The Amsterdam Economic Board recently presented an interesting study about the Dutch business climate, in collaboration with EY. The presentation gave insight into foreign direct investment (FDI) and the attractiveness of the Netherlands. Investors ranked the Netherlands sixth in the top 10 countries with the most foreign investment projects in Europe.

The confidence of foreign investors in the Netherlands is in line with their confidence in Europe. For many years international companies have shown much confidence in the Dutch business climate, but it has never been as high as this year.

Amsterdam is the most attractive Dutch city

In the Netherlands, Amsterdam is by far the most popular destination for foreign investment projects. In 2014 32% of international companies chose for Amsterdam. Rotterdam and Eindhoven follow at some distance at the 2nd and 3rd place respectively.

What makes the Netherlands in general and Amsterdam in particular such an attractive business location?

The confidence of foreign investors in the Netherlands is high. The main reasons for this confidence are: the Netherlands’ international orientation, a stable legislation, the presence of foreign companies and their positive experiences overall.

High quality of life

Quality of life is the most attractive factor of Dutch business climate. This is repeatedly demonstrated in other studies, including by Mercer. Amsterdam ranks globally as the 11th most attractive place to live for expatriates. It’s one of the safest cities in the world. The good telecommunications infrastructure and the high level of education of local workers are also appreciated.

Foreign companies mostly invest in the Netherlands in setting up new facilities (so-called “greenfield operations”). These greenfield investment projects mainly take place in the software and business services. According to StartupJuncture, 2014 was a successful year for Dutch startups: a total of 75 deals were closed with a total investment of EUR 500 million for Dutch startups.

If we make a comparison in the area of ​​innovation and entrepreneurship, Amsterdam is the fifth most innovative city in the world (Source: CITIE). Startup costs are lowest in the Netherlands, followed by the United Kingdom and France. Germany is Western Europe’s most expensive country for starters. (Source: KPMG).

Competitive threat is high

Who are competing with the Netherlands and Amsterdam when it comes to attracting foreign companies? EY interviewed 808 international decision makers and asked for their opinion about the attractiveness of Europe. At national level Germany is the Netherlands’ strongest competitor (44% of respondents), followed at some distance by the United Kingdom (preferred by 9% of respondents).

If we zoom down at a city level, Amsterdam ranks fifth (mentioned by 7% of respondents) in the list of most favourable cities in Europe. Only London (52%), Paris (29%), Berlin (28%) and Frankfurt (11%) are more popular (Source: EY).

Although Amsterdam and Netherlands score well on various indicators, the competition is strong. According to the WEF Global Competitiveness Report the Netherlands currently holds the 8th position, after having reached a fifth position in 2012. Therefore it is important not to rest on our laurels.

How could we maintain the strong position of Amsterdam and the Netherlands? According to foreign investors the inflexibility of Dutch labour laws need improvement. Lower tax rates are also considered important in order to remain globally competitive.

Finally, reliable institutions, a good infrastructure and investment in education, talent development and new technologies are a prerequisite to stay competitive in a global economy.

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