The Netherlands is a prosperous, dynamic centre of trade and industry with one of the world’s most open economies. The country, although small, is densely populated and is strategically located. As the home to Europe’s largest port it is considered a gateway to Europe. Over 160 million consumers are located within a 300 mile radius of the capital city.
The Netherlands has capitalised on its key location to achieve a position among the world’s top 12 trading nations. It is a highly competitive market that is expanding and offers opportunities for small and medium businesses in all sectors. The country has an advanced economy and currently has the 16th largest GDP in the world. The Netherlands holds a key position within the global business network and has an advanced infrastructure that is geared towards the transportation of goods people and electronic data.
Economy
The economy is characterised by low unemployment and inflation rates and a sizeable current account surplus. The country’s proximity has led to it developing into a transportation hub.
More than two thirds of the Netherlands’ GDP is derived from merchandise and services trade. The service sector accounts for almost 75 per cent of the national income, the main services are transportation, distribution, logistics and financial areas including banking and insurance. The industrial sector produces approximately a quarter of GDP and is dominated by metalworking, oil refining, chemical and food processing industries.
Following a period of consistent growth in the 1990s, in which employment was reduced to just three per cent, the economy took a downturn in line with the global economic slowdown. Many cited a loss of competitiveness as an impediment to growth. Low wage agreements were signed which saw many companies turn in better performances. High costs and weak domestic demand saw the economy struggle. A brief recovery occurred in 2004, with GDP growth increasing to two per cent. However, recovery was short lived and growth fell back to 1.5 per cent in 2005.
Growth accelerated quickly in 2006 to a six- year high. In 2007 the economy continued to perform strongly and posting growth of 3.5 per cent, the highest growth rate since the beginning of the decade. Growth slowed to 2.1 per cent in 2008, in line with global developments. Inflation dropped below two per cent as domestic price pressures weakened.
In 2009, the economy is expected to contract by 4.5 per cent. Private consumption is forecast to decline and fixed investment is in a contractionary phase, imports are also expected to remain weak. Growth is not expected to return until 2011 following a further economic contraction of 0.3 per cent in 2010. Growth looks set to return to an average of 1.2 per cent a year between 2011 and 2013.
Investment Climate
The Netherlands is a geographically small, densely populated country that is strategically located 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. More than 160 million consumers reside within a 300 mile radius of the capital city. The country is a key centre within the global business network with an advanced infrastructure geared towards the transportation of goods, people, and electronic data. It has capitalised on its location and advanced economy to become one of the top dozen trading countries in the world.
The Netherlands is home to some of the world’s most superior logistics and technology infrastructure. The Port of Rotterdam is the world’s third largest seaport, while Schiphol Airport is recognised as one of the major business hubs in Europe. The country 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.
The Netherlands trade and investment policy is one of the world’s most open. With combined merchandise exports and imports that are almost on par with GDP, the Dutch economy is one of the most internationally oriented in the world. With virtually no trade or investment barriers the Netherlands is a receptive market for exports. It is also an important investment partner, ranking fifth among global recipients of foreign direct investment (FDI).
Since January 2007 the Dutch tax environment for international companies has become even more attractive. The corporate tax rate has been lowered to 25.5 per cent, which is well below the EU national average. Dividend tax has been reduced from 25 per cent to 15 per cent. Furthermore, a patent box with a ten per cent 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 per cent tax break for highly qualified foreign employees), the fiscal climate is another reason why the Netherlands is a favourable destination for investment.
Industry Sectors
Aerospace
Although the fabled Fokker Aircraft Company ceased manufacturing aircraft in 1996, the Dutch aircraft supply industry is flourishing. Companies in the sector develop and produce innovative materials (including composites), aircraft systems, engine parts and aircraft interiors. They rely on a wide network of Dutch universities, research institutes and firms of consulting engineers.
Delft University of Technology’s Faculty of Aerospace Engineering is acknowledged to be one of the best in the world. It was here that fundamental research was conducted leading to Glare (glass-fibre reinforced aluminium), a new, lightweight composite used for the first time in the fuselage of the Airbus A380. The National Aerospace Laboratory (NLR) and the Netherlands Organisation for Applied Scientific Research (TNO) are also sources of specialist aviation expertise.
On the commercial side the market is driven by aircraft maintenance, repair and overhaul (MRO). The MRO sector encompasses a broad range of products and services related to servicing, parts replacement and logistics. Civil aviation accounts for 85 per cent of the demand, while defence accounts for 15 per cent. The rising cost of new aircraft means that airlines are less inclined to replace their fleet. Instead, they are increasingly having major maintenance and repair work done on their aircraft.
On the military side, the Netherlands companies have a wide variety of trade opportunities in the defence sector. Despite its small geographical size, the Dutch military spends approximately €1 billion (approximately $1.42 billion) on new material and €200 million (approximately $284 million) on its infrastructure.
Oil and Gas
Onshore oil is found primarily in the Schoonbeck area but is present in smaller quantities elsewhere. Although it provides smaller amounts of revenue it is still an important segment of the sector. Revenue has been declining recently, however, a new phase of development is under way and new operators have won development and production permits for oil and gas fields relinquished or divested by the major oil companies.
Downstream the county has important refining capabilities. The capacity of the refining sector was last estimated at 1.25 million barrels of oil per day, compared with the 1.85 million barrels per day that the UK refines. In addition to the refining segment there is a substantial petrochemicals production segment. Its activity is mainly conducted in Rotterdam, Vlissingen and Geleen. Two new liquid natural gas (LNG) terminals have been commissioned in the country. The first LNG import terminal in the Netherlands is currently being constructed in Rotterdam’s Maasvlakte area and is due for completion in 2011. The other is in Eemshaven; once its commercial operations have been clarified, decisions on the building can commence. This project is expected to be up and running during 2015.
The head office of Shell is in The Hague. Saudi Aramco has a procurement office in Leiden. Other multinational oil, gas, and chemicals companies have operations in the country.
There are reasonable prospects for increasing UK exports of goods and services in both up and downstream developments as well as in projects for maintenance and operational upgrades of existing facilities. Many UK companies are already established in the market, either through their own sales offices or through distributors and agents. The potential for sales through the international contractors for third country projects cannot be overemphasised.
Opportunities
Barriers to market entry are low and the transparent legal framework and sophisticated financial services system, which, combined, make the market an attractive place for UK companies. Geographically close to UK with excellent transportation links to main and regional UK airports, make exploring the market cost effective.
The Netherlands re-exports between 60-70 per cent of its imports to the rest of Europe and beyond, representing a useful springboard into other European markets.
UK exports are mainly in the following sectors:
• Petroleum and gas products and related services
• Medical and pharmaceutical products
• Chemicals
• Telecommunications
• Office and automatic data processing equipment
The Dutch chemical market should not be neglected by UK firms. It plays a pivotal role from a convenient and central location. It is compact in itself and home to several chemical majors such as Shell, AKZO-Nobel and DSM.
UK Trading Relationship
The Netherlands is the 5th largest export market for the UK. In 2008, the UK exported goods worth £19.3 billion, representing an increase of almost £5 billion on 2007 figures. The trade balance lies in the Netherlands’ favour, with the UK taking goods worth £25.3 billion in 2008. There are a number of major Anglo-Dutch run companies, including Royal Dutch Shell, Unilever, Reed Elsevier, Logica/CMG, Reckitt Benckiser and P&O Nedlloyd.
KEY FACTS
Official Name: The Kingdom of the Netherlands
Capital: Amsterdam
Area: 41,864 sq km
Population: 16.5m (UN, 2008)
Major language: Dutch
GDP (current): US$765.83bn (World Bank, 2007)
GDP growth: 3.5% (World Bank, 2007)
GNI per capita: US$45,650 (World Bank, 2007)
Inflation (consumer prices): 1.5% (2008 est.)
Labour force: 7.75m (2008 est.)
Unemployment: 4.5% (2008 est.)
Monetary unit: 1 euro = 100 cents
Exports to UK: £25,253.33m (HMRC 2008)
Imports from UK: £19,362.77m (HMRC 2008)
Main Industries
Agroindustries, metal and engineering products, electrical machinery and equipment, chemicals, petroleum, construction, microelectronics, fishing.
Main Exports
Machinery and equipment, chemicals, fuels, foodstuffs.
Main Imports
Machinery and transport equipment, chemicals, fuels, foodstuffs, clothing.
CONTACTS
UK Trade and Investment
66-74 Kingsgate House
Victoria Street
London SW1E 6SW
Tel: 0207 215 8000
Web: www.uktradeinvest.gov.uk
British Embassy The Hague
Lange Voorhout 10
2514 ED The Hague
Tel: 00 31 70 427 0427
Fax: 00 31 70 427 0346
Email: trade.enquiries@fco.gov.uk
Web: www.britain.nl
Embassy of the Kingdom of
the Netherlands
38 Hyde Park Gate
London SW7 5DP
Tel. 020 7590 3200
Email: london@netherlandsembassy.org.uk
Web :www.netherlands-embassy.org.uk
Netherlands British Chamber of Commerce
Imperial House
15-19 Kingsway
London WC2B 6UN
Tel: 020 7539 7960
Email: info@nbcc.co.uk
Web: www.nbcc.co.uk
Netherlands Foreign
Investment Agency
38 Hyde Park Gate
London SW7 5DP
Tel: 020 7225 1074
Email: info@nfia.co.uk
Web: www.nfia.co.uk
