The Dutch EconomyEconomic performanceThe Netherlands has emerged from its economic stagnation of the first half of the 2000’s and is once again in good shape. The very open Dutch economy has benefited from the supportive international environment and investors have continued to be attracted by its business friendly environment. The pace of real GDP growth has strengthened since 2005, unemployment has fallen back to a low level and the fiscal position has been brought back into balance. Although the current recovery is partly cyclical, it is also built on an impressive underlying performance, which has helped to maintain income per capita among the highest in the OECD.
International tradeThe Dutch economy has a strong international focus, as the Netherlands is one of the European Union’s most dynamic centers of trade and industry. Owing largely to its favorable location by the North Sea, it plays a key role as a main port and distribution centre for companies operating worldwide. The Port of Rotterdam handles some 377 million tonnes of goods every year, and is one of the largest ports in the world; while Amsterdam’s Schiphol Airport is one of the largest airports in Europe. For these reasons the Netherlands is often called the ‘Gateway to Europe’.
The Netherlands’ position in global competitiveness has strengthened, placing it among the world’s top ten. The Netherlands moved up from the 11th position in the Global Competitiveness Index (GCI) to the 9th position in 2007, according to a 2007 report published by the World Economic Forum (WEF). For a number of years, the Dutch economy has consistently succeeded in generating trade surpluses.
IndustryDutch industry has reacted swiftly to technological advances, producing knock on effects throughout the economy. The information and communications technology sector now accounts for nearly 20% of total GDP growth. In addition, biotechnology is playing an increasingly prominent role in more traditional sectors such as agrofood and chemicals. These trends have been spearheaded by Dutch and foreign firms alike, especially in the fields of information and communications technology, life sciences and chemicals.
CompetitivenessAccording to the Economist Intelligence Unit, the global business environment rankings paint a relatively favorable picture of the global operating environment over the next five years. The average country business environment score in 2008-2012 is 0.43 points higher than in 2003-2007. The Netherlands scores well, ranking in 9th place. Factors cited in this report (global ranking model measuring the quality of the business environment of 72 countries) include: the stable political environment; sound regulatory framework; and close trading relationships with its regional neighbours.
Export and importFigures from Eurostat (epp.eurostat.ec.europa. eu/) indicate that, in 2007, the Netherlands was the EU’s third top exporting country after Germany and France. Prime reason for this is the fact that the Netherlands plays a key role as a hub in the distribution of goods to other European countries.
Dutch exports also grew substantially in 2007. If the current trend continues, the Netherlands will move up to take second position in 2008. With 968 billion euro, Germany was easily the EU’s largest exporter. In 2007, the Netherlands exported goods worth around 400 billion euro, more than the collective export values of the new EU member states which joined the EU in 2004 or 2007.
Relative to other countries, the Netherlands exported large volumes of food products, gas oil and natural gas.
In 2007, growth in export volumes will slow down modestly, largely because of weaker demand from Germany and the US, while solid growth in domestic demand will continue to pull in imports. However, trade prices developed a little more favorably in 2007 than was the case in 2006. In 2007, a moderation in oil prices and the strength of the euro translated into much slower increases in import prices, helping to offset the unfavorable trend in net export volumes. As a result, the trade surplus remains fairly stable.
The services balance is expected to improve further, continuing the trend existing since 2001, but net income inflows will be undermined by a strong currency, which will reduce the euro value of earnings from overseas investment. In general, it is expected that the current account surplus will decline as a percentage of GDP, in 2008.
Over the longer term, it is expected that the Netherlands will continue to record substantial surpluses on the current account, mainly because of the large and persistent surplus on merchandise trade. The National Bureau of Statistics (CBS) features comprehensive information on international trade.
Foreign InvestmentForeign investments increased on a worldwide basis in 2007. Within the EU, the Netherlands (104,2 billion US dollar), the United Kingdom (171.1 billion US dollar) and France (123.3 billion US dollar) demonstrated resilience in attracting foreign direct investment (FDI). This is indicated in the most recent figures issued by UNCTAD.
The Netherlands, in particular, posted good results with multinationals from emerging industrial countries, such as India, Korea and China. Asian corporations especially, are selecting the Netherlands more frequently as a strategic base of operations for their European expansion, due to its strong commercial spirit, excellent location, state of the art infrastructure, international orientation, and tradition of innovation and creativity.
Education and labour forceThe Netherlands boasts a highly educated, well motivated and multilingual workforce, whose productivity exceeds that of most other European countries. Furthermore, the Dutch workforce consistently receives high marks from the international business community for its high percentage of advanced educational degrees and familiarity with foreign working styles and business environments.
The official language of the Netherlands is Dutch, but being the most pragmatic and practical of people, they long ago realized that, as a small country which, out of necessity, had to go beyond its borders to trade, that success lay in learning other people’s languages.
Today, Holland is by far the most multilingual country of all Europe. More to the point, the Dutch have a better working knowledge of English than many other nationalities on the European continent. Besides English, most Dutch citizens also speak German and French.
Holland has the lowest percentage of days lost to strikes within the whole of the EU. Companies operating here achieve flexibility in their labour practices through a mixture of arrangements, such as different kinds of labour contracts, flexible working hours, the use of various types of shift work and the frequent employment of temporary workers.
Dutch workers are covered by a social security program, the costs of which are shared by workers, employers and the government. Additionally, the Dutch social insurance system covers medical and hospital costs and provides a minimum income for those unable to earn a living due to illness, injury or other valid reasons for being unemployed.
Dutch educational institutions are renowned the world over for their advanced programs in the study of agriculture, geography and city planning, economics, mathematics and computer sciences, chemical engineering and engineering in general. Moreover, scientific and technical subjects dominate the curriculum in higher education, which is comprised of 13 universities and over 100 (university-level) higher vocational institutes; the latter produce the future engineers and other highly trained professionals eagerly sought by industry.
Most universities and technical colleges have well-developed business links with commercial enterprises to ensure that both training and research activities on the academic side coincide with the needs of the local and global business communities.
Maintaining a steady flow of this necessary human capital into academia, the Netherlands proudly points to a high proportion of its young people enrolled in higher education, especially in the fields of technology, economics, law and social sciences.
Reasons to invest in the NetherlandsStrategic location in EuropeThe Netherlands provides a strategic location to serve markets within Europe, the Middle East and Africa. The central geographical position of the Netherlands, combined with accessibility and an excellent infrastructure are only some of the reasons why numerous European, American and Asian companies have established their facilities in the Netherlands.
International business environmentThe Netherlands, long Europe’s trading crossroads, is an obvious choice to locate a pan European operation, whether it is a European headquarters, a Shared Services Center, a Customer Care Center, a distribution and logistics operation, or an R&D facility. The country’s pro business environment creates a gateway to Europe that helps international companies succeed throughout the continent.
An international outlook and openness to foreign investment is firmly engrained in the Dutch culture, and this has yielded a wealth of world class business partners who know how to deal with global business challenges in today’s economy.
Superior logistics and technology infrastructureThe Port of Rotterdam is the world’s third largest seaport, while Schiphol Airport is recognized as one of the major business hubs in Europe claiming over 100 international awards over the last couple of decades. The Netherlands is also classified as one of the most ‘wired’ countries in the world, a dynamic force in electronic commerce, communications and outsourcing. More than a decade of investment in high speed Internet, cable and digital communication systems, as well as the rapid adoption of state of the art computer and mobile phone technology, have created an ideal base for companies seeking to take advantage of modern technology.
Highly educated, multilingual and flexible workforceThe Netherlands features one of the most highly educated, flexible and motivated workforces in Europe. Dutch professionals are also among the most multilingual in the world, enabling them to successfully operate in companies in any industry serving customers throughout the continent.
Quality of lifeThe Netherlands is proud to have a high standard of living, while maintaining an affordable life for its residents. The costs of living, housing, education and cultural activities are lower than in most Western European countries.
Favorable fiscal climateSince January 2007 the Dutch tax environment for international companies has become even more attractive. The corporate tax rate has been lowered to 25.5%, which is well below the EU national average. Dividend tax has been reduced from 25% to 15%. Furthermore, a patent box with a 10% tax rate on income from innovations was introduced. Combined with other traditional features of the Dutch tax system (wide tax treaty network, participation exemption, 30% tax break for highly qualified foreign employees) the fiscal climate is quite simply one more reason to establish or expand your European operations in the Netherlands.
Source: www.hollandtrade.comNetherlands: market entryThere are several ways of marketing products in the Netherlands. Several organisations can be of assistance in finding the right methods. One of the most accessible is the Chamber of Commerce, which has made a basic checklist for exporters to the Netherlands:
Is there a market for my products?In many instances, ready made market information is available. If not, the Chamber of Commerce can put you in contact with organisations that conduct specific market research geared to your products.
Does my product meet commercial and legal requirements?You must take European legislation into account. For example: electrical products and toys must meet strict quality standards (CE mark). These regulations concern safety, health, and environmental and consumer protection. We recommend that you discuss these points with your Dutch buyer.
What are the most effective distribution channels for my product?What route to take? Through importers, agents, distributors, wholesalers or directly to the consumer?
Which promotional activities are most relevant for my product?Trade fairs and exhibitions are commonplace and effective promotion tools in the Netherlands. The International Trade Consultant can often provide you with practical advice on effective promotion methods for your product in the Netherlands.
How can I find the right business partner?The International Trade Consultant can assist you in finding business partner, who may be an importer, agent, distributor or wholesaler. Should you have very specific questions, or require specialised support in finding the right business partner, you may be directed to a commercial consultant.
Transport and packaging?Is the existing packaging suitable for transport and does it meet market requirements? The Chamber of Commerce can assist, by putting you in contact with the relevant organisations.
VAT, Customs and ExciseThe Dutch tax and customs authorities distinguish between products stemming from either within or from outside the EU. Rules and regulations differ depending on the product.
Did you know?- The Netherlands is the world’s 8th largest exporter?
- The Netherlands is ranked World No1 in the number of households having access to broadband internet (OECD08)?
- Rotterdam is the world’s biggest seaport?
Source: www.nfia.nl 
