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03THEHAGUE1879 24 July 2003 No clasificado Embassy The Hague

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This record is a partial extract of the original cable. The full text of the original cable is not available.






E.O. 12356: N/A

REF: STATE 128494

1. Attached we transmit the text of the 2003 investment
climate statement for the Netherlands. This update
corresponds with chapter VII in the FY 2003 Country
Commercial Guide. The full text of the ICS has also
been transmitted by e-mail to EUR/IFD/OIA for the
attention of
Neil Feird and Ann McConnell July 24, 2003. For
additional information on the Netherlands ICS please
contact Jan Razoux Schultz in Embassy The Hague’s
Economic Section at telephone number 00 31 70 310 92
76,or by e-mail at

A.1. Openness to Foreign Investment

2. The Netherlands’ trade and investment policy is
among the most open in the world. With combined
merchandise exports and imports accounting for more
than two-thirds of GDP, the Dutch economy is one of the
most internationally oriented. The Netherlands remains
among the world’s largest suppliers of investment
capital and currently ranks number six among the
world’s ten largest foreign investors (third if FDI is
related to GDP). The Netherlands also ranks number six
among global recipients of FDI. The Dutch government
maintains liberal policies toward foreign direct
investment, and adheres to the OECD investment codes.

3. The only Dutch exception to the principle of
national treatment is in air transport. Nationality
and ownership requirements apply for licenses to
operate an airline, and the right to cabotage is
reserved to national carriers. With the exception of a
few public and private monopolies from which foreign
and domestic private investment is banned (the
Netherlands central bank, Netherlands railways,
national airport Amsterdam Schiphol, national carrier
KLM, and public broadcasting) foreign firms are able to
invest in any sector and are entitled under the law to
equal treatment with domestic firms.

4. European Union reciprocity provisions in banking and
investment services and in a few other areas bind the
Dutch. Provisions related to government incentives,
national rules of incorporation, and access to the
capital market are all administered on a
non-discriminatory basis. Business laws and
regulations are in accordance with international legal
practices and standards and apply equally to foreign
and Dutch companies.

5. Structural and regulatory reforms have long been an
integral part of a major reorientation of Dutch
economic policy. Product market competition is
strengthened by way of programs aimed at strengthening
market forces, deregulation and legislative quality
combined with tightening of competition policy. The
government has reduced its role in the economy by
introducing market forces in formerly public utilities
sectors. While the gas and electricity sectors are
gradually being opened up to foreign competition,
government-controlled entities retain dominant
positions in rail transport and water sector and
continue to play a large role in aviation and in

6. Despite relatively high Dutch labor costs and labor
market imperfections (complex labor laws resulting in
restrictive hiring and firing practices for employers),
foreign investors have found the Netherlands a
favorable location for their European investment
projects. The Dutch actively solicit foreign
investment through the Netherlands Foreign Investment
Agency (NFIA), and related regional economic
development companies. Approximately 30 percent of
total FDI in the European Union is directed towards the
Netherlands. Foreign direct investment is concentrated
in growth areas including information technology,
biotechnology, medical technology and food processing.
Investment projects are predominantly in contract
manufacturing (high-tech assembly), distribution, and
value-added logistics. Ernst & Young’s international
annual benchmark studies identify the Netherlands as
one of four most popular locations for foreign ICT in
Europe, while also ranking the Dutch biotechnology
sector among Europe’s elite.

7. The Netherlands also ranks among the countries in
Europe with the largest number of broadband connections
and the highest internet penetration in the European
Union. According to the Economic Intelligence Unit
(EIU) e-commerce readiness survey, the Netherlands
ranks third in the world due to continued rollout of
broadband services, internet related legislation and
government programs. The government will shortly
embark on a broadband action program aimed at creating
the regulatory framework that will stimulate and
facilitate broadband development.
8. The Netherlands is particularly attractive for the
establishment of European headquarters, European
distribution centers, call centers and shared services
centers. Investment surveys indicate that U.S.
investors in particular favor the Netherlands as a
location for European Distribution Centers (EDCs). An
estimated 60 percent of U.S. companies in Europe have
located their EDCS in the Netherlands. Following the
introduction in 1997 of a more friendly tax regime, the
number of European headquarters established in the
Netherlands has also increased sharply to nearly ninety
in 2002. A special Corporate Financing Arrangement
(CFA) allows European headquarters established in the
Netherlands to set aside eighty percent of intra-
company financing into a tax-free reserve, thereby
reducing the effective corporate tax rate to seven
percent from a normal rate of 34.5 percent.

9. Foreign investors find the Netherlands attractive
because of the country’s stable political and
macroeconomic climate, a highly developed financial
sector, the presence of a well educated, and productive
labor force, and the high quality of Dutch physical and
communications infrastructure. The Netherlands ranks
among the world’s most internationally oriented
countries, second only to Singapore.

10. Various international surveys rank the Netherlands
among the top ten countries in the industrialized world
with the most competitive economies and most favorable
business and investment climate. The 2003 World
Competitive Survey by the Swiss-based Institute for
Management Development (IMD) ranked the Netherlands
eighth among the world’s most competitive (smaller)
economies. The Economist Intelligence Unit’s (EIU)
2003 survey of the global business environment singled
out the Netherlands as the country with the most
favorable business climate for the period 2003-2007,
due to its political stability and effectiveness,
policy towards investment and the availability of
finance. Finally, a recent OECD study cites the
Netherlands among countries offering the best
environment for direct investment.

11. The Netherlands is also known for its favorable
fiscal climate. Precise tax guidance given to foreign
investors provides transparency with regard to long-
term tax obligations. A recent Forbes global tax
burden survey ranked the Netherlands relatively
favorably with regard to the overall tax burden as well
as the marginal tax rate.

12. Despite predominantly favorable business and
investment conditions, other international
organizations, including the World Economic Forum, flag
a sharp erosion of the competitive position as a major
challenge confronting the Netherlands. More
specifically, relatively high wage cost, growing
imperfections in the road infrastructure, and a less
than flexible labor market are sited as potential
bottlenecks in attracting foreign direct investment to
the Netherlands.

13. Deterioration of the fiscal climate due to sharper
tax competition among EU Member States and measures by
the European Commission aimed against national tax
incentives with a subsidy element is likely to also
affect the Dutch competitive environment. To this end,
the CFA corporate financing arrangement will be
abolished in January of 2004 as a state subsidy harmful
to EU tax competition.

14. There are no apparent foreign investment screening
mechanisms and 100 percent foreign ownership is
permitted in those sectors open to foreign investment.
The rules on acquisition, mergers, takeovers, and
reinvestment are nondiscriminatory. All firms must
conform to certain rules of conduct on mergers and
takeovers. The Social Economic Council (SER), an
official advisory body composed of representatives of
government, business and labor, administers Dutch
merger and takeover rules. SER rules are intended,
first and foremost, to protect the interests of
stakeholders and employees. They include requirements
for timely announcement of merger and takeover plans
and for discussions with trade unions. A survey among
European companies by Heidrick & Struggles ranks the
Netherlands second after the United Kingdom for its
transparency of corporate governance practices.
Despite the supposedly open policy, elaborate corporate
protective measures against hostile takeovers may de
facto block acquisitions or takeovers by Dutch and
foreign investors. A draft corporate governance code
of conduct that seeks to improve transparency in
shareholder/management relations as well as structure
and accountability of management, was introduced in
July 2003. The code of conduct, providing for a
marginal reduction of takeover defenses, will become
effective as of January 1, 2004.

15. The Netherlands maintains no preferential or
discriminatory export or import policies with the
exception of those that result from its membership in
the European Union. The Dutch also abide by all
internationally agreed strategic trade controls,(e.g.
the Wassenaar Agreement). In summary, Dutch domestic
restrictions on foreign investment remain minimal and
no new ones are being planned. The Dutch investment
climate should continue as it is, but will increasingly
be influenced by EU policies.

A.2. Conversion and Transfer Policies

16. There are no restrictions on the conversion or
repatriation of capital and earnings (including branch
profits, dividends, interest, royalties), or management
and technical service fees, with the exception of the
nominal exchange license requirement for non-resident

A.3. Expropriation and Compensation

17. The Netherlands maintains strong protection on all
types of property, including private property, and the
right of citizens to own and use property.
Expropriation would only take place in the public
interest and with adequate compensation. We have no
reason to believe that it would be undertaken in a
discriminatory manner or in violation of established
principles of international law. The embassy is
unaware of any recent expropriation claims involving
the Dutch government and U.S. or other foreign-owned

A.4. Dispute Settlement

18. The embassy is not aware of any investment dispute
involving the Dutch government and U.S. or other
foreign companies. The Netherlands is a signatory to
the International Convention on Investment Disputes and
a member of the International Center for the Settlement
of Investment Disputes (ICSID). Although the central
government has no rules regarding withdrawals of
investment, occasionally trade unions go to court over
company closures. This has occurred in the case of
both domestic and foreign-owned firms.

A.5 Performance Requirements/Incentives

19. There are no trade-related investment performance
requirements in the Netherlands. General requirements
to qualify for investment subsidy schemes apply equally
to domestic and foreign investors. There are no
requirements for employment of local capital or
managerial personnel. However, in practice almost all
chief executives of major U.S. subsidiaries in the
Netherlands are Dutch or other EU nationals, because
skilled managers are available at a cost less than that
of posting an American abroad. In the case of staff
personnel, however, Dutch nationals must be employed
unless firms can demonstrate that a Dutch national
cannot perform the job in question. This burden is
eased by an existing provision that prior employment
with the firm of at least two and a half years amounts
to a presumption of unique qualifications for the job.

20. Limited, targeted investment incentives have long
been a well-publicized tool of Dutch economic policy to
facilitate economic restructuring and to promote energy
conservation, regional development, environmental
protection, R&D, and other national socio-economic
goals. Subsidies and incentives are available to
foreign and domestic firms alike and are spelled out in
detailed regulations. Subsidies are in the form of tax
credits that are usually disbursed through corporate
tax rebates or direct cash payments in the event of no
tax liability.

21. Reflecting the European Union’s limits on direct
government support, the Regional Investment Projects
Subsidies Scheme (BSRI), formerly IPR, is the only
major investment incentive still available to
investors. The BSRI aims to encourage corporate
investment in parts of the country with a high
unemployment rate by giving an investment grant for new
investments (industrial buildings and fixed assets) or
the acquisition of land. Investment costs qualifying
for BSRI grants include costs incurred for the
acquisition of land, necessary buildings and durable
equipment. BSRI cash grants of up to 20 percent of
actual investment costs are available up to a maximum
of approximately $13 million per project. Sharply
rising unemployment, a major criterion for Brussels
approval of national investment subsidies, is likely to
increase the significance of the BSRI as an investment-
stimulating instrument.

22. Local investment subsidies are sometimes also
available from regional development companies.
Regional non-tax incentives are available in the form
of cash grants, low-interest loans, local government
participation and export guarantees for selected areas.
The growing number of tax incentives offered to
investors in other EU countries has prompted the
government to look into the possibilities of expanding
existing tax instruments to aggressively improve the
Dutch tax climate vis—vis that in competitor
countries like Belgium, Germany and Ireland. Right to

A.6. Right To Private Ownership and Establishment

23. There are full rights of private ownership and
establishment of business enterprises in the
Netherlands, except in the monopoly sectors as noted in
the introduction. Despite the fact that service
providers must often meet stringent licensing
requirements, numerous enterprises in the Netherlands
are 100 percent owned by foreign firms, including many
from the United States. Licenses are granted on the
basis of competitive equality.

A.7. Protection of Property Rights

24. The Netherlands has a generally good set of
legislation and regulations that protect intellectual
property rights. However, the enforcement of
anti-piracy laws remains a concern to producers of
software and digital media (see below). The
Netherlands belongs to the World Intellectual Property
Organization (WIPO), is a signatory of the Paris
Convention for the Protection of Industrial Property,
and conforms to the accepted international practice for
protection of technology and trademarks. The Dutch have
been slow in implementing EU directives bringing
domestic legislation in line with the WIPO 1996
Copyright Treaty (WCT), the WIPO performance and
phonogram treaty (WPPT), and the EU 98/44/ec directive.
There is an overall sense among policy makers to step
up measures aimed at raising awareness of Intellectual
Property Rights (IPR) rules and regulations and to
strengthen enforcement.

25. Patents for foreign investors are granted
retroactively to the date of original filing in the
home country, provided the application is made through
a Dutch patent lawyer within one year of the original
filing date. Patents are valid for 20 years. Legal
procedures exist for compulsory licensing if the patent
is inadequately used after a period of three years, but
these procedures have rarely been invoked. Since the
Netherlands and the United States are both parties to
the Patent Cooperation Treaty (PCT) of 1970, patent
rights in the Netherlands may be obtained if PCT
application is used. The Netherlands is a signatory of
the European Patent Convention, which provides for a
centralized Europe-wide patent protection system. This
convention has simplified the process for obtaining
patent protection in the Member States. Infringement
proceedings remain within the jurisdiction of the
national courts, which could result in divergent
interpretations detrimental to US investors and

26. The enforcement of anti-piracy laws remains a
concern to producers of software, audio and videotapes
and textbooks from the United States. Organized
optical disc software piracy and e-commerce piracy are
also of major concern to the Dutch. Annual losses to
the US motion picture industry due to audiovisual
piracy in the Netherlands have been estimated at tens
of millions of dollars annually. The Dutch government
has recognized the need to protect intellectual
property rights and law enforcement personnel have
worked with industry associations to find and seize
pirated software. Dutch IPR legislation currently in
place explicitly includes computer software as
intellectual property under the copyright statutes.

A.8. Transparency of the Regulatory System

27. Laws and regulations that affect direct investment,
such as environmental rules, health and safety
regulations, etc., are non-discriminatory and apply
equally to foreign and domestic firms. Dutch tax law
facilitates attracting non-Dutch personnel to live and
work in the Netherlands. Currently, expatriate staff
transferred to the Netherlands on a temporary contract
can make use of the 30 percent ruling. The ruling
provides that 30 percent of his/her gross employment
income in the Netherlands is not taxable under Dutch
personal income tax laws. This treatment is granted for
a maximum of ten years. Furthermore, the expatriate is
considered a non-resident, meaning that only income
from Dutch sources is taxed in the Netherlands.

28. Dutch corporations and branches of foreign
corporations currently are subject to a corporate tax
rate of 34.5 percent (profits of up to _ 22,689
($24,000) are taxed at a rate of 29 percent) on taxable
profits, which puts the Netherlands at the higher end
of the corporate tax bracket in the European Union.
Dutch corporate taxation generally allows for the
exemption of dividends and capital gains derived from a
foreign subsidiary (participation exemption). A survey
by Baker & McKenzie into the corporate tax structure of
EU Member States observed that both the corporate tax
rate and the effective corporate tax rate (20.67
percent in the year 2001) are higher than the European
average. Nevertheless, the Dutch corporate tax
structure ranks among the most competitive in Europe.
A further reduction of the corporate tax rate to 30
percent to bring the effective corporate rate closer to
the EU average has therefore been proposed. No local
Dutch income taxes are levied on corporations.
Furthermore, the Netherlands maintains an extensive
network of tax treaties with a large number of
countries. A new tax treaty with the U.S. took effect
on January 1, 1994.

A.9.Efficiency of Capital Markets and Portfolio


29. Dutch financial markets are fully developed and
operate at market rates, facilitating the free flow of
financial resources. The Netherlands is an
international financial center for the foreign exchange
market and for eurobonds and bullion trade. The
flexibility that foreign companies enjoy in conducting
business in the Netherlands extends into the area of
currency and foreign exchange. There are no
restrictions on foreign investors’ access to sources of
local finance.

A.10.Political Violence

30. The Netherlands is noted for its stable political
environment. In the highly consensus-oriented Dutch
society, political violence is almost nonexistent. The
Dutch economy derives much of its strength from a
stable industrial climate fostered by partnership
between unions, employers’ organizations and the
government. Strikes are rarely regarded as the primary
means to settle labor disputes and labor strikes in
recent decades have been very rare.

A.11. Corruption

31. New anti-bribery legislation, implementing the 1997
OECD anti-bribery convention, became effective in 2001.
The new anti-bribery law reconciles the language of the
OECD anti-bribery convention with the EU fraud
directive and the Council of Europe convention on
fraud. It makes corruption by Dutch businessmen in
landing foreign contracts a penal offense, and bribes
are no longer deductible for corporate tax purposes.
At a national level, Dutch justice and interior
ministries have taken steps to sharpen regulations to
combat bribery in public procurement and in the
issuance of permits and subsidies. This has led NGO
Transparency International to rank the Netherlands
number six among the least corrupted countries in the
world after Canada, Austria, Switzerland, Sweden and

B. Bilateral Investment Agreements

32. The Netherlands has signed bilateral investment
agreements with a large number of countries including:
Albania, Argentina, Bangladesh, Belarus, Belize,
Bolivia, Bosnia-Herzegovina, Brazil, Bulgaria, Burkina
Faso, Cameroon, Cape Verde (Republic of), Chile, China,
Costa Rica, Cuba, Croatia, Czech Republic, Ecuador,
Egypt, El Salvador, Estonia, Ethiopia, Gambia, Georgia,
Ghana, Guatemala, Honduras, Hong Kong, Hungary, India,
Indonesia, Ivory Coast, Jamaica, Jordan, Kazakhstan,
Kenya, Korea (Republic of), Kuwait, Laos, Latvia,
Lebanon, Lithuania, Macedonia, Malaysia, Malta, Mexico,
Moldova (Republic of), Mongolia, Morocco, Mozambique,
Namibia, Nicaragua, Nigeria, Oman, Pakistan, Panama,
Paraguay, Peru, Philippines, Poland, Romania, Russian
Federation, Senegal, Singapore, Slovenia, Slovak
Republic, South Africa, Sri Lanka, Sudan, Tajikistan,
Tanzania, Thailand, Tunisia, Turkey, Uganda, Ukraine,
Uruguay, Uzbekistan, Venezuela, Vietnam, Yemen,
Yugoslavia, Zambia, and Zimbabwe.

33. The Netherlands adheres to the OECD codes on
capital movements and invisible transactions, with the
exceptions mentioned earlier. It maintains a treaty of
friendship, commerce and navigation with the United
States that generally provides for national treatment
and free entry for foreign investors, with certain
exceptions. The Netherlands is also a member of the EU
single market.

C. OPIC and Other Investment Insurance Programs

34. Dutch companies investing in developing countries
through the establishment of subsidiaries or joint
ventures can insure their investment against
non-commercial risks with the privately-owned
Netherlands Credit Insurance Company (NCM) under the
1969 investment reinsurance act (WHI). The NCM
reinsures its political risks with the Ministry of
Finance. Dutch investors have not heavily utilized
this insurance program, however, and efforts are
underway to find ways of making the program more

35. According to Article 7b of the investment
reinsurance act (WHI) of 1969, reinsurance of
investment in LDC’s (Less Developed Countries) can be
provided only if a satisfactory agreement has been
reached with the recipient country regarding
regulations that will apply to Dutch investment in that
country. The act covers procedures that will be
followed in the case of a dispute between the investor
and the host country on recovery of indemnity resulting
from the insurance of the investment. A temporary
program (Thrio) covering the insurance of investment in
all Eastern and Central European countries, with the
exception of the former Yugoslavia and the Asian
republics of the Commonwealth of Independent States
(CIS) was introduced in 1991. In 1997, the WHI and
Thrio programs were merged with similar programs for
developing countries into the Investment Reinsurance
Arrangement (IRA). Investment in countries with which
the Netherlands has concluded a bilateral investment
treaty is eligible for coverage under the IRA. The
Netherlands is a member of the Multilateral Investment
Guarantee Agency (MIGA).

D. Labor

36. The Dutch workforce is largely well educated and
multilingual. As a result of the current economic
downturn, employment growth has been decelerating which
has resulted in a steep increase in the level of
unemployment. With an unemployment rate of 5.4 percent
in June of 2003 (up from 3.7 percent in May of 2002),
the official unemployment rate is climbing but remains
well below the EU average. Stagnating employment
growth and a growing number of layoffs are expected to
raise the average unemployment rate to more than five
percent of the labor force in 2003, and to well over
six percent, and closer to the EU-15 average, in 2004.
Because of unfavorable labor market developments, the
Dutch government is giving the highest priority to
reducing structural unemployment, particularly long-
term unemployment, while boosting job creation.

37. The Netherlands currently has the highest part-time
work rate in the OECD, which has contributed to greater
labor market flexibility. A substantial increase in
the participation of women in the workforce led the
share of part-time workers in the total working
population to increase to more than 40 percent. Labor
market participation, especially by elderly workers, is
slowly but gradually growing from a low of sixty
percent in the early 1990s to more than 70 percent of
the potential labor pool in 2004. The high part-time
employment rate and low labor market participation are
the main factors contributing to less than full
utilization of labor potential. Increasing labor
market participation is regarded as a critical to
ensure continued economic growth and to cope with the
impact of a rapidly graying population.

38. The Dutch government’s job creation policy is
focused on the following elements: reducing the general
burden of taxes and social security contributions,
moderating growth in wage levels, improving
productivity, and strengthening the economic structure.
In addition, the Dutch government has taken measures to
improve labor market flexibility. This combination of
greater (but not full) labor market flexibility,
consensual wage restraint, and lowering of the tax
burden and social security contributions is seen as the
key to economic recovery.

39. Workers may be found through government-operated
labor exchanges, a rapidly growing number of private
employment firms, or directly through, for example,
newspaper advertisements. The official average
workweek currently is 38 hours, but work-shortening
programs (ADV) effectively reduce the average workweek
to 36 hours. Cutting average working hours is often
used to create jobs or avoid layoffs. Recently
concluded wage contracts include provisions for a 36-
hour workweek. Also, the American business community
in the Netherlands has given cautious approval to
efforts to split the average 38-hour working week over
four instead of five days, and treat Saturday as a
normal working day. This would help ease the country’s
traffic-choked roads and allow companies to better
utilize their machinery. On the other hand, new
legislation has been adopted which will increase the
flexibility in the operating hours of companies and
40. The average contract wage increase in 2002 was
close to four percent compared to an increase of
approximately five percent in 2001. Counting on the
impact of a slowdown in the economy and sharply rising
unemployment to moderate wage demands, official
estimates optimistically expect the negotiated contract
wage rise in 2003 to stay just below three. Labor
contracts for the year 2003 and 2004 concluded so far
provide for an average contract wage rise of 2.4
percent. The average per unit wage costs increase in
2003 is forecast to decelerate to a level below an
average 4.6 percent wage cost increase in 2002.
Surveys of average annual labor costs, base pay plus
employers’ social security costs, mandatory benefits
and voluntary benefits, across the European Union rank
the Netherlands ninth after countries such as the UK,
Germany, France, Sweden and Denmark.

41. Benchmark reports by the European Industry
Federation UNICE observe that, despite relatively high
wage costs, the Netherlands has one of the highest
levels of labor productivity in the manufacturing
industry. In order to reduce the gap between
productivity and wage costs the Dutch government has
significantly reduced employers’ costs for workers who
earn minimum wage or slightly above. It has also
called on organizations of employers and workers to
create jobs at the lowest end of the wage scale.
Currently, the lowest wage established by collective
labor agreements (CAO’s) is about eight percent higher
than the statutory minimum wage ($1,413 per month in

42. Labor/management relations in both the public and
private sectors are generally good in a system that
emphasizes the concept of social partnership. Although
wage bargaining in the Netherlands is increasingly
decentralized, there still exists a central bargaining
apparatus where labor contract guidelines are
established. About 75 percent of all Dutch workers are
covered by union contracts that are negotiated on a by-
sector basis with employers associations and, if
accepted by the government, are extended by law to the
entire sector. Some sector labor contracts (e.g., road
transport and haulage) are relatively inexpensive,
while others (e.g., metal) are more costly. To avoid
surprises, potential investors are advised to consult
with local trade unions to determine which, if any,
labor contracts apply to workers in their business
sector prior to making an investment decision.
Collective bargaining agreements negotiated in the past
few years have, by and large, been accepted by the rank
and file without much protest, despite only moderate
wage rises, and days lost to strikes are relatively

43. The Dutch have always had an economy that derives
its strength from free trade and a stable industrial
climate fostered by partnership between unions,
employers’ organizations and the government. There is
substantial labor involvement in corporate
decision-making on matters affecting workers. Each
company in the Netherlands with at least 50 workers is
required by law to institute a Works-Council with which
management must consult on a range of issues including
investment decisions. Legislation implementing the EU
work council directive came into effect in March of
1998. The Dutch government in 2003 agreed on
legislation governing employee participation of
European companies (companies operating in at least two
EU member states). Under this legislation, company
founders and its workers must conclude an agreement on
employee participation. Trade unions and management
are generally receptive to foreign investment,
especially where this leads to improved employment
possibilities and related benefits. U.S. companies
generally perceive works councils as contributing to
management-worker relations and a benefit to the

E. Foreign Trade Zones/Free Ports

44. The Netherlands has no free trade zones or free
ports in the sense of territorial enclaves where
commodities can be processed or reprocessed tax-free.
There are, however, a large number of customs
warehouses (EU category a through e, but no category a
and f or "free zones") and free warehouses at
designated places and international airports where
goods in transit may be temporarily stored under
customs supervision. Goods may be repacked, sorted or

F. Foreign Direct Investment Statistics

45. Statistics on the level of FDI in the Netherlands
(by country of origin and industry sector), and
comparable data covering the stock of Dutch FDI abroad,
are compiled by the Netherlands Central Bank (NB) on an
ad hoc basis ( The NB’s FDI inflows
are based on sources of capital transactions rather
than on actual "by country" investment outlays.

46. The FDI to GDP ratio in the Netherlands continues
to be among the highest in the European Union. The NB’s
FDI statistics reveal that the total stock of FDI in
the Netherlands amounted to $350 billion, equal 74
percent of GDP, at the end of 2002. Sharing in the
global foreign direct investment slowdown, total FDI
inflows into the Netherlands in 2002 were almost halved
(down 45.7 percent) to seven percent of GDP, from well
over 13 percent in 2001.

47. FDI from the U.S. in 2002 fell sharply to $ 7
billion, from $ 24.8 billion in 2001. The NB’s FDI
statistics also show that reduced inflows of direct
investment and lower capital movements by non-bank
financial enterprises lowered the stock of U.S. direct
investment in the Netherlands to $74 billion, equal 16
percent of GDP, in 2002 ($145.7 billion according to
U.S. Department of Commerce statistics). This ranks
the United States as the largest supplier of direct
investment in the Netherlands.

48. According to FDI statistics based on actual
investment outlays by country of origin during the
period 1987 through 2002, the Netherlands Foreign
Investment Agency (NFIA) was actively involved in the
establishment of close to 700 U.S. investment projects
with a total value of more than $5 billion. The total
volume and value of direct investment projects for the
whole of 2002 is estimated to be somewhat higher than
the official number because the Netherlands has no
compulsory registration of foreign investment, and also
because there is a considerable amount of regional
investment acquisition.

49. Foreign companies established in the Netherlands
account for roughly one-third of industrial production
and employment in industry. At the end of 2002, about
25 percent of foreign establishments in the Netherlands
were of U.S. origin, 51 percent from the European
Union, 10 percent from other European countries, four
percent Japanese and the remaining 12 percent from
non-OECD and non-EU countries.

50. The Netherlands is regarded as one of the most
attractive countries for setting up European
headquarters (EHQ’s), call centers, shared services
centers (SSCs), and European distribution centers
(EDC’s). Of all foreign headquarters established in
Europe, close to 60 percent are located in the
Netherlands. An estimated 25 percent of SSCs in Europe
have chosen to come to the Netherlands. According to
the UK Data Monitor, the Netherlands currently also has
close to one thousand call centers within its borders,
many of which are located in the capital of Amsterdam.

51. Amsterdam has also developed into the continent’s
biggest data-communications infrastructure junction and
ICT center. U.S. ICT companies including Cisco Systems
and MCI World Com have chosen to build their data
centers close to Amsterdam’s fiber optic high-speed
data lines and its Gigaport broadband network. A
similar data-communications infrastructure junction and
ICT cluster, linking the Netherlands with the North of
Europe, has been established by U.S. company Tycom in
the city of Groningen in the north of the Netherlands.

52. The Dutch also lead Europe in attracting
distribution centers. An estimated 42 percent of U.S.
multinational companies have established a European
distribution center in the Netherlands. U.S. companies
investing in the Netherlands have also been expanding
robustly in the micro-electronics field and value-added

53. According to the Netherlands Foreign Investment
Agency, computer manufacturers in particular are
looking to northern Europe to establish an assembly,
maintenance and distribution centers. Packard Bell is
successfully operating a distribution center in the
city of Nijmegen, province of Gelderland, employing 500
workers. Technology wholesaler, Ingram Micro,
established a multi-million dollar regional
distribution center in the province of Limburg. Other
large U.S. electronics firms with establishments in the
Netherlands are AT&T, Rank Xerox, IBM,and Honeywell.

54. Abott Laboratories, manufacturer of infant formula
and medical nutritional food, has chosen the province
of Noord-Brabant as the place to invest $ 51 million in
a European distribution center. Abott Labs will be
following in the footsteps of Amgen Europe BV, leading
manufacturer of bio-pharmaceuticals, that has been
operating a European Logistical center in Noord-Brabant
since 1989.

55. In the chemical sector, Lyondell Chemical Nederland
Ltd. is currently investing an estimated $1 billion in
a joint project with Bayer aimed at expanding Propylene
Oxide (PO)and Tertiary Butyl Alcohol production
capacity in the Port of Rotterdam Botlek area.

56. The top fifteen U.S. investors in the Netherlands,
based on the number of employees (by company investment
outlays are protected) include Alcoa Europe Holding BV,
IBM Nederland NV, Sara Lee/DE NV, Dow Benelux NV, Du
Pont De Nemours Nederland BV, General Electric Plastics
Europe BV, Philip Morris Holland BV, Compaq Computer
BV, Cargill BV, Honeywell BV, Masterfoods Veghel BV,
Merck, Sharp & Dohme BV, Esso Nederland BV, Eastman
Chemical Europe BV, and Cisco Systems International BV.