Speech by Yves Leterme At the Investment Seminar Luncheon in Seoul
06/04/2010
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“Why invest in Belgium”
Ladies and Gentlemen,
I am glad to have this opportunity to meet you and to present my country, Belgium, to you.
It is an honor and a pleasure for me to visit the Republic of Korea and to see its remarkable achievements. Since the 1960s, The Republic of Korea has achieved an incredible record of growth and global integration to become a high-tech industrialized economy. Four decades ago, GDP per capita was as low as that in the poorer countries of Africa and Asia. In 2004, South Korea joined the trillion dollar club of world economies, and currently is among the world's twenty largest economies, as is Belgium.
Our countries are different in size but not so different that they cannot play in the same league.
The Gross Domestic Product of South-Korea is 800.3 billion dollars, that of Belgium 461.5 billion. This ranks us respectively 15th and 37th in the world league. The GDP per capita is 27,700 dollar in South Korea, 36,600 in Belgium.
In view of those data, there is much room for improvement in our bilateral economic relations.
In 2008 Belgium’s export to South-Korea amounted to 1.2 billion dollar (0.6% of the total Belgian export), the import from South-Korea to 2 billion, which was one percent of total South-Korean exports.
The main Belgian export to your country are chemicals, the main South-Korean export to our country cars. The EU-ROK free trade agreement, which is soon to be ratified, will boost trade by at least 20 percent.
I would like to focus today on the room for improvement in mutual investment and especially on the opportunities Belgium offers for foreign investors.
As the figures show, Belgium is a highly developed country. We have world class companies and R&D in the sectors of pharmaceuticals, biotech, nanotechnology, shipping and logistics, nuclear technology for fourth generation reactors, green industry, and the automotive industry.
Investors find world class laboratories and innovative technology in Belgium, for instance the 24.000 square meter IMEC campus, near our Louvain University, which is Europe’s largest independent research center in nano-electronics and nano-technology. Over 1,650 researchers from all over the world work there. IMEC’s research is applied in better healthcare, smart electronics, sustainable energy, and safer transport.
You do not have to take my word only that Belgium is a favourable place to invest.
More than two hundred Japanese companies are already established in Belgium and in in February of this year, the Belgium Japan Association published a study which ranks Belgium as the most globalised country worldwide, a study which compares the business climate of Belgium and her neighbours.
Among our principal assets are, and I quote, ‘the availability of a highly educated and productive work force’ and of a ‘multilingual work force’. The study also mentions our favourable taxation policy towards foreign companies, our central location in the European Union, a market of half a billion people, and the presence in our capital of the European institutions. Our relatively cheap rental prices come as an added bonus.
I’d like to elaborate on those points for a few minutes.
Our federal and regional governments have recently met to launch a comprehensive stimulus package to maintain and improve world class excellence in a number of the afore mentioned sectors.
We have five priorities:
1. Labor productivity expressed per hour of work is one of the highest in the world. It is even 10 percent higher in Belgium than in the USA. With reductions in taxation on labor and moderate wage agreements, we aim to be competitive with regard to wages, and to remain better in productivity than our neighboring countries.
2. In regard to R&D and innovation, Belgium is world class in chemicals and pharmaceuticals. It is a world leader in so-called ‘in-house product innovators’, meaning innovation developed within the firm. A striking 55 percent of the large Belgian companies develop ‘in house innovations’. To make research attractive the federal government offers a very generous tax system for researchers.
3. As far as education and training is concerned, our very high productivity is due to a highly skilled and motivated labor force. The education system, especially at secondary level, is among the world top performers, according to the so called Pisa score of the OECD.
4. Logistics is also one of our strong points. Approximately two thirds of Europe’s Gross Domestic Product is produced within a radius of 300 kilometers from Brussels and Antwerp, which illustrates to which important market our country is a gateway. It is therefore no wonder that we trade a significant share of imports and exports of the Eurozone, itself the world’s largest trading block. Because of the importance of our ports, Antwerp, Ghent and Zeebrugge, the government now works on facilitating trade even further. This will be done, among other things, by reducing and streamlining formalities and by cutting red tape for ships harboring in our ports.
5. The fifth and last point is attracting Foreign Direct Investment. Belgium is an attractive country for foreign investors. During the last years, Foreign Direct Investment amounted to around 12% of the GDP. To compare, the share of FDI in other top destinations in Europe, like Ireland and the Czech Republic, amounts to about 4,1% of GDP.
Apart from lowering the wage cost, the fiscal competitiveness of companies has also been boosted in recent years by well targeted measures such as the notional interest deduction scheme. So investors should not be deterred by the nominal tax rate of 33.9 percent on corporate profits. The notional interest reduction brings it down considerably and moreover is in the interest of corporate stability as it increases with the degree of capitalization.
Before launching this package, the government took measures to help companies weather the economic hardship which followed the financial crisis.
One important measure was the extension of our system of temporary unemployment from blue collar workers to white collar workers. This allows companies to reduce fixed costs during slow periods and to react quickly when demand picks up again.
Besides these measures for companies, the government boosted the confidence of consumers by increasing their purchasing power and by temporary measures such as the temporary reduction of VAT on construction.
The business climate is an important factor of investment but is not the only one. Belgium also offers a high quality of living, among other reasons because of an attractive mixture of town and country where city dwellers are never more than half an hour away, by train or car, from the green countryside. The presence of so many international institutions and foreign investors means we have a cosmopolitan population in and around Brussels, and a number of excellent international schools. There is a lively cultural life and we offer extensive sporting facilities.
Brussels is also one of the safest capital cities of Europe, but we work on improving the security as we have not been immune for crime.
So I would like to say to those of you who do not yet know Belgium or who have no operations there: please come and see for yourself. We will be honored to receive your visit, and more than pleased to help you in any way we can.
I thank you for your kind attention.
