French Foreign Ministry to play active role in attracting investment

Press briefing by the Foreign Ministry Spokesman (excerpts)

Paris, 19 February 2014

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Attractiveness of France – Action by the Foreign Ministry

THE SPOKESMAN – The President yesterday chaired the Strategic Investment Attractiveness Council. This is an important stage in strengthening our country’s attractiveness.

Foreign Minister Laurent Fabius took part in the meeting and confirmed that the Foreign Ministry is continuing to play an active role in supporting the economic recovery and attracting investment.

Several new decisions will be implemented:

- Promoting our economic attractiveness will now be the responsibility of a new body, created from a merger between the French International Investment Agency (AFII) and Ubifrance: France International Entrepreneurs will be placed under the joint supervision of the Foreign Ministry and the Economy and Finance Ministry. This reform will enable us to rationalize the work of the two agencies, which have significant resources (the AFII has 150 staff and 22 offices in 18 countries, and Ubifrance has 1,400 staff and 81 offices in 65 countries), and to better adapt the services provided to our companies’ needs. The Foreign Ministry’s joint supervision will also enable us, in line with M. Laurent Fabius’s commitment to economic diplomacy, to step up fruitful cooperation between the new structure and our diplomatic and consular network abroad.

- A “talent passport” will also be created. This mechanism will enable us to offer a four-year residence permit to qualified young graduates, creators, investors, managing agents and highly-qualified workers. It will also facilitate all their administrative procedures in France.

Concurrently, the Foreign Ministy will continue, in liaison with the Interior Ministry, to implement a visa policy supporting all those who can contribute to our recovery:

- Regarding multi-entry, short-stay visas, the diplomatic and consular network received instructions in 2013 to further improve the issuance rate for visas and extend their validity period to five years, as the President said yesterday, for those who come to our country regularly (businessmen, investors, academics, scientists, artists, and tourists who travel to France a great deal). These visas enable their holders to enter and leave the Schengen Area without being forced to make a new request on each visit, for one 90-day stay in the Schengen Area in every six-month period.

This is an important administrative simplification measure.

The procedure will also be speeded up, with issuance periods reduced, partnerships established (with companies, travel agencies and chambers of commerce) and procedures made simpler for the leading French export companies to invite their foreign partners to France. Measures will be taken to offer the partners of the 4,000 approved French export companies special access conditions to visa services and greatly reduced issuance periods.

In China, for example, all [consular] posts now process short-stay visas in 48 hours, with issuance rates increasing by more than 20% in 2013. This measure will be extended to other priority countries this year.

- The procedure will also be simplified for foreign nationals who come to work in France for periods of under three months: the provisional work permit – obtaining which could delay the issuance of a visa – will be replaced by a system of prior declaration.

- Foreign students will enjoy significant facilitation measures. They will each receive a residence permit whose duration will correspond to that of their study period, which will save them going through annual procedures. There will be fewer procedures for outstanding master’s students from the autumn 2014 term onwards. Graduate students who set up businesses will be able to extend their residence permits by a year. An additional year will also be granted to second-year master’s students, to enable them to find jobs corresponding to their university courses and facilitate procedures for them with a view to changing their status.

Q. – Regarding students, is there an age limit?

THE SPOKESMAN – What matters above all is the degree courses followed. The aim is to make it easier for those students to come to France and to make our higher education attractive.

The aim of the measures announced yesterday is to facilitate exchanges with company directors and students, and also to make it easier for tourists to stay in France.

Q. – Does this system also apply to artists?

THE SPOKESMAN – Yes. It’s up to each consulate to examine each individual case and assess the quality of the applicant. (…)

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French Strategic Investment Attractiveness Council (Conseil stratégique de l’attractivité) – Speech by M. François Hollande, President of the Republic (excerpts)

Paris, 17 February 2014

Ladies and gentlemen business leaders of all nationalities,

I most sincerely thank you for the effort you have made in coming to talk to the members of the government present here; with the Prime Minister yesterday evening over a long dinner; and again through the morning. We need this confidence, because every time there’s investment in France, it marks the beginning of a relationship between our country and a foreign company. (…)

There are 20,000 foreign companies established in France. They represent two million jobs, meaning that one in seven employees in the commercial sector today is employed by a foreign company. Every year, there’s been nearly €20 billion of foreign investment in France, which means that 10% of total investment comes from capital which at some point chose to thrive in France.

France is an attractive country, open to the world, and it remained so even during the period we’ve just gone through, that of the crisis particularly in Europe. In 2013, nearly 700 foreign investment decisions were taken – that’s more than in 2012 in terms of job creation, because last year nearly 30,000 jobs were created as a result of these decisions, these choices to set up and locate [in France]. There were only 26,000 in 2012. So France remains an attractive country. (…)

One conclusion I draw from this is that France has certainly succeeded in maintaining its position, but it must do even more when it comes to attractiveness. (…)

So what are the challenges we have to take up? And I must say that the dialogue we’ve had over the past few hours we’ve spent together has been particularly informative, even though it has confirmed – I have to say it – many of our intuitions and even our intentions.

First challenge: to bring in more investment from the emerging countries, because this year roughly 10% of investment decisions are going to involve emerging countries coming to set up in France – that’s too few. These countries are very dynamic and have strong growth, and they have to be better represented here in France. And whenever I visit the major emerging countries, I issue the same appeal, saying that we need an economy which is open, and this applies to every nation. So we’re ready to welcome more investment from the emerging countries. (…)

The second challenge in terms of attractiveness is to be able to cover the whole of our country. Admittedly the capital, Paris, is a decisive asset. Since 2012 – i.e. for nearly two years – Paris has even become more attractive, since our capital has risen from sixth to fourth place among the most attractive global cities. (…)

But we want the investment from throughout the world to be directed all over France. (…)

Finally, the last challenge in terms of attractiveness is to attract more innovation and research activities. Here too, investment is rising sharply in France. (…) We want this trend to be even more sweeping, because we have to be present in this technological sector.

In this respect, I confirm once again that the R&D tax credit – which was one of the technology investment levers – will not only be ring-fenced for the next few years, but extended to cover innovation too.

But attractiveness can’t be separated from competitiveness, and this is what has emerged from our discussions. So the aim of attracting foreign investment must come under a more global policy, the one I announced for our country and which we’ve been implementing for 20 months.

Firstly, the choice of innovation through the 34 sector-based projects we put together and are implementing, and which centre on three major strategic priorities for France: the energy transition, digital technology and the living economy, health. Moreover, we even think that these three priorities will soon merge to form only one: that digital technology will benefit health and also the energy transition.

The second policy we’ve been conducting for 20 months is simplification – of the labour market in particular, with the agreement reached between employers and unions on job security and, more recently, on vocational training – and we’ll continue to move towards this.

Finally, there’s the Responsibility Pact, which I presented to the French and to employers and unions at the beginning of January, whose aim is to go on reducing labour costs, something we started with the competitiveness and employment tax credit, which will represent €12 billion in 2014 and €20 billion in 2015; and we’re going to develop this further since the idea is to scrap family allowance contributions paid by employers, i.e. over €30 billion.

But it isn’t just about reducing labour costs; we must simplify our rules as well. A new phase of social dialogue needs to be opened up in order to promote recruitment and investment.

The Responsibility Pact is also a pact of predictability vis-à-vis the fiscal trajectory which our country must clearly set out, for both companies and households. Our aim, our desire, our commitment is to bring corporation tax into line with our main European neighbours, particularly Germany, by 2020. And on Wednesday, I’ll have the opportunity of talking to Mrs Merkel about this, since we’re having a joint meeting of our two governments.

I nonetheless wanted to add measures encouraging attractiveness to the measures encouraging competitiveness, and this is what I wanted to present to you this morning.

First decision: everything must be done to bring in, quickly and effectively, investment from abroad. That’s why the Invest in France Agency and Ubifrance will quite simply be merged. This tool for promoting France will therefore bring together 1,500 people, with a budget of €200 million and a network of 65 countries we’re represented in.

A quarter of the company leaders on the board of directors will be the heads of foreign companies established in France, so that what we do really targets foreign investors. The new agency will work in close cooperation with the French regions, whose leading role in the policy of supporting businesses will be reaffirmed and strengthened in the future decentralization act. This network will be at the service of all companies interested in settling in France.

Second decision: in order to bring in investment you have to welcome investors better; it’s very hard to discriminate between them; that’s why we must welcome innovators and creators more effectively, and that’s the principle of the “Talent Passport”, which will offer a four-year stay in France for young, qualified graduates, creators, investors, managing agents, highly-qualified workers and all those people we need in France, who mustn’t be hindered by all kinds of procedures.

I’ve so often heard entrepreneurs or senior executives of foreign companies telling me they’ve had great difficulty coming to our country, just when they wanted to work on an investment! Well, that will be stopped. Likewise, entrepreneurs or business leaders who travel regularly to our country for trade will now have long-stay visas – i.e. for five years. The period for obtaining these visas will be reduced to 48 hours, instead of the several weeks it takes today, and we’re also going to facilitate all procedures to make it easier for foreign tourists – particularly those from emerging countries – to come to France.

I also wanted it to be easier for foreign students and researchers to come to France; they’ll benefit from a residence permit whose duration will correspond exactly to that of their studies or research; and it’s been shown that, at the end of their career paths, students and researchers invest, create and do business in the country that welcomes them. That’s true of French people who go abroad; it’s also true of foreigners who come to study in France.

Third decision: I wanted arrangements for welcoming foreign start-ups to be improved in France; from this year, they’ll have a single point of contact for all their procedures. They’ll also enjoy financial assistance of €25,000 and support for setting up. Likewise, foreign company subsidiaries that settle in France will be able to benefit from the Public Investment Bank’s interventions; this hasn’t hitherto been the case, and I want this tool – which is there to finance the economy and supports the banks’ activities – to be fully available to foreign companies.

Fourth decision: France wants to be a platform for global trade – in other words, we want to facilitate trade carried out in France; there were brakes on the import of goods into the country; those brakes will be lifted. So from 2015, the VAT regime applicable to import companies will be simplified, and this measure will enable foreign companies to be present and to develop in our ports and airports.

From the end of this year, all import and export customs procedures will be phased out. France must be a straightforward country; that’s not the image it may always convey abroad, or at home for that matter, because complexity is blind to nationality, and so simplification will also apply to everyone – both foreign and French companies.

France must also be a place of excellence. A few days ago I was in Silicon Valley with a major delegation of French companies; I paid tribute to its success; a lot of French companies had also set up in Silicon Valley, and I’m very happy about that, because we need this exchange of technology; but in a way we, France, also have to have a valley of innovation, and it already exists: we could say that in Saclay we have all the conditions for making it a centre of excellence. There are great universities there, French grandes écoles, ( [1]) high-performance research laboratories and many businesses.

What’s lacking is a fast link between the Plateau de Saclay – which will be called a “French hi-tech” plateau – and the capital, Paris, and so this infrastructure will have to be developed by what’s called Grand Paris [infrastructure project for Paris region]. In terms of infrastructure, we also want Roissy – which is a major international airport and is set to be complemented by business centres and start-ups – to be much more easily linked to the capital; that’s the challenge of the Charles de Gaulle Express [high-speed rail project]; it’s also an infrastructure we’re developing as part of Grand Paris.

But I want to come back to the decision that is perhaps the most eagerly awaited by both foreign and French companies. A kind of relationship of trust must exist. The aim is to guarantee the stability of tax standards and mechanisms. From now on, a French or foreign company will be able to confirm with the tax administration the rules applying to its investment. This transparency is essential. How can you invest if you’re not sure the tax situation is going to remain the same throughout the life of the investments?

There’s a procedure in France called rescrit [tax exemption]. It will be broadened out to social legislation as a whole. What does it mean? It means that a company, French or foreign, which wants to invest will have a commitment from the administration that the tax, labour, administrative rules etc. will be the same. It will be a guarantee.

We also want the tax administration – and it will be the case – to establish, from this year, a bureau for foreign investments in France. Its very purpose will be to guarantee the taxation to be imposed on entrepreneurs who place their trust in us.

I know that France – and it’s been confirmed to me by our discussions – is regarded as a more complicated country than others. This could make us proud, but it doesn’t. It’s true that we have a form of administrative intelligence that has flourished in recent years – as taxation has risen and public expenditure has been stimulated –, but this doesn’t necessarily make us competitive. So it’s about ensuring that simplification can be developed.

I’ve made several commitments. Firstly, to control public spending. The government has been doing this for nearly two years. It will be continued through a programme of savings. I’ve also made a commitment that corporation tax levels until 2020 will be known.

But I also want us to be able to provide a clearer framework for industrial relations in our country. That’s what happened with the agreement reached between the employers and unions on increased job security and to govern redundancy procedures, with much shorter periods facilitating partial unemployment if necessary – let’s call it “partial activity” – and encouraging conciliation procedures to avoid recourse to the justice system. I know it’s always a problem, for employees and companies, when you have to go to the judge to settle certain disputes. Hence conciliation, which must be encouraged here.

Ladies and gentlemen,

Our strategy is therefore investment and innovation. It’s a national strategy and therefore an international and European strategy. (…)

I also wanted to state the obvious to you: France is afraid of nothing; it’s not afraid of opening up to the world; moreover, you win market share when you’re a company – and influence when you’re a country – only if you leave home, if you’re capable of going and promoting the excellence of your products or the excellence of your resources abroad; that’s what we do. (…)

You’ve been kind and even generous or sincere enough to remind us of our strengths, and it’s also good for the French to be able to hear this message from you, foreign investors.

You’ve also been sincere and frank enough to tell us what had to be put right, and that’s also our duty. But by coming to settle here, by coming to invest here, you’re spurring us even more to persuade many other foreign companies to join you. And the effort we’ve embarked on with this Strategic Investment Attractiveness Council will continue.

This was the first meeting of the Council – which enables dialogue between the members of the French government and major company directors from all over the world – in three years. Well! Every six months I’ll be convening this Council so that you can judge our reforms, and judge our ability to make France a great country for foreign investors. (…)./.

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Dernière modification : 21/02/2014

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