In 2008, foreign investment in Belgium stood at €85.2 billion, slightly down from a peak in 2007 of €91.4 billion. Last year, however, the figure plummeted to €26.3 billion, or a return to the level of 2005.

Dropping from second to tenth place, Belgium saw itself overtaken by China, France, Hong Kong, the UK, Russia, Germany, Saudi Arabia and India. Belgium still performs better than the Netherlands, Spain and Italy.

As Flanders Today reported in April, the US alone accounted for a drop of more than €4 billion, according to figures from the National Bank. The American Chamber of Commerce in Belgium then repeated its argument that Belgian employment costs are too high, and its labour market too inflexible.

The cost of employment was blamed by outgoing junior economy minister Vincent Van Quickenborne, reacting to the Unctad report. “This relapse cannot solely be attributed to the economic crisis,” he said. “We are still suffering the effects of a wages handicap when compared to the countries around us. Our employment costs are 10% higher than those in Germany.”

Van Quickenborne, a Flemish liberal whose party looks like being consigned to the opposition when a government is finally formed, warned that the fall in inward investment would continue unless the handicap is dealt with.

The Unctad report also shows a decrease in Belgium’s outward investments – the investments its companies make abroad. In 2008, outward investment stood at €100 billion – a large part of which was the takeover by InBev of the American brewer Anheuser-Busch. In 2009, however, the net outward investment was negative – companies actually pulled €11.6 billion back from abroad.

Belgium’s poor performance in attracting investment has to be seen in the context of a worldwide shrinkage of 37%. But Unctad sees some cause for optimism. “The World Investment Report 2010 highlights a promising outlook: after a significant global downturn in foreign direct investment in 2009, flows worldwide are expected to recover slightly this year, with a stronger recovery in 2011 and 2012,” the report’s foreword, signed by secretary-general Ban Ki-moon, says. “Overall, towards FDI, seeing it as an important external source of development finance.”

Meanwhile the Flemish employers’ organisation Voka called on the government to take steps to make Belgium more attractive to foreign investors. Those include lowering the costs of employment, installing a tax regime more attractive to businesses, and bringing down energy costs. “It would also be good if after the political impasse of the last three years there could be some clarity about the new federal government, said Voka managing director Peter Leyman.