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Belgium is centrally located in the European Continent hence it acts as a spring board to other countries in European Union (EU). Belgium shares its boundaries with leading EU nations such as France, Germany, United Kingdom, the Netherlands and Luxembourg.
Brussels which is capital of Belgium also acts as capital of Europe as the headquarters of the European Commission is also located here. Besides, Brussels is also the place where the headquarters of Council of Ministers, European Parliament and NATO is located.
Belgium holds economic importance when it comes to trade in EU. The country acts as main transit zone for movement of goods in European Union and 20% of Europe’s traffic is carried out by Belgian freight carriers.
Foreign Direct Investment has always played a systematic and pivotal role in Belgium’s economy. Belgium has always encouraged international trade and foreign investment. Belgium practices global equity which means Belgium’s trade and incentives policies does not discriminate between domestic and foreign companies. Belgium follows openness in foreign trade and investment which means foreign investors does not need prior authorization of payments and investors can also use other currencies for transactions. There are no debt-to-equity requirements and there is free flow of financial investments including investments and credits. Belgium has strong anti- bribery laws, freeports, foreign trade zones and investors can gain from investment subsidies and incentives.
Belgium was badly hit by the global economic crisis of 2008. However, the economy is slowly coming back on track for a gradual recovery. Based on the forecast of international organizations, Belgium GDP growth was predicted to grow 2.0% per year from year 2008-2010. Thanks to low inflation in Belgium the productivity has gained in good proportion in relation to wage increase. Moreover, the interest rates have also remained consistent throughout these years. The market forecasts say that under condition of no new regulation being introduced the Belgium GDP will continue to grow at rate of 1.6% in year 2011.
Belgium economy adopted expansionary fiscal measure in line with EERP (European Economy Recovery Program) with calculated impact of ½ of GDP in year 2009 and 2010. The measures included reduction in VAT rate for residential constructions, delay of tax payments for firms, wage subsidies and acceleration of public investment. There were many such measures that were taken for assisting the financial sector.
The measures adopted according to EERP framework helped in improvement of balance sheets of financial institutions and it reflected in the GDP growth which showed quarterly improvement by 0.7% and 0.35 in year 2009. The overall GDP growth for year was rounded to 3.1% as whole.
According to UNCTAD, Belgium ranked fifth in the inward FDI stock in global rankings.
Despites its small size in EU, Belgium attracted 5%-20% of total EU’s FDI inflows in the year 2002 -2009. In 2009 alone, Belgium attracted 182 investment projects.
Belgium has a open economy with a highly developed road network and a diversified industrial and commercial sectors Belgium is known for its high tech sectors and it is known as R&D home for life sciences. The considerable strengths of economy lie in the textile, heavy engineering sectors, steel and coal.
Foreign investors have attractive opportunities for investment in different industries and sectors such as Chemical industries, automotive industry, Greenfield investment projects, Agro-food sector, pharmaceuticals industry, R&D, plastics, textile weaving, industrial metal and services.
The Belgian government encourages and promotes foreign investment in the country. Recently, the government has taken an initiative that includes giving special encouragement to industries that produce new skill and increase countries export earnings.
The Belgian government follows an investor friendly policy which does not discriminate between domestic and foreign investors. The fact is strongly supported by its investment policy which gives foreign investors and companies equal treatment under the law and offers special tax inducements and incentives to foreign companies to setup and establish enterprises in different sectors.
Besides it does not have any regulation that prescribes the proportion of foreign capital to domestic capital in any given investment project or new enterprise. Foreign investors can seek long term credit and can transfer all capital profits as he wishes to. Foreign Investors can seek help from local authorities who offer concessions and special assistance to those who wish to set up an enterprise in the area.
In Belgium regional authorities provide incentives to investors for setting up an enterprise in their area. For example Flanders Investors and trades regional authority gives special grants for ecological investments. The grant is applicable to company of any size irrespective of its location in the area. The size of the grant provided changes with the size of the company. The Flanders regional investment authority provides support to
• Environmental investments
• Energy saving investments
• Renewable energy
• CHP (cogeneration)
Belgium government also provides direct aid, labor and training incentives, R&D and international trade opportunities. Besides it also gives subsidies to enterprises that create jobs, reduced security payment to employers and special tax regime for individuals that include foreign executives, researchers and specialists.
Belgium has different investment and trade agencies that assist investors and companies that invest in their region. These agencies not only assist foreign investors but also provide various incentives for setting up enterprise in their region. The three main regions Wallonia, Flanders and Brussels have their own investors and trade regional authority that looks into various aspects of foreign investment.
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