Economic reforms attracting investment, says President
Economy/Strategic Attractiveness Council – Speech by M. François Hollande, President of the Republic (excerpts)
Paris, 19 October 2014
This evening I wanted to bring together the [Strategic] Attractiveness Council, this council led by the ministers and particularly the Prime Minister: business leaders who are committed not only to investing in France, many of them, but also to considering, with France, the image it must project and its ability to welcome new investments and therefore new jobs. (…)
First of all, I want to begin with an observation: France is an attractive country. It isn’t sufficiently attractive yet, but it is attractive. And to give a few illustrations of this, I’ll mention the investment decisions that have been taken by foreign entrepreneurs and business leaders in our country in the past six months.
First, Adecco announced the creation of 1,000 jobs in France; then Barilla made its Châteauroux production site in the Indre one of the main industrial bakeries in Europe; Cevital, an Algerian company, bought FagorBrandt, an investment of €200 million; Peugeot opened up its capital to Dongfeng, a major project for the automotive industry in France and China; Mahindra, which is represented here, has just taken over the majority stake in Peugeot Scooters; in July, the major bank Santander decided to locate its Europe headquarters – which will be responsible for the whole development of its financial activities – in Paris. I could go on but I’d tire you out, so I want to mention all those examples to show clearly that France is an attractive territory. It also holds first place in Europe in terms of the number of industrial or logistical projects that have attracted foreign investors. Let me also remind you of another, little known fact: that nearly half the capital of CAC40 companies is owned by foreign investors, which proves not only the confidence they have in us and in the largest French companies but also the internationalization of those companies.
In the World Economic Forum’s ranking – drawn up by Professor Schwab, who is here and who organizes the well-known Davos Forum –, according to that indicator – I’m taking it as one among others – we’ve risen 10 places in terms of the effectiveness of the labour market and four in terms of companies’ access to financing. It’s the result of the efforts made in the last two years, which are enabling us to give our country another image.
What’s happened since the first meeting of the Strategic Attractiveness Council? It was six months ago. That was around the time when I presented the Responsibility and Solidarity Pact and the Prime Minister was appointed. Well, we’ve implemented what was announced in the pact, because an exemplary framework of stability had to be provided for both French and foreign companies. The package of tax reductions on companies was approved by Parliament, and many of those reductions will take full effect on 1 January 2015. Together with the Prime Minister, I also made another commitment: to make €50 billion in savings in the next three years. And the Finance Minister presented a budget, currently being discussed at the National Assembly, which provides for €21 billion in savings in 2015 alone.
Reforms were embarked on six months ago, and perhaps even longer ago, to bring our universities together and make them centres of excellence in terms of research and innovation. A territorial reform is also being discussed in Parliament which aims to reduce the number of administrative grades in our country.
We’ve also introduced more competition into many sectors, and I wanted a simplification shock (1); it’s in its first stages, and it’s aimed at simplifying the lives of both businesses and individuals.
We’ve also sought, in these reforms, to improve attractiveness. Hence the simplification of the authorization system for major energy projects; hence, too, the simplification of visas to attract more creative people, more entrepreneurs, more inventors, even more students. And both the Interior Minister and the Foreign Minister are playing particularly active roles to achieve this goal.
We’ve also ensured there’s a mechanism for welcoming foreign investors that can be strengthened, through the Invest in France Agency, which has also been merged with other establishments that had the same purpose. It’s led by Muriel Pénicaud, and it’s now the single gateway enabling us to follow every project that may be presented, from start to finish. Along with the Finance and Economy Ministries, it also enables those tax issues that might arise while the investment is being made to be resolved.
The Strategic Attractiveness Council, which met today, provides me with the opportunity – in addition to your own thoughts, which will be useful to us – to present to you a new stage in our reforms. The government of Manuel Valls has proposed a bill to revitalize business. It concerns several spheres. First of all, the labour market sphere, with new regulation to be introduced for Sunday trading, aimed at better protecting employees but also spreading activity better over seven days a week in certain areas when necessary.
The project will also – subject to the negotiation embarked on between the social partners – introduce provisions to improve industrial dialogue and reduce the duration of disputes, which is much too long in France and therefore creates uncertainty.
Emmanuel Macron also wanted the regulated professions to be opened up, by encouraging access to the market for the youngest professionals and introducing more competition so that rates can be reduced and jobs created in many sectors. Finally, the bill will introduce new mechanisms to promote employee share ownership: this was a request particularly from start-ups and major innovation businesses, so that they can give their staff a greater interest in the company’s success.
Your work has helped move our thinking forward in three areas, with three questions I want to answer.
The first question is how to attract more talent to France. It’s natural for the best minds and the most qualified staff to move around; in France we have nothing to fear, and when a number of our compatriots go abroad it also reflects our idea of openness, internationalization and even the conquest of markets. And at the same time we must also attract talent from abroad. There’s competition between countries, and the government will address this through the system for foreign expatriates working in France – a taxation system that will enable us to give that talent an even more encouraging welcome – as well as by developing share ownership and through even stronger support for innovation. Let me remind you that the R&D tax credit is the most powerful mechanism for encouraging hi-tech investment; I’ve always been asked to ensure it’s maintained, and I’m confirming to you again today that the R&D tax credit will have the same provision as today for the next three years. And we’ll try to reduce the checks that follow the granting of these arrangements.
The second question we must answer is how to get more major investment projects based in France. There again, I’m addressing this through simpler procedures, through even more individualized support for the companies involved in those major projects, by making available long-term financing, linking up with a number of financial institutions in France, and through greater transparency for investors coming from abroad, so that there’s no risk of retroactive taxation. When an investor turns up here, not only must they know the tax rule existing when they take their decision but it must also be the same throughout the project’s implementation.
The third question we’re being asked – and which you’ve asked – is how to give foreign investors more confidence, so they can not only create but also develop.
I know there was some doubt about certain legislation in France which could be misunderstood, even though it’s not being applied. That’s why the Labour Minister has listened to you and has also listened to a number of social partners who may be open regarding the issue, insofar as the legislation creates doubt in investors and doesn’t better protect employees. The criminal penalties associated with the offence of contempt of court, which could sometimes be prison sentences – which were never handed down, of course, but which could nevertheless worry people – will be replaced by financial penalties, and it’s better that way.
There you are: the reforms are ongoing. They were embarked on in the first months of my five-year term and they’ll continue at an even faster pace until the end, because France needs reforms: not reforms for their own sake but reforms to create more wealth, more business and more jobs and also attract more investors and more businesses.
But attractiveness doesn’t mean simply – and this is important – labour costs, the labour market and tax provisions. Attractiveness also means a comprehensive response taking all these parameters into account but adding others: quality of life, the health system’s effectiveness, the success of education and also a good level of infrastructure and in particular transport.
Attractiveness is also about culture, with three major events due to take place in France next week alone. The first is the inauguration of the LVMH Foundation, designed by the great architect Frank Gehry, which will be the culmination of a hugely imaginative project drawing on the most advanced techniques and which will attract hundreds of thousands of visitors. It’s the big project of the 21st century. It’s the result of private initiative. We’ve also developed sponsorship in France; we’re seeing its result.
There’s going to be a second, very powerful moment: the reopening of the Musée Picasso. This too is a rare, exceptional project, the Picasso family has also been involved in it, and it will have a global impact.
And there will also be contemporary art, with its biennale, which will also attract thousands of visitors. Culture means tourists who arrive by the hundreds of thousands, and this is an additional asset for the companies you represent. (…)
I want to thank you for being here – being here not just at this level, but being in France through your investments, through the jobs you’ve created. But above all, I want to thank you for the confidence you’ve placed in my country. You’re the best proof that the companies which are the largest, most dynamic, most inventive and even most stringent in terms of competitiveness establish themselves in France, create jobs in France and succeed in France, perhaps because you’re aware that things are going even better in France than elsewhere./.
(1) a series of measures to simplify administrative procedures, cut red tape for businesses and boost growth.