Business Climate and Investments in the Current Crisis

 

The AmCham Belgium Perspective

 

From a global perspective, Belgium has always been a very active business hub, in part due to its status as “The Capital of Europe”. As transparency and stability are top priorities for potential investors, the current governmental issues in Belgium are bound to have a significant impact on the country’s overall attractiveness for investment. But what has the real impact been for business?

Not as Bad as it Seems

AmCham Belgium predicts that the short term effects will not be as drastic as one may have thought. The US has always been a close trade and investment partner of Belgium and there are a significant number of well-established US companies here in this country. Consequently, many US companies in Belgium have been run by local managers for years – they have previous experience with the changes of the Belgian government and have an innate cultural understanding of the political infrastructure. A ‘we’ve survived it once, we can survive it again’ attitude will be a considerable extra comfort for these companies.

For new US investors considering setting up business in Belgium, the political situation may have a more negative short-term impact. Although Belgium has dealt with political instability before, foreign investors will most likely be unfamiliar with the situation and this could ultimately be a key factor in a new investment decision. However, with the economic crisis having its own impact on the level of new investment, this is not expected to have a major impact on investment flows.

Long-Term Effects

At the outset, business in Belgium looks set to withstand the impact of the political situation, but what about the longer term effects? From this perspective, government instability often evolves into the long-term problem of damaging the country’s reputation and hurting its competitiveness. This has already been seen, as US investment in Belgium took a harder hit than in neighboring countries. This can be best explained as a trickle down effect from Belgium not being in a position to take long-term strategic views to strengthen the country’s competitiveness due to the lack of stability of the government.

Also, the complexity of the Belgian political structure is a matter that managers are being pushed to spend unnecessary time on trying to explain it to their foreign employees. This could have a negative impact on the perception of Belgium and its potential for doing business and, as a result, have a negative effect on the country’s investment position.

It is important to note that despite Belgium’s political situation, the impact cannot be viewed separate from the current economic crisis, which needless to say was unsympathetic to the local business community. All EU countries are suffering from increasing deficits and government debt. With this in mind, it makes the need for an effective government – and the ability to provide active intervention – even more of a necessity.

The combination of the economic crisis and the fall of the Belgian government have meant that business currently functions within an unsteady climate. But the US will remain the biggest foreign investor in Belgium and AmCham Belgium sincerely believes that investment will not suffer too much.