doing business, belgium, manufacturing

The Kingdom of Belgium achieved its independence from the Netherlands in 1830, and has become an admired modern country, well-known as the home of international organizations such as NATO and the EU. Since most Western European capitals are within 1,000 km of Brussels, Belgium’s capital, it is an ideal location for international groups. The country participates in more than 50 global organizations, including the International Olympic Committee (IOC), World Health Organization (WHO) and International Monetary Fund (IMF).

Belgium is very cosmopolitan, with three official languages — Dutch, French and German. The country is about the size of the U.S. state of Maryland with 30,528 sq km of area. Its climate is temperate, with mild winters and cool summers. Belgium is bordered by France, Germany, Luxembourg and Netherlands, and has a robust shipping infrastructure including multiple ports, making it a perfect location for trade both within the EU and with other geographic regions.

Manufacturing in Belgium

Typical manufacturing products made in Belgium include engineering and metal products, automobile assemblies, transportation equipment, scientific and precision instruments, chemicals, pharmaceuticals, textiles, glass, petroleum and food and beverages. Belgian chocolate is famous around the world, and Antwerp is well-known as the center of the international diamond trade.

Industrial production is growing at about .2 percent annually as of 2017, making Belgium the 168th country in the world for industrial growth rates. Manufacturing accounts for about 22 percent of the GDP.

Other Important Industries

Services make up about 77 percent of the GDP and engage about 80 percent of the workforce. Retail businesses, tourism and financial services account for the bulk of the service sector.

Agriculture, which is clustered in the northern areas of Flanders, uses about 44 percent of the landmass of Belgium. Primary agricultural products include sugar beets, fresh vegetables, fruits, grain, tobacco, beef, veal, pork and dairy products.

In addition, Belgium has become a hot spot for the growing Biotech industry with big focus on research, startup clusters and medical trials.

Supply Chain Infrastructure for Manufacturing

Belgium’s transportation and communication pathways are robust. In fact, 23 percent of its GDP in 2017 went to investments in fixed capital and inventories. 36 percent of Belgium’s energy consumption comes from renewable sources, making it the eighth country in the world for renewable energy production. Coupled with its low emissions from energy consumption—where Belgium ranks 35th in the world—the country is a great location for manufacturers looking for a greener footprint.

Shipping

Belgium has 41 airports, 26 of which have paved runways and six of which can handle large cargo aircraft. The seven registered air freight carriers in Belgium carried 1.4 billion metric tons of goods in 2015. Coupled with its prime location and healthy multimodal freight system, Belgium has the ability to move goods quickly around Europe and the rest of the world.

Belgium has more than 120,000 km of paved roadways and 3,592 km of railways. Major seaports include Antwerp, Oostende and Zeebrugge. Antwerp, one of Belgium’s major ports, is a river port as well as a large container port, providing great flexibility for both imports and exports of manufactured goods and raw materials. It serves as Europe’s second largest seaport and the world’s second largest chemical cluster.

Workforce

With one of the highest population densities in the world, the northern part of Belgium is where most manufacturing is clustered, although coal and steel are strongest in southern Wallonia. Despite a highly educated workforce, unemployment in Belgium runs at just over seven percent. There is a sharp difference in unemployment by region: Flanders has a rate of 4.4 percent while Wallonia has a rate of 9.9 percent. The total workforce is 5.324 million, with 18 percent of the workforce engaged in industry.

The country spends about six percent of its GDP on education, and most citizens complete 20 years of education from primary through tertiary levels.

Along with their education and technological skill, Belgian workers have traditionally enjoyed high wages and plentiful benefits, making the country slightly less competitive than other areas of the world. The government has recently undertaken labor reforms to make the country more competitive, but this has led to concerns from labor and trade unions.

Economy

In 2017, Belgium had $300.8 billion in exports and $300.4 billion in imports. Roughly 75 percent of Belgium’s trade is with EU countries. About half of the Port of Zeebrugge’s trade is with the U.K. This dependence has created uncertainty around Belgium’s economic future due to the U.K. leaving the EU.

Germany accounts for 16 percent of Belgium’s exports; France for 14.9 percent; Netherlands 12 percent and the U.K. 8.4 percent. Both the U.S and Italy hover at just under five percent. Major export commodities include chemicals, machinery and equipment, finished diamonds, metal products and food.

Belgium imports raw materials, machinery and equipment, chemicals, raw diamonds, pharmaceuticals, food transportation equipment and oil. The Netherlands accounts for 17.3 percent of the imports; Germany 13.8 percent, France 9.5 percent, the U.S. 7.1 percent, the U.K. 4.9 percent followed by Ireland and China at just over four percent each.

Belgium is the 37th largest economy in the world based on its GDP of $529.2 billion. The country has a staggering national debt equal to 103.4 percent of its GDP in 2017. This debt amount puts it in the 13th position in the world of countries with debt to GDP ratios.

Political Landscape

Belgium’s constitution was ratified in 1831 and revised in 1993 to create the federal state. Belgium is a federal parliamentary democracy under a constitutional monarchy. The country is divided into three regions: Brussels-capital Region, Flemish Region (Flanders) and Walloon Region (Wallonia). In addition to federal and regional governments, there is also a third branch: Linguistic.

The office of Prime Minister is occupied by Charles Michel, who has served in the role since 2014. Michel submitted a letter of resignation of the government after it lost the majority in parliament. He now heads up a government limited in capacity to current affairs until the next election, which is scheduled for May 2019.

Tax Rules

In Belgium, taxes are equal to 51.3  percent of the GDP, putting it at the 15th highest in the world. In 2017, the Belgian government voted to reduce the corporate tax rate from 33 percent to 25 percent by 2020. The new tax plan also includes incentives and other benefits designed to spark innovation, competitiveness and more private investment. These incentives make this an ideal time to invest in manufacturing in Belgium.

The World Bank ranks Belgium at number one in the world for its ease of trading across border, with an average time to export of about one hour. This makes Belgium an ideal location for manufacturing, distribution or warehousing operations. Belgium also ranks 45th in the world for overall ease of doing business. The country scores well in ease of starting a business and dealing with construction permits. Resolving insolvency, obtaining credit, protecting minority investors and enforcing contracts are also strong points for doing business in Belgium. Belgium requires corporations to make 11 tax payments per year.

Special Circumstances

The planned changes to reduce business taxes and curtail wages will make Belgium an even better place for manufacturing businesses, though some economists are concerned that they may cause an economic slowdown in the interim. In addition, the U.K.’s planned withdrawal (Brexit) from the EU may have a deleterious effect on the Belgian economy.

Getting Down to Business

Doing business in Belgium has its many advantages due to its excellent location for distribution, companies need to ensure they have a transportation management solution that is up to the fast pace. In addition, QAD Internationalization enables companies to identify and overcome challenges with taxes, regulations and globalization.

How would you describe the state of Manufacturing in Belgium? Learn more about manufacturing and doing business in other great countries around the world.

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