Event in Focus

Minister Van Quickenborne Talks Opportunities, Challenges of 2012

By Nick Klenske

It’s no surprise to anyone that 2012 will be a challenging year. According to Minister Van Quickenborne, the year begins against a backdrop of a struggling European economy, limited job growth, and consolidated public finances. Yet he was quick to note that despite these challenges, there is still room for optimism: “In every crisis lies opportunity,” he said. “This is also the case today.”

One of these opportunities is the chance to implement much needed reforms. For example, the Minister pointed to the numerous reforms that Belgium has already started to implement – many of which were unthinkable even just six months ago. “Unemployment benefits will become more DEGRESSIVE, offering bigger incentives for the unemployed to find a new job, and health expenditures will be kept under control,” noted the Minister. “Further, I have already pushed for the first major pension reform in more than 30 years, increasing the age for early retirement and generally keeping people at work longer.” 

Minister Van Quickenborne noted, however, that the success of such reforms is not the sole responsibility of government regulation, but also the responsibility of company policy. For example, in order for the reforms aimed at keeping people in work longer to be successful, companies must keep people employed when they are in their fifties and early sixties. 

“Reforms like this require inventive, creative and flexible solutions,” said Van Quickenborne. “I am well aware that this is not always easy, but if we really want to build a sustainable social system, we have to think seriously about how we can keep older employees at work and how we can make better use of their experience and skills.”

Staying Attractive

One goal of these reforms is to maintain Belgium as an attractive investment location. “As you know, Belgium has many assets when it comes to attracting foreign investors,” said Van Quickenborne. “It is among the top ten destinations for foreign direct investment worldwide, with nearly 1,800 US companies doing business here and hundreds of multinationals having established their European headquarters in Belgium, many of them with roots in the US.”

The Minister mentioned numerous strengths that Belgium boasts, including its central location, motivated workforce, quality of life and, of particular interest to companies, the numerous tax incentives available.   As a result of all these factors, Belgium has built a reputation for being an attractive place for foreign investment. However, Minister Van Quickenborne noted that in 2012, not only do these factors need to be strengthened but, in some cases, also protected. 

For example, the notional interest deduction was at the center of debate during the government coalition talks. “Two months ago, when I gave a speech for the 30th anniversary of Biomedical Systems, US Ambassador to Belgium Howard Gutman called publicly on me not to abolish the notional interest deduction. I told him we would do our best,” said the Minister. “Mr. Ambassador, today, I can tell you that we did indeed maintain this system.”

Another area of interest to foreign investment is pensions – a topic very close to the Minister: “As Minister of Pensions, I should not forget to mention that pension funds are a major beneficiary of our attractive tax systems. As part of our ambition to become the number one location for pension funds, Belgium facilitated the establishment of the pan-European pension funds already some years ago.”

Belgium is currently the only European country offering multinationals a complete and comprehensive, dedicated framework for establishing both pan-European and international pension funds. This framework is characterized by a flexible governance structure that allows for tailor-made solutions. Further, pension funds also benefit from a zero-tax base. As a result, several multinationals like Pfizer, Citco, Alcon, BP and Nestlé have set up their pension fund activities here.

“The recent turbulence on the global financial market have demonstrated the importance of pan-European pension funds,” noted the Minister. “In the years to come, sheer demographics will lead to an unprecedented growth of the pension funds market, making it clear that the framework we have in place holds the answer international companies are looking for.”

 A Time for Resilience and Realism

Minister Van Quickenborne concluded by stating that now is not the time for grand statements or big promises, but a time for resilience and realism. 

“We must acknowledge that a lot of work needs to be done in order to bring our economy back on track and to balance the budget by 2015,” he said. “The government will do its job by enacting the necessary reforms and by laying the groundwork that investors can build on. But we are fully aware that we will only succeed when we choose a path of collaboration and partnership.” 

In other words, we must do this together. 

 

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