The Japan Times

WORLD EYE REPORTS
BELGIUM
 AT THE CROSSROADS OF EUROPE




©THE JAPAN TIMES
 		Friday, January 29, 1999
 		B1

The unifying factor

Jan. 1 marked the day 11 members of the European Union took the single most defining step in the history of Europe's integration by formally giving up their own currencies and replacing them with the single currency known as the euro. Even before the euro's launch, its forecasted strength has had a stabilizing effect on its members' economies.

Though the European Central Bank is located in Frankfurt the real center of the EU's operations remains Brussels, the defacto capital of Europe.

BELGIUM

Social cohesiveness

The driving force for development

The Kingdom of Belgium, officially created in 1830, is a constitutional monarchy headed by King Albert II, who ascended the throne in 1993. Belgium's governing structure, however,has changed dramatically since the country's creation. It has gone through massive constitutional reforms that have resulted in a very loosely bound federal state. Today Belgium has one federal government and local governments in the its three regions: the Brussels-Capital Region, Wallonia and Flanders.

The region maintain a decentralized and autonomous administration with extensive powers over economic policy, foreign trade, agriculture, energy, public works, employment, scientific research and land-use planning.

The Brussels-Capital Region

The main business goal of the Brussels-Capital Region government is to be the European headquarters for international companies. Brussels is Europe's decision-making center, home of the EU, NATO and over 1,000 other international organizations. As Joe Chabert, vice president of the Brussels-Capital Region, puts it, "We are the Kitchen of Europe. This is where the meals are prepared. Businesses like to be here so they can see what ingredients are going in and how things are prepared, and more importantly, so they can try to persuade the cooks to make the food to their liking.


Jos Chabert, Minister of Economics, Finance, Budget and External Relations, Brussels Capital region.

"We try to give seed money to companies that have a future. We invested in Mobistar, a mobile phone company. Now they have 700 to 800 people working here. We invested Bfr 650 million five years ago. Now the company is on the stock exchange and worth five times what we invested. We will now take what we have earned and reinvest it in other promising new businesses."

Chabert divulged what he calls his Dynamo Plan to stimulate the regional economy, both by attracting foreign investors and improving the business environment for local companies: The aim of the Dynamo Plan is to create dynamism within the economy. One of the main problems with Brussels is the amount of bureaucracy. To simplify matters and be more efficient, we created a one-stop shop office called the Brussels Regional Development Agency, where investors can take care of all their business needs without having to deal with separate offices."

Wallonia

Wallonia, Belgium's southern region comprises slightly over half the country's geographic area and is home to 3.3 million of its 10 million people.

"Wallonia was Belgium's center of industrial development in the 19th century," explained Robert Collignon, minister president of Wallonia. "The region is now in the painstaking process of transforming its economy based on heavy industry into a more modern economy. It's an expensive process, both in terms of the actual conversion and in the environmental cleanup. Some of the old industrial companies are being rationalized and reconstructed, while others are being eliminated completely."

The region has taken some significant steps toward modernization, specifically in the high-tech sector. In fact, Wallonia has become as important center for the European biotech industry and generates 71 percent of the country's biotech revenues.

In addition to biotech, the aerospace and aeronautics industries are quickly developing in the Walloon region. And the region is no newcomer to this field. The Sabca company has been involved in aerospace research since 1920s. Sonaca, another company engaged in aeronautics, arrived just 10 years after that.

 


Robert Collignon, Minister President, Government of Wallonia

"This sector already accounts for 2,800 jobs in the region. The federal government invests some $185 million per year in the aerospace and aeronautics industries, while the regional government has invested $12 million in R&D and $15 million in other aspects of the industry in the last five years. Wallonia is responsible for 6 percent of all European space research, with just 3 percent of the EU population," Collignon said.

The Walloon government is currently focusing on promoting cooperation between the public and private sectors. It recently announced plans to target its public activities budget toward a joint venture it has formed with the private sector. This venture will promote the development of four specific sectors of the economy considered essential to the region's development: the environment, telecommunications, new technologies and housing development.

Within the environment sector, projects will be developed dealing with water, waste and recycling. Suez Lyonnaise Des Eaux and Vulcan Environment, two companies already established in this sector, will be involved in the project.

Within the environment sector, projects will be developed dealing with water, waste and recycling. Suez Lyonnaise Des Eaux and Vulcan Environment, two companies already established in this sector, will be involved in the project. In telecommunications, the proposed activities include the development of an alternative fixed operator , the development of mobile telephony, the convergence of fixed and mobile phone systems with the Internet, the development of service productions and satellite communications. Wallonie Telecommunications will cooperate with such companies as Mobistar, Skybridge, ACM and Telinfo in these efforts.

The new technology sector's will encourage and finance university or corporate research and activities that introduce new important technologies to the region.

And in housing development, the objective is to stimulate the construction of housing units and large-scale housing facilities, especially in certain regions of Wallonia where current facilities are deemed insufficient.

Wallonia proudly points to its quality of life, which is second to none, along with its excellent communications network and sound infrastructure. The region also offers tax and financial assistance to investors in the region as well as employee assistance programs. And a very open market mentally is prevalent in Wallonia, something of great importance in today's global village.

Gilded houses of the Grande Palace, Brussels

Flanders - third in high-tech in Europe

Around 80 percent of the world's polished diamonds pass through Antwerp in the northern Dutch-speaking region of Flanders. On the other hand, the only city in the world with bigger petrochemical industry than Antwerp is Houston, Texas. These facts alone may be enough to cause surprise, but there is more. The high-tech industry in Flanders is the third-densest in Europe, after German states of Baden-Wurttenberg and Hesse. And 75 percent of the new jobs created in Flanders are in the high-tech sector.

Eric Van Rompuy, minister for economic affairs for the Flanders Region, said, "Since the 1980s Flanders has been focusing on developing its high-tech sector. There is an area with high labor costs, but our labor pool is highly skilled and very productive. Therefore, we have a tradition of attracting very capital-intensive investments.

"Textiles and food are also traditional sectors. There are still 50,000 people working in the textile industry here, but two-thirds of the costs in this industry are labor costs, so this industry isn't likely to last Flanders. Our future is in high-tech." Flanders has four high-tech "valleys" focused on speech technology, biotech, graphics and multimedia. These projects aim to bring entrepreneurs at the cutting edge of their technologies

Llernhaut & Hauspie Speech Products is a Belgian company founded 11 years ago. It specializes in core technologies such as automatic speech recognition, text-to-text speech and text-to-text digital speech compression. The founders of this firm, together with other related companies, formed the Flanders Language Valley for the development and commercialization of speech and language technology products.

The Flanders Language Valley is supported by a venture capital fund, the first in the world to focus exclusively on applications in speech and language technology. The advantage for investors in this organization, and the others like it, is the expertise and contacts of technicians involved. The Flanders Language Valley is expecting its rapid growth to continue in the coming years, and the other "valleys" expect no less. It's certain that these types of projects typify the future of the Flanders economy.


Eric Van Rompuy, Minister for Economic Affairs, SME, Agriculture and Media, Government of Flanders

One of the challenges facing Flanders as it approaches the new millennium is a stagnating workforce. Van Rompuy explained, "It is too easy for people coming out of universities to get jobs with the big multinationals instead of creating their own innovative enterprise. New venture capital projects are booming in the United Stares, Britain and some extent the Netherlands, but not as much here yet. We are trying to promote this type of activity in a number of ways, one of which is by offering financial incentives to this involved in venture capital projects.

"In a country with virtually no remaining natural resources, our greatest resource is the human brain." Van Rompuy continued. "Other regions of Europe are becoming more competitive in what they are offering investors, so Flanders can't remain competitive in the long-run without maintaining a very well educated, productive workforce with the skills necessary to work with the latest technology. In 1996 Flanders spent 43 percent of its budget on education. Only the Scandinavian countries spend more."
TOP
Social cohesiveness


Jean-Luc Dehance, Prime Minister of Belgium

Q: What image does Belgium project, and what are its main advantages as a business location?

The image of Belgium as a business location is one of a small open economy right at the very heart of Europe with a highly skilled and productive workforce, the openness of its economy and its business-friendly climate, as well as its location in an affluent and densely populated region.

Belgium is also the seat of such major international organizations as the European Union and NATO.

Another great advantage is our sophisticated infrastructure, for example the ports of Antwerp, Zeebrugge, Ghent and Ostend. We also have an extensive railway system and a very dense network of roads. With our multilingual population, Dutch, French, English and German are all commonly spoken.

Q: What is on the economic agenda for Belgium approaching the new millennium?

For the better part of the 1990s, the main items on the Belgian economic agenda have been the boosting of employment and the consolidation of public finances. Regarding the latter, we still face a high public debt ratio, but today our public finances are sound. The public deficit was about 1.5 percent of GDP in 1998, so the debt-to-GDP ratio is showing steady decline.

We will stick to our tight fiscal policy in order to cope with the challenges posed by the aging of our population, which will become acute about 2021.

Employment has been the other big item on our agenda and will remain so in the years ahead. The first results of our comprehensive approach to promoting employment have become apparent. Cuts in social contributions, as well as wage moderation, enhanced training efforts increased labor market flexibility and a large range of targeted programs have all contributed to a substantial increase in the overall employment rate.

Q: How would you rate Belgium's effort to attract foreign investment?

Belgium has always done very well in attracting foreign investment. The extraordinary rate of growth Belgium enjoyed in the aftermath of World War II was largely due to foreign direct investment. Today also, much of Belgium's business is a result of foreign investment. To illustrate: A full 15 percent of our exports are made by subsidiaries of American companies.

Belgium is holding its own in the competition with our neighboring countries to attract investment as to our very evident advantages. We are continuing to improve the business climate in Belgium. We have improved financial parameters and reduced social contributions.

We are also making broad efforts to improve nonfinancial parameters. These efforts range from dramatic reduction and simplification of administrative forms to expanding the opening hours of public institutions. A clear, transparent, efficient and stable regulatory environment is crucial in attracting foreign investment, and we are working on improving this.

Q: What are the greatest challenges facing Belgium economically and what is being done to meet these challenges?

In the long term, the main challenge will be to continue making progress in social cohesion. Our social model has yielded wonderful results, with a high standard of living, a high quality of life and a low poverty rate. We have to protect and improve the basic features of the so-called European social model. Continuing to reduce unemployment and ensuring that future generations enjoy at least as high a standard of living as we do are further issues of concern for us in the long term.

The idea that our children or grandchildren might have a lower standard of living than ours is unacceptable. We have to cut public debt further, address the pension issue and commit ourselves to a very ambitious environment plan.

The depletion of natural resources, pollution and other forms of environmental damage will create severe disadvantages for future generations unless we act now. We must take responsibility for these issues.

The most immediate challenges facing the economy, however, are at the corporate level. These include the transition to the euro currency and measures to ward off the computer millennium bug. The federal government has launched various initiatives to raise the public and private sector's consciousness in regard to these issues.

TOP

The driving force for development

Belgium's economic structure has always impressed foreign investors, thanks to the country's regional governments, which manage about 80 percent of all economic activity. Belgium remains one of the EU's fastest growing members.

Among the fastest growing

Belgium's economic growth is largely due to its internationally oriented economy. a huge chunk of Belgium's businesses have benefited from foreign investments, while the Belgian economy as a whole is heavily dependent on foreign trade. Some 60 percent of Belgium's GDP is derived from imports and exports.


Elio Di Rupo, Vice Prime Minister, Ministry of Economics and Telecommunications

In the current international economic turmoil, many people have assumed Belgium would be hit severely due to its exposure to cross-border dealings. This has not been the case. Elio DI Rupo, the Belgian minister of economics and telecommunications, explained: "As investment and private consumption have strengthened, the driving force of the expansion has progressively shifted from exports to domestic demand. The revival of private consumption reflects stronger job-creation and the growth in disposable personal income. The high level of private consumption is also benefiting from a decrease in the savings ratio. Consumer confidence has rebounded as a result of the remarkable progress we have made in fiscal consolidation and because of better prospects in the labor market."

Federal Agency for Foreign Investors
Economic incentives for investors, and the promotion and attraction of investments, are activities that fall within the responsibility of the Belgian regional authorities. To sustain growth and promote foreign investment, however, the Belgian government has undertaken several initiatives.

First, it created the Federal Agency of Foreign Investors to promote the image of Belgium as an investment location. "This agency, in collaboration with the regions, answers all questions from potential investors. The information provided is related to Belgium in general and to issues concerning federal regulations, such as trade laws, social laws, the organization of financial markets,price and income policies and the rules of access to the market," stated A.S. Krasovac at the agency.

Other initiatives include the guarantee of legal security for companies that launch stock option plans, as well as for the workers and managers who benefit from them.

 


AS Krasovac of the Federal Agency for Foreign Investors, Ministry of Economic Affairs

The administrative formalities to access territories have been simplified and shortened for foreign business people and their families. To further facilitate entrepreneurial initiatives, the Belgian government has initiated a huge program aimed at simplifying the producers imposed on companies.

Krasovac said, "Following the examples of the governments of Austria, Denmark and the Netherlands, I have asked the Belgian Planning Bureau to benchmark the Belgian economy against others. This study will focus on Belgian competitiveness compared to other European countries. A systematic diagnosis will provide a useful guide on the investment climate in Belgium. Actually it will allow political and economic decision-makers to have a good grasp of the possibilities offered by Belgium as an investment location."

Promoting business in Brussels

Foreign and domestic businesses have a very valuable partner in the Brussels Regional Development Agency. Since 1974 it has developed 29 industrial and research parks with a total area of 150 hectares. It offers shared industrial premises and refurbished spaces, and provides information on business premises for lease or sale in the Brussels region.

Luc Daems, General Director, Brussels Regional Development Agency

"We are developing a new system in which all the companies we have a profile on will be informed of new openings within 24 hours," explained Luc Daems, general director of the agency.

ECOBRU is yet another program created in 1997 by the minister of economics for the Brussels-Capital Region to promote and sustain the dynamism of business in Brussels. It is an extension of the Brussels Regional Development Agency. ECOBRU provides information on virtually every aspect of significance to enterprise. Daems stated, "We go further than just giving information; we work with both local and international companies to solve problems."

The Japanese market is one of the key target markets in Brussels' plan to attract foreign investment. Vincent Vanden Bossche, economic adviser at the Brussels Regional Development Agency, explained, "The Japanese market will be very important to our future, so we are always working to improve relations with Japan."

The minister of economics and foreign trade for the Brussels-Capital Region recently initiated a plan to promote Brussels in Japan. Concerning this mission, Daems said, "We worked with our Belgian attaché in Tokyo to make contacts and arrange meetings with the business community to discuss the business opportunities in Brussels."

Daems believes the future looks bright for Brussels and that Japanese companies are now more interested in coming to Brussels than they were just a year ago.

TOP


HOME  About Us  Careers  Contact Us  Reports  Advertisers  About Japan Times

© 1999 World Eye Reports