Speech of Henri Grethen, Minister of the Economy at LUXASIA 2000

Royal Highness,
Mr. Chairman,
Distinguished Guests,

It is my great honor and pleasure to give you a very warm welcome to LUXASIA 2000. As Minister of the Economy, I am very proud that Luxembourg hosts this important event.

I would like to thank all of you for being here today and for your strong interest in a close collaboration between companies from Asia and Europe. 12 regions from Asia and 9 regions from Europe are present today to develop economic cooperation.

At the ASEM conference in Seoul a few weeks ago, the political decision makers expressed their strong wish to further intensify efforts to increase trade and investment flows between our two continents.

LUXASIA 2000 is certainly a most timely example of these efforts to enhance the economic relationship between Asia and Europe.

For two days, Luxembourg will be the host of this event. I would therefore like to take the opportunity to present you briefly the Luxembourg economy and its role in the so-called larger economic integrated area of Saar-Lor-Lux.

Luxembourg, the smallest founding member state of the European Union with a territory of 2.600 square kilometers, has a population of nearly 440.000 people. This is indeed four times the area of the city of Seoul but with a population of less than 5%.

Despite or perhaps because of it being a small scale economy, our country has consistently enjoyed higher than average growth rates over the past ten years, boasting as a result today one of the highest standards of living in Europe. GDP growth stood at 7,5% in 1999, and we should reach again the same performance in 2000.

In order to give you a further appreciation of the performance of the Luxembourg economy, I would like to refer to the very recent "Global Competitiveness Report" of the World Economic Forum, in which Luxembourg ranks number 3 after Singapour and the United States.

Since the beginning of the sixties, Luxembourg has undergone a profound structural change of its economy. From an agricultural and steel based economy, Luxembourg has developed to an international financial center and has become an economy with highly developed infrastructures in transportation, telecommunication and industry.

More recently a substantial potential for the development of the communication, media and information industry has emerged.

Four main factors have contributed to this structural change of our economy:

  • the implementation since the beginning of the seventies of a pro-active development and diversification policy in the manufacturing sector;
  • the restructuring in the European and Luxembourg steel industry;
  • the development of Luxembourg as one of the worlds largest financial centers;
  • the policy of the Government to encourage research and development and the promotion of innovative companies in new sectors of activity.

Distinguished Guests,

I would like to present you briefly some key figures of our economy.

As I already mentioned, last year gross domestic product has grown in real terms by over 7,5%. But, Luxembourg has also by far the lowest unemployment rate in Europe with presently 2,5%.

Though the unemployment rate is low, an impressive job creation during the last ten years has allowed total employment to increase by 25%. In 1999 alone, employment has grown by 5,3%.

Indeed, a large reservoir of labor is available in the bordering areas of the Saar-Lor-Lux region and the free flow of people across borders brings every day over 85.000 commuters to Luxembourg.

The Government budget has been in structural surplus since the mid '80s allowing for a consistent lowering of the tax burden on the economy and on wage earners.

Foreign trade in goods and services is of vital importance for the Luxembourg economy. Our country is exporting over 80% of its total production.

The bulk of these exports are directed towards the European Union countries.

Ladies and Gentlemen,

LUXASIA 2000 brings together regions from South East Asia and from the European Union, mainly from the so-called Saar-Lor-Lux region. Economically speaking, Luxembourg is the center of this larger integrated transborder area. Saar-Lor-Lux is standing for the German region of Saarland and Western Palatinate, the French region of Lorraine, the Belgian Province of Luxembourg and the Grand-Duchy of Luxembourg. Covering all or part of the territory of 4 countries, this area represents today one of the most dynamic regions in the European Union. A potential market of 11 million people is available on a territory of 54.000 square kilometers. State of the art infrastructures, cooperation in research and development, experience and industrial know-how, a center for technology and innovation, availability of highly qualified human and capital resources have put the Saar-Lor-Lux area in a strategic position for business development in the European market.

Luxembourg, as the center of this region, provides the hub of and the link between the constituent parts of this area.

Ladies and Gentlemen,

What are the key factors which have contributed to the dynamic development of our economy?

Above all, a stable and predictable economic, social and political environment has favored business confidence and encouraged the setting up of many new companies.

In addition, a policy of openness to trade and investment, a clear and modern legal framework have been basic ingredients for economic development.

Continuity in the implementation of economic policy and the absence of major labor disputes for over 70 years are all elements which have contributed to enhance private initiatives for business growth.

A good framework for education and research is today of increasing importance. Investments in skills and human resources by companies grow substantially.

An overall policy promoting competitiveness and the Government's continued commitment to reduce the overall tax burden favor entrepreneurship and investment.

Indeed Luxembourg has one of the most advantageous corporate income tax rates and the Government has pledged to reduce it further. A sound budget policy has over the years provided the margin of manoeuvre to substantially reduce taxation in Luxembourg. In 2001 and 2002, the Government will further reduce corporate income tax as well as personal tax rates.

In addition to the general growth features, which I have mentioned previously, more specifically, the central location and the proximity to the main European markets of France, Germany and the Benelux allows companies to deliver their products just in time to their customers.

The Luxembourg Government and the people of Luxembourg have a welcoming attitude towards foreign investment and an open mind for European and international cooperation.

I am sure you find in Luxembourg an excellent environment for partnerships with companies from other regions.

Ladies and Gentlemen,

I am confident that LUXASIA 2000 provides all of you an excellent opportunity to further develop your business and to strengthen the economic ties during these two days and far beyond. May I wish all the participants of LUXASIA 2000 success and a fruitful cooperation with their new partners.

Thank you for your attention.

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