June 2008 - American Chamber of Commerce in the Netherlands

CHAMBERNEws
The study of Ernst & Young furthermore
shows that FDI coming to Europe can
increasingly be attributed to service
related projects (the share of service
related FDI projects in total FDI increased
from 48% in 2005 to 60% in 2006). On
business sector level, especially software
and business services attracted significant
numbers of FDI projects (472 and
446 respectively, amounting to 25% of
all FDI projects coming to Europe).
Keeping all these trends in mind, in its
Netherlands Attractiveness Report Ernst
& Young also posed the question of
Table 1: Foreign Direct Investments in Europe
6
2006 2007
AmChamnews June 2008
how a relatively small country like
the Netherlands performs compared to
other countries and, most importantly,
how it can manage to stay on the agenda
of foreign decision-makers.
Compared with other European
countries, the Netherlands succeeded
in increasing its share in FDI projects
coming to Europe in 2006 by 16%
(compared to 2005) and ranks 12th of all
European countries receiving FDI (rank
13 in 2005). The UK and France remain
the major destination countries (19%,
respectively 16%) while Germany
Number of Share iN Number of Share iN iNcreaSe iN
raNk ProjectS euroPeaN fDi raNk ProjectS euroPeaN fDi market Share
united Kingdom 1 686 19.4% 1 559 18.2% 1.2%
france 2 565 16.0% 2 538 17.6% -1.6%
germany 3 286 8.1% 3 152 5.9% 2.2%
spain 4 212 6.0% 6 147 4.8% 1.2%
beLgium 5 185 5.2% 5 179 5.8% -0.6%
poLand 6 152 4.2% 4 180 5.9% -1.6%
romania 7 140 4.0% 12 86 2.8% 1.2%
switzerLand 8 136 3.9% 11 93 3.0% 0.8%
czech repubLic 9 113 3.2% 7 116 3.8% -0.6%
sweden 10 113 3.2% 10 95 3.1% 0.1%
hungary 11 108 3.1% 8 115 3.8% -0.7%
the netherLands 12 95 2.7% 13 82 2.7% 0.0%
russia 13 87 2.5% 9 111 3.6% -1.2%
ireLand 14 74 2.1% 15 67 2.2% -0.1%
itaLy 15 74 2.1% 18 49 1.6% 0.5%
buLgaria 16 68 1.9% 19 32 1.0% 0.9%
denmarK 17 60 1.7% 17 55 1.8% -0.1%
austria 18 56 1.6% 16 59 1.9% -0.3%
sLovaKia 19 46 1.3% 14 70 2.3% -1.0%
portugaL 20 38 1.1% 20 29 0.9% 0.2%
other / 237 6.7% / 221 7.2% -0.5%
total 3531 3065
managed to significantly increase its
share in FDI projects coming to Europe
(increase of 57% compared to 2005).
In Eastern Europe, Romania succeeded
to considerably increase its share in FDI
projects (increase of 63% compared
to 2005). Surprisingly, other Eastern
European countries such as the Czech
Republic, Poland and Hungary lost
market shares and attracted less
foreign business facilities than in
2005 (respectively - 3%, - 16% and - 6%)
(see Table 1).
Asked what measures the Netherlands
should take in order to fulfill these
expectations, the interviewees specified
that the decision of the government to
introduce a more attractive tax climate
is already a first important step.
Furthermore, the top-managers
interviewed indicated that costs for labor
and land are dissatisfactory and that the
labor law flexibility needed more policy
attention (see figure 1/page 5).
The Netherlands does possess many
qualities in order to confidently position
itself. Nevertheless, in the fierce
competition for FDI, it is crucial that
foreign investors are convinced by
the Netherlands being the country
offering the best talent, the most optimal
infrastructure, the most favorable logistics
location, the most qualified suppliers
as well as the most innovative knowledge
institutions. In order to attract more FDI
projects in the future, it is therefore
crucial to communicate these positive
attributes of the country to intensify
investment promotion efforts as well
as to focus on most promising target
groups. However, Ernst & Young also
advises Dutch authorities not to neglect
taking care of existing foreign companies
in order to prevent them from relocating
to another country and to make them
flourish and expand in the Netherlands.
The recently introduced tax regimes
known under the names ‘patent box’
and ‘interest box’ are designed to
facilitate foreign investments in exactly
those areas. Additionally, the Dutch
government should strengthen efforts in
cooperation with private companies to
promote the Netherlands as the Gateway
to Europe for goods produced outside the
EU. The initiative of establishing
‘Holland Financial Center’ to position
itself as an attractive location for
financial institutions is a good example
to encourage foreign companies to invest
in the Netherlands. According to Ernst &
CHAMBERNEws
Young, the country should keep focusing
on simplifying legislation and reducing
‘red tape’ in order to create a level playing
field with regard to labor and real estate.
Furthermore, the Netherlands should
reassure its position for talented
expatriates as a safe, hospitable, efficient,
pleasant and internationally oriented
country.
AmChamnews June 2008 7