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UPDATE 2-Harper to promote Canada business, but no investment rules yet

Randall Palmer
Thursday, 1 Nov 2012 | 6:39 PM ET

* PM, on Nov 3-11 Asian trip, will say Canada open for business

* New foreign investment guidelines won't be unveiled during trip

* Government ``overwhelmingly supports foreign investment in Canada''

* Investors uncertain over CNOOC, Petronas bids

* Nuclear supply deal being negotiated with India

OTTAWA, Nov 1 (Reuters) - Prime Minister Stephen Harper will promote Canada as open for business during a Nov. 3-11 trip to Asia, although he is not likely to unveil long-awaited guidelines for foreign takeovers of Canadian firms, an aide said on Thursday.

``I don't think it's a problem at all to go around the world and say we're open for business, because we are,'' Harper's chief spokesman, Andrew MacDougall, told reporters ahead of the trip, which will take Harper to India, the Philippines and Hong Kong.

``Canada overwhelmingly supports foreign investment in Canada ... There's been a small handful of transactions that have been turned down under the Investment Canada Act.''

The Investment Canada Act asks the industry minister to rule whether foreign takeovers over a certain size are of ``net benefit'' to Canada, a term that has never been fully defined.

The climate for foreign investment became even more opaque after an interim government decision last month to turn down a Malaysian bid for a Canadian company, and expected delays on whether Canada will approve a Chinese takeover attempt.

The Conservative government, which says Canada needs some $650 billion in investment over the next decade, has promised to release new guidelines on foreign investment at around the time it rules on the $15.1 billion bid by China's state-owned CNOOC Ltd to take over oil producer Nexen Inc, and Harper has said decisions would be made ``fairly shortly.''

Asked if the guidelines would be unveiled during the trip to Asia, MacDougall said: ``I don't expect we'll be covering much on the foreign investment front.''

The CNOOC bid has become increasingly controversial in Canada amid heated debate over whether foreign state-owned enterprises should be allowed to buy Canadian companies.

Sources close to the matter told Reuters on Wednesday that the government needed more time to formulate its investment guidelines, and the deadline for its CNOOC decision was likely to be extended beyond Nov. 10.

Canada may also need the guidelines in the $5.17 billion ($5.17 billion) offer by Malaysian state oil company Petronas to buy natural gas explorer Progress Energy Resources Corp.

In a surprise ruling, Ottawa rejected the bid on Oct. 19, saying it was not of net benefit to Canada. Petronas has 30 days to change the terms of its proposal and submit a new offer.

Harper will be in India from Nov. 4-9 with International Trade Minister Ed Fast and a group of corporate executives. He will then spend a day in the Philippines and half a day in Hong Kong.

He will meet the chief executive of Hong Kong, but will not be meeting Chinese government officials during the visit.

Canada and India have been working for eight years on an agreement to protect foreign investment, but it was not clear if this might be signed on the trip.

The two countries also have been negotiating a civil nuclear energy deal which would enable Canadian firms like Cameco Corp to export uranium to India.

China and India signed a nuclear cooperation agreement in 2010 but Canada wants further language that will let it ensure uranium imported from Canada is used only for peaceful purposes.

MacDougall could not say if agreement on these new provisions would be reached next week.