The Assets of Luxembourg's Economy

Luxembourg Fest 2016 Luxembourg American Cultural Society & Center

The assets of Luxembourg’s economy Michel Franck Managing Partner AIA President of the Luxembourg American Chamber of Commerce August 2016

11

Agenda

ü Introduction to Luxembourg’s economy ü Keep moving! Luxembourg – a diversified economy ü Good reasons to invest in Luxembourg ü Challenges & opportunities

22

Introduction to Luxembourg’s economy

Luxembourg - Get to know us

576,249 inhabitants (increase of 50% since 1991)

Source Luxembourg for Finance

33

Introduction to Luxembourg’s economy

Luxembourg’s place in the world

Non-Violence Knotted gun

by Frederik Reutersnärd 44

Introduction to Luxembourg’s economy

Luxembourg : A European Laboratory

•

Direct market access to France, Germany and Belgium

•

International orientation of companies

•

500 million consumers in the EU

•

European fundamental freedoms

1000 km

55

Introduction to Luxembourg’s economy

An open and international business environment

NATIONAL PRODUCTION

SERVICEORIENTATION

CURRENT ACCOUNT

WORKFORCE

EDUCATION

80%

80%

High structural surplus

72%

20 European

of the

national production (goods and services) are exported

70%

of EU GDP within a travel day

of all exports are services

5.5%

of GDP in 2015, mostly due to net exports of services

of total workforce are non nationals

45%

of total workforce are cross-border workers from Belgium, France and Germany

universities and polytechnic schools within a 200 km radius

66

Introduction to Luxembourg’s economy

We are doing ok. Are we?

Macroeconomic picture of Luxembourg 2015

2016 (p)

2017 (p)

GDP Total employment Unemployment rate

4.8%

3.3%

3.9%

2.5%

2.6%

2.5%

6.4%

6.2%

6.2%

Inflation

0.1%

-0.1%

1.8%

Source: European Commission Spring Forecast May 2016

77

Introduction to Luxembourg’s economy

IMD World Competitiveness Yearbook 2016 2007

2008

4

5

2009

2010

2011

2012

2013

2014

2015

2016

6 12

11

- Exports of commercial services (#1) - Government budget deficit (#3) - Banking sector assets (#1)

11

12

13

11

11

- Renewable energies (#50) - Start-up days (#49) - Office rent (#48)

88

Introduction to Luxembourg’s economy

Diversified economy INDUSTRY & AUTOMOTIVE

ICT, MEDIA E-COMMERCE

LOGISTICS

FINANCE, BANKS, INVESTMENT FUNDS, INSURANCE AND OTHER SERVICES

EUROPEAN INSTITUTIONS

99

Introduction to Luxembourg’s economy

Dynamic financial sector..

Source: Luxembourg for Finance

10 10

Agenda

ü Introduction to Luxembourg’s economy ü Keep moving! Luxembourg – a diversified economy ü Good reasons to invest in Luxembourg ü Challenges & opportunities

11 11

A diversified economy

A wide range of new promising niche sectors…

Logistics § 780 operators from all over the world and 13,000 jobs § Multi-modal strategy: rail, road, water, air § #1 for international shipments and timeliness § Cluster for Logistics & Luxembourg Maritime Cluster § Luxembourg Freeport

ICT § § § § §

Home to ICT global players Spectacular growth over the past decade Many points of intersection with other key sectors Attractive regulatory environment and state-of-the-art infrastructures High potential for diversification wihtin the sector

Health technologies § Personalised medicine § At the intersection of material sciences, ICT and biomedical research § Excellent infrastructures, e.g.: LCBS, Biohealth Cluster, LIH, LIST § Close collaboration : University of Luxembourg & companies 12 12

A diversified economy

… and a new strategy to create synergies

Clean technologies § 200 eco-companies in renewable energies, environmentally sound management of waste, environmentally sound management of water and eco-construction § 3 priorities: circular economy, mobility and smart cities § Saving energy: the « Learning Factory» § LëtzGreen

Space technologies § SES created in 1985 § Member of the European Space Agency since 2005 § Thematic areas: space telecommunications, global navigation satellite system and location based applications, maritime surveillance, space related technologies

Third Industrial Revolution § Towards a fully digitalised economy § Period of economic transition § Convergence of ICT, energy and logistics § Interconnectivity and greater adaptability of systems § Efficiency of resources 13 13

A diversified economy

Automotive components industry..

Source : Luxembourg for Finance

14 14

Quick facts

Automotive components industry..

Did you know?

Almost all cars worldwide rely on at least 1 key component developed in Luxembourg.

Source Luxembourg for Finance

Luxembourg connects 1 million Peugeot and CitroĂŤn vehicles with SIM cards.

15 15

A diversified economy

ÂŤ Hidden champions Âť in Luxembourg

16 16

Quick facts

The wine sector‌

Did you know?

Luxembourgish wine makers, which are famous for their pinot gris and sparkling crĂŠmants, won 20 medals (8 gold and 12 silver) at the 2015 Concours Mondial de Bruxelles.

Source Luxembourg for Finance

17 17

Agenda

ü Introduction to Luxembourg’s economy ü Keep moving! Luxembourg – a diversified economy ü Good reasons to invest in Luxembourg ü Challenges & opportunities

18 18

Good reasons to invest in Luxembourg

Did you know?

Source administrative services : Eurostat, Urban Satisfaction Rate 2013

19 19

Quick facts

Did you know?

Luxembourg ranks 9th o u t o f 1 4 1 countries for global innovation INSEAD Global Innovation Index 2015

Luxembourg is number 6 out of 28 countries for innovation performance

Luxembourg ranks 1 st in the world for technological readiness World Economic Forum Global Competitiveness Report 2015

Innovation Union Scoreboard 2015 European Commission

Source Luxembourg for Finance

20 20

Good reasons to invest in Luxembourg

Luxembourg’s success formula: open, reliable and dynamic!

• • • • • • • •

Central, strategic location in Europe Political and social stability Hotspot for cultural activities Melting pot of cultures and languages Open and neutral economy with sound fundamentals (AAA) A flexible & diversified economy « Hidden champions » A wide range of new promising niche sectors.. and a new strategy to create synergies

Source administrative services : Eurostat, Urban Satisfaction Rate 2013

21 21

Good reasons to invest in Luxembourg

Central, strategic location in Europe

by plane…

by car…

Source Luxembourg for Business

22 22

Quick facts

They say that...

“We were global from day one from Luxembourg.”

Niklas Zennström Co-founder of Skype

Source Luxembourg for Finance

23 23

Good reasons to invest in Luxembourg

A good place to live: political and social stability

One of the highest standards of living in the world:

Gross national income per capita based on purchasing power parity in 2014

Source: AMECO

24 24

Quick facts

They say that...

“The stable, efficient and business oriented government is the key to Luxembourg’s success.”

Wang Hongzhang Chairman of China Construction Bank

Source Luxembourg for Finance

25 25

Good reasons to invest in Luxembourg

Hotspot for cultural activities

Source: Luxembourg for Business

26 26

Good reasons to invest in Luxembourg

Melting pot of cultures and languages

A country widely open to the world

Daily flows of the cross-border workers

Source: Report on the Economic and Social Situation of the Greater Region 2013/14

27 27

Quick facts

Did you know?

Luxembourg counts the highest proportion of highly qualified people in its workforce in the world.

World Economic Forum's (WEF) 2015 Human Capital report

Source : Wort

28 28

Agenda

ü Introduction to Luxembourg’s economy ü Luxembourg’s key advantages: Good reasons to invest in Luxembourg ü Challenges & opportunities

29 29

Challenges

Construction sites‌

30 30

Opportunities

Enhance competitiveness & diversification

31 31

Opportunities

Transatlantic Trade and Investment Partnership

32 32

Opportunities

Transatlantic Trade and Investment Partnership

33 33

Opportunities

Transatlantic Trade and Investment Partnership

34 34

Annex

Comply with new fiscal transparency standards COMMON BELIEF

WE DO COOPERATE AND COMPLY ü Gradual alterations to banking secrecy (still valid for Lux residents) :

“Luxembourg invites criminals from around the world, including some of the worst dictators as well as organized crime leaders and ordinary tax dodgers, to hide money."

- Exchange upon request - Following the requirement of the G20 and global forum - Act 25 November 2014 (modifying Act 31/03/2010) ->Luxembourg declared compliant on 30 October 2015 - Automatic exchange - With the USA - Within the EU - Worldwide

35 35

Annex

Show commitment in the future

Other tax developments : à BEPS à Parent Subsidiary Directive à Patent Box à Tax Amnesty

36 36

Luxembourg Fest 2016 Luxembourg American Cultural Society & Center

Thank you for your attention!

37 37