of the U.S. A Canadian entrepreneur can look forward to paying about 50 percent of their income to the government if they succeed in joining the top bracket of income earners.

Compensating for this disadvantage, the federal government is offering a perk that no other advanced economy offers foreign entrepreneurs: permanent residency status.

For foreign tech workers in the U.S. anxiously awaiting the six year limits on their H-1B visas, immigration to Canada offers a chance of stability that only permanent residency can provide.

Also working in Canada’s favor is the perception of being a safer country than the U.S., with significantly lower violent crime rates, particularly homicide rates. A better fiscal situation, with a much lower deficit to GDP ratio than the U.S., also gives foreign nationals more confidence in the country’s economic future.

Regardless of how successful CIC’s headhunting campaign in Silicon Valley ends up being, the federal government has a lot of ground to make up for, with total venture capital funding in all of Canada in 2012 coming to $1.5 billion -less than 15 percent of the $10.9 billion worth of deals that happened in Silicon Valley last year.

Financial Post Profiles Canada’s Latin Immigrants

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Canada’s Latin American immigrant entrepreneurs are dispelling stereotypes of Latin America’s revolutionary communist past

A story appearing in Monday’s Financial Post, one of Canada’s largest national business newspapers, examines the achievements of Canada’s Latin American immigrant entrepreneurs, which it calls Generation Ñ.

The article, by Eva Salinas, profiles Diego Casco, a native of Costa Rica, who now runs a branding agency in Toronto, Canada.

His experience is like that of many in Generation Ñ. After over a decade of building a modest-sized business, improving his English, and getting himself familiar with the Canadian business environment, he now wants to expand his company and become a major player in Canada’s business world.

Salinas notes that Generation Ñ is highly educated, with the Toronto Hispanic Chamber of Commerce (THCC) finding that 91% Toronto area Latin American professionals surveyed report having a Bachelor’s degree or higher:

“These people are educated, they come with a decent amount of money and they’re looking for not only a new life but to be recognized in terms of their quality of work and experience and education that they have,” says Jacob Moshinsky, THCC chairman and Mexican-born entrepreneur. He now runs Ñ Communications.

“There’s absolutely a misconception of what the Hispanic community is here,” he adds, listing Latino stereotypes such as all being refugees and living in low-income areas.

Unlike the previous generation of Latin American business owners, the new generation is looking to integrate into the wider Canadian economy and target beyond its own cultural group, says Salinas.

Salinas describes Cristian Contreras, who immigrated to Canada from Columbia, and graduated from the University of Toronto, as a Generation Ñer who fits this profile.

Since graduating, he has taught himself how to program, and created a political collaboration website called Next Parliament, which is intended to improve the way Canadians create, discuss and share political proposals.

Immigrant Income Levels Depend on Canadian Immigration Program

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Data from the Statistics Canada report on the income of immigrants, released in December, shows large differences in the economic performance of immigrants depending on which immigration program they were admitted through (Moxy)

In the second part of our series on the recently released Statistics Canada report on the income of immigrants, we delve deeper into the data and look at how various economic class immigration programs compare for immigrants who arrived between 1986 and 2010. The first part can be found here.

Among the most important immigration-related issues for the federal government every year is picking the right mix of immigration programs to make up the annual quota that it sets aside for new permanent residents.

The major priorities that the federal government seeks to meet in selecting the allocation are:

  • meeting the humanitarian commitments it has set for itself to re-settle a certain portion of the world’s refugees
  • accommodating Canadians whose family members live abroad and who they would like to re-unite with through family class immigration sponsorship
  • admitting immigrants that will contribute to Canada’s economy and meet its investment and labour needs

To meet the last objective, the federal government currently allocates 60 percent of the permanent residence quota to economic class immigration programs, which consist of the Federal Skilled Worker Class (FSWC), the Canadian Experience Class (CEC), the business class programs, and the provincial nominee class programs.

Historically, the skilled worker program (FSWC) has contributed the largest portion of Canada’s economic class immigrants, but there have been calls to increase the proportion admitted through programs in the business and provincial nominee classes.

The provincial governments in particular have frequently called on the federal government to allow them to pick a greater share of Canada’s immigrants through their respective provincial nominee programs (PNPs), which has resulted in their quotas being increased from 2,500 in 1999, to over 30,000 in 2009.

Whether the FSWC should remain the mainstay of Canadian economic-class immigration or whether the PNPs, or perhaps business class programs, should continue to see their role expanded, is a question that the StatCan report can help answer.

The 30 year longitudinal study (we have only reproduced 24 years of it, as we assessed the data from 1980-1986 to be too limited to be useful) has a few surprising findings.

Income of immigrants by immigration program. Skilled worker class immigrants see the most wage growth over the 24 year period.

Early success for PNP immigrants, long-term success of the skilled worker class immigrants

Immigrants admitted through the FSWC earn significantly more than those admitted through the business classes, and after seven years in Canada, more than PNP class immigrants.

Average income in 2010 for skilled worker class immigrants. The graph shows rapid income gains in the first few years following immigration, followed by more gradual income growth

PNP-class immigrants earn nearly double what other immigrants earn in the first year of their permanent residence. This is most likely due to the fact that a person needs to already be in Canada and working to qualify for most provincial nominee programs, whereas immigrants who become permanent residents through the FSWC or business class programs arrive in Canada for the first time on the day they receive their permanent residency.

The data shows that the PNPs’ lead in income quickly closes, as FSWC immigrants see rapid income gains in their first few years in Canada.

Average income in 2010 for provincial nominee (PNP) class immigrants. PNP-class immigrants start out with much higher incomes than other economic-class immigrants

It should be taken into account however that the data on PNP-class immigrants that arrived in the early 2000s is quite limited, given the provincial nominee programs admitted fewer than 10,000 immigrants for most of the first of half of the 2000s, so the long term income growth statistics for the PNP class could change over-time.

Poor performance of business class immigrants

The business class immigrants, despite having met demanding minimum net worth requirements to qualify for immigration to Canada, have lower income levels than skilled worker and provincial nominee class immigrants, especially in the first few years after they arrive.

Over the long run, their income gradually converges with the skilled worker class, but this takes nearly 24 years and it never meets the level of their skilled worker counterparts.

One partial exception to this is immigrants from the Africa and Middle East region. Business class immigrants in this group see their income surpass skilled worker class-immigrants from the same region after 24 years.

Average income in 2010 for business class immigrants. Business class immigrants from the Africa and Middle East region see significant income growth over a 24 year period

Cause of business class under-performance

Ideally, business class immigrants, with their substantial capital and business experience, would be the biggest contributors to the Canadian economy among the country’s immigrant population.

One possible explanation for their lower than expected incomes is that they keep their investments abroad.

Canada, which has relatively high average personal income tax rates, is out-matched in investment opportunities by many regions in the world, like the rapidly developing Asian country of South Korea, which has average personal income tax rates and government expenditure levels that are one third lower than Canada.

While business-class immigrants could choose to remain invested abroad, skilled worker class immigrants likely benefit from working in Canada, since it is a high-income country that provides better wages than the vast majority of the world, and in any case they have few options other than working and earning their salary in Canada, since labour is not mobile like capital.

If investment opportunities in Canada being comparatively poor is in fact the cause of lower than expected income performance of business class immigrants, this is not a problem that the federal government can fix by changing immigration selection rules.

Regulatory Compliance Costs Canada’s Economy $6,000 per Employee, Possible Relief on the Way

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Regulations cost Canadian businesses nearly $6,000 per employee per year, with most of that cost borne by small businesses

A report by the Canadian Federation of Independent Business (CFIB), which represents Canada’s small and medium sized businesses, estimates that the country’s regulatory burden costs Canadian businesses nearly $6,000 per employee per year, with the cost falling heaviest on small businesses.

The report, done in partnership with auditor KPMG, also found that compliance costs are higher in Canada than the US for businesses in all size categories except the largest – those with 100 or more employees – for which per employee costs in Canada, at $1,146, are slightly lower than the $1,278 cost in the U.S.

For the smallest businesses, which are categorized as those with 5 or fewer employees, regulatory costs in Canada average $5,942 per employee, significantly more than the $4,082 per employee cost in the US.

In the survey outlined in the report, 31 percent of Canadian business owners said they may not have gone into business if they had known the burden of regulation, a discouraging finding for Canada’s business environment.

The report is the second major analysis in the last year showing that regulations are placing a heavy burden on Canada’s smallest economic players.

A study by the Canadian Labour Market and Skills Researcher Network (CLSRN) last October found that occupational regulations are preventing many of Canada’s immigrants from working in their field of study, at a cost of $2-5.9 billion a year to the country’s economy.

A turning of the tide

Like most OECD countries, Canada has experienced gradual regulatory creep over the past several decades, as a diverse array of labour and business interest groups have promoted the expansion of regulations in their respective sectors, to limit the competition they face from the greater labour and business markets.

The trend could see a reversal over the coming years though, with the seminal Red Tape Reduction Action Plan. The plan is one of the most ambitious regulatory reform initiatives in Canadian history, and includes:

  • A One-for-One Rule which will require compliance costs imposed by the enactment of new regulations to be offset by an equal reduction of regulatory compliance costs through the reduction of existing regulations.
  • A Small Business Lens which will require regulators to take into account the costs imposed on small businesses by regulations.
  • The publication of Forward Plans, which will inform businesses of upcoming regulatory changes 24-months in advance of their enactment, to allow them to prepare for the changes.
  • Service Standards that set targets for speedy issuance of licences, certifications and permits, and encourage the establishment of feedback mechanisms by regulators for businesses subject to licensure.
  • An Annual Scorecard which will publicize progress on reforms, in particular the One-for-One Rule, the Small Business Lens and the Service Standards.

In addition to the six systemic reforms, the plan requires 90 department-specific reforms over the next three years. The President of the Treasury Board of Canada, Tony Clement, described the Red Tape Reduction Action Plan as a “game changer” when it was unveiled last October.

Canadian Government to Provide $400 Million to Bolster Domestic Venture Capital Industry

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The headquarters of Shopify, one of Canada’s rising tech stars, in the ByWard Market district of Ottawa. The federal government hopes to see more high-growth technology companies like Shopify being started in Canada (GOOGLE MAPS)

The Harper government announced on Monday that it will inject $400 million in Canada’s venture capital industry as part of the Venture Capital Action Plan.

The goal of the plan is to encourage the creation of large venture capital funds that specialize in investing in early-stage, high-growth startup companies in Canada.

“Our Government understands that Canada’s long-term economic competitiveness in the emerging knowledge economy needs to be driven by globally competitive, high-growth businesses that innovate and create high-quality jobs,” said Prime Minister Stephen Harper in announcing the initiative.

$250 million of the $400 million of federal funding will be used to create a “fund of funds” for Canada’s venture capital industry, which will invest in Canada-focused venture capital funds.

$100 million will be invested into a private-sector counter-part to the government-run ‘fund of funds’, which will have a similar role as the government-administered fund, but with private and provincial co-funders.

The remaining $50 million will be invested into “three to five” existing high-performance Canadian venture capital funds.

The federal government has made several efforts over the past year to support Canada’s venture capital and startup industry, including providing publicity for the volunteer-led and funded Startup Canada project, and beginning consultations on creating a new ‘startup visa’ to provide a route for entrepreneurs with venture capital funding to immigrate to Canada.

With top marginal personal income tax rates that are among the highest in the world though, the government could face an uphill battle in fostering an entrepreneurial culture in Canada according to some analysts.

A study released by Canadian economist Ergete Ferede last year shows a negative correlation between the extent of redistribution and progressivity in the personal income tax and the rate of self-employment.

Provincial Government in Canada Criticizes Remarks About Immigrant Investor Program

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A river walkway in Winnipeg, Manitoba’s largest city

The provincial government of Manitoba on Tuesday shot back at critics who have said the NDP government’s management of the Manitoba Provincial Nominee Program (MPNP) for Business has been a failure.

Among the critics are Manitoba Progressive Conservative immigration critic Bonnie Mitchelson and the former program manager for the MPNP for Business, Randy Boldt, who say that a report showing that only 20 percent of foreign investors nominated for permanent residence by the Manitoba provincial government have made their required investment points to a total program failure.

The government criticized those statistics as misleading and inaccurate, stating that immigration through the MPNP for Business is a two-step process, with the province first nominating individuals, and the federal government then admitting the individual, and that investor applicants only make their investment after the second step is complete.

The government says that the 20 percent figure is for all applicants who have completed the first step and been nominated by the Manitoba government, and includes many who have yet to complete the second step. Figures that only account for those who have completed both steps shows 60 percent of applicants end up making their investment.

The program requires all immigrant investor applicants to provide a $75,000 deposit, which they forfeit if they do not meet the program’s requirements of investing $150,000 into a Manitoba-based business within two years of arriving in Canada.

The Manitoba government says that $200 million has been invested into the provincial economy through the program since it began in 2000.

Fast Track Option of Popular BC Immigrant Investor Program Suspended For Review

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The BC provincial government announced on Thursday that the Fast Track option in the business component of the BC PNP would be suspended, pending review of its economic contribution to the province's economy

The BC government announced on Thursday that it is suspending the Fast Track nomination option in the business stream of the BC Provincial Nominee Program (BC PNP).

Through the business immigration stream of the BC PNP, foreign nationals who invest at least $200,000 to $400,000 to start or purchase and expand a qualifying BC-based business, are nominated for permanent residency by the BC provincial government after two years.

Under the regular BC PNP business program, candidates receive a two year work permit, during which time they are required to meet the business requirements detailed in the PNP performance agreement.

At the conclusion of the two year period, the BC government reviews their business, and if it fulfills the conditions of the program, nominates them for immigration.

The Fast Track option of the BC PNP business program is a special stream that allows candidates who make a $125,000 deposit to the BC government to receive a nomination for permanent residency immediately upon arriving in Canada, instead of being required to wait two years and fulfil their PNP performance agreement first.

Applicants who do not meet the obligations set out in BC PNP performance agreement forfeit their $125,000 deposit but can still keep their permanent residency status.

The BC government said that it would review this Fast Track option to see if it contributes to the province’s economy and that the suspension will not affect the regular business immigration stream of the BC PNP.

Canadian Government to increase Investor Program Financial Requirements

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Last year, only 30 minutes after it began, the federal government’s investor program reached its quota of 700 applicants. Now Canadian Citizenship and Immigration Minister Jason Kenney wants to increase the amount immigration applicants need to invest to become permanent residents of Canada.

As reported in the National Post, Mr. Kenney said:

“I’ve always said that I believe Canada has been underselling itself through our Immigrant Investor Program ..

They get permanent residency in the best country in the world for lending Canadian governments $800,000 for five years … so it seems to me, given there are millions of millionaires around the world who would love to come to Canada, we can do better than that and we’re looking at ways we can redesign the program to extract more bang for the buck.”

Instead of an $800,000 loan to the federal government for five years, Mr. Kenney said he would prefer that that immigrant investors be required to make a permanent investment in Canada, and to show that the investment created a certain number of jobs for a certain number of years.

That is how the federal government’s entrepreneur program, suspended last July, worked. That program is currently being revamped to attract more “high value innovators” and is expected to be re-instated soon.

Mr. Kenney also said that the federal government is considering increasing the size of the required investment, which is currently less than the $1 million required by the investor programs of Australia and the US, and the equivalent of $1.6 million required by the UK’s.