Canadian Business Costs Lowest Among G7 Countries, Reports KPMG

Toronto, Canada (ots/PRNewswire) -

- Study Says Canada Maintains Cost Advantage Over US Despite
Rising Dollar

TORONTO, Canada, March 21 /PRNewswire/ --

Canada leads the G7 countries as the most cost- effective location
for business, according to a 2006 study that compares business costs
in nine industrial countries in North America, Europe and Asia
Pacific. Canada ranked second out of the nine countries examined,
with business costs approximately 5.5 percent below those in the
United States.

Singapore is the overall leader among the countries studied, with
business costs approximately 22.3 percent below those in the United
States. According to KPMG's study, Competitive Alternatives: KPMG's
Guide to International Business Costs, Japan and Germany rank as the
most expensive countries in which to do business.

The study results were determined using recent exchange rates,
with the Canadian dollar valued at US85.2 cents (C$1.1735 per US$).
"Even with the strong appreciation of the Canadian dollar relative
to the U.S. currency, Canada continues to have a cost advantage
relative to the United States," says Mark MacDonald, a director in
KPMG's Advisory practice. "The Canadian dollar would have to rise in
value by approximately 13 percent, almost to par with the U.S., to
bring Canadian cities to a breakeven position with the U.S. in terms
of overall business costs. While this would vary from city-to-city
and business-to-business, this is still positive news overall for
Canada."

KPMG's 2006 Competitive Alternatives study measured 27 cost
components - including labour, taxes, real estate, and utilities -
as applied to business operations in nine countries: Canada, France,
Germany, Italy, Japan, the Netherlands, Singapore, the United
Kingdom and the United States . The research included an analysis of
these costs in 128 cities worldwide. The study's basis for
comparison was the after-tax cost of startup and operation for 17
types of business, over a 10-year planning horizon.

For larger cities in Canada, Edmonton and Montréal rank as those
with the greatest cost advantages relative to the United States.
While costs in Toronto and Vancouver are the highest within Canada,
and on par with such low-cost U.S. cities as Atlanta and Tampa,
these cities do still offer significant cost advantages over most of
the large US cities included in the study. Among the smaller cities
examined, Canadian cities generally continue to offer lower cost
structures than equivalent U.S. cities, even after allowing for the
higher value of the Canadian dollar since 2004.

"The advantage seen for many of the Canadian cities relative to
the U.S . is generally the result of combination of lower labour
costs, including lower employer costs for private medical coverage,
lower real estate costs, and lower electricity costs in Canada than
in the United States, where deregulation has seen electric costs
soar in many regions." KPMG's Mark MacDonald stated. "Various
federal and provincial tax cuts over the last decade have also made
Canada's tax system more competitive with the U.S., and have
contributed to the positive position of the Canadian cities,"
MacDonald concluded.

Comparison of Cost Indices Among Selected Cities in Canada
-----------------------------------------------------
City Cost Index
-----------------------------------------------------
Sherbrooke, QC 90.1
Moncton, NB 91.1
Charlottetown, PEI 91.7
Halifax, NS 92.2
Quebec City, QC 92.6
Saskatoon, SK 92.8
Edmonton 93.3
Chilliwack, BC 94.0
Winnipeg, MB 94.1
Montreal, QB 94.3
St. John's, NF 94.3
Waterloo Region, ON 94.3
Calgary, AB 94.7
Ottawa, ON 95.1
Toronto, ON 96.5
Vancouver, BC 96.9
(x) Source: KPMG's 2006 Competitive Alternatives Study
(x) Business Costs are expressed as an index with the United States being
assigned a baseline index of 100.0. A cost index less than 100
indicates lower costs than the US. A cost index greater than 100
indicates higher costs than the US. For example, an index number of
95.0 represents a 5.0% cost advantage relative to the US. Cost index
is determined by averaging variables from various industries and
operations.
Canada and International Comparison
-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
Canada ranks second overall and first among the G7 countries for low
business costs, with a cost advantage of 5.5 percent over the United
States.
-------------------------------------------------------------------------
Combining salary and wage costs along with all benefits, total labour
costs are lowest in Singapore, followed by Canada. However, expressed as
a percentage of payroll, benefit costs in Canada are lower than in any of
the other countries studied.
-------------------------------------------------------------------------
Industrial facility costs, including land purchase and factory
construction costs, are lowest in Canada, followed by Italy, the United
States, and France.
-------------------------------------------------------------------------
Canada, along with the United Kingdom and France, are the countries that
offer the greatest tax incentives to encourage research and development
(R&D) activities.
-------------------------------------------------------------------------
Canada offers the lowest electricity costs among all countries studied.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other Countries
-------------------------------------------------------------------------
Singapore ranks first among the countries studied, with business costs
22.3 percent lower than in the United States. With GDP per capita now on
par with some western European nations, Singapore is the first newly
industrialized country to be included in Competitive Alternatives.
-------------------------------------------------------------------------
France and Netherlands ranks third and fourth respectively, with overall
business costs lower than in all other European countries, and a cost
advantage of approximately 4.4 percent over the US.
-------------------------------------------------------------------------
Italy and the United Kingdom rank fifth and sixth respectively, with
business costs approximately 2 percent below the seventh ranked United
States.
-------------------------------------------------------------------------
Japan and Germany were the most costly places to set businesses, with
business costs approximately 7 percent higher than in the United States.
-------------------------------------------------------------------------
Singapore, the United Kingdom and the Netherlands offer relatively low
effective corporate income tax rates for the widest ranges of operations.
-------------------------------------------------------------------------
Office leasing costs are lowest in Italy, followed by Germany, and the
Netherlands.
-------------------------------------------------------------------------
(x) Source: KPMG's 2006 Competitive Alternatives Study

International rankings and relative cost indices are illustrated
in the following chart. The benchmark cost index (U.S. (equal sign)
100) is defined as the average of nine representative U.S. cities.

--------------------------------------------------
Cost-Competitiveness:
2006 Rankings by Country
--------------------------------------------------
Country Cost Index Rank
--------------------------------------------------
Singapore 77.7 1
--------------------------------------------------
Canada 94.5 2
--------------------------------------------------
France 95.6 3
--------------------------------------------------
Netherlands 95.7 4
--------------------------------------------------
Italy 97.8 5
--------------------------------------------------
United Kingdom 98.1 6
--------------------------------------------------
United States 100.0 7
--------------------------------------------------
Japan 106.9 8
--------------------------------------------------
Germany 107.4 9
--------------------------------------------------
Source: KPMG's 2006 Competitive Alternatives Study
--------------------------------------------------

To access copies of the full report, please go to
www.competitivealternatives.com

About Competitive Alternatives

KPMG's 2006 Competitive Alternatives study provides an independent
comparison of international business location costs in 128 cities
around the world. The study enables businesses executives to take a
quick, initial scan of how business costs compare among a variety of
cities in leading industrialized countries. It also assists KPMG
professionals and economic developers in their work with businesses
considering relocation, and enables policy makers to help determine
the impact of a proposed tax and/or incentive policy change on the
cost-competitiveness of their jurisdiction in relation to others.

The study is available online at www.CompetitiveAlternatives.com

About KPMG in Canada

KPMG LLP is the Canadian member firm of KPMG International, the
global network of professional services firms whose aim is to turn
knowledge into value for the benefit of their clients, people and
the capital markets. With nearly 94,000 people worldwide, KPMG
member firms provide industry- focused audit, tax, and advisory
services from more than 717 cities in 148 countries.

KPMG assists clients as they consider expanding, relocating or
consolidating their business activities. More than 100 KPMG
professionals throughout the world offer a variety of global
location and expansion services, ranging from strategic planning, to
site analysis, to determining the availability of business
incentives.

KPMG's Canadian Web site is located at www.kpmg.ca

ots Originaltext: KPMG International LLP
Im Internet recherchierbar: http://www.presseportal.de

Contact:
For further information: Media Contacts: Sharon Godsell, Media
Relations, KPMG, +1-(416)-777-3533, sgodsell@kpmg.ca; Julie
Bannerjea, Senior Manager, Media Relations, KPMG, +1-(416)-777-3243,
jbannerjea@kpmg.ca


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