6 minute read 24 Sep 2019
Attractiveness

7 key findings from the Belgian Attractiveness Survey 2019

Authors

Tristan Dhondt

EY Belgium Transaction Advisory Services Partner

Think out of the box. Financing and deal making. Quantification of decision processes. Macro -economic views. Strategy challenging.

Marie-Laure Moreau

EY Belgium Assurance Partner and Regional Managing Partner Wallonie

Passionate about entrepreneurship and growth. Dedicated wife and mother. Loves ski and golf and supporter of Standard de Liege.

6 minute read 24 Sep 2019

New record for foreign investments in Belgium in 2018, bucking the European trend.

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. This is shown by the Belgian Attractiveness Survey, an annual study conducted by EY that gauges the attractiveness of Belgium as a location for investment.

Belgium is doing noticeably better than the neighboring countries, but the perception of Belgium as an attractive country for professional settling slightly decreases.

1. 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.
 

2. 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.

3. 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.

4. 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
EY Belgium Assurance Partner and Regional Managing Partner Wallonie

5. 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.

Mobility

41%

of respondents feel mobility and accessibility to public transport in Belgium has a negative influence on their investment decisions in Belgium.

6. 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.

Innovation

84%

of respondents believe Belgium is developing the latest technologies while also preparing for the unknown innovations that will emerge in the near future.

7. 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
EY Belgium Transaction Advisory Services Partner

Recommendations

These are the policy measures EY Belgium suggests to ensure the attractiveness of Belgium for foreign investors in the long term.

    • 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
    • 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
    • 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
    • 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
       

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Summary

After the record number of investments in Belgium last year, there is again reason for optimism this year. In 2018, Belgium attracted as many as 278 investment projects, representing around 7,363 jobs. This is shown by the Belgian Attractiveness Survey.

About this article

Authors

Tristan Dhondt

EY Belgium Transaction Advisory Services Partner

Think out of the box. Financing and deal making. Quantification of decision processes. Macro -economic views. Strategy challenging.

Marie-Laure Moreau

EY Belgium Assurance Partner and Regional Managing Partner Wallonie

Passionate about entrepreneurship and growth. Dedicated wife and mother. Loves ski and golf and supporter of Standard de Liege.