For Belgium, 2018 was an absolute record year for attracting foreign direct investments (FDI). A total of 278 foreign investment projects were initiated, representing a 29% increase on the previous year and creating an all-time high number of jobs (7,363). With this increase, Belgium is going against the European trend.
Belgium is doing noticeably better than the neighboring countries, but the perception of Belgium as an attractive country for professional settling slightly decreases.
Record year for foreign direct investments in Belgium
For Belgium, 2018 was a record year for attracting foreign direct investment (FDI). A total of 278 projects were initiated, representing a 29% increase on the previous year and creating an all-time high number of jobs of 7363.
Such a large increase in overall FDI bucks the European trend and takes Belgium from a ranking of 8th in Europe in 2017 to 5th in 2018.
Flanders & Brussels are driving the surge, more jobs/projects in Wallonia
Flanders and Brussels are driving the surge in foreign investment projects in Belgium, with respectively 169 and 61 projects.
Wallonia achieves a large number of jobs per investment project (39), outperforming Flanders and Brussels with respectively 32 and 2 jobs per investment project.
The results of our survey shows that Brussels has almost caught up with Flanders as the most attractive region in Belgium for investment. Around 40% perceive Flanders as top, down from 51% last year, with Brussels the direct beneficiary increasing from 29% to 39%. This result might reflect the rising profile of the city region and its improved branding.
Business services sector leads the way, transportation sector creates the most jobs
The business services sector attracted the highest number of projects (47). Followed by transport and logistics (35), agri-food business (26), digital sector (23) and transportation manufacturers and suppliers (21).
Just over a quarter of all jobs related to FDI projects were created by the transport and logistics sector. When the sector is combined with the transport manufacturing sector to form a broader transport sector, this sector accounts for 44% of all jobs created.
Possible Brexit boost results in more HQ projects
Sales and marketing initiatives attracted the most projects (97). Ahead of logistics (58), manufacturing (57) and research & development, which increased to 36 projects from 17 the previous year.
The number of investment projects relating to headquarters greatly increased, rising from 4 in 2017 to 19. It can be speculated that a high percentage of these projects are Brexit-related relocations.More than half of respondents (58%) to our survey believe that the UK’s departure from the EU will have a positive impact on Belgium’s attractiveness.
“The quality of the workforce in Belgium is a major attraction, so we need to invest in training and support all staff in the use of new technologies. Innovation is the future of our country.”Marie-Laure Moreau - Partner EY Belgium
Negative impact of mobility remains
41% of companies surveyed indicate that mobility has a negative influence on their investment decision in Belgium.
This opinion is especially strong among companies active in Belgium, 64% of which say that traffic jams and road infrastructure have a negative influence on their decision.
Supporting innovation is the main priority
84% of the companies surveyed believe in the potential of Belgium to meet future challenges in the field of innovation.
They also indicate that supporting innovation should be Belgium’s main priority in order to remain competitive in the global economy, climbing above reducing taxation.
Qualitative aspects on the rise, but the reduction of taxation remains important
Qualitative aspects like the quality of the labor force and the quality of life in Belgium, are becoming more important for foreign investors.
However, especially companies already established in Belgium insist on the reduction of taxation and the reduction of labor costs in order for Belgium to maintain its competitiveness.
“Good mobility and transportation infrastructure are an asset and strength for a country. Investments in infrastructure could have an accelerating effect on the attractiveness of Belgium.”Tristan Dhondt - Partner EY Belgium
- Reduce the corporate rate to 20% and simplify the system
- Widen knowledge of the tax incentives that support innovation
- Lower the withholding tax on interest, dividends and royalties to a maximum rate of 10%
- Create a stable tax climate that ensures certainty over tax issues
- Ensure a legal and fiscal stable framework for companies
- Enforce and empower the Belgian Ruling Commission
- Education and training
- Increase focus in primary and secondary schools on developing IT skills
- Provide structural training in entrepreneurship in educational programmes
- Promote the teaching of digital skills
- Invest in durable life-long learning, allowing employees to retrain and participate in the digital economy in the long term
- Invest in the opportunities for learning at the workplace
- Address the structural underfunding of higher education
- Existing and new investors
- Stimulate investment in the chemical sector, particularly the port cities
- Focus on generating greater investment in the sectors of the future, such as digital technologies and IT, and ensure that projects result in commensurate job creation
- Encourage greater cooperation among Belgium’s three regions -- Brussels, Flanders and Wallonia – to ensure that the success of one region reinforces another and that their individual advantages are combined to maximise overall attractiveness
- Reduce the complexity of the regulatory framework in the field of subsidies
- Analyze continuously the gap in labor costs with the most important trade partners of Belgium and act on the analysis
- Examine ways in which the cost of labour can be further reduced
- Lower the tax burden for employees, including social security
- Continue to organise and even increase delegations to and events in the UK to showcase Belgium as an attractive future hub for logistics, manufacturing and HQs
- Emphasise the role Belgium plays as a ‘crossroads’ connecting the UK with mainland Europe
- Focus on the country’s growing logistics sector and continue to address mobility issues
- Logistics and mobility
- Maintain focus on developing competences in logistics, promoting education and training
- Develop the country’s sustainability in the field of transport and logistics infrastructure
- Encourage large industries to shift towards adopting a smart industry, known as Industry 4.0