Belgium recorded a 15% drop in the number of foreign investment projects last year, but maintained its number five position in the top five most attractive European countries, according to the “attractiveness barometer” published Monday by Ernst & Young Global Limited (EY) Belgium.
Cleantech and high-tech industry are seen as the drivers of the Belgian economy.
“While our country still has a number of important advantages, countries like Spain and Italy are making rapid progress,” the report said.
“The main risk for our country is now the level of our taxation and the complexity of our tax system, which have overtaken labour costs as the main concern of investors.”
In 2020, Belgium registered 227 projects that generated the creation of 5,098 jobs. Flanders remains the most attractive region with more than half of the projects, while Wallonia has fallen back from the record figures for 2019.
The ranking is dominated by France, ahead of the UK, Germany and Spain.
The UK has become the largest investor in Belgium, while the US and France have drastically reduced their number of projects. China has almost doubled its investment projects in Belgium.
According to the barometer, however, Belgium is lagging behind the average recovery prospects in Europe.
“Belgium still holds many assets that are appreciated by foreign investors,” said Tristan Dhondt, partner at EY Belgium.
“But the last thing we need is complacency. Belgium has to defend its reputation as a trade hub, which should be able to attract more investments.”
EY therefore recommended focusing on investors already established in Belgium by simplifying administrative and regulatory procedures, reducing the corporate tax rate to 20%, investing in digital skills and focuses on cleantech and industrial high tech industries.