Tuesday July 22, 2014

A Passage to India

B.C. growing business presence in Asia with two new trade and investment offices
BC Government Photo

Michael de Jong being sworn in as minister of health in 2011. The current finance minister followed through on a commitment he made as health minister to raise awareness of chronic diseases by doing a walking tour of northern India while in the Asian nation to open a pair of new trade and investment offices. India is among the Asian target markets for B.C. natural gas.

Michael de Jong has a simple answer to the question of why British Columbia would choose to open a pair of trade and investment offices in the Indian cities of Mumbai and Chandrigarh.

"It's all about sales," said the provincial finance minister, fresh from his early December trip to the Asian nation in support of the new endeavor.

"It's about promoting the sales of B.C. products into the Indian market and about identifying investment opportunities that exist both in India and, as importantly, in British Columbia," he added.

"There is a vast amount of potential investment wealth in India looking for opportunities elsewhere in the world. And what we want to do is ensure that they understand the opportunities that exist in Canada and, particularly, in British Columbia."

Mumbai is the financial capital of India, while Chandrigarh enjoys a strong cultural connection with British Columbians of Indian heritage as the capital of the States of Punjab and Haryana.

"Part of the history of this province for over 100 years," de Jong said of Punjabi-Canadians.

"The challenge, I've always said, is how to take that strong cultural linkage and transform it into an even more powerful economic linkage. And we're beginning to see that happen."

De Jong has been interested in developing that economic connection between British Columbia and India throughout his time in government.

"It's actually something that I've been a proponent of for the better part of ten years," he said.

De Jong draws parallels between these new efforts in India and past efforts to sell B.C. wood products to Chinese customers that began about a decade ago.

"They gave me all the reasons why it wouldn't work," he said, adding that China is now the province's biggest market for wood products by volume.

"India's a different place," he admitted. "And we'll have to go about this in a slightly different way. But I think we can enjoy similar success.

"Thousands and thousands of B.C. families are working today because of the success that we've had in China. I think we can do the same thing in India."

Interestingly, just as was the case with China a dozen years ago, the most recent efforts in India revolve around an abundant natural resource in the province, one that is also coveted by China and their Asian neighbours such as Korea and Japan.

"The opportunities associated with the development of liquefied natural gas," said de Jong, explaining that Indian companies have strong interest in LNG due to the high cost of energy required for manufacturing they are enduring presently.

"In their manufacturing sector, in many cases, their highest input cost is energy," he said.

However, a less expensive source of energy isn't their only interest.

"This is what struck me during my time there," said de Jong. "We generally associate countries like India with a manufacturing base given their lower labour cost. But because of their high energy cost, they are beginning to look at a place like British Columbia as a potential location for some manufacturing activity."

The implication is that is partly due to the abundance of locally sourced natural gas available at a low price.

"India is a country that we will be paying a lot more attention to going forward."

De Jong describes India's potential demand for B.C.'s LNG in terms of a population of 1.2 billion people and the largest middle class in the world.

"Their domestic consumption is steadily on the rise," he said, noting that their rate of economic growth should only trail that of China in the coming years.

"Regrettably, we have been a little bit late getting into the Indian market, but I think we can make up some lost ground."

Exporting natural gas to such a large market is top of mind for de Jong, especially considering the links between low commodity prices and the provincial deficit that he has discussed.

"Finding a destination for a commodity that we have in abundance and securing access for that commodity in markets that are paying significantly more for that product is a no-brainer," he explained. "And that's why liquefied natural gas represents such a huge and important opportunity for B.C.

"We conservatively estimate the benefits that would flow to communities in B.C. and the province itself in the tens of billions of dollars."

However, during his walking tour of northern India, a journey to raise awareness about diabetes and hypertension, he recognized another energy link between British Columbia and India.

"I actually walked through rural parts of Punjab visiting health clinics," de Jong said of the trek. "And we were particularly focused on diabetes prevention because Punjabis both here and in Punjab … are suffering above average rates of diabetes. And it leads to all sorts of chronic health complications.

"We saw some extraordinary examples of people delivering health care in rural parts of India in what we would describe as very basic facilities in some very challenging circumstances."

De Jong also saw the potential for run-of-river hydroelectric projects in the northern part of India, a country that has begun investing heavily in renewable energy.

"Northern India is tremendously well suited for the development of … smaller scale run of the river projects that we have developed world leading technology around," said de Jong.

"There is a huge potential for technology transfers into that market," he continued, noting that India presently suffers from an energy deficit.

"When I was walking across northern India towards Chandigarh to open the office, virtually every night, in the rural parts of India that I was in, the power went out for two hours."

The new trade and investment offices are expected to help connect interested parties in India and B.C. whether the subject is wind power, natural gas or even farmed salmon.

"By having people on the ground, we can source out those opportunities," said de Jong. "Almost in the way that a marriage might be arranged, we can introduce the parties to one another.

"Ultimately, the agreements and the sales are made by the people that know the products and the technology best. But what our trade representatives can do is source out those opportunities and get the right people in the room together.

"That, by the way, is precisely the formula we have used with such success in China when it comes to wood products."

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