All posts by Sharif Hasan

B.C. government targets Chinese companies for investment diversification

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The B.C. government has stepped up its efforts to attract Chinese investment in multiple sectors in the province. The Minister of International Trade Teresa Wat met top executives of four major Chinese companies in two months last year, according to documents obtained through Access to Information request.

Baidu Inc., Tianjin Huabei, Tsinghua Tongfang and Poly Culture are the four companies that were invited to discuss investment opportunities in the bilateral meetings held in July and Aug. 2014.

All the four companies are market leaders in different industries in China ranging from information technology, mineral resources, art auction to film and television production and eyeing at expanding their operation in North America.

Jason Si, a senior manager at the Ministry of International Trade said the B.C. government is very keen to have diversified investment in the province and has targeted Asian companies for that.

“It’s a part of our long term economic relations development plan. Last year we had many government to government, government to business and business to business meetings and discussions to ensure that business leaders in different sectors come and invest in B.C.”.

International Trade and Intergovernmental Relations officer Kirsten Youngs said the government is encouraging diverse investment in the province as it has a number of direct and indirect benefits, including job creation, increased trade, and economic growth.

The B.C. government launched a new project titled HQ Vancouver to lure Asian companies to move their head offices to the city on Feb. 13, 2015.

The $6.5 million project is jointly funded by the B.C. government, the Business Council of British Columbia (BCBC) and the federal government’s Western Economic Diversification program.

“The project is part of Minister Teresa Wat’s mandate and is focused on promoting B.C.’s advantages as Canada’s Gateway to Asia,” Youngs said.

The initiative aims to attract five international head offices to B.C. by 2020. It has also set a target of attracting an investment amounting $100 million and creating 500 new jobs in the province.

Youngs said this project will help generate industry clusters that will attract other businesses within supply chain to the area.

At present nearly 1,000 international companies have operations in B.C., including the Bank of China and the Agricultural Bank of China – two of the world’s 10 most-profitable banks.

“These offices generate a number of direct economic benefits, including the creation of local, well-paying jobs and increased contribution to the tax base. They also generate indirect business services, ranging from accounting and legal to advertising services and real estate leasing,” Youngs added.

Wei Liu is the director of the B.C. chapter of Canada China Business Council (CCBC), a bilateral trade organization for businesses in Canada and China. He said that for many years Chinese companies were mostly engaged in real estate business in B.C. but the trend has started to shift in recent years and more and more investors from Mainland China are buying small and medium sized enterprises these days.

He also said many Chinese companies are showing their interest in investing in IT, entertainment and energy sectors as they find many advantages like location for corporate investment, outstanding telecommunications infrastructure, clean and competitive energy, and low tax rate in B.C.

“The province’s ports are closer to Asia than anywhere else in North America and B.C. has a competitive business environment, a skilled and diverse workforce, and a quality of life,” he said.

“The government wants investment and they want business. It’s a win-win situation,” he added.

ATIPA Request Documents:

Municipal Request 1

Municipal Request 2

Provincial Request 1

Provincial Request 2

Provincial Request 3

Federal Request 1

Federal Request 2

Rideau-Vanier residents aren’t happy with city’s garbage collection

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The residents of Rideau-Vanier are not happy with the garbage collection service in their neighbourhoods and want the city to act.

According to City of Ottawa Open Data Catalog, in August 2014 highest number of garbage related service request calls came from the ward and the residents say the problem still continues.

Garbage

Scattered garbage bins in front of a house in Nelson Street, Photo: Sharif Hasan

Marie-Gauthier, who has been living in the ward’s Sandy Hill neighbourhood since 1992 said, “The garbage problem isn’t sparing us. In fact, it’s getting worse every year.”

“There’s a high amount of garbage turn out and there are some people who don’t follow the system. So, it stays out for quite a while,” she added.

She complained that the city is not proactive enough to consider the growing number of people in the ward, which is contributing to the deterioration of the situation.

In August 2014, the total number of garbage collection related calls made from this ward was 70, which was 42 in the same month of the previous year.

A total of 817 calls were made from the 23 wards of Ottawa city in August 2014. The second highest number of calls came from Baarhaven while the lowest number of calls was made from Stittsville-Kanata West.

In August 2013, a total of 845 calls were made and College ward ranked number one whereas the lowest number of calls came from Kanata North.

Ward councillor Mathieu Fleury said that this is not unusual to have as many as 70 calls as the Rideau-Vanier is one of the most densely populated wards of the city. He also said that he appreciates the fact that people are making calls to keep their neighbourhood clean.

“It’s good that the residents are reporting the problems and I would like to work with them in order to improve the quality of life in the area.”

“I understand people want weekly garbage pick-up but we don’t have the workforce needed for that,” he added.

Fleury also said that the residents should maintain diversion bins and bag their garbage properly to get some relief from the problem.

Jakir Talukder, a PhD candidate at Ottawa University said that garbage collection has been a constant problem for the area and there is no action in sight.

“Many people blame it on the students who mostly live in the rental properties in the neighbourhood but it’s the responsibility of the city to find some kind of solution,” he said.

Talukder has recently moved to an apartment in Prince of Wales neighbourhood and feels happy that he does not have to worry about his trash any more.

Walter Robinson, the former chief of staff to Mayor O’Brien said in an e-mail that there are many reasons why people make the 311 calls. It could be a missed or late collection or a missing or damaged bin that people wanted to report.

He also said that 70 calls out of 817 constitute only 9 per cent of the total calls received by the service department. Therefore it should not be inferred that the service is really bad.

However, Gauthier said that garbage collection is a big issue and the city needs to address the problem seriously.

“They should do something about this before the summer. I fear what’s going to happen when it gets warm. Cats, raccoons, they all create such a mess and it smells horrible,” she said.

The role of the GST in Canadian economy, 25 years after the controversial tax bill was passed

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25 years ago the Conservative dominant House of Commons passed the Goods and Services Tax (GST) bill despite huge opposition from both political rivals and the public. But the GST is now one of the major sources of revenues for the Canadian government.

In the fiscal year 2013-14, the total amount of revenues collected from the GST was 29.9 billion dollars, which constitutes 1.6 per cent of the total gross domestic product (GDP). The amount is projected to have a steady increase in coming years.

Tax consultant and lawyer Amin Miah said, “The government won’t be able to implement its budget without the GST. People don’t like to pay taxes but now Canadians understand that the GST is crucial for running social programs”.

The Progressive Conservative government led by Stephen Harper cut down the seven per cent GST by one point on July 1, 2006, and a further percentage point on Jan. 1, 2008. The measure was welcomed by the public, consumer groups while critics said it benefitted the high income people only.

University of Ottawa Professor Jean Bernard said that lowering the GST was a bad decision. He said, “The GST cut does not make a huge difference for the average income households but imposes certain extra costs on businesses.”

“The revenue losses caused by the reduction in the GST mean cutting back funds for social welfare and development programs”, Bernard added.

The GST is harder for the people to evade, as they have to pay the federal sales tax whenever they buy something.

Former Liberal MP Sheila Copps who fought against the GST during her political career said in an e-mail, “Governments like it because it is impossible to avoid the GST if you purchase consumer goods, as everyone does. It generates revenues that some corporate taxpayers would not otherwise pay”.

Sales tax revenue is more recession-resistant and government-friendly than corporate or personal income tax payments.

In December 1990, after eight months’ debate, amid the cries of protestors in the gallery, members of Parliament voted on the highly controversial Goods and Services Tax bill.

Liberal and NDP members jeered at the Tories and raised protest cards against the proposed seven per cent tax saying it would be hard on lower income Canadians.

On the other hand, the Conservatives defended the tax as a deficit-busting tool and the then Prime Minister Brian Mulroney was adamant to get the bill passed. On its third and last reading, the House of Commons voted to pass the bill 144 to 114, which went into effect on Jan. 1, 1991.

Earlier in September 1990, Mulroney used the little known and highly complicated constitutional provision to stack upper chamber with eight more Tories to evade Liberal opposition to the GST in the Senate.

“At the time, there was already a manufacturers’ sales tax, and the GST was designed to replace that but covered many essentials, including home heating, books etc.,” Copps mentioned.

Copps resigned from the Parliament in 1996 in protest of the Liberal government’s policy of retaining the GST though she was reelected in subsequent by-election.

Prior to the federal election in 1993, the Liberals pledged to eliminate the GST once they were elected.

Documentation:

The History of the GST

The Goods and Services Tax: Overview and History

 

Target departure is likely to hurt Shopping mall owner RioCan

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RioCan

Canada’s largest retail landlord RioCan is likely to be affected by Target’s departure as the company generates 2.5 per cent of RioCan’s total annualized rental revenue.

The financial information of the 3rd Quarter of 2014 shows a slight increase in earnings before interest, tax, depreciation and amortization, which indicate that RioCan may have hard time tackling the blow Target’s withdrawal may cause.

According to the report, net earnings attributable to the investors is $162 million, which is $33 million more than the amount posted for the same period last year.

Deen Taposh, an investment analyst at Lamarnic & J Ltd. said, “RioCan reports another stable year. The increase in the company’s enterprise value in 2014 shows Riocan, as a company has experienced an increase in its value or takeover price but that’s not substantial.”

According to the financial report, in 2014, RioCan has experienced a modest increase in its asset and a decrease in its debt too.

When asked how Target’s withdrawal will affect RioCan, Taposh said, “They will be affected for sure as Target constitutes a good share of RioCan’s revenue but it depends a lot on how the management deals with the crisis.”

“When you see a company’s debt coverage ratio is higher than 1, you know it can sustain damages as it illustrates that the company is generating enough income to pay its debt obligations. Then again RioCan is not able to carry the burden for long period of time,” Taposh added.

According to RioCan’s 2014 Q3 financial records, the company’s debt service coverage ratio is 2.89. Last year it was 2.10.

Minneapolis-based clothing and housewares retailer Target announced on Jan. 15 that they are going to withdraw themselves from the Canadian market.

According to a RioCan statement issued the same day, RioCan has 26 locations leased by Target. In the statement Edward Sonshine, Chief Executive Officer of RioCan said, ” While significant, Target currently represents less than two percent of RioCan’s annual rental revenue, thus reinforcing the strength of the Trust’s tenant diversification within the portfolio.”

“Our locations are in strong retail nodes, and while this process will unfold over time, we expect that the interruption to revenue will be minimal, if at all. Ultimately, this could prove to be an opportunity for RioCan,” Sonshine said.

RioCan, however, has been struggling to regain its committed occupancy rate in Canadian portfolio. Now the rate is 97 per cent while in the fourth quarter of 2012 it was 97.2 per cent.

The committed occupancy rate of the Canadian portfolio

over the most recent eight quarters:

Source: RioCan Real Estate Investment Trust 3rd Quarter Report 2014

The company’s committed occupancy rate in the US market is in a standstill as well.

RioCan owns and operates Canada’s largest portfolio of shopping malls, with ownership interests in a portfolio of 340 retail properties in Canada and US combined, containing approximately 80 million square feet as at Sep. 30, 2014.