A new France for your invests
So reads the key message of the visual campaign launched in late 2004 by the French Ministry of the Economy, Finance and Industry and organised by the Invest in France Agency (IFA). Designed to promote the attractiveness of France’s economy, the campaign is set to run for a minimum of three years and uses both media and non-media resources to target five key countries: U.S.A., U.K., Germany, China and Japan. To ensure the campaign’s success, France is pursuing an ambitious and vigorous policy. Recognised as a priority by the government, this venture lies at the heart of French economic policy.
The goal is to attract business talents from abroad and to promote the industrial and tertiary sectors, viewed as strategic, in a unique bid to create productive jobs in the country. Already, Foreign Direct Investment (FDI) accounts for a significant contribution to employment in the industrial sector: foreign firms employ nearly one third of France’s industrial workforce.
The 2005 IFA report shows that foreign investment rose by 12.4% over 2004. In total, 664foreign productive investment projects were initiated in France last year. This encouraging record nevertheless belies a disappointing reality. These projects helped create or sustain 33,296 jobs at a quasi-stable level compared to 2004, a year in which 33,247 jobs were created or safeguarded. This begs the question of how the number of jobs created has remained stable while investment projects have reached a record level? “Because France has a tendency to attract fewer big industrial projects and more small-scale projects, particularly in the service sector,” emphasises Clara Gaymard, president of IFA.
Key measures to attract
During two governmental seminars, the attractiveness programme led to the approval of over 80 measures in a range of areas. The government is effectively launching a charm offensive, deploying various measures designed to attract top foreign students, leading international researchers, and the RD centres of international companies.
This action plan is also intended to improve facilities for hosting highly qualified foreign individuals and to bolster the legal security of investors by enhancing the competitiveness of French law. Since 2004, several major structural reforms have seen the light, notably concerning pensions, social security and, of course, the labour market. Companies are being subjected to significantly lower taxes, RD is strongly encouraged, and small and medium enterprises are receiving more financing from employee savings plans: overall, the competitiveness of France’s labour law is improving.
France is also targeting artistic activities in a bid to attract investors, particularly in response to the growing number of French production companies choosing to film outside France’s borders. The government is planning to reduce the tax burden on TV and film production companies shooting in France. Plus, audiovisual companies filming or producing fiction, documentary and animation productions endorsed by France’s National Cinematography Centre (CNC) will benefit from special tax credits.
Furthermore, France intends to improve conditions for resident foreign artists. A joint mission has been assigned to the audit units of the Ministry of Finance and the Ministry of Culture in order to revise the tax rates applied to foreign artists in an effort to simplify and enhance the sector’s taxation scheme.
Of course, much remains to be done and France still needs to improve its attractiveness. Some investors remain sceptical on several points. To increase the country’s appeal, for example, a more favourable tax regime would encourage economic activity. Other points to address include reducing the cost of transferring companies to France, pursuing reforms in the labour market, thus make hiring easier, and continuing to simplify administrative procedures. Only then can the stereotype of a complicated and bureaucracy-heavy system, traditionally associated with France, hope to fade.
By late 2007, IFA has set as its goal to increase by 150 every year the number of foreign businesses starting up in France. A budget of €10 million in 2006 and an additional €5 million in 2007 has been allocated to ensure this objective is met. By placing the quest for attractiveness at the centre of France’s economic policy, the government’s stance is clear: the conservative image of France as slightly “out of touch” is over and the hour of innovation and action is here. But will a simple promotional campaign suffice to turn these clichés on their head?