Ambassadors lunch, ABN Amro Amsterdam
Speech by Maria van der Hoeven, Minister of Economic Affairs of the Netherlands, Ambassadors lunch, ABN Amro Amsterdam, 24 September 2007.
Ladies and gentlemen,
We are indeed facing turbulent times. The takeover of ABN Amro, the current subprime problems in the United States, the fears of a worldwide credit crunch – these are only signals that the world in general and the financial world in particular are changing rapidly. International capital flows, technological progress, globalisation, the rise of emerging markets and especially the speed of these developments are causing financial, economic and social dynamics that we have never experienced before.
Allow me to make one thing very clear: I am not afraid of these dynamics. I am not afraid of foreign takeovers either, and I don’t consider them negative as such. Foreign companies stimulate competition and innovation, provide the Netherlands with stronger links to international financial networks, hold up a mirror to our investment climate and confirm our reputation as an open, flexible economy. And we are best buyers too. According to KPMG, the number of Dutch takeovers abroad rose from 132 to 216 in the past two years. In the same period, foreign takeovers in the Netherlands only increased from 135 to 145.
How about Sabic, a chemical concern from Saudi Arabia? It took over DSM’s dwindling petrochemical activities, expanded its research activities and moved its headquarters from London to the Netherlands. The Saudis made substantial investments in our economy and created substantial employment. How about DAF Trucks, which was taken over by Paccar? The results have been entirely positive: since the takeover, DAF has advanced to third position in European truck company rankings, with a market share of almost 15 per cent. And at least as positive is the news that it has doubled its workforce to 8,000. So we should not allow ourselves to be misled into taking protectionist measures. Protectionism is the biggest threat to an open economy like ours.
Recently, a debate has started on the unfavourable effects that investment from government funds may have on our public interests. The issue is that national security and control of vital infrastructure could be compromised if government funds from, say, Russia, China or the Middle East were to acquire stakes in our network industry or other strategic sectors. I want to be clear on this as well: many of these funds have been operating for many years and have a good track record as shareholders. Foreign investment, including sovereign wealth funds, contributes to our prosperity.
However, the transparency of these funds needs to be improved substantially. Norway and Singapore offer good examples of how this could be done. I hope the IMF and World Bank will promote standards to make such funds more transparent.
Studies by Ernst & Young show that foreign investors choose the Netherlands because of its favourable location, its world-class seaport and airport, its first-class links to the rest of Europe and its excellent reputation for storage, distribution, transport and logistics. A highly skilled, multilingual workforce and a modern ICT infrastructure are also important reasons for foreign companies to locate here. The Netherlands is a hub in many ways – of knowledge, logistics and business cultures, and it is well placed as a springboard between the euro countries and other financial centres. And I haven’t even mentioned the landscape and quality of life here or the high standard of our theatres, museums and concert halls.
This has also very much favoured the financial sector in the Netherlands. This sector contributes 7.4 per cent of our Gross Domestic Product. It scores higher than the financial sector in the United Kingdom, which contributes 6.5 per cent. And don’t forget that London is Europe’s financial centre. More than 300,000 people work in the sector in the Netherlands – and that’s not counting the people in related sectors: the lawyers, accountants and consultants providing all kinds of support services. If these employees are included, the financial sector accounts for over 535,000 jobs.
Ladies and gentlemen,
How can we further improve this strong position? How can we attract foreign investors? How can we encourage foreign companies to settle in the Netherlands? How can we tackle our disadvantages, in our infrastructure for example?
My answer to these questions is that we must aggressively work on three things:
- 1. a more open, social and tolerant culture;
- 2. a top-notch knowledge infrastructure that attracts foreign R&D;
- 3. an attractive investment, academic and social climate so knowledge workers from abroad will settle in the Netherlands.
1. Tolerance and openness
Our first task is to expand tolerance and openness. We Dutch have always been famous for our attitude towards people of different backgrounds, religions, races and opinions. Immigration has made a well-known contribution to Dutch innovation for centuries. I need only mention the Portuguese Jews, including Spinoza’s parents, who came to the Netherlands in the 16th and 17th centuries. Or the Flemish, who gave an important boost to the textile industry in Leiden. Many of these immigrants flourished in Dutch society, contributing to innovation and higher productivity. And they started new businesses, such as V&D and C&A, companies that are successful to this day.
I regret to say that I am concerned about growing intolerance towards foreigners in Dutch society and feelings of mutual misunderstanding. Let me be clear: I do think it is appropriate to ask foreigners to adapt to our society, and I would hope and expect every resident of the Netherlands – irrespective of his or her roots – to fully integrate and participate in society. To find a job, to learn Dutch, to learn about our history and culture, to educate their children accordingly.
But at the same time, all Dutch people – whether their families have been here four hundred, forty or just four years – must respect the different backgrounds and cultures of our newest citizens. Likewise, all Dutch people must acknowledge the efforts being made by new immigrants to integrate into our society, and help facilitate their integration. For instance, by offering them a job if they have the skills and knowledge required.
In the words of Francis Fukuyama, the Netherlands must remain a high-trust society. Not only because this is the best way to deal with growing global competition and to meet the demand for more knowledge-based products. But also for ethical reasons – because we are humane and civilised.
2. Top-notch knowledge infrastructure
Secondly, we have to work on our knowledge infrastructure. World Economic Forum statistics show that the Netherlands has surpassed the US in ICT-related innovation. But other statistics are troubling. Fewer students in the Netherlands are choosing “hard” sciences than in other countries. The number of doctorates awarded in the Netherlands is among the lowest in Europe. Our aging society is thinning the ranks of essential researchers.
So we cannot rest on our laurels. We shall continue investing in the creation of new technology institutes. We shall cooperate with the provinces to start National Economic Top Programmes for ‘Brainport’ Eindhoven, the Food Technology knowledge and industrial cluster in the eastern Netherlands and the international Energy Hub of Groningen. Schiphol and Rotterdam, our vital transportation links, will participate in the Randstad Urgency Programme.
As for the financial sector, I am happy to mention the Holland Financial Centre, which was set up this summer. Its main aim is to further develop a strong financial sector in the Netherlands. As you might know, Holland Financial Centre has got off to a flying start, with an impressive list of parties subscribing to it.
3. Attractive climate for knowledge workers
Thirdly, we need to create a more attractive climate for knowledge workers. As Richard Florida made clear in The Rise of the Creative Class, well-educated and creative people are the sine qua non for economic growth. And, as Florida acknowledges in The Flight of the Creative Class, countries and cities have to compete for such people, since there is a shortage of them and they tend to wander across the globe. Today’s creative class is always looking for hot spots of art and excellence where they can exploit their talents, find new trends and meet other interesting people. And the challenge for countries and municipalities is to help create environments attractive to these people. Environments that are melting pots of cultures, talents and knowledge.
The Dutch government recognises the increasing demand for highly-educated people. Our knowledge migrants facility – through which 4,000 highly-educated knowledge workers from outside the EU have accepted a job in the Netherlands without first applying for a work permit – is a step in the right direction. But there remain too many red-tape type complaints about our immigration policies. We will streamline existing investigative procedures, and sponsors – companies and educational institutions – will be given co-responsibility for admission. We also plan to reduce admission procedures to only a few weeks.
Conclusion
Mr Rijkman Groenink, ladies and gentlemen,
ONE – tolerance and openness; TWO – a top-notch knowledge infrastructure; and THREE – an attractive climate for knowledge workers. These will remain high on the government’s agenda. I hope you will spread this message to companies in your home countries that are considering whether to invest or settle in the Netherlands.
Thank you.