In their annual report published just over a week ago the Netherlands Foreign Investment Agency (NFIA) discussed how the Netherlands is a huge magnet for attracting foreign investment, now more than ever before, writes the Holland Bureau.

NFIA states that in 2011 there were 193 foreign investment projects with a total investment value of 1,47 bn Euros in the Netherlands. These projects will, in the long term, create 3530 new direct jobs (and 4300 in total). In 2010 and 2009 the amount of foreign investment was ‘only’ 155 million.
The NFIA’s analysis indicates that the distribution of the direct investment projects is not unsurprisingly quite uneven. This is the general interpretation of the mainstream Dutch media – for instance, see the NOS. It indicates that one can find new investment projects mainly in North Holland (Amsterdam), South Holland (Rotterdam), North-Brabant and Limburg, but almost nothing in the Northern part of the country, or in Zeeland.
However, looking at the spread of the investments in terms of Euros instead of new projects did reveal a small surprise. From this perspective the difference is enormous. North Holland has received around 1000 m Euro, followed by North-Brabant and Limburg receiving almost 10 times less. Moreover, the total direct investment of all other provinces together is not even half of the direct investment flowing into North Holland.
In reaction to the report of the NFIA, Henk Bleker, Minister for Foreign Trade & Agriculture, pointed to the oft-mentioned characteristics that give the Netherlands a favourable investment climate: “Companies favour the Netherlands for its position as a stepping stone into Europe, its language and educational skills, as well as its fiscal climate.” Regarding the last item the Netherlands, with a corporate income tax rate of only 25.5%, has the lowest business tax in Western Europe. Furthermore, according to financial services conglomerate KPMG, amongst the European countries included in the survey the Netherlands comes out as the cheapest location overall for foreign companies. Even Japan and the US generate higher costs for foreign business than the Dutch.
Nevertheless, the NFIA report indicates that the pull for foreign investment to come to the Netherlands is actually increasing. How is this possible?
First of all, the Netherlands has again benefited greatly from the continuing rise of Asia. More than half (52%) of the 193 projects that the NFIA refers to come from the Asian continent. The countries heavily investing in the Netherlands won’t surprise you; China (29%), Korea (25%), Japan (24%) and Taiwan (11%).
Secondly, the high levels of investment were also due to some help from the United Arab Emirates. For instance, The UAE energy company TAQA invested 815 m Euros in a gas storage project in Bergermeer (North-Holland). TAQA now owns 60% of the project, the Dutch state taking the remaining 40%. Via this foreign investment alone, the ‘priority sector’ of Energy accounts for the highest investment amount in 2011. TAQA is still a relatively small but growing player. Only founded in 2005, its profits have expanded rapidly. In 2011 TAQA saw its net profit increasing by 66%, to around 230 m Euros, having quadrupled in 2010.
The investment relevance of this Bergermeer project for the Netherlands in general should not be taken too lightly. No doubt, if the Netherlands wants to become the gas hub of Northwest Europe (see previous HB post The Big Dutch Spider in the European Gas Web) this investment is essential. TAQA would like to use the empty Bergermeer site to store gas for the coming decades – in the porous layers of sandstone 2500 meters under the ground. The enormous extra storage space allows for great flexibility in the Dutch gas infrastructure, which, according to Jan Dirk Bokhoven, Chief Executive Officer of EBN, will also enable further growth of irregular renewable energy sources such as wind energy.
Looking now at these two aspects, it becomes clear that the increase in FDI in the Netherlands is mostly due to developments other than an improved investment climate in the Netherlands. Growing players in other areas of the world seem to be the main reasons behind these very favourable results.