Foreign perception reveals domestic disdain

Land of confusion, written by Genesis in 1986, is a song expressing consequences of political uncertainty, and could also apply to the growing perception of foreign investors looking for investment opportunities in Belgium.

According to Inge Geerdens’ column (De Tijd, July 27, 2010), who reports from a recent international meeting of 80 CEOs from 30 countries, foreign investors do not understand what is going on in Belgium. As a consequence, little investment is to be expected, Ms Geerdens argues.

As a matter of fact, foreign direct investment (FDI) in Belgium fell last year by 70%, according to the 2010 World Investment report by the United Nations conference in trade and development (UNctad). The US alone accounts for more than 16% of the drop of €23.6 billion, according to the National Bank of Belgium.

Despite the fact that Belgium outperforms The Netherlands in attracting FDI in absolute terms, €33.8 billion compared to €26.9 billion respectively, Belgium’s relative drop of 70% is only outperformed by Spain’s drop of 80%. In addition, domestic perception of investment opportunities and entrepreneurship in Belgium is rather pessimistic.

The Belgian Minister of Economy, Vincent Van Quickenborne, argued in a response to the UNctad report, that this decline cannot be fully attributed to the economic crisis, and points the finger to higher employment costs. Germany, for instance, which experienced a 32% growth of FDI last year, has 10% lower employment costs than Belgium.

As a consequence, the Flemish employers’ organization (Voka) urges the upcoming Government to take steps to make Belgium more attractive to foreign investors, or in Genesis’ words “To make it a place worth living”.

AmCham Belgium’s position:
In its earlier publications, AmCham Belgium identified major issues related to taxation, labor costs, employment flexibility and regulation to increase the attractiveness of Belgium as a place in which to invest and to do business.

For instance, lowering the employer social security costs to 20% of gross wages and reducing corporate tax rate to 25% would not only attract foreign investors but also domestic entrepreneurs.

AmCham Belgium advises the upcoming Government to signal a strong determination to take drastic steps, outlined in our Open Letters, to improve the business climate.