Canada's Harper says could block other foreign investments

OTTAWA (Reuters) - Prime Minister Stephen Harper, in some of his toughest remarks on foreign investment yet, signaled a willingness to block foreign purchases of Canadian companies if other countries are not open to Canadian investment.

Speaking on the eve of a trip to India and other parts of Asia, Harper said in an interview published in Saturday's Postmedia newspapers that Canada as a general rule welcomes foreign investment.

"The real issue, as we go to places like India - and I think that Canadians recognize what the real issue is, not the openness of Canada to foreign investment, because Canada is very open," he said.

"The real issue is, are we going to get that reciprocal openness in other countries? And that's the real challenge. You know, we could block a whole lot more investments than we are and be still one of the most open regimes in the world."

Harper's November 3-11 trip to India, the Philippines and Hong Kong comes against the backdrop of two major bids by Asian state-owned enterprises to buy Canadian energy firms.

The prime minister has said his government would lay out a general framework when it decides on these bids, and this will be "fairly soon," but it is increasingly clear that reciprocity will figure prominently in the guidelines.

He was asked if the waters would be muddied as he promotes Canadian business while leaving it uncertain if Canada is open to foreign investment, with these major decisions pending.

Speaking of Canada's openness, he said: "I don't think that's a serious issue. Obviously, these individual decisions are serious decisions. The government will take them seriously. But the real issue as we go to India is making sure that in the long term Canadian businesses have the opportunity to set up and to prosper in India as well."

Late on Friday, Canada extended to December 10 its review of a $15.1 billion bid made in July by China's CNOOC Ltd (0883.HK) for Canadian energy producer Nexen Inc NXY.TO. Reuters had reported on Wednesday that an extension was likely.

Canada temporarily blocked Malaysian state oil firm Petronas' C$5.17 billion bid for gas producer Progress Energy Resources PRQ.TO on October 20, giving it 30 days to make new representations to the government.

Officials say Harper has taken the opportunity of every meeting with Chinese leaders to point out the need to make economic benefits flow in both directions. Ottawa is particularly eager to see Beijing demonstrate its openness to Canadian investment in China.

Canada has twice made final decisions turning down foreign investments, both under Harper. In 2010, it rejected BHP Billiton's (BHP.AX) (BLT.L) $39 billion bid for Potash Corp (POT.TO), the world's largest fertilizer maker.

A year earlier, it blocked a $1.325 billion U.S. offer for a satellite unit of MacDonald Dettwiler and Associates (MDA.TO).

"This government, as a general rule, welcomes foreign investment. We do review it and there are occasions on which - two, to be precise - we have turned down foreign investments," Harper said.

"But obviously we have a general policy, but we're determined to make sure that while we welcome foreign investment that we make sure that it's in the best interest of this country."

(Reporting by Randall Palmer; Editing by Vicki Allen)