DUBAI: For the sixth consecutive time Competitive Alternatives, KPMG’s guide to international business costs, has ranked Canada as the lowest-cost G7 country in which to do business.  

“In today’s global marketplace, companies continue to seek out the best, most cost-competitive places in which to locate and invest,” according to Canada’s International Trade Minister David L Emerson.

“The KPMG study shows once again that Canada offers one of the most cost-effective business and investment climates in the world.”

The 2006 Competitive Alternatives report represents the most thorough comparison ever undertaken of G7 business operations, and those of Singapore and the Netherlands. Canada ranked second overall after Singapore, a newly industrialised country.

The eight-month international study of leading industrial countries compares the after-tax costs of starting up and operating 17 different types of business over a 10-year period. The analysis takes into account labour, transportation, energy and facility costs, as well as both income-based and non-income-based taxes.

The 2006 results show Canada having an overall 5.5 per cent cost advantage over the United States. When the results are broken down by municipality, Canadian cities rank higher than many of their international counterparts, particularly those south of the border.

For example, among large metropolitan areas in the G7, Montreal ranks first with a cost advantage of between two and 18 percentage points over comparable US cities. The study also reveals that larger cities such as Toronto and Vancouver also offer significant cost advantages over their US counterparts. Sherbrooke, Quebec, is again ranked first among all small and medium-sized cities included in the 2006 study.

The report also identifies Canada as the lowest-cost G7 country in 12 of the 17 industries examined, including important sectors such as aerospace, chemicals, electronics, medical devices, pharmaceuticals, precision manufacturing, telecommunications, biotechnology, software design, Web and multimedia, and back office/call centres.

According to the study, labour costs typically represent the majority of location-sensitive costs, for both manufacturing and non-manufacturing operations. Facility costs represent the second largest location-sensitive cost factor, accounting for 10 to 22 percent of costs for manufacturing operations and 4 to 13 percent for non-manufacturing operations. Taxes are another key factor, representing 3 to 13 percent of total location-sensitive costs.