A competitive economy in turbulent times Update on economic developments in the Netherlands in 2011/2012 This outline is on the Netherlands, where many prominent Irish companies have operations, which the Netherlands Foreign Investment Agency - or NFIA - greatly appreciates. There are some 40 Irish companies with operations in our country, some having been there for a long time with multiple offices and manufacturing or distribution centres. Others have set up their first presence more recently. So I am pleased that two of these companies are present here today as well; Ventac who acquired a small noise testing business at the High Tech Automotive Campus in Helmond, and Clarion Consulting, who set up a sales office for their Consultancy services in Leiden last year. A large part of the Netherlands' income and employment is generated by international investment, trade and exports. All of your activities contribute to the Dutch economy. As a matter of fact, foreign companies in the Netherlands are hugely important. There are almost 6000 foreign companies with establishments in the Netherlands; 4% of our companies are foreign-owned. These generate 16% of private employment in the Netherlands. Most importantly they generate 24% of the added value of Dutch business and contribute 31% to the total turnover! And last but not least, foreign companies in the Netherlands are responsible for 30% of investments in research & development. So we really value your presence for your contribution to our economy. Economy So, what is the status of the Dutch economy now? In these times of ongoing worries about the Eurozone and our politicians continuing talks about what to do, I cannot paint a rosy picture: the Netherlands has entered recession with a economic decline of 0.4% over the third quarter of last year and a decline of 0.7% in the fourth quarter of last year. To present some indicators; The budget deficit is expected to go down to 4.1% in 2012, which is less than previously expected due to worsened economic prospects. Not surprisingly, exports to non-EU countries performed better than exports to EU countries. Unemployment stands at 6% and consumer inflation at 2.5%. But what is the other side of coin? The Netherlands is still viewed as one of the stronger economies in Europe. The long term 'triple A' status has been reaffirmed by rating agencies. Offsetting the weak political environment at European level the Netherlands has maintained some important economic strength. As Standard & Poor stated: It is still a diversified, prosperous, and competitive economy, supported by a strong track record of prudent domestic economic policies, with sustainable account surpluses on average 6.4%, and a strong net external position of 32% of GDP in 2011.
NFIA results As Netherlands Foreign Investment Agency, we saw the strength of our economy and the strong investment climate for foreign companies reflected in our results over 2011. Foreign direct investment into the Netherlands increased with 25% in 2011, showing that the Netherlands remains a stable, competitive and highly-connected location for companies to service mainland Europe. NFIA attracted more than 4,300 jobs, €1,47bn in investment pledges, and 41 international headquarters, especially to Amsterdam. Some one third of these projects is related to marketing & sales activities, followed by 21% related to international headquarters, 20% to distribution and 10% to R&D. The share of international headquarters activities in the total number of projects increased again from 17% in 2010. I have to add that we do expect a decrease in results for next year due to the European developments. But my office particularly sees an uptake of interest from Irish companies, using the Netherlands as a stepping stone into mainland Europe, strengthening their Irish base. Business policy We do everything to secure this strong position. On a policy level then, I introduced the new business policy of the Ministry of Economic Affairs, Agriculture and Innovation, my ministry, last year at this luncheon. This is a targeted policy to promote innovation and enterprise, in part by encouraging cooperation between enterprises, academic and research institutions, and the government. The policy focuses on encouraging and strengthening the current and future spearhead sectors of the Dutch economy:
water,
food,
horticulture,
high tech,
life sciences,
chemicals,
energy,
logistics and
creative industry.
To enhance economic development and innovation, clusters like Food Valley or the main ports Amsterdam and Rotterdam are also stimulated. Plans, drawn up by business people, academics and government officials together, have progressed with concrete projects being funded right now. Concrete improvements The government is implementing a facilitating policy and is increasing the regulatory burden by 5% per annum. For example, the definition of salary is standardised, and the legislation of private limited liability companies (BV) is being simplified. For example, as per 1 January of this year, the regulation on management and supervision of BV’s was changed; enabling a one tier board system with executive and non-executive members. As of 1 July last
year, a declaration of no objection of the Ministry of Justice is no longer needed to start a BV, making it easier to start a business. There is still legislation pending to abolish the requirement for paid-in capital of 18,000 euros as further improvement. Furthermore, the fiscal investment climate is already strong in the Netherlands. Particularly in the area of research & development, the Netherlands has implemented enhanced measures to stimulate companies to invest. We already had a R&D allowance WBSO which provides in wage tax and social security deductions for personnel that carries out R&D work. We also have the innovation box, which a a low effective tax rate of 5% on income generated from qualified R&D (including software development). And now effective of 1 January 2012, there is an extra credit on the tax bill possible for investment and exploitation cost of R&D capital investments. Concluding We are further building on our strong position for business: the Netherlands has a strategic location with superb airports and sea ports for your entry into mainland Europe, combined with our trading spirit, knowledge of languages and cultures and an internationally oriented business environment and tax system, and very strong sectors in e.g. Food, logistics, life sciences and high tech systems. So we aim to continue to offer a competitive investment climate for your operations.
Dublin, 27 February 2012 Liesbeth Staps, Executive Director UK & Ireland, Netherlands Foreign Investment Agency