EY’s attractiveness survey Netherlands … Attractiveness Survey 2015 ... key source of insight on...

TEY’s attractiveness surveyNetherlands Attractiveness Survey 2015

From confidence to investment

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Cont

ents

EY Attractiveness SurveysEY’s attractiveness surveys are widely recognized by our clients, the media and major public stakeholders as a key source of insight on foreign direct investment (FDI). Examining the attractiveness of a particular region or country as an investment destination. The surveys are designed to help businesses to make investment decisions and governments to remove barriers to future growth. A two-step methodology analyses both the reality and perception of FDI in the respective country or region. Findings are based on the views of representative panels of international and local opinion leaders and decision-makers.

2 EY’s attractiveness survey From confidence to investment

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04 Management summary

06 — 07 Foreword

08 — 11 Reality Foreign investments in the Netherlands and Europe

12 — 15 Perception The Netherlands seen through the eyes of foreign investors

16 — 21 Actions What should be the next step for the Netherlands?

3EY’s attractiveness survey From confidence to investment

Man

agem

ent

sum

mar

y 2014: Record number of foreign direct investment projects in Europe

The Netherlands is losing ground

Change in the types of facilities invested in

2012

3.797

2011

3.909

2010

3.758

2014

4.341

2013

3.957

Source: EY's Global Investment Monitor 2015

+10%

In 2014, Europe attracted a record number of foreign direct investment projects since records began being taken in 1997. An increase of almost 10% compared to 2013, with the total number now at 4,341.

With 149 projects, the Netherlands lost ground relative to other European countries.


Sales & Marketing7167 81

2014 2013 2012

Logistics

20 18 23

2014 2013 2012

Shared Services Centre

1 12014 2013 2012

Research & Development

8 112

2014 2013 2012

Education & Training

1 42014 2013 2012

Testing and Servicing

9 5 22014 2013 2012

Internet Data Centers

9 13 82014 2013 2012

Production

19 17 20

2014 2013 2012

Headquarters

1525 21

2014 2013 2012


2013

161

2014

149-7%

2012

161

2010

110

2011

170

The Netherlands is gaining ground in terms of logistics, production, and testing and servicing facilities, but is losing ground in sales & marketing offices, headquarters, Internet data centers and R&D facilities.


2012 2013 2014

United States 67 6266

United Kingdom 15 19 18

Germany 12 1215

China 5 6 9

Canada 3 2 5

Japan 7 2 5

Sweden 4 6 5

India 5 5 4

Other 43 40 29


Unprecedented confidence in the Dutch business climate

Over the last 10 years, international companies have never been as positive about the Dutch investment climate as this year.

34%

Very attractive Fairly attractive Total

Quality of life

81%27%54% 76%31%42%81%34%47%

Telecommunications infrastructure

79%45% 34% 73%39%

Local labor skills Transport and logisticsInfrastructure

A clear and stablepolitical, legislativeand administrative

environment

After experiencing a small drop last year, “quality of life” has once again been rated by participants as the most attractive Dutch location factor. However, the differences between the top 5 factors are very small.

The United States remains the largest investor in the Netherlands

Despite a slight decrease, US companies remain by far the largest group of foreign investors in the Netherlands. Meanwhile, China, Japan and Canada have increased their number of investment projects in this country. It is mainly in the other countries that we see a decline in the number of investment projects.

“Quality of life” is the most attractive location factor

2005

2007

2010

2011

2012

2013

2014

2015

4%

1%

13%

6%

4%

23%

25%

26%

34%

33%

6% 44%

3% 37%

10% 48%

Significantly improveSlightly improve


2014’s record number of foreign direct investments (4,341) is an indication that investment confidence in Europe is continuing to grow. This is also reflected in the investors’ confidence that Europe has so improved its capacity to create and innovate, it could plausibly harbor the next Google, and that it has pulled further ahead of China as the world’s most attractive investment destination. Moreover, Europe has increased its lead on China as the most attractive investment location.

Investors are gaining more and more confidence in European culture and creativity, entrepreneurship, and its companies’ adaptability and flexibility. Following in London’s footsteps, cities across the continent have demonstrated their capacity to restore economic growth and competitiveness, and incubate new-age companies that can imagine and commercialize ideas for transforming the lives of millions. And, whether they are fresh out of college or already have work experience, Europe’s new multilingual entrepreneurial generation seems every bit as able as that emerging elsewhere.

The confidence foreign investors have in the Netherlands is in line with their confidence in Europe. International firms have had a lot of confidence in the Dutch business climate for years, but it has never been as high as this year. For instance, 32% of the senior executives interviewed plan to expand or make new investments in the Netherlands in 2015. 85% percent also expect that the Dutch business climate will (greatly) improve in the next three years. While 73% are confident that the Netherlands will maintain its attractive fiscal climate, which includes the participation exemption, ruling practice as well as the large number of tax treaties.

But what are the participating companies basing their confidence in the Dutch business climate on? The primary factors are the country’s international orientation, regulatory stability (in line with international legislation) and the presence of foreign companies and their positive experiences.

Caroline Rodenburg Senior Manager

Bea Haring Managing Partner for the Netherlands and Belgium Markets

Fore

wor

dDecline in investments despite higher-than-ever confidence in the Netherlands

EY’s attractiveness survey From confidence to investment6

“In order to develop the Netherlands into an innovation leader, we will have to invest more in education and training in new technologies”

Decline in investments despite higher-than-ever confidence in the Netherlands

Nevertheless, the considerable confidence did not translate into more foreign investments last year. In fact, there was a slight drop in foreign investments in the Netherlands compared to neighboring countries and the European average. There were 149 investment projects in 2014, as opposed to 161 in 2012 and 2013. This raises the following question: what is keeping companies from investing in the Netherlands?

The location factors reported as less attractive are mainly associated with (in)flexibility of labor legislation and costs (e.g., labor costs, corporate income tax, subsidies and incentives). And, in order to develop the Netherlands into an innovation leader, we will have to invest more in education and training in new technologies. Investors also find that there is room for improvement in Dutch business culture with respect to innovation, creativity and entrepreneurship.

In short, it would seem that the Netherlands still has some catching up to do in these areas. It is, therefore, important not to take our position among the top six European countries for granted. We have to continue investing in further improvements to the Dutch business climate. Fortunately, foreign investors have a lot of confidence in the Netherlands, which serves as a good basis for attracting new investments. By means of a few structural measures, the Netherlands can translate this confidence into an even more attractive investment climate.

In contributing to the discussion about the attractiveness of the Netherlands, we hope this report and the survey results and expert views presented will provide fresh inspiration for effective policies on this subject.


Foreign direct investments in the Netherlands and Europe

149 foreign direct investment projectsin the Netherlands in 2014,compared to 161 in 2013 and 2012.

US companies are the most importantinvestors in the Netherlands.

Most investments were made insales and marketing facilities.

The Netherlands ranks sixth amongthe top 10 countries with the mostforeign direct investment projects.

The United Kingdom, Germanyand France are the main Europeandestinations for foreign direct investments.

Rea

lity

8 EY’s attractiveness survey From confidence to investment8

Total number of foreign direct investment projects in Europe

Number of foreign direct investment projects in Europe

CountryUnited Kingdom 799 887Germany 701763France 515 608Spain 221 232Belgium 175 198Netherlands 161 149Poland 107 132Russia 114 125Turkey 98 109Ireland 111 106Finland 108 98Switzerland 76 85Denmark 58 75Romania 52 62Slovakia 34 06Italy 53 75Sweden 54 45Portugal 39 53Czech Republic 60 53Serbia 63 46Other 358 389

3.957 4.341 Total

+11%

+9%

+10%

-12%

-27%

-5%-9%

+18%+5%

+13%

+23%

+11%

-7%

+12%

+76%+19%

+29%

+8%

+36%

+9%

+10%

0%

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Ranking for2013

Ranking for2014 2014 2013

Change from 2013-2014

1

2

3

4

5

6

10

7

11

8

9

12

15

18

21

17

16

20

14

13


European investmentsIn 2014, Europe attracted 4,341 foreign direct investment projects, representing an increase of nearly 10% relative to 2013 and the highest number since records began being taken in 1997. Investments have been trending upward again since 2013.

2012

3.797

2011

3.909

2010

3.758

2014

4.341

2013

3.957


+10%

The top 6 countries with the largest number of investment projects did not change compared to 2013. Notable changes in the top 20 were Slovakia (+76%), Portugal (+36%), Denmark (+29%), Serbia (-27%) and Poland (+23%). After a drop in 2013, Poland overtook Russia to regain the top spot among Eastern European countries.


Foreign direct investments in the Netherlands by country of origin


Sales & Marketing

67 71 81

2014 2013 2012

Logistics

20 18 23

2014 2013 2012

Shared Services Center

1 12014 2013 2012


8 112

2014 2013 2012

Education & Training

1 42014 2013 2012


9 5 22014 2013 2012


9 13 82014 2013 2012

Production

19 17 20

2014 2013 2012

Headquarters

1525 21

2014 2013 2012

The Netherlands attracted 149 foreign direct investment projects in 2014, compared to 161 in 2012 and 2013 — a drop of 7.5%. In practical terms, these projects concern the establishment of specific facilities in our country, such as headquarters, sales organizations and logistics centers. This placed the Netherlands sixth among the top 10 of European countries in terms of attracting foreign investment projects. We are still behind Belgium, with the gap widening: Belgium attracted almost 50 more investments than the Netherlands in 2014. Despite Belgium’’s higher number of foreign investments, only 7% of respondents — just like in 2014 — saw it as the Netherlands’ biggest competitor,.

In addition to the drop in the number of investments, we also see a change in the type of facilities being invested in. There was a decrease in foreign investments in sales and marketing facilities, headquarters, internet data centers and R&D centers. Internet data centers and headquarters had experienced an increase in 2013. At the same time, the number of logistics and production facilities rose, approaching the figures from a few years ago. The growth in the number of testing & servicing centers in 2014 is also worth noting.

Investment trends in the Netherlands

Investments by country of originJust as in previous years, US companies were the largest group of foreign investors in the Netherlands, though the number of their investments (62) is somewhat lower than it has been in the past. In 2014, the United States accounted for almost 42% of the total number of international investment projects in the Netherlands country, the same as 2013. There was also a slight drop in the number of investment projects from the United Kingdom and Germany (numbers 2 and 3) — in contrast to an increase in projects from the remaining three top 6 countries (China, Canada and Japan).

The number of investment projects originating from BRIC countries increased from 11 to 14, which also represents a rise in their relative share — from 7.0% in 2010, 6.5% in 2011, 7.5% in 2012 and 6.8% in 2013 to 9.4% in 2014. This increase is primarily due to the number of investment projects from China (6 in 2013 and 9 in 2014). This places the Netherlands higher than the European average (8.4%).

Foreign direct investments in the Netherlands by type of facility

2012 2013 2014

United States 67 6266

United Kingdom 15 19 18

Germany 12 1215

China 5 6 9

Canada 3 2 5

Japan 7 2 5

Sweden 4 6 5

India 5 5 4

Other 43 40 29



Number of foreign direct investments in the Netherlands by sector

The business services and software sectors have always attracted considerable foreign direct investment, but both experienced a sharp drop in 2014. Investments are now more evenly distributed across all sectors.

Investments by city and province Amsterdam is by far the most popular destination for foreign direct investment projects: 32% of the international companies investing in the Netherlands chose the capital city in 2014. This encompassed 48 investment projects which — despite representing a slight increase compared to 2013 (46 projects) — was still lower than the number of projects in 2012 (59). Rotterdam continues to rank second, with 15 investment projects — also an increase with respect to 2013 (13 projects). Eindhoven ranks third, with 7 projects, followed by Tilburg, with 4 projects. The Hague experienced a decrease from 8 projects in 2013 to 3 projects in 2014.

Where the Dutch provinces are concerned, Noord-Holland attracted a particularly high number of foreign direct investment projects (56), representing a share of around 38% of the total (37% in 2013). Despite witnessing a further drop in the number of foreign direct investment projects (40 in 2011, 31 in 2012, 24 in 2013 and 23 in 2014), Noord-Brabant occupies second place among provinces after Noord-Holland. The province of Zuid-Holland managed to attract 21 projects, a drop with respect to 2013 (34 projects) and 2012 (22 projects).

Investments in “greenfield operations” by sector Foreign companies mainly invest in greenfield operations in the Netherlands (73% in 2014). This involves the development of entirely new facilities. These greenfield investment projects are primarily in the software development and business services sectors. Compared with countries such as Belgium and France, the number of foreign investor expansion projects in the Netherlands is relatively low (18.9% on average in the past three years, compared with 34.5% and 41.7% on average in Belgium and France, respectively). However, this figure is more or less in line with that of Germany in the past three years (18.3%).


2014 2013

Software

3426

Machines and tools

10

Insurance andPensions

6

Car assembly

2

Retail

4 4

Chemicals

10

Telecommunicationsand post

Foods

77

Business services

12

Electronics

135

14 23

611

0 6 6

Henri de Groot Professor of Regional Economic Dynamics at Vrije Universiteit Amsterdam and Ecorys

An interesting academic discussion is taking place with regard to the social added value of attracting international companies.

In the academic literature, we are still examining the extent to which international companies are truly generating spin-offs for local companies. I think this report forms a very important knowledge base which will also enable these kinds of studies to be conducted in the future.

Watch the full interview at www.ey.nl/attractiveness


Quality of life is the most attractive factor of the Netherlands as a business location.

The Netherlands seenthrough the eyes of foreign investors

Amsterdam is seen as the mostattractive Dutch city.

(In)flexibility of labor legislationis seen by foreign investors as theprimary point for improvement.

Germany is considered theNetherlands' biggest competitor.

Perc

epti

on


Quality of life is the most attractive factor of the Netherlands as a business location.

The Netherlands seenthrough the eyes of foreign investors

Amsterdam is seen as the mostattractive Dutch city.

(In)flexibility of labor legislationis seen by foreign investors as theprimary point for improvement.

Germany is considered theNetherlands' biggest competitor.

Perc

epti

on

Expectations with respect to the Dutch climate for establishing a business

Dutch business climate by type of facility

2005

2007

2010

2011

2012

2013

2014

2015

4%

1%

13%

6%

4%

23%

25%

26%

34%

33%

6% 44%

3% 37%

10% 48%

Significantly improveSlightly improve

First choice Total

39%28%


24%14%

Production

31%15%

Logistics

21%13%

Headquarters

18%9%


14%6%


16%

Sales & Marketing

6%

Contact Center

5%2%

According to the respondents, the Dutch business climate is especially attractive for R&D facilities, followed by logistics, production and headquarters. Thirty-nine percent of this year’s respondents found the business climate most attractive for R&D facilities, compared to 26% in 2014. There was also a significant improvement in perception with respect to production facilities, from 14% to 24%.

This raises the following question: what are the respondents basing their confidence in the Dutch business climate on? The primary factors are the country’s international orientation, regulatory stability (in line with international legislation) and the presence of foreign companies and their positive experiences.

For years, foreign companies have had a lot of confidence in the Dutch business climate but never has it been as high as this year (2015).

The outlook for new investment projects is good. For instance, 32% of the foreign company senior executives interviewed, plan to expand or make new investments in the Netherlands in 2015. This is high in comparison with neighboring countries (e.g., 27% in the UK and 25% in Germany). This figure was 26% in 2014 and 21% in 2013. This mainly concerns investments in logistics and production facilities and sales & marketing offices. Notably, mostly businesses that are already established in the Netherlands expect they may invest in the country.

If we look at the Dutch business climate in general, the companies interviewed are more positive now than they have been at any point in the past ten years. Fifty-eight percent expect that our business climate will (greatly) improve in the next three years. This includes both companies that are already established in the Netherlands and those that are not (yet). Nevertheless, 10% of the companies already established in this country expect a slight worsening, while only 1% of the companies not (yet) established in the Netherlands share this perception.

Confidence in the Netherlands has never been so high

In the OECD and the EU, there has been a lot of debate recently regarding tax evasion and avoidance. Does this impact the attractiveness of our country? Very little, apparently. Confidence in the Netherlands is considerable. Seventy-three percent of the senior executives are confident that the Netherlands will maintain its attractive fiscal climate, which includes the participation exemption, ruling practice as well as the large number of tax treaties.

Arjo van Eijsden

Partner at EY Tax Advisors

The tax rate partly determines where companies are based.

The Netherlands has a competitive tax rate. However, if we compare our corporate income tax rate with the rate in other countries, it becomes clear that it could be lower. We ought to consider whether we could make our fiscal business climate more attractive by reducing the rate.



Confidence in specific aspects of the Dutch business climate

Strengths of the Dutch climate for establishing a business

Points for improvement with respect to the Dutch climate for establishing a business

It is also important to know why companies decide in favor of the Netherlands. What are the factors that make foreign companies decide to set up business in the Netherlands, and what are the factors that keep them from doing so?

According to foreign investors, the Netherlands has a number of clear strengths, including “quality of life,” the telecommunications, transport and logistics infrastructure, and the educational level of local employees. The top 6 most attractive location factors have remained the same since 2005, with the other factors being a clear and stable political, regulatory and administrative environment and an entrepreneurial culture and entrepreneurship.

After falling to the fourth position in 2014, “quality of life” has regained the top spot. However, we can discern a clear trend: companies already established in the Netherlands have a more positive perception of the location factors than those that are not (yet) established in the Netherlands.

The location factors reported as less attractive are mainly associated with flexibility of labor legislation and costs (e.g., labor costs, corporate income tax, subsidies and incentives). However, we see a clear difference between companies that are already established in the Netherlands and those that are not (yet); the former are considerably more positive about tax benefits, subsidies and incentives. If we want to attract more new, foreign companies, we will have to do a better job of “selling” the Dutch economy with respect to the aspects that are considered to be weaker.

13%

First choice Total

Stable national legislation that is in line with international legislation

Positive experiences of companies that are already located in The Netherlands

International orientation of the country25%

21%

38%

33%

11% 24%

Already existing pool of international companies 12% 22%

Language skills of the population5% 17%

Government policy with regard to corporate income tax8%

12%Government measures taken to overcome the economic and financial crise

5%

Government standpoint with regard to the European Union7%5%

Zeer aantrekkelijk Redelijk aantrekkelijk Totaal

Very attractive Fairly attractive

54%

27%81%

76%

31%

45%

73%

39%

34%

79%

45%

34%

Kwaliteit van leven Telecommunicatie infrastructuur

Opleidingsniveau van lokale werknemers

Transport & logistiekeinfrastructuur

Duidelijke en stabiele politieke, wetgevendeen administratieve omgeving

81%34%

47%Local labor skills 45%

34%

27%

Transport and logisticsInfrastructure

A clear and stable political, legislative andadministrative environment

Telecommunications infrastructure

Quality of life 54% 81%

81%

79%

76%

73%

47%

34%

45%

34% 39%

31%

Not very attractive Not at all attractive

Corporate income tax 4%

4%

4%

Tax advantages, subsidiesand support

Research and innovation capacity

Labor costs

Flexibility of labor legislation 32% 36%

36%

21%

28%

9%

32%

17%

14%

6% 3%

4%


2011 2012 2013 2014 2015

Amsterdam Rotterdam The Hague

Utrecht Eindhoven

73%70%

80%

64%

73%

53% 51% 47% 50% 47%

8% 9%

6%

14% 17%

10%

14%10%6%

7%5%

13%11%

Main competitors for the Netherlands

Most attractive cities in the Netherlands

Bron: EY’s European Attractiveness Survey 2013

2015 2014

41%44%

2% 4% 7% 7%

Germany

United States

14% 9%

United Kingdom

Belgium

Boudewijn Revis

Alderman for the City Centre and Public Space, The Hague

Investing in the public space has put The Hague on the map.

The Hague has made a conscious decision to invest in its public space. We are convinced that by means of the public space, the business climate contributes to the economy of the city and the living environment in The Hague. Good cooperation between the municipality and investors is essential here.


Besides countries, cities also compete for foreign investments. They promote themselves with a view to securing a spot on the shortlist of investing companies. But how do potential investors see Dutch cities? Our survey shows that they rate Amsterdam as the most attractive Dutch city, followed by Rotterdam. After experiencing a dip in 2014, the appeal of the capital is back at its old level, with 73% seeing Amsterdam as the most attractive city.

On the EY 2015 European Attractiveness survey, respondents were asked to name the three most attractive European cities. Seven percent of more than 800 respondents named Amsterdam as one of their top 3, which placed it after London (52%), Paris (29%), Berlin (28%) and Frankfurt (11%).

As primary reasons for the appeal of Amsterdam and Rotterdam, the respondents mention international business culture (61% versus 59%), transport and logistics infrastructure (30% versus 44%), “quality of life” (23% versus 11%) and educational level of local employees (19% versus 21%).

Like every year, the top 5 cities cited included the cities of Amsterdam, Rotterdam, The Hague, Utrecht and Eindhoven. Evidently, these cities have been successful in securing a spot on the shortlist of foreign companies. The Hague, Utrecht and Eindhoven all strengthened their positions, gaining 3, 6 and 4 percentage points, respectively.

Competition Dutch citiesThe attractiveness of the Netherlands is not something that stands on its own; it also depends on the climate for establishing businesses in other countries. When other (European) countries improve (aspects of) their business climate, this can have an impact on the Netherlands. For instance, the Netherlands and the United Kingdom keep a close eye on each other with respect to new measures for attracting foreign companies. When it comes to attracting headquarters, competition is felt particularly strong on both sides.

We also asked participating companies what they see as the Netherlands’ biggest competitor. For years, roughly 40% have said Germany. The United Kingdom is still quite a way behind Germany, but it is steadily gaining ground.


Act

ions

What should be the nextstep for the Netherlands?

30% see ICT as the driverbehind Dutch economic growthin the coming years.

22% see reducing the taxburden as a point for improvementif the Netherlands is to remaincompetitive globally.

34% find that educationand training in new technologiesmust improve in order for the Netherlands to become more innovative.


Which business sectors will drive the growth in the coming years?

Reform issues for the Netherlands as an innovation leader

Logistics and distribution channels

23%13%

9% 15%

Bank/Finance/Insurance

Green technology

8%13%

Energy andutilities

12%7%

Transport Industry and Automotive

15%9%

ICT

30%18%

First choice Total

Improve educationand training in new

technologies

22% 34%

Develop a cultureof innovation and

creativity

13% 26%

Increase tax incentives for innovative

companies

12% 21%

Develop entrepreneurship

Reducing thetax burden

Develop joint researchprograms at the European level

Develop a culturein green and social

innovation

12% 20%

12% 19% 12% 17%

6% 15%First choice

Total

1 The European Commission’s Innovation Union Scoreboard is an annual survey of the research and innovation performance of the EU Member States and the relative strengths and weaknesses of their research and innovation systems.

Drivers of the Dutch economyThe Netherlands and Europe are currently in a phase of economic recovery. But which sectors will reap the benefits of this recovery? The expectation is that internationally-oriented sectors will profit most. Growth is also picking up in sectors that are heavily dependent on domestic demand. Nonetheless, we must remain vigilant, as the market is dynamic and the competitive balance can change very quickly.

Decision-makers at foreign companies see the IT sector, in particular, as a driver of growth in the Netherlands in the years to come. IT is followed by logistics and distribution, which previously held the top spot. In earlier years, respondents were most confident about the logistics sector. For all other sectors, they see little difference in potential. It is noteworthy that mainly companies established in the Netherlands still have a lot of confidence in the logistics sector. Companies that have not (yet) established in the Netherlands are placing their bets — after IT — mainly on the growth of the banking and insurance industry.

The Netherlands as an innovation leaderInnovation — the successful renewal of business operations — is the driving force behind economic and social growth and enables a country to raise its standard of living. According to the European Commission’s Innovation Union Scoreboard 2014, the Netherlands is currently an innovation follower. In contrast to innovation leaders, who are well above the EU average in terms of innovation performance, innovation followers score above or close to the EU average.

Therefore, we asked the participating companies what has to be done to develop the Netherlands into an innovation leader. They find education and training in new technologies to be the primary point for improvement. Innovation, creativity and entrepreneurship are areas that could also be more resourceful. Twenty-one percent of the respondents further mentioned increasing tax incentives, though this figure is considerably lower than last year (34%). At the same time, they would also like to see a reduction in the tax burden.


How can the Netherlands remain attractive on a global scale?

Lower tax22%

Support high-tech industries and innovation

19%Labor flexibility regardinghiring, termination andduration of work

17%Increase incentivesfor foreign direct investors

13%Facilitate accessto credit

9%

Develop educationand skills

22%Lower labour costs

21% Invest in majorinfrastructure andurban projects

20%

“Reduce the tax burden in the Netherlands” — the participants saw this as a key opportunity for keeping the Netherlands competitive globally. The same applies to better education and incentivizing R&D. It is noteworthy that mainly those companies already established in the Netherlands see “flexibility in labor legislation” as an opportunity. Only 13% mentioned “increasing incentives for foreign companies”, compared to 24% of respondents in 2014. It would therefore seem that other aspects of the Dutch business climate have become relatively more important for promoting the country internationally.

How can the Netherlands retain its worldwide competitiveness?

Steps to be takenThe Netherlands has not benefited from the growth of the total number of investment projects in Europe. This means that we cannot take our position among the top 6 European countries for granted. Therefore, if we want to attract more foreign direct investment projects, we will have to continue investing in the attractiveness of the Dutch climate for establishing a business.

Fortunately, foreign investors have a lot of confidence in the Dutch business climate, which serves as a good basis for attracting new investments. By means of a few structural measures, the Netherlands can translate this confidence into an even more attractive business climate.

These actions can be allocated into various areas: economy, finance, international promotion and cities and regions.

• Decision-makers at foreign companies mainly see IT as a growth sector, followed by logistics and distribution. Companies that are not (yet) established in the Netherlands are placing their bets, after IT, mainly on the growth of the banking and insurance industry. However, these are not among the Dutch Government’s specific top sectors. The Netherlands must, therefore, continue investing in areas outside the designated top sectors in order to enhance its appeal to foreign companies.

• ►International companies mainly place their bets on investments in R&D, followed by logistics,

production and headquarters. The perception of R&D and production facilities, in particular, is much more positive than in previous years. In other words, the basic location factors for this type of investments must be in order. Education and training in new technologies are the primary points for improvement in this area, according to the participants. We also have to improve our culture with respect to innovation and creativity and encourage entrepreneurship. This can be done by investing in permanent education in order to support the adaptive capacity of the Dutch economy.

Economy


• It is important to present a clear picture of the qualities of the Dutch business climate for the international community. To achieve this, Dutch public authorities, businesses and knowledge institutions need to work closely together and coordinate their activities. This will enable us to “sell” Dutch business opportunities with better success to foreign investors. Our survey has revealed that there is considerable room for improvement with respect to the knowledge that foreign companies have about the Dutch climate for establishing a business. This is therefore an issue that should be prioritized by the Government and business sector.

• A positive finding is that confidence in the Dutch business climate is primarily related to the country’s international orientation, its regulatory stability (in line with international legislation) and the presence of foreign companies and their positive experiences. It is precisely these aspects that serve as excellent selling points for the Netherlands as an attractive investment destination.

• Cities and regions also have to continue promoting their specific appeal to investors. Companies are becoming more mobile and, consequently, spatial differences are having an increasingly larger impact on location decisions. In this respect, it is important that cities and regions make mutual agreements, regarding specific attractive factors per city/region (e.g., clusters) or the timing of approaching potential investors, for instance. It would also be beneficial if the representatives of cities and regions include the attractive aspects of other cities and regions in their sales pitch. After all, the goal is to present an attractive picture of the Netherlands as a whole for the international community.

• Cities are increasingly focusing their efforts on attracting and accommodating innovative start-ups, which provide an important foundation for further growth and city promotion. To effectively attract start-ups, it is essential that Dutch cities become innovation leaders instead of innovation followers. This means the Netherlands must continue to invest in better education and stimulate R&D so as to retain its worldwide competitiveness.

Finance • ► One way to achieve sustainable growth is to stimulate innovation, a key priority of the Dutch Government’s policy. To this end, it is important that innovative foreign companies establish a presence in the Netherlands. When asked how the Netherlands can become an innovation leader, foreign companies believe that improving education and training in new technologies is imperative. The Netherlands also needs to be attractive to start-ups, the companies of the future.

• ► It is important that innovation is fiscally supported. The Netherlands already provides a wide range of tax incentives for innovation, such as the R&D wage tax credit, the R&D Allowance and the innovation box. However, companies are not always familiar with these incentives. Twenty-one percent of the companies interviewed mentioned an increase in the tax benefits for innovative companies as an important reform

measure that would help make the Netherlands an innovation leader. However, these incentives do not always have an optimal effect. One of the components of the tax reform is, therefore, aimed at streamlining these incentives.

• The call of international companies for lower costs (labor costs, corporate income tax, subsidies and incentives) and flexibility of labor laws remains a point of concern and should, therefore, be a priority on Dutch policymakers’ agendas. According to a letter submitted by the State Secretary for Finance, on 16 September 2014, the Government aims to create 100,000 new jobs by easing the burden on labor by €15 billion annually. Moreover, the European Council, the OECD and the IMF have recommended that the Netherlands reduce its burden/tax on labor. This should therefore be one of the basic principles of a tax reform.

Cities and regions

International promotion


Surveyed companies by nationality

Surveyed companies by turnover

Position of the respondents

Surveyed companies by industry affiliation

41%Northern America Western Europe

27%

Northern Europe9%

Asia19%

Oceania2%

Central & EasternEurope

2%

Managing Director

30%

FinancialDirector

30% Chairman/President/CEO

8%

Other22%

Marketing andCommercialDirector

10%

Industry, Automotive,

Energy

48%17%Private &

Business services

18%Consumer goods

10%Telecommunication services and high-technology

services

7%Chemical & Pharmaceutical

industries

Less than € 150 million

€ 150 million — € 1.5 billion

More than€ 1.5 billion

40%

22% 38%

Met

hodo

logy

The Netherlands Attractiveness Survey 2014 is based on two main sources:

1. Actual attractiveness of the Netherlands to foreign investors

Actual investment projects in Europe according to the EY Global Investment Monitor (GIM). This database permanently monitors the actual cross-border investments and expansions of international companies. By excluding portfolio investments and mergers and acquisitions, it shows the reality of investments in manufacturing or service operations by foreign companies. The database, which is maintained by Oxford Intelligence, registers announced investments, as well as, where available, the number of jobs created and the amount in capital expenditure involved. Projects are identified by monitoring and analyzing over 10,000 sources of news on a daily basis. The research team aims to contact 70% of the companies that make investments. This verification process ensures that data are presented accurately.

The GIM excludes the following:

• Mergers, acquisitions and joint ventures• License agreements• Retail and leisure operations, hotels and property investments• Investments in utility services, including telecommunications networks, airports and ports• Extraction activities (minerals, ores and fuels)• Portfolio investments• Replacement investments with respect to manufacturing facilities Not-for-profit organizations

2. The perception of foreign investors with respect to the attractiveness of the Netherlands and its competitors

The perceptions and expectations of international decision-makers with respect to the Netherlands as a prospective investment country. This information was obtained from interviewing 200 decision-makers of international companies. These interviews were held by the CSA Institute in February and March 2015. About 57% of the persons interviewed are established in the Netherlands, while the other 43% are established abroad. Of the latter group, 62% are established outside Europe (North America: 41%, Asia: 19%, Oceania: 2%). A total of 808 international decision-makers were asked to voice their opinion on the attractiveness of Europe.

Information on the sample The selection of companies is representative for those that actually invest in the Netherlands. This was validated by taking into consideration the nationality of the parent companies, the size of the companies and their industry affiliation. Their respective shares will be presented in the figures on the next page.

Nationality of the respondents In order to ensure that the geographical distance between the respondents and their business location was observed, the companies were divided into two groups according to their nationality:

• ► Half of the group of decision-makers work for subsidiaries in the Netherlands and were interviewed in the Netherlands.

• The other half of the group of decision-makers were interviewed in their country of origin.


Surveyed companies by nationality

Surveyed companies by turnover

Position of the respondents

Surveyed companies by industry affiliation

41%Northern America Western Europe

27%

Northern Europe9%

Asia19%

Oceania2%

Central & EasternEurope

2%

Managing Director

30%

FinancialDirector

30% Chairman/President/CEO

8%

Other22%

Marketing andCommercialDirector

10%

Industry, Automotive,

Energy

48%17%Private &

Business services

18%Consumer goods

10%Telecommunication services and high-technology

services

7%Chemical & Pharmaceutical

industries

Less than € 150 million

€ 150 million — € 1.5 billion

More than€ 1.5 billion

40%

22% 38%

Position of the respondents The interviews were held with decision-makers who had gained experience in or with the Netherlands. Managing directors and financial directors were the categories of individuals most frequently interviewed.

Company size To provide further assurance that all sectors and international strategies were represented, the survey also covered the following target groups

• SMEs• Multinational corporations• Industrial companies• Service companies

Sectors of industry The five surveyed sectors of industry are representative of the foreign companies established in the Netherlands (based on EY’s Global Investment Monitor).


EYnovation: the international network of EY available to start-upsThe Netherlands is working hard to improve its attractiveness for start-ups and young, fast-growing businesses (scale-ups). As per 1 January, The Netherlands even has a visa especially for founders of start-ups. EY supports these entrepreneurs when they decide to set up shop in the Netherlands with respect to visa applications, transferring intellectual property and setting up their legal structure, for example. In addition, we bring start-ups, scale-ups and investors together, so they can successfully come to investments.

Start-ups quickly can face the same sort of challenges as large corporations — issues related to intellectual property, setting-up an international business structure or negotiating with foreign investors, among others. Using the EYnovation service, EY’s knowledge and

expertise in the said areas will become available.

EYnovation offers starting entrepreneurs and fast-growing businesses swift and easy access to EY’s network, supporting their growth towards market leadership. Through an EYnovation subscription, We provide the same high-quality service and access to our worldwide network and thought leadership, as we provide the current market leaders. A dedicated point of contact at EY, will point out information relevant to their business.

More and more large corporations are interested in connecting with start-ups, so they can learn from their innovations and their entrepreneurial spirit. In the Netherlands, EY has served as a good example for the past years of how large international corporations fruitfully work with and assist start-ups. EY Nederland

has co-founded “Startupbootcamp HighTechXL” and “Startupbootcamp Smart Materials,” actively helping foreign start-ups to make a “soft landing” in the Netherlands, by rendering advice on licence contracts and IP transfer, for example.

EY is lead partner of StartupDelta, the network that, led by Neelie Kroes, puts the Netherlands on the international map as an attractive place to launch start-ups. In addition, EY is partner of various other Dutch initiatives, such as YES!Delft, StartupAmsterdam and ACE Venture Lab. We provide start-ups with advice on how to roll out their businesses internationally from the Netherlands. As co-organizer of the Launchpad Network, we aim to make The Netherlands more attractive for national and international startups.

www.ey.nl/eynovation

22 EY’s attractiveness survey From confidence to investment22 EY’s attractiveness survey From confidence to investment

EY International Location Advisory ServicesEY International Location Advisory Services (ILAS) is a part of Real Estate Advisory Services (REAS) and focuses on the area of transaction guidance and support, strategic real estate advice and project finance. We offer services in the fields of real estate portfolio optimization, due-diligence audits, valuation, land commercialization and risk management, feasibility studies, area development and public–private partnership projects.

We support companies globally with their strategic international investment and their location and relocation decisions. We help government bodies formulate policies aimed at maximizing both the volume and quantity of investments.

To that end, we assist them in designing clear target group, acquisition and after-care strategies.

Companies are increasingly considering new locations and cross-border investment strategies, and more and more countries welcome foreign investors. These new options require a sharpened focus on the balance of risks and rewards in economies and industries globally. Today, more than ever, companies look at costs, quality and risk factors before selecting their strategic business locations. The question of “where do we (re)locate” is becoming an increasingly important part of a company’s overall strategy. EY ILAS knows where, how and when.

We offer solutions for clients who have questions related to their location strategy, plant and office locations, real estate investments and divestments. Following an analysis of an investment project’s specific needs, our team works with the client’s management on the best long-term options in terms of criteria such as cost savings, available labor pools, and secure infrastructure.


Contactpersonen:

Tristan DhondtPartner Real Estate Advisory Services + 31 88 4071006 [email protected]

Caroline RodenburgSenior Manager International Location Advisory Services + 31 88 4070809 [email protected]

EY | Assurance | Tax | Transactions | AdvisoryAbout EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

© 2015 EYGM Limited. All Rights Reserved.

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This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

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