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Ottawa subsidising Mastercard’s new $510-million Vancouver cybersecurity R&D centre

The federal government has enticed Mastercard Inc. to open a technology research and development centre in Vancouver with $49-million in incentives through its Strategic Innovation Fund (SIF).

The global payments network giant will fund most of the $510-million cost to create the centre, its sixth global R&D operation. It will focus on product development in digital and cybersecurity, artificial intelligence and internet-of-things technologies aimed at improving digital identification as Mastercard aims to enhance the security of its payments network from the growing threat of data theft and cyber fraud from increasingly sophisticated hackers.

The centre will create 270 jobs by 2029 and hire 100 students on co-op work terms, Mastercard said. The centre, in Vancouver’s Old Exchange Building, is home to NuData Security, a 100-person business specializing in biometric identification that Mastercard purchased in 2017. NuData CEO Christopher Bailey, executive vice-president of its EMV/Digital devices division, will run the operation.

“This will make Canada a world leader in cybersecurity and help us tackle the cost of cybercrime in Canada,” Innovation Minister Navdeep Bains said in a statement.

The government has made $2-billion in prior SIF contributions to companies from both Canada (such as CAE, BlackBerry and Maple Leaf Foods) and abroad (Siemens, Toyota and Nokia) to fund 64 projects collectively budgeted at $43-billion. In addition to the SIF money, Mastercard will qualify for federal and provincial R&D tax credits.

Ajay Bhalla, Mastercard’s president of cyber and intelligence solutions, said his company was not looking to expand its complement of R&D centres until a meeting at the World Economic Forum last year with Mr. Bains and Ian McKay, head of Invest in Canada, a federal agency devoted to attracting foreign investment to Canada.

“We were of course very interested” in Canadian technology, talent and the country’s education institutions “but we did not have a plan to set up a whole cyber and intelligence centre out of Canada,” Mr. Bhalla said.

“It’s the encouragement of the government that actually got us thinking about it. … Yes, incentive is important because it helps accelerate our investment, but I think the [government’s] whole attitude of embracing the private sector and driving innovation into the country is what really drove us to choose Canada.”

The Trudeau government has actively courted global multinationals to set up here, addressing long-standing concerns Canada is a laggard in attracting foreign direct investment (FDI). Canada’s FDI levels recovered in the past two years from 2017 when there was significant divestment in the oil and gas sector, but they are still below levels in the early 2010s. Ottawa in particular has targeted foreign tech giants, helping with efforts in an unsuccessful bid to bring’s second headquarters to Toronto.

But critics have voiced concerns that efforts to entice foreign investment undermine the flourishing domestic tech sector, drawing attention and resources – including skilled talent – from homegrown innovators who they argue contribute more to economic growth than branch plants. “The energy spent luring more branch plant operations should be spent on developing a national cyber strategy, a roadmap that manages both the risks and opportunities of the data-driven society,” said former BlackBerry co-CEO Jim Balsillie.

Mr. Bains, in a recent interview, defended the government’s “two-pronged approach” of supporting local companies and wooing foreign giants. “It’s not an either-or approach,” he said. “We have to recognize that in Canada, it wouldn’t be wise if we just closed our doors and focused on Canadian companies.” Doing both “is what Canadians expect and that’s what an economy of 37 million people should be doing."



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