Foreign direct investment and multinationals
Foreign direct investment is a key element of globalisation, as international business is more than just international trade. The Netherlands attracts foreign investment, which can lead to economic growth, innovation and more jobs. Multinationals are important actors behind this foreign direct investment, and it is therefore worthwhile to study them, which we do in this chapter. It begins by examining inward and outward direct investment in and by the Netherlands. It then zooms in on the multinationals, distinguishing between those under foreign and Dutch control.
7.1Key findings
In addition to international trade flows, foreign direct investment (FDI) is an important measure of the interdependence of the Dutch economy with those of other countries. By investing in foreign subsidiaries, enterprises can benefit from both production scale-up and locally available production factors. However, enterprises may also be active abroad for tax or legal reasons. Large enterprises try to reduce their tax payments by channelling their investment activities through countries with a favourable tax environment. The Netherlands plays an important role in this, as shown by the establishment of a large number of Special Purpose Entities (SPEs) and holding companies. As a result, a large proportion of the investment that enters the Netherlands on paper leaves the Netherlands again without adding any substantial value to the Dutch economy. This is the case for both Special Purpose Entities and holding companiesnoot1, as these have few employees, many of them have no physical presence in the Netherlands, and their (possible) trading activity mainly consists of intra-concern financial activities. They are therefore shown separately in the foreign direct investment figures. Partly as a result of the presence of channelling entities of this kind, the Netherlands ranks firmly among the top 5 countries in the world with the most foreign direct investment. Nevertheless, even without SPEs and holding companies the Netherlands remained the 2nd largest player worldwide, after the United States and China, in terms of outward FDI in 2020, with €1,851 billion. As regards inward FDI, the Netherlands ranks 4th, after the United States, China and the United Kingdom, with €1,391 billion (DNB and OECD, 2021).noot2
Looking at the Dutch business economy (almost 1.3 million companies) from an investment perspective, we find that one in fifty companies were multinationals in 2018.noot3 The Dutch business economy included approximately 26,500 multinationals in 2018, of which 53% were under foreign control and 47% under Dutch control. Multinationals, both Dutch-owned and foreign-owned, provided work for over 2.4 million people in the Netherlands in 2018, representing an increase of 92,000 full-time jobs compared to 2017. They thus account for 41% of total employment in the Dutch business economy. Of all multinationals, 35% operate in the wholesale and retail trade: employing 694,000 people, they provide over 44% of employment in that sector. Multinationals accounted for 85% of Dutch exports of goods and 90% of exports of services in 2019, in line with the figures for 2018.
One in five foreign multinationals in the Netherlands in 2018 were US-controlled (over 3,000 companies). The United States was therefore the largest foreign employer in the Dutch business economy in 2018, with around 218,000 employees. Germany and France complete the top 3 largest foreign employers in the Dutch business economy. The number of multinational companies controlled by Turkey doubled between 2014 and 2018, reaching 150, enabling Turkey to climb from 22nd to 17th place. Many Turkish companies choose to establish a branch in the Netherlands in order to expand into the European Union.
Most subsidiaries of Dutch multinationals in 2018 were located in Germany (approximately 2,600), followed by the United States (1,865). Compared to 2017, in absolute terms the number of Dutch subsidiaries grew the strongest in the United States (+35). The number of subsidiaries of Dutch multinationals in the ASEAN-5 countries rose again in 2018 (by 20%), to 805. The Gulf region also saw a slight increase (+10) in the number of Dutch subsidiaries in 2018, to a total of 275. The number of Dutch subsidiaries in North Africa remained the same in 2018, compared to both 2017 and 2010.
7.2Macro-level view of foreign direct investment
The first part of this chapter discusses the investment position of the Netherlands, based on macro-level figures from the Dutch central bank (De Nederlandsche Bank, DNB), UNCTAD and the OECD. This enables us to focus on the most recent insights from the DNB data on foreign direct investment (FDI). To what extent has the coronavirus pandemic affected these macro-level figures for 2020? Who are the most important investment partners for the Netherlands, excluding investments through SPEs and holding companies?
The Netherlands also affected by worldwide decline in investment
Global foreign investment collapsed in 2020 as a result of the coronavirus pandemic. Such a low level was last seen in the 1990s, and investment is now even below the level during and after the global financial crisis of 2008–2009 (UNCTAD, 2021). The lockdowns throughout the world in response to the coronavirus pandemic delayed existing investment projects, and the prospects of a recession led multinationals to re-assess new projects. The fall in FDI was significantly sharper than the fall in GDP and trade (UNCTAD, 2021).
In the Netherlands, too, there was a clear dip in both inward and outward foreign direct investment (Figure 7.2.1). In 2020, the Netherlands’ international investment position comprised €1,391 billion in inward investments and €1,851 billion in outward investments, after adjustment for SPEs and holding companies. The year before, these totals were €1,419 billion (inward FDI) and €1,948 billion (outward FDI), hence the decline was 2% in inward and 5% in outward investments.
| Categorie | Jaar | Excluding SPEs and holding companies |
|---|---|---|
| Inward | 2020, Inward | 1391 |
| Inward | 2019, Inward | 1419 |
| Inward | 2018, Inward | 1396 |
| Inward | 2017, Inward | 1321 |
| Inward | 2016, Inward | 1300 |
| Inward | 2015, Inward | 1256 |
| Outward | 2020, Outward | 1851 |
| Outward | 2019, Outward | 1948 |
| Outward | 2018, Outward | 1893 |
| Outward | 2017, Outward | 1873 |
| Outward | 2016, Outward | 1886 |
| Outward | 2015, Outward | 1698 |
Decline in inward FDI due to reduction in debt instruments
The Netherlands’ investment position can be broken down into two components: equity participations (equity capital) and debt instruments (borrowings) (Figure 7.2.2). Equity participations include for example incorporations, mergers, takeovers and capital injections. Looking at a breakdown of the investment instruments used by companies, we are struck by the fact that the decline in inward FDI in 2020 was entirely due to the debt instruments. In the case of the other component of FDI, equity participations, there was even a slight increase. Debt instruments are strongly driven by multinationals’ financing requirements, making them more volatile in general than equity participations. That makes this component more difficult to interpret (Hemmerlé, 2021). As regards outward FDI, the decline is more or less equally distributed between the two instruments.
| Categorie | Type | Equity | Debt instruments |
|---|---|---|---|
| Inward | 2020, Inward | 1002 | 389 |
| Inward | 2019, Inward | 999 | 420 |
| Outward | 2020, Outward | 1298 | 554 |
| Outward | 2019, Outward | 1361 | 588 |
The Netherlands still an important intermediate station
A substantial proportion of the foreign direct investment that enters the Netherlands does not end up in the Dutch economy but leaves the country without adding value to it. This is true of both Special Purpose Entities (SPEs) and holding companies. The total FDI figures (including SPEs and holding companies) are thus not only affected by global economic trends; the increasingly critical attitude of international and Dutch politicians towards ‘letterbox’ companies may eventually make the Netherlands less attractive to SPE-like entities. The G20 countries recently agreed on a 15% minimum tax rate on multinational profits. As a result of the agreement, multinationals will in future pay taxes in the countries where they earn their revenue, and less profit will be channelled to low-tax countries (Giesen & De Waard, 2021).
Dutch legislative environment attractive for headquarters
Between 2018 and 2020, the Netherlands fell from 9th to 17th place in the International Tax Competitiveness Index.noot4 This measures the extent to which a particular country’s tax system is based on two vital elements of tax policy, for example competitiveness and neutrality. Tax laws are regarded as competitive if the marginal tax rates are low, encouraging global companies to invest in that country. Tax laws are regarded as neutral if they try to generate maximum revenue with minimum economic distortion (Bunn & Asen, 2020). In particular, the index is indicative of the tax burden in the Netherlands, which has increased, relatively speaking, compared with other countries, between 2018 and 2020. For the time being, however, there is little sign of decreasing activity or increasing presence of these predominantly tax-driven entities (SPEs and holding companies) in the Netherlands. This may be partly due to the Dutch legislation, which enables a company based in the Netherlands (for example a public limited company) to protect itself against hostile takeover relatively easily. This is why a number of large listed companies have moved their headquarters to the Netherlands on paper in recent years, without having much physical presence, and consequently economic activity, there. This has a major effect on the overall Dutch investment figures, however, as these companies are shown at market value in the direct investment figures. Investments through companies of this kind have been ignored here in order to make a cleaner distinction between Dutch and foreign companies, as listed companies with little physical presence in the Netherlands fall into the category of holding companies.
As a result of the above factors, a substantial proportion of FDI in the Netherlands has long been accounted for by SPEs and holding companies, namely 69% of inward FDI and 67% of outward FDI in 2020.noot5 In addition to the €1,851 billion of outward FDI not made by SPEs or holding companies, €3,797 billion worth of investments from the Netherlands was made through SPEs or holding companies, bringing the total of outward FDI in 2020 to €5,648 billion. Excluding SPEs and holding companies, outward FDI declined more sharply than inward FDI, whereas the converse was true of investments made by SPEs or holding companies.
Most FDI (excluding SPEs and holding companies) from the US
However, if we ignore investments through SPEs and holding companies, Dutch outward FDI in 2020 amounted to approximately €1,851 billion, a 5% decline compared to 2019. In terms of outward FDI (excluding SPEs and holding companies) the Netherlands nevertheless ranked 3rd worldwide, after the United States and China. As regards inward FDI, the Netherlands ranked 4th, after the United States, China and the United Kingdom, with €1,391 billion (excluding SPEs and holding companies) (DNB and OECD, 2021). This inward FDI was 2% less in 2020 than in 2019.
Through foreign investment, companies can scale up production, take advantage of cheaper local factors of production and save transport costs to foreign markets. Direct investment provides knowledge and employment for recipient countries. The Netherlands’ main investment partners are the United States, Luxembourg, the United Kingdom, Germany and Switzerland (Figure 7.2.3). The top 3 countries that invest in the Netherlands (excluding SPEs and holding companies) remained unchanged from the previous year, led by the US (€241 billion), followed by Germany (€186 billion) and Luxembourg (€143 billion).
The figures in Figure 7.2.3 refer to the country from which the investment comes directly. However, due to different constructions (for example channelling), there may be a difference between where the investment has come from directly and where it originally came from. The Netherlands continues to exert great pulling power on US companies as an investment location. US investment enters not only directly through the United States but in many cases also through other (channelling) countries such as Luxembourg. If we look at provisional direct investment figures based on original owner, we find that the United States is even more important than the traditional figures on investment by direct owner indicate (Hagendoorn, 2020).
| Categorie | Land | 2020 | 2019 |
|---|---|---|---|
| Inward | United States, Inward |
241 | 211 |
| Inward | Germany, Inward | 186 | 211 |
| Inward | Luxembourg, Inward | 143 | 176 |
| Inward | United Kingdom, Inward |
130 | 166 |
| Inward | Switzerland, Inward | 102 | 82 |
| Outward | United Kingdom, Outward |
216 | 256 |
| Outward | United States, Outward |
215 | 259 |
| Outward | Germany, Outward | 190 | 174 |
| Outward | Switzerland, Outward | 177 | 187 |
| Outward | Brazil, Outward | 122 | 99 |
There have been some shifts in the rankings of countries in which the Netherlands invests in 2020 compared to 2019. The United Kingdom climbed from 2nd place in 2019 to 1st place in 2020, with the United States slipping down to 2nd place. The United Kingdom even ranked 3rd in 2018. Around 12% (€216 billion) of total inward FDI in the Netherlands in 2020 came from the United Kingdom, after adjustment for investments through SPEs and holding companies. Another striking point is Brazil’s ranking, in 5th place: the Netherlands had a total of €122 billion worth of outward FDI in Brazil in 2020. This increase is accounted for mainly by companies in the petroleum industry.
No clear effect of Brexit on the direct investment relationship with the UK
Dutch investment from and into the United Kingdom declined in 2020, but this did not have a negative effect on the position of the UK as an investment partner for outward FDI. The UK direct investment figures in fact show that investment from Europe has generally declined in recent years as a result of Brexit (Office for National Statistics, 2020), but the barriers to the UK-Dutch direct investment relationship currently appear to be less serious than expected. We anticipate that further details will be available in the course of 2021. As regards inward FDI, the United Kingdom fell from 2nd place in the top 5 (excluding SPEs and holding companies) in 2018 to 4th place in 2019 and 2020.
7.3Multinationals in the Netherlands
This section looks specifically at the companies that invest: the multinationals. CBS figures on the Inward and Outward Foreign Affiliates Statistics were used to examine multinationals in the Netherlands by nationality, for the period 2013–2018. How many multinationals are there in the Dutch business economy? What proportion of employment in the Dutch business economy is provided by multinational companies? Which sectors are they active in? Which countries control the foreign multinationals?
A multinational is a company that exercises ultimate control over other businesses in two or more countries. The number of multinationals is increasing, as new multinationals establish themselves in the Netherlands and Dutch companies are taken over by foreign companies. In addition, Dutch companies are increasingly crossing the national borders, enabling them to become Dutch multinationals. Research by Doyle et al. (2018) shows that, on average, domestic and foreign multinationals in OECD countries account for almost 30% of value added and trade and 20% of employment. Their foreign networks, among other things, give multinationals good import and export positions, and they supply a good deal of their production output directly to other countries (CBS, 2018).
One in fifty companies in the Dutch business economy are multinationals
The number of multinationals in the Netherlands is growing: in 2018, the most recent year for which data are available, 26,500 multinationals were active in the Dutch business economynoot6, representing 2.2% of the total. As Figure 7.3.1 shows, the number of multinationals in the Dutch business economy increased over the 2010–2018 period. Despite the growth in the number of multinationals, their share in the business economy has remained virtually the same year on year, as the number of non-multinationals (especially self-employed entrepreneurs and self-employed with employees) is growing faster.
| jaar | Foreign multinationals | Dutch multinationals |
|---|---|---|
| 2010 | 8.57 | 12.06 |
| 2011 | 10.46 | 11.94 |
| 2012 | 10.85 | 11.54 |
| 2013 | 11.97 | 11.25 |
| 2014 | 12.34 | 11.84 |
| 2015 | 12.62 | 11.85 |
| 2016 | 13.13 | 12.23 |
| 2017 | 13.94 | 12.35 |
| 2018 | 14.16 | 12.39 |
CBS distinguishes between Dutch-owned and foreign-owned multinationals. A Dutch-owned multinational is a company under Dutch control with subsidiaries (majority interests) abroad. A foreign-owned multinational is a subsidiary located in the Netherlands that is ultimately controlled from abroad. Of the multinationals, 53% were under foreign control and 47% Dutch-controlled (Figure 7.3.1).
Altogether, multinationals employed more than 2.4 million people in the Netherlands in 2018, accounting for 41% of total employment in the Dutch business economy. In comparison with the previous year, multinationals were responsible for a net increase of 92,000 full-time jobs (+3.9%) in 2018. Despite the fact that multinationals make up a very small proportion of the Dutch business population (approximately 2%), they provide a substantial proportion of employment in the Netherlands.
More and more people in the Netherlands are working for multinationals. On average, they pay higher wages than Dutch companies located solely within the national borders (Vos et al., 2019). There are nevertheless potential drawbacks to working for a multinational. Employees of multinationals may experience a heavier workload and more mental fatigue than those of non-multinationals (Vos et al., 2019; Loog & Smits, 2014; Jaarsma, 2013). There are fewer Dutch multinationals than foreign multinationals, but Dutch multinationals lead the way in terms of employment. In 2018, all Dutch multinationals combined employed around 324,000 more people than did foreign multinationals (Figure 7.3.2). This is partly due to the fact that foreign multinationals import a lot, and it may be, therefore, that large parts of their production processes take place abroad rather than in their Dutch companies (CBS, 2018).
| jaar | Foreign multinationals | Dutch multinationals |
|---|---|---|
| 2010 | 819 | 1084 |
| 2011 | 855 | 1053 |
| 2012 | 858 | 1152 |
| 2013 | 871 | 1148 |
| 2014 | 867 | 1209 |
| 2015 | 916 | 1243 |
| 2016 | 967 | 1286 |
| 2017 | 1017 | 1323 |
| 2018 | 1054 | 1378 |
35% of multinationals active in the wholesale and retail trade
As Figure 7.3.3 shows, the distribution of multinationals by sector differs significantly from the distribution in the Dutch business economy as a whole. Approximately 31% of all companies in the Dutch business economy operate in specialised business services. This sector is also popular among the multinationals, albeit to a lesser extent. Multinationals in the Netherlands were mainly represented in the wholesale and retail sector in 2018, namely 39% of foreign multinationals and 29% of Dutch-controlled multinationals. Relatively large numbers of wholesalers in the Netherlands have a foreign parent company, owing to the nature of their activities in the Netherlands. Foreign industrial companies (for example Japanese car manufacturers with a European logistics centre in the Netherlands), for instance, are often regarded as wholesalers (Van den Berg & Mounir, 2019).
Although the majority of multinationals – both Dutch and foreign – operate in the wholesale and retail trade and specialised business services, these sectors are not dominated by multinationals. Multinationals accounted for 3.6% of the more than 254,000 companies in the wholesale and retail trade in 2018. In the specialised business services sector the proportion of multinationals was 1.3%. Multinationals have an above-average presence in manufacturing. Almost one in six Dutch multinationals and one in seven foreign multinationals operate in that sector, whereas the proportion in the Dutch business economy as a whole is only 1 in 17. The converse is the case in construction: 15% of companies in the Dutch business economy operate in that sector, whereas the proportions of foreign and Dutch multinationals there are 2% and 6% respectively.
| categorie | Manufacturing | Wholesale and retail trade | Transportation and storage | Information and communication | Specialised business services | Renting/leasing and other business services | Other sectors |
|---|---|---|---|---|---|---|---|
| Foreign multinationals | 14 | 39 | 7 | 12 | 16 | 5 | 8 |
| Dutch multinationals | 16 | 29 | 6 | 9 | 20 | 6 | 13 |
| Total Dutch business economy | 6 | 21 | 4 | 8 | 31 | 7 | 24 |
Multinationals in the wholesale and retail trade employ 694,000 persons
In the Dutch business economy as a whole, the largest employers are the wholesale and retail trade, renting/leasing and other business services, and manufacturing (Figure 7.3.4). These three sectors also provide the most employment by multinationals, albeit the rankings of these top 3 differ. Dutch multinationals active in renting/leasing and other business services accounted for 31% of employment by Dutch multinationals in 2018. Among foreign multinationals, the most important sector in terms of employment is the wholesale and retail trade, followed by manufacturing.
| categorie | Manufacturing | Wholesale and retail trade | Transportation and storage | Information and communication | Specialised business services | Renting/leasing and other business services | Other sectors |
|---|---|---|---|---|---|---|---|
| Foreign multinationals | 22 | 31 | 11 | 8 | 5 | 13 | 10 |
| Dutch multinationals | 14 | 27 | 9 | 4 | 7 | 31 | 8 |
| Total Dutch business economy | 12 | 26 | 7 | 5 | 12 | 19 | 19 |
As regards employment in the Netherlands created by multinationals, there are differences between foreign and Dutch multinationals (Figure 7.3.4). For instance, construction, specialised business services, renting/leasing and other business services are larger employers, relatively speaking, if we compare Dutch multinationals with foreign multinationals. We find the largest percentage of differences in renting/leasing and other business services and manufacturing. Almost 22% of all people on the payroll of foreign multinationals in 2018 worked in manufacturing, as against 14% in the case of Dutch multinationals. Conversely, approximately 31% of all people on the payroll of Dutch multinationals in 2018 worked in renting/leasing and other business services; the proportion was 13% in the case of foreign multinationals.
Multinationals provide 55% of employment in transportation and storage
Transportation and storage employed some 427,000 people in 2018 (Figure 7.3.5), of whom approximately 234,000 work for multinationals. Broken down into Dutch and foreign multinationals, 29% are employed by Dutch multinationals and 26% by foreign multinationals. Of the 715,000 people employed in manufacturing, almost a third are on the payroll of a Dutch multinational; approximately 28% work for foreign multinationals. Thus 59% of employment in manufacturing is provided by multinationals. The wholesale and retail trade provided the most employment in the Dutch business economy in 2018. Of the 1.6 million people working in this sector, 44% are employed by multinationals. Almost 80% of employment in specialised business services was accounted for by non-multinationals in 2018.
| categorie | Foreign multinationals | Dutch multinationals | Non-multinationals |
|---|---|---|---|
| Wholesale and retail trade | 329 | 365 | 868 |
| Renting/leasing and other business services |
141 | 426 | 588 |
| Manufacturing | 227 | 197 | 291 |
| Specialised business services | 53 | 93 | 554 |
| Transportation and storage | 112 | 122 | 193 |
| Information and communication | 86 | 57 | 180 |
| Other sectors | 107 | 117 | 895 |
One in five foreign-owned multinationals are American
Most foreign multinationals in the Dutch business economy are still under US, German, UK, Belgian or French control (Figure 7.3.6). Altogether these five countries make up more than 62% of all foreign-owned companies in the Netherlands. The United States is still our main investment partner in terms of the number of multinationals operating in the Netherlands. There were over 3,000 US-controlled companies in the Netherlands in 2018, representing over 21% of all companies under foreign control, followed at a considerable distance by Germany, with 2,300. There are various reasons for foreign companies to locate in the Netherlands: the favourable location in Europe, for instance, the highly developed logistical and data infrastructure, the relatively well educated Dutch population and the favourable business climate exert great pulling power on foreign investors.
| land | 2018 | 2014 |
|---|---|---|
| United States | 3090 | 2725 |
| Germany | 2295 | 2070 |
| United Kingdom | 1415 | 1285 |
| Belgium | 1360 | 1095 |
| France | 845 | 755 |
| Japan | 595 | 535 |
| China | 555 | 380 |
| Switzerland | 480 | 455 |
| Sweden | 405 | 355 |
| Italy | 315 | 255 |
This top 10 has changed little over time. For all the countries in the top 10, we see that the number of companies under their control rose compared to both 2017 and 2014. A striking point in the figures is that the number of Chinese-controlled companies grew by 175 in 2018 compared to 2014, to 555. China has thus overtaken Switzerland as the 7th country of origin. That increase also gave China the 3rd strongest growth (in absolute terms), after the United States and Germany.
Outside the top 10 foreign-owned multinationals, Canadian, Spanish, Turkish and Australian multinationals in particular have been on the rise since 2014. The number of multinationals controlled by Turkish companies, for instance, doubled over the past five years, reaching 150 in 2018, enabling Turkey to climb from 22nd to 17th place. More and more Turkish companies have opened branches in the Netherlands, driven partly by the insecure economic situation in Turkey itself (RTL News, 2019). The Netherlands has a good investment climate and a relatively large Turkish community (RTL News, 2019). Many Turkish companies are choosing to open branches in the Netherlands in order to expand into the European Union. This is easier from a base in the Netherlands than from Turkey, because of problems obtaining business visas and a banking system that does not run smoothly (RTL News, 2019; Kroezen, 2019). We find these Turkish companies among both service providers and production companies, for example printing companies or production companies such as fruit growers or companies in the car (and parts) industry (RTL News, 2019).
Google, Coca Cola and American Express are familiar examples of US companies in the Netherlands. Some 218,000 people worked for companies with a US parent in 2018, approximately 4,000 more than in 2014. The United States was thus the largest foreign employer in the Dutch business economy in 2018 (Figure 7.3.7). Germany and France complete the top 3 largest foreign employers in the Dutch business economy. German and UK multinationals provided employment for 34,000 (+26%) and 25,000 (+24%) more people respectively in 2018, compared to 2014.
| land | 2018 |
|---|---|
| United States | 218 |
| Germany | 164 |
| France | 136 |
| United Kingdom | 130 |
| Japan | 85 |
| Belgium | 39 |
| Switzerland | 39 |
| Sweden | 35 |
| Denmark | 22 |
| India | 19 |
| Other countries | 167 |
Multinationals account for 85% of the export value of goods
In addition to the relatively large role that multinationals play in employment in the Netherlands, they account for a large proportion of international trade. Whereas multinationals only take up around 2% of the Dutch business economy as a whole, they were responsible for 83% of imports and 85% of exports of goods in 2019 (Figure 7.3.8). The foreign multinationals are most involved, as they account for 54% of the total import value of goods and 51% of the total export value of goods, as against 30% and 33% respectively among Dutch multinationals. This pattern is even more clearly discernible in the case of the international trade in services, with multinationals accounting for 91% of the import value and 90% of the export value of services in 2019. Here again, foreign multinationals contribute the bulk, with 75% and 68% of the total import value and export value of services respectively.
| Jaar | Foreign multinationals | Dutch multinationals | Non-multinationals |
|---|---|---|---|
| Exports | . | . | . |
| 2019 | 179.5 | 117.2 | 55.5 |
| 2018 | 177.9 | 114.5 | 50.4 |
| 2015 | 151.2 | 100.1 | 44.9 |
| Imports | . | . | . |
| 2019 | 178.7 | 99.2 | 53.4 |
| 2018 | 175.7 | 98.0 | 46.3 |
| 2015 | 152.9 | 77.9 | 42.9 |
7.4Dutch multinational activity abroad
This section focuses on the countries in which Dutch multinationals operate, their local business activities and how much employment is created in those countries as a result. We have described the trends where possible. More information and figures on this topic can be found in the datasets accompanying Chapter 7, which can be accessed through the home page of this publication.
Most Dutch subsidiaries abroad are in Germany
Dutch companies’ foreign subsidiaries are most often located in Germany, as Figure 7.4.1 shows. In 2018, for example, almost 2,600 subsidiaries of Dutch multinationals were operating in Germany. After Germany, the United States had the most Dutch multinationals, with 1,865 companies. Figures for the number of Dutch companies in the United Kingdom – the 3rd country of destination in 2017 – are unavailable for 2018 at the time of writing.
| land | 2018 |
|---|---|
| Germany | 2584 |
| United States | 1865 |
| France | 973 |
| China | 660 |
| Poland | 558 |
| Italy | 526 |
| Singapore | 385 |
| Australia | 275 |
| Canada | 255 |
| Brazil | 245 |
| 1)In the figures for Germany, Italy and Poland, there is a trend break in the number of Dutch subsidiaries (IFATS) as of 2018. For the United Kingdom, data over 2018 are missing. | |
Compared to 2017, the number of Dutch subsidiaries grew the strongest in the United States (+35). The number of Dutch subsidiaries in China also grew slightly (+10).
Further growth in the number of Dutch multinationals in the ASEAN-5 and Gulf region
Creemers et al. (2020) showed that the number of subsidiaries of Dutch multinationals in the ASEAN-5 countries (Indonesia, Malaysia, Singapore, Thailand and Vietnam) grew between 2010 and 2017. This growth continued in 2018, bringing the number of Dutch subsidiaries in that region to 805 (Figure 7.4.2). This corresponds to 20% growth compared to 2010.
The number of Dutch subsidiaries in the Gulf region (Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the UAE) has also grown. That region had approximately 275 Dutch subsidiaries in 2018, 10 more than in 2017 and 125 more than in 2010. As in previous years, the number of Dutch subsidiaries in North Africa (Algeria, Morocco, Tunisia and Egypt) remained the same, compared to both 2017 and 2010.
| categorie | 2018 | 2017 | 2015 | 2010 |
|---|---|---|---|---|
| ASEAN-5 | 805 | 790 | 765 | 670 |
| Gulf region | 275 | 265 | 255 | 150 |
| North Africa | 95 | 90 | 95 | 95 |
Half of Dutch subsidiaries in the ASEAN-5 are in Singapore
Many Dutch-controlled companies in the ASEAN-5 are located in Singapore. This was the case for approximately 385 Dutch-controlled companies in 2018, 110 more than in 2010. Dutch companies in Singapore most often operate in manufacturing, transportation and storage, and specialised business services.
The number of Dutch companies in Indonesia, Malaysia and Vietnam has also increased. Thailand continues to be notably less favoured by Dutch subsidiaries: the number declined again in 2018. The number of Dutch subsidiaries has fallen by 30 in comparison with 2010. The number of industrial companies under Dutch control decreased in particular.
Most Dutch subsidiaries abroad are in the UAE
In the Gulf region, it is still mainly the United Arab Emirates (UAE) that represents an interesting partnership for Dutch multinational investments. Of the approximately 275 companies under Dutch control in the Gulf region, 205 were established in the UAE in 2018. Compared to 2017, the number of Dutch companies in the UAE grew only slightly (+5), and most of that growth took place between 2010 and 2015. Dutch companies in the UAE operate mainly in the wholesale and retail trade, manufacturing, consulting, research and other specialised business services. There was no further decline in the number of Dutch companies in Bahrain, Oman, Qatar and Kuwait in 2018. The relatively small number of Dutch companies in Saudi Arabia grew very slightly.
| regio | land | Development relative to 2017 | Development relative to 2010 |
|---|---|---|---|
| ASEAN-5 | Indonesia, ASEAN-5 | 0 | 10 |
| ASEAN-5 | Malaysia, ASEAN-5 | 5 | 20 |
| ASEAN-5 | Singapore, ASEAN-5 | 10 | 110 |
| ASEAN-5 | Thailand, ASEAN-5 | -5 | -30 |
| ASEAN-5 | Vietnam, ASEAN-5 | 5 | 25 |
| Gulf region | Bahrain, Gulf region | 0 | -5 |
| Gulf region | Kuwait, Gulf region | 0 | -5 |
| Gulf region | Oman, Gulf region | 0 | -20 |
| Gulf region | Qatar, Gulf region | 0 | 10 |
| Gulf region | Saudi Arabia, Gulf region |
5 | 5 |
| Gulf region | UAE, Gulf region | 5 | 140 |
| North Africa |
Algeria, North Africa |
0 | 0 |
| North Africa |
Egypt, North Africa |
0 | 0 |
| North Africa |
Morocco, North Africa |
5 | 15 |
| North Africa |
Tunesia, North Africa |
0 | -15 |
Number of Dutch subsidiaries in North Africa stable
Morocco was once again the country in North Africa with the most Dutch subsidiaries in 2018. Of the 95 Dutch companies in that region, 45 were situated in Morocco. The number of Dutch companies in Morocco grew in 2018 (+5), whereas that in Tunisia declined (–15). The number of Dutch-owned companies in these four countries combined remained stable between 2010 and 2018.
Dutch subsidiaries in Germany employ almost 330,000 people
As in 2017, Dutch multinationals in Germany were the largest employers in 2018, when just under 330,000 Germans worked for Dutch-controlled companies, more than 25,000 fewer than in 2017. This may be related to changes in the German observation of foreign multinationals. After Germans, we find Americans most often working for Dutch subsidiaries, 293,000 in 2018. This is slightly more than in 2017, when 291,000 people in the US worked for Dutch companies. We have seen a large rise in employment at Dutch companies in Poland, approximately 38% growth. However, there was a trend break in the Polish figures too in 2018, as Eurostat data shows, and this also occurred in Italy. The number of people working for Dutch-controlled companies grew in Belgium, Brazil and Mexico. It fell by 4% in China, in spite of a small rise in the number of Dutch companies there (Figure 7.4.1).
| Number of employed persons 2017 | Number of employed persons 2018 | Percentage change 2018 relative to 2017 | |
|---|---|---|---|
| x 1,000 | x 1,000 | % | |
| Germany | 356 | 327 | –8 |
| United States | 291 | 293 | 1 |
| Poland | 140 | 193 | 38 |
| France | 200 | 193 | –4 |
| United Kingdom | 163 | - | - |
| Italy | 81 | 101 | 24 |
| Belgium | 84 | 86 | 2 |
| China | 74 | 71 | –4 |
| Brazil | 45 | 48 | 7 |
| Mexico | 35 | 37 | 6 |
Source:CBS, Eurostat
As regards Dutch companies in the larger countries outside the top 10, the number of people working there has grown in many cases. The number of jobs in India, for instance, grew by 2,000 compared to 2017, by 3,000 in Australia and by another 3,000 in the UAE. Small dips in employment at Dutch subsidiaries abroad were seen in Argentina (–2,000), Thailand, Taiwan and Malaysia (1,000 fewer each).
7.5References
References
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Bunn, D. & Asen, E. (2020). International tax competitiveness index 2020. Washington D.C.: Tax Foundation.
CBS (2018). Multinationals account for 30 percent of economy. Statistics Netherlands: The Hague/Heerlen/Bonaire.
Creemers, S., Franssen, L. & Jaarsma, M. (2020). Foreign direct investment and multinationals. In: M. Jaarsma & A. Lammertsma (Red.), Dutch Trade in Facts and Figures, 2020. Statistics Netherlands: The Hague/Heerlen/Bonaire.
Dialogic (2021). Het Nederlandse investeringsklimaat. Utrecht.
Doyle, D., Caliandro, C., Pilgrim, G. & Fortanier, F. (2018). Measuring MNEs using Big Data: The OECD Analytical Database on Individual Multinationals and their Affiliates (ADIMA). Organisation for Economic Co-operation and Development.
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Noten
Entities with few employees that serve a financial purpose, with both Dutch and foreign subsidiaries. Some of these entities act as global headquarters, but their activities are primarily financial.
Only SPEs have been omitted from the international figures, whereas holding companies have also been omitted from the Dutch figures. This will make little or even no difference to the ranking, as the number of holding companies in other countries is likely to be smaller.
A multinational is defined as a company that is under foreign control or that has subsidiaries abroad. Subsidiaries are defined as companies in other countries in which a company based in the Netherlands, under Dutch control, has a majority stake. See Glossary.
The Netherlands still ranks 4th, however, in the Corporate Tax Haven Index of the Tax Justice Network.
The share of SPEs and holding companies combined has remained stable for many years, although there were major shifts in the SPE sector towards holding companies or captive financial institutions in 2020 as a result of stricter statistical guidelines on the definition of Special Purpose Entities.
The Dutch business economy comprises the companies in the General Business Register (ABR) in sections B-N plus division S95, excluding section K. Agriculture, forestry and fishing (A), financial institutions (K), public administration (O), education (P), health care (Q), culture, sports and recreation (R), ideological and political organisations (division 94), wellness and funeral services (division 96), households (T) and extraterritorial organisations and bodies (U) are therefore outside the Dutch business economy.