Canada Steps Up Surveillance of Foreign Investment in Pandemic

(Bloomberg) -- Canada says it will apply extra scrutiny to foreign investment in companies that are related to public health or that supply critical goods during the pandemic.

“There are vulnerable businesses that are going to be important to our recovery who are perhaps exposed to foreign purchases,” Prime Minister Justin Trudeau told reporters in Ottawa Sunday. “We will be strengthening our oversight and paying close attention to foreign investment in this country to ensure there aren’t people taking advantage of this crisis.”

On Saturday, his government released a policy statement saying it will scrutinize “with particular attention” any investment by state-owned firms or by private investors with close ties to foreign governments -- regardless of the size of the investment.

“Some investments into Canada by state-owned enterprises may be motivated by non-commercial imperatives that could harm Canada’s economic or national security interests, a risk that is amplified in the current context,” the statement said.

The move follows the actions of other countries to tighten investment rules during Covid-19. Australia, for example, said last month all foreign takeovers will need government approval, no matter how small.

Canada will leave the enhanced measures in place until the economy recovers from the pandemic, according to the policy statement.

The shutdown of non-essential businesses and social distancing measures to curb the spread of the virus has brought the Canadian economy to a near halt and caused company values to plummet. Canada’s benchmark S&P/TSX Composite Index is down almost 16% since the start the year, even after four straight weeks of gains.

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