Expert panel dissects role of state-owned enterprises in Canada

From left to right: former Canadian Senator Jack Austin, Yuen Pau Woo, President and CEO of the Asia Pacific Foundation of Canada, Dornoch Capital chairman Michael Phelps, and Daniel Shapiro, Dean of the Beedie School of Business.

The Beedie School of Business in partnership with the Asia Pacific Foundation of Canada brought together some of the country’s leading experts in Canada-Asia business affairs in hosting a panel discussion on the role of state-owned enterprises (SOEs) in Canada’s economic and political future.

The event was held by the Beedie School’s Jack Austin Centre for Asia Pacific Business Studies, and aimed to clarify the most important issues in the role of SOEs in the future of the Canadian economy, as well as devise a way forward in the interest of all stakeholders.

The event proved particularly timely, coming in the wake of Friday’s introduction by the Canadian government of a new series of rules for acquisitions of Canadian companies by state-owned enterprises. Prime Minister Stephen Harper approved the foreign takeovers of Nexen by China National Offshore Oil Co., or CNOOC, and Progress Energy Resources Corp. by Malaysia’s Petronas. Much of the Monday panel discussion focused on understanding the impact the new rules are likely to have on Canada’s economy.

The event featured a panel of leading experts consisting of former Canadian Senator Jack Austin, Dornoch Capital chairman Michael Phelps, and Yuen Pau Woo, President and CEO of the Asia Pacific Foundation of Canada. The panel was moderated by Daniel Shapiro, Dean of the Beedie School of Business.

Shapiro opened the discussion by referencing recent research he co-wrote with Beedie professor Steven Globerman on the international activities and impacts of state-owned enterprises. Shapiro’s research focused on foreign direct investment (FDI) in both developed and developing nations, and he ultimately posed the question of whether Canada needs a policy on SOEs, or whether it needs a resource policy, before inviting the panel to share their thoughts.

Austin then discussed the new government position, which he referred to as the “Harper Doctrine”. He said that he agreed with the principle of the new rules, but that they left a lot unsaid which will require discussion in the future. He pointed out one example which the rules do not address, regarding the issue of mixed enterprise companies which are part state-owned and part shareholder-owned, and said that this will require clarification in future.

The floor was then passed to Phelps, who said that the new rules were vague and that the process would benefit from more transparency. “The entire process is just starting and a lot of rules are still to be worked out. One thing that will not change, is that companies in the natural resources sector will occasionally get into distress, and in that event, the policies will become more flexible.”

Woo then shared with the audience his take on the new legislation. “What the government has done very skillfully is not draw a line in the sand prohibiting further SOE investment, but they have instead given themselves flexibility, limiting the prohibition of Canadian companies to the oil sands sector.”

Woo argued that SOEs investing in Canadian resources was not necessarily a bad thing, and pointed out that SOEs might benefit from exposure to Canadian practices such as worker safety and environmental policies if allowed to invest in the Canadian economy. In closing, he claimed that competition and an open investment climate was required if Canada wanted to produce globally leading companies which can represent the nation around the world.

The floor was then opened up to questions, with the panel sharing their thoughts on several issues, including what the next stages of the process will be; how the policy of the federal government will impact on the local government in terms of natural resources; and how FDI fits into the conversation about an overall federal policy towards energy.

For more information about the Jack Austin Centre for Asia Pacific Business Studies, visit https://beedie.sfu.ca/jack-austin-centre/