Thank you, Mr. Chair, for the opportunity to address this committee.
Thank you, Mr. Chair and distinguished members of the committee, for inviting me to speak today.
I have to tell you that it is both an honour and a privilege to be here with you. I know the request came in not too long ago, but for me it was really important to be here. It really demonstrates the importance and it's nice to see that the committee recognizes that as well. It is a pleasure to address the committee on the measures we are taking to educate and support Canadian SMEs seeking to scale up through innovation and trade.
I'd like to take this opportunity to acknowledge my colleagues who have accompanied me here this afternoon. Kelly Gillis is the associate deputy minister at Innovation, Science and Economic Development Canada. David Lisk is the vice-president of the industrial research assistance program of the National Research Council. Michel Bergeron is the senior vice-president of marketing and public affairs at BDC.
As we all know, SMEs represent 99% of all businesses in Canada and employ almost 90% of the private sector workforce. We are a nation of entrepreneurs who want to succeed, and small businesses are the backbone of the Canadian economy.
They create jobs, support communities and enable our best and brightest to make their mark.
As the first , my goal is to help these small businesses prosper through innovation and exports.
First, allow me to talk about innovation. In June, I joined my colleagues and in launching the government's innovation agenda. Our goal is for Canada to be a world leader in turning ideas into solutions, in growing start-up companies into global successes, and in attracting and retaining the best talent. We listened to Canadians closely, and we are now acting on a plan to make this vision a reality.
Canadian entrepreneurs told us, for instance, that government support for innovative, high-growth firms must be simplified. In that regard, I was thrilled to launch the accelerated growth service last June. Under this initiative, we are piloting a different approach to delivering federal support to growth-oriented companies with export ambitions. The AGS brings together federal partners like Export Development Canada, the trade commissioner service, the National Research Council, the Business Development Bank of Canada, and the regional development agencies. The goal is to help high-growth SMEs to become more productive, innovative, and export-oriented. This is why EDC, with its relationship with foreign buyers, and the trade commissioners, with their on-the-ground expertise around the world, are critical partner organizations.
The AGS offers high-growth firms one point of contact and tailored services like strategy development, finance, and export support. This is all offered in a client-centric, coordinated manner. This is about delivering the right services at the right speed and scale.
Let's take a look at LED Roadway Lighting Ltd. based in Halifax. They are a world leader in the design and manufacture of street lighting and LED control systems. Their products help municipalities and utilities around the world save on energy costs as compared to those for conventional lighting technologies. Through the AGS, they were introduced to services available to them in a more cohesive and coordinated way, saving them valuable time and allowing them to focus on business development. Today, the company continues to grow, with operations in the United States, Mexico, Brazil, and China.
By March, we expect to have supported 150 firms, with another 300 to come on board in 2017. Entrepreneurs also told us during the innovation agenda consultations that they could benefit greatly from having the Government of Canada as a client before they export their products abroad. We're now working to expand the scope for Canadian firms to bid on government procurement projects from coast to coast to coast. The benefits here are twofold: increasing business opportunities, especially for smaller businesses, and lowering government costs. Our aim is to ensure that firms across the country get broader access to billions of dollars in new procurement opportunities, whether we're talking about a Calgary contractor or a Thunder Bay supplier or a Saskatoon entrepreneur with a solution. One thing is clear: having the federal government as a customer would give Canadian companies a leg up as they seek clients across the globe.
Allow me now to turn to trade. As committee members know very well, only 12% of small and medium-sized enterprises export. Many Canadian SMEs hope to expand beyond the United States, with whom nearly nine out of 10 of our exporting SMEs do business. Indeed, only 31% of SMEs export to Europe, and even fewer export to China and other Asian countries. Of the 12% of SMEs that export, nine out of 10, or about 89% of them, export to the United States. About 13% of them export to China, and 16% export to other Asian countries.
We want to broaden their horizons. We want them to consider more export markets, as there is a real opportunity for growth here. Small firms, however, cite a number of challenges in expanding to global markets. When it comes to addressing these issues, SMEs, which have fewer resources than do large corporations, can really have a tough time. We understand that, so to support Canadian exporters, I was thrilled to launch a program called CanExport with the Minister of International Trade.
CanExport helps Canadian small businesses explore global markets, while creating jobs and supporting economic growth in Canada.
I understand that Global Affairs officials provided an in-depth briefing on the program last Thursday, so I won't belabour that point.
CanExport is a key element of the government's overall trade and investment strategy. I have been working closely with and now with on a new international trade and investment strategy.
This strategy will include a progressive trade policy agenda that recognizes and addresses SMEs' concerns over trade agreements and negotiations. It will also include enhanced support to SMEs that are looking to grow through exporting. The new strategy will also feature trade agreement implementation plans in order to help SMEs take advantage of the opportunities that flow from trade agreements. The strategy will also aim to deepen trade and investment relations with emerging markets, particularly China. More details will be announced later this year.
One detail I can share now, however, is that in the strategy we will add a focus on SMEs owned by under-represented groups such as women and indigenous Canadians.
On the topic of women entrepreneurs, last June I signed a memorandum of understanding with the United States and Mexico to promote women's entrepreneurship and the growth of women-owned enterprises in North America. Also, as you know, earlier this week, announced the creation of the Canada-United States council for the advancement of women entrepreneurs and business leaders. Not only do these initiatives help to promote and support the growth of women-owned enterprises, but they promote these companies to think and go global.
Our Canadian companies trade not only in goods, but in services.
As the minister responsible for tourism, I would be remiss if I did not mention that tourism is Canada's largest service export, accounting for 2% of our GDP. The tourism sector is critical for SMEs, generating $18.4 billion in export revenue in 2015. Of the 192,000 businesses in the tourism sector, 98% are small and medium-sized enterprises. Not only is tourism an important economic driver for SMEs, but tourism marketing also supports international trade opportunities by raising awareness of the qualities that make Canada a favourable place in which to invest and do business. The Canadian brand is strong, and we will keep it that way.
Finally, allow me to touch briefly on the importance of interprovincial/territorial trade.
As you know, our current rules prevent us from truly having one national economy. I am pleased to tell you that our government is working collaboratively with our provincial and territorial counterparts on modernizing Canada's internal trade framework to help SMEs compete and thrive. A more modern agreement will help to further open up our market and expand trade within Canada—a stabilizing force for our economy during periods of global instability. When completed, it will be instrumental in helping SMEs scale up at home in order to help grow the next generation of globally competitive Canadian companies. This will create opportunities for good middle-class jobs, attract innovative companies, and grow our economy.
In closing, you can count on me to continue to ensure that SMEs' interests are reflected in trade agreements and programs designed to support our exporters.
I sincerely want to thank all members of this committee for recognizing the vital role SMEs play in our economy and for recognizing the importance of ensuring that SMEs have the export markets they need to successfully compete.
Mr. Chair, I want to thank the committee members.
I'm now ready to answer your questions.
I will agree with you that we need to do a better job to communicate with them.
There are programs and services at work. When we are looking at the success rate of these SMEs that are applying, a good number of SMEs are successful, but we want to see that number go up.
When it comes to the Canada Business Network, we need to ensure that every entrepreneur or anybody who wants to consider business is going to the Canada Business Network and looking at those opportunities. It's a single window, as our colleague has spoken about. You can mention where you're from and what you're looking for, and then all of a sudden it will provide you the information.
BizPaL is another opportunity for businesses that want to start up. Regardless of the community, province, or territory, you're able to say where you're from, and then you're able to see what regulations, licensing, and so forth you need to ensure that you're doing it in the right way.
By bringing regional development agencies under one umbrella, you're also able to go to the RDAs to retrieve that information, but most important, I would say, is the IRAP concierge service. Most people don't know about it, and that's unfortunate. If we can consult and engage with people earlier, then they will be able to go to this concierge service, which will be able to help them manoeuvre and get to the spot they're going to.
I will challenge all members in the House and will be working closely with them to ask them to consider sharing information, as part of their householders, on how SMEs can succeed and grow.
That's an excellent question. You do have a beautiful riding.
I would have to say that I have a beautiful riding as well, and I'm sure every member would agree that is the case. We need to create opportunities to be able to flow through that border better. We know what that border does. We know the relationship between Canada and the United States is a critical relationship, and that's what the did a great job of representing.
It was really good to see also south of the border, speaking to her counterpart to ensure that SMEs were being represented.
When it comes to this government and our approach, it's not that I need to go down to be the voice of SMEs. When any minister, including the , travels to any community in any country, he or she is also voicing what we are talking about right here.
We will continue to work closely with the to ensure that those opportunities exist, because we know how important pre-clearance is. That's why, for me, regardless of where people talk about it, this conversation comes down to the people we are serving and the responsibility I take very seriously.
I also want to take a moment to talk about the trade opportunity and the fact that the United States is our number one export market. It is our number one source for tourists. With Canada's 150th birthday this year, with the Charter of Rights and Freedoms celebrating its 35th anniversary this year, and—just because it's my riding—with the University of Waterloo celebrating 60 years, and Conestoga College, 50, we really want people to come and see what our country has to offer. Something we have in common in every single community that I've been to is that we all have tourism operators. They are SMEs. They have the potential to grow and succeed, but we need someone to showcase...and allow people to know to come here.
People individually will feel that they bring tourists to their communities, but the reality is that they come to our country, and that's why the government invested $50 million over two years in Destination Canada. We continued with the connecting America program to ensure that the United States considers Canada as a travel destination.
We know that with the dollar right now we have opportunities. We will continue to thrive and grow from those opportunities. We also know that Canadians need to be challenged to visit the10 provinces and three territories, and that's why the millennial travel program is so important. It's so that Canadians also travel.
Five hundred.... We had an exercise in Chatham. We have a business development organization that analyzes how we're doing with the hiring and that. I was part of that and was very pleased to see the work they are doing. They offered those statistics to us. Now, I want you to understand; I want you to just kind of visualize what I'm saying here. They presented how many businesses we had that had over 500, and there were very few. I think there were two. Then for the 100 to 500, there weren't that many either. The vast majority had less than 100.
Now, this is kind of a trick question. I don't know if it's going to be much different in my riding, Chatham–Kent–Leamington, which is a small rural riding. Our main city has a population of 40,000. If I were to ask you the question, the number of hirees, what would be the largest group? In other words, from zero to 100, 10 employees, 20 employees. What do you think would be the highest? I know this is kind of an unfair thing to offer you, but I do suggest that your department should get a handle on this and find out. I'm going to tell you because it's really not fair. It was zero, zero employees by a landslide.
At first I was shocked. What I'm telling you is, in Chatham–Kent—Leamington, the vast majority of all those small businesses that we're so proud of had zero employees. I can tell you why. I got thinking about this. As a businessman, I remember that, if government taxed us 50%—if that's all there was—you'd probably go out there to beat the bushes and try to make a living. You know what kills you? EI, because when you hire an employee, there are EI premiums, CPP, workmen's comp—and I know that's not part of the federal—licences, and energy costs, all those things. By the end of the day, after you've worked and you've tried to make a profit, you find out that you're behind the eight ball. There are more and more young people, more and more entrepreneurs saying, “This isn't worth it.”
I'm going to suggest this. I'm going to suggest that, first of all, the government give us those statistics. I really want to know them, nationwide. Then I think I'm going to suggest, because we're talking about working together, and I'd really like to do that, that we figure out a way to tackle this and get people excited about starting businesses again, because we could do all the other fancy stuff we want. We can have all the programs, but if those things are stopping our entrepreneurs, and I believe those are precisely the things that are stopping our growth, then we're just going to be spinning our wheels.
I know I'm almost out of time, but not yet. I've got—
I love that you're here presenting to us. I love that you're an amazing role model for small businesses, and the reason for that is.... I want to thank you for the energy and the can-do attitude that you bring to this portfolio. It is so important, and I know Mr. Van Kesteren knows that.
Small businesses, with zero, one, or two employees, they wear every hat and they need to have that energy. More than the energy, they need to have the belief, the faith that they are going to succeed, every single day they have to get up. To know that you're in this job supporting them and bringing that knowledge.... They feel that when government and departments are with them and on their side, they can tackle those big obstacles. They're huge: an export strategy, export pricing, risk management, getting paid, legal issues, etc., things that they may not have any expertise in. For us to be able to support them in that way....
I want to talk about one particular company here. It's a Canadian story.
A gentleman came from Germany, as an international student, and landed here in Ottawa. He is now a Canadian citizen. He was going to sell snowboards online. He couldn't do it, couldn't figure it out. E-commerce just wasn't there, so he started a company called Shopify, here in Ottawa. The headquarters is still here. That was in 2004. They started to sell their own snowboards. Now they do e-commerce for over 300,000 businesses globally. I got a chance to visit them at their Toronto office, and they showed me people selling everything from tea to tractors on this e-commerce platform.
The levelling of the playing field now is the Internet and being able to support these small businesses so that they can put their products and services out there and sell them around the world.
Can you tell us a little about what you think is coming up? I think we are on the precipice of big things with small and medium-sized businesses, especially because of the Internet levelling the playing field.
That's an excellent question.
My team just met with Shopify yesterday. It was interesting, because they are part of the solution. The more we engage and consult, and have these conversations, the more we find that every single person is part of the solution, just as every person on this committee is going to help us create those opportunities.
The innovation agenda will be quite the solution for e-commerce. We know that it is a challenge for some businesses to get online. We know that some rural and remote areas don't have full access, and that's why we need to ensure that there is a way of investing in connectivity. The connect to innovate program is an example of that. It will invest up to $500 million by 2021 to bring broadband Internet access to 300 rural and remote communities across Canada so that our SMEs, as well as communities, can grow and have those opportunities that we need them to have. That's how you create those opportunities and those jobs that were referenced earlier.
The BDC offers targeted initiatives for digital, websites, and using technologies. That's another partner we are leveraging and working closely with so that there is a solution for e-commerce, and more businesses are part of that world. We need people to be online. That's really how you can go global and consider export markets, because you don't have to be there physically but you are connected through the web.
NRC's IRAP helps businesses find other service providers, like the digital accelerators for innovation and research, and leverages Canada's investment in CANARIE and its research and education networks to provide Canada's high-tech entrepreneurs access to a free cloud. Those are programs and services that we are learning about and we know, but the right people don't know. That's why we are going to make sure that they know about those programs. We are going to communicate better and ensure that the voice of the people who know....
The office of consumer affairs offers guidance, such as the Canadian Code of Practice for Consumer Protection in Electronic Commerce—I can share that link with you as well and make sure all members have access to that information—so that you're actually thinking about the challenges, instead of having to face them once you're online. We want our businesses to be proactive instead of reactive, because when you are proactive you can achieve the growth and opportunities that we need you to achieve.
Honourable members of the House of Commons Standing Committee on International Trade, at the outset I wish to congratulate Canada on the approval of the CETA and the SPA by the European Parliament today. I am sure this is an important milestone for Canada and the EU in your continuing efforts for progressive free trade.
I'm honoured to be invited to make a statement to the committee on behalf of the Malaysian government regarding the TPP agreement. First and foremost, let me take this opportunity to highlight that Malaysia and Canada have long enjoyed warm and cordial relations. This year is particularly significant as we commemorate the 60th anniversary of Malaysia-Canada diplomatic relations.
I wish to reiterate that we share important historical linkages through our common membership in the Commonwealth. Canada is also a dialogue partner of ASEAN, and this year we commemorate 40 years of that relationship. We also are partners in APEC, and of course, we closely interact in other multilateral platforms.
Key focus areas in our bilateral ties are trade, investment, defence, and security co-operation, to name a few. In this regard, we value Canada as an important trade and investment partner. Total bilateral trade between Malaysia and Canada for the period January to November 2016 was $1.52 billion Canadian. In 2015, Canada was Malaysia's 27th largest trading partner.
Our investment in the Canadian market is mainly in the oil and gas sector. The $36-billion potential investment by Petronas, our national oil corporation, in British Columbia is touted as the largest foreign direct investment in Canada. Certainly this investment will be a catalyst for enhanced trade and commercial relations between our two countries. We were delighted with the approval, with conditions, by the Canadian government on September 27, 2016, for Petronas to proceed with the project. Petronas is presently undertaking a review on whether to proceed.
As any open economy highly dependent on international trade and FDI, Malaysia embraces free trade, much like Canada. Therefore, the TPP offers an excellent platform to realize the creation of a huge market, as it encompasses some of the biggest economies in the Asia-Pacific region.
TPP is different from other FTAs in that it is more comprehensive and encompasses a wider scope, such as government procurement, environment, government-owned companies, and intellectual rights. Consultations by our MITI with various stakeholders have also revealed an increasing need by Malaysia's companies for more open markets and trade facilitation. The TPP agreement motion was tabled in the Malaysian Parliament in January 2016, which enabled our lawmakers to deliberate on the pros and cons of the TPP to our country. The TPP agreement motion was passed with a majority support of 127 against 84, resulting in Malaysia signing the agreement with Canada and other TPP members last February in Auckland.
Many Malaysian products are of world standard and are able to compete at a global level. Malaysian companies are also increasingly becoming international investors and require a level of transparency and predictability that can only be guaranteed effectively through binding agreements like FTAs.
There is also interest from foreign companies in non-TPP countries that are increasingly exploring Malaysia as a base for their operations to enjoy the benefits of the TPP agreement. In addition, there are Malaysian companies that export to the U.S. and Canada that are increasingly interested in seeing the implementation of the agreement.
The TPP agreement will allow Malaysia to continue to be an integral part of the deepening economic integration taking place within the Asia-Pacific region. It will also enable us to engage in a more concrete way with major trading partners such as Canada, the U.S., Mexico, and Peru, with which we currently do not have FTAs.
As a member of the TPP, Malaysia will also be able to participate as an important link in the whole regional supply chain. Almost 4,000 tariffs within this market will be abolished. This includes our main exports, namely, electrical and electronics, chemical and petrochemical, wood-based products, food, rubber-based products, and textiles.
In the long run, Malaysia believes the TPP will bring benefits of the lower cost of goods and more efficient production by taking advantage of the competition and economies of scale. The successful conclusion of the TPP will form an unprecedented market of 793 million people with a combined GDP of $27.5 trillion U.S. This far surpasses the limited domestic market of 29.5 million people and a GDP of $300 billion U.S. in Malaysia.
With the TPP, we aim to open up new market opportunities and horizons for Malaysians to take advantage of the international marketplace. In short, the TPP will provide an opportunity for Malaysia to be a seamless market with preferential access far beyond our population. It will provide investment opportunities regionally and globally.
With regard to Malaysia and Canada, it will certainly enhance trade and economic relations between our two countries, as we currently do not have any bilateral FTA. The TPP agreement would also introduce a new dimension to regional trade and investment between countries.
In addition to extensive trade liberalization in goods and services, TPP was further intended to promote fair competition, develop the digital economy, govern the role of state-owned enterprises in the global economy, promote free investment movement, enhance enforcement of intellectual property, and harmonize legal and regulatory issues.
At the same time, TPP is also the first FTA that has a dedicated chapter on SMEs. This provides numerous opportunities for Malaysian SMEs, especially when it comes to knowledge sharing and collaboration with SMEs from other TPP countries. This will allow deeper integration of SMEs in the regional and global supply chains.
We also recognize that TPP is not just about trade. It will also help improve Malaysia's competitiveness and governance through the adoption of international standards, for example, in halal requirements, as well as best practices in areas such as labour and environment.
Malaysia sees the TPP as a balanced agreement beneficial to all its members. However, we acknowledge that the future of the TPP after the U.S. withdrawal would very much depend on further consultation and collective decision-making by the remaining TPP agreement members, including Malaysia. The entry into force of the TPP agreement under the present conditions cannot take place without U.S. participation.
Going ahead without the U.S. is an option, but this would require an amendment to the clause on entry into force in the text of the signed agreement. In this regard, TPP agreement chief negotiators from the other 11 countries, including Malaysia, would need to be in constant communication with each other to consider all available options before deciding the best way forward.
During the meeting of the 12 leaders of the TPP agreement countries in Lima, Peru, on November 19, 2016, all leaders reaffirmed their commitment towards the realization of the agreement because of the benefits it will bring to their respective economies and the region, particularly in boosting trade and investment, as well as further enhancing the internationalization of small and medium-sized enterprises.
Going forward, Malaysia remains hopeful that the agreement will be implemented as agreed to in Auckland on February 4, 2016, as it is an important undertaking in an open economy that will deepen co-operation in the Asia-Pacific region. Should the TPP agreement fail to enter into force, Malaysia would see it as a missed opportunity.
As expressed by our Minister of International Trade and Industry at the World Economic Forum in Davos recently, should the TPP agreement fail to materialize, Malaysia's focus would be to enhance the economic integration of ASEAN in the context of the ASEAN economic community's “Blueprint 2025”. We would also be pushing for the timely conclusion of the regional comprehensive economic partnership, or RCEP, as well as pursuing bilateral FTAs with TPP members with whom we don't have any preferential trading arrangement.
As regards Canada, we welcome the statement by , who was then Minister of International Trade, that Canada will conduct a feasibility study on an ASEAN-Canada FTA. We hope that the study will find that such an agreement would be beneficial to both Canada and ASEAN. As of now, ASEAN has existing FTAs with China, South Korea, New Zealand, India, and Japan.
In the meantime, Malaysia will continue to monitor closely developments in U.S. trade policies. With or without the TPP agreement, Malaysia will continue to amend various laws and regulations that have been identified, to make them relevant in current times. We hope to table them in parliament this year. The changes to these laws are not merely to comply with the TPP agreement but also are part of Malaysia's internal domestic review in order to strengthen and update legislation, as well as to meet international obligations.