Daniel Da Cruz, what was the rationale behind setting up the Trade & Investment Board (TIB) and the Trade & Investment Steering Committee (TISC)?
“It was part of the economic advancement reform initiated in 2016 with the aim of optimising the coordination and consistency of initiatives related to promoting external trade and prospecting, as well as of clarifying the roles of the various players involved.
This being the case, a foreign trade and investment steering committee – the TISC – made up of representatives of the Ministry of the Economy, the Ministry of Foreign and European Affairs, the Ministry of State, the Chamber of Commerce and Luxinnovation was set up with the aim of producing an advancement strategy. This strategy would be submitted to the TIB – the leading supervisory body – for approval.
The Trade & Investment Board is chaired by the Minister of the Economy, with H.R.H the Hereditary Grand Duke as its Honorary Chair. In addition to the institutions already represented on the TISC, representatives of the Ministry of Finance, the Ministry of Higher Education and Research, FEDIL and the Chamber of Skilled Crafts also hold seats on the committee. It is important to have this mix of public and private players who are all affected by efforts to promote the country on the international stage. This global strategy reflects a common vision that can be broken down into a series of strategic objectives combined with operational objectives that will make it possible to monitor the situation. At the same time entrusting Luxinnovation with a number of new tasks.”
Was it difficult to get so many players involved at the same time?
“In the beginning, yes, of course, but very soon everyone saw the added value that such an organisation could provide, and eventually everyone got involved. The idea is really for everyone to work together to better optimise and identify a new approach to achieving consistent economic development. The word “together” is essential here, since everyone has their part to play and can make a contribution.”
Does that mean that what was happening before was unsatisfactory or not effective enough?
“I wouldn’t say that, no, it’s just that things didn’t really “gel”. Take the Luxembourg for Business economic advancement agency, for example, it had only two full-time employees and acted only within the Ministry of the Economy. Whilst it did contribute to developing efforts to advance foreign trade, there wasn’t really any consistency and there was clearly a pressing need to redefine its scope of activity.
“These days, it’s not enough to simply sell the assets that Luxembourg has as a multilingual, welcoming, and politically and fiscally stable country.”
The main idea behind the reform also involved coming up with a more professional, more targeted framework. These days, it’s not enough to simply sell the assets that Luxembourg has as a multilingual, welcoming, and politically and fiscally stable country; companies clearly need more information about their respective sectors, which requires a lot more in-depth work. Hence the importance, and indeed, the relevance of the connection with Luxinnovation, which already has significant expertise in various sectors.
Data and economic intelligence really are the black gold of the 21st century. So it’s vital that we take advantage of this expertise when it comes to market intelligence in order to better identify both sector-specific and geographic priorities whilst, of course, targeting those activities that could help improve the ecosystem. This particularly concerns the sectors targeted by national economic diversification policy, which notably include the space industry, eco-technologies, ICT and smart mobility, among others.”
How is the implementation of this new strategy progressing?
“For the time being, we have mainly focused on the background work. The first major asset that we have is the fact that we have a common image and a common brand linked to the “Luxembourg ‒ Let’s make it happen” nation branding initiative, and I am pleased that all of the stakeholders involved have been able to adopt this. This initial point was really critical.
Then, of course, we began planning and coordinating the various initiatives in order to better synchronise our respective calendars and know who was going where, when. Between State visits, working visits, fairs and exhibitions, the TISC plays a vital role as an executive and even coordinating body.
At the moment, for example, we are heavily involved in the issue of talent management, which means not only attracting skills to Luxembourg, but also knowing how to keep them here. This requires us to develop this expertise right here, within the country. It’s becoming an increasingly topical issue and one that we, together with our partners, are on top of, trying to identify concrete approaches and solutions for the future.”
Luxembourg launched the SpaceResources.lu venture in 2016 and introduced a legal framework for exploring and using space resources. There has been a large number of announcements regarding the initiative, since the Luxembourg Space Agency was created last September. Is this a catalyst of choice in the strategy for economic advancement?
“Clearly, when it comes to nation branding and promoting Luxembourg’s image, it can only be a good thing, particularly as it’s not just about the effects that the announcements have. There is also a lot of substance behind them and a lot of action being taken, which gives the country credibility in the field and represents another step towards an innovative economy. This has obviously created a strong image for Luxembourg.”
Are any other sectors as advanced as this?
“The ICT field is also very advanced, though this is perhaps less obvious to the general public as it is primarily a cross-disciplinary field that affects all economic sectors. In any case, Luxembourg has a very good reputation when it comes to infrastructure and IT security, for example, not to mention its logistics sector, which has really gone from strength to strength in recent years. In fact, nearly 250,000m2 of logistics space has been created in the country since 2013, representing an investment of some €250 million on the part of the companies concerned. There are also the projects under way at the Eurohub Sud site, which currently account for 150,000m2 of logistics space and will employ around 800 people.
Luxembourg has a very good reputation when it comes to infrastructure and IT security.
Last but not least, a great deal of effort has also been made with regards to eco-technologies and smart mobility, and I think that we’re really doing well in that respect. There is, of course, still some way to go, especially when it comes to bringing together the required expertise and contacts, but it was never going to happen overnight.”
Is it hard to find the right balance between the eagerness to see certain projects come to fruition and the reality on the ground, where things often progress at a slower pace?
“With the government’s support, lots of resources have been, and continue to be, invested in the various sectors that we have targeted and in which we believe, and a great deal of effort has been made in this respect. That said, we cannot allow ourselves to overlook these sectors when it comes to diversifying our economy. This is also, of course, perfectly in keeping with the framework of the third industrial revolution, bringing a strong element of consistency to the whole project.”
What distinguishing assets can Luxembourg promote?
“It is often a matter of niche specialisations, which add real added value in certain sectors. This is a well-known fact, and complements the country’s structural assets, which must also be protected, of course.”
What is the main difficulty you encounter with this approach?
“I think it’s the challenge of creating the most comprehensive ecosystem possible with the potential to support the development of different sectors. Given the size of the country, it’s not always easy to find sufficient critical mass, which brings us back to the issue of the talent we need to develop various projects.”
What are the next major steps you will be taking?
“The ministry is in the process of finalising sector-specific strategies with the experts from Luxinnovation. So we’ll have to see to what extent these strategies can bring Luxembourg international recognition, particularly from the perspective of a data-driven economy, which is an underlying theme for all priority sectors.
Based on these strategies, we will be in a better position to attract more targeted foreign investment that is geared more towards client needs. Once companies located outside of the European Union, wherever they may be, automatically think of Luxembourg when they start looking into opening their first branch in Europe, then we can claim to have achieved our first concrete objective.”
But that won’t be enough – this intention then has to come to fruition…
“Of course, and that’s why we have to reinforce our position as a real haven for companies, and industrial ventures in particular, with high added value, and to develop this welcoming approach in order to best meet the aims and expectations of these companies.
We now have a whole host of individuals on board that make this the perfect time to move forward with this project.”
American giant Google recently purchased land in Luxembourg and may be planning to open data centres there. Is this another major asset in your promotional strategy?
“Obviously this will really highlight the country’s appeal, as did the arrivals of Amazon, PayPal and eBay at the time. The fact that such companies are now opening head offices here can only encourage other companies to follow suit, but this is a hugely complex and political matter and we have to let time take its course.
That said, the mere fact that Google has Luxembourg in its sights and that it has purchased land here proves that the work carried out over recent years is paying off! I’m not sure that that would have been the case five or ten years ago.”
Does that mean, then, that there has been a positive change in Luxemburg’s global image?
“I don’t know whether Luxembourg has a particular image. Generally speaking, a lot of educational work remains to be done when it comes to promoting the country abroad, and we still have to explain what Luxembourg is, before we can even think about tackling the economic aspect. The country has to be put into perspective and into context and the emphasis placed on its specific features and characteristics. It is important not to assume that those we are dealing with automatically know who we are or where we come from.
Then, once they know what we are all about, we might have a chance to build something and, of course, convey a positive image of the country. This is even more beneficial when there is some substance behind it, such as cutting-edge ICT infrastructures. Ultimately, it’s about “putting Luxembourg on the map”, as the saying goes.”
This doesn’t mean that promoting the country’s economy abroad cannot, in fact, be closely linked to nation branding…
“The two are, of course, intertwined, but the concept of nation branding is much broader. As I was saying before, it’s a very good start if all of the players involved are conveying the same image, this gives us a strong foundation on which to build. It’s still a little early to say for certain whether it has worked, but we are clearly going in the right direction.”
Luxembourg also has a network of representational offices abroad. How does that work?
“We actually have a network of eight Trade & Investment Offices in key markets around the world and we are working closely with all the Luxembourg embassies. This network of ‘economic embassies’ works very well. These offices are located in markets that show great promise where the national economy is concerned and are primarily a very valuable source of help and support when it comes to preparing for State visits and economic missions. They not only serve as our representatives on the ground with regards to organising such events, but also do a great deal of background work by helping both companies looking to open branches in these countries and companies within these countries that are interested in establishing branches in Luxembourg.”
Is this network of LTIOs going to have to expand further in the future?
“Discussions are currently ongoing, of course, and it will be up to the future government to make the decisions. One thing for certain is that our priority was initially to strengthen the existing network to provide us with a series of well- established offices that we could rely on. Now that we have achieved this objective, we need to think about expanding our geographical footprint, in order to better cover those regions that show great promise or economic potential.”
What is the most difficult aspect – convincing a foreign company to open a branch here or a Luxembourg company making it in a foreign market?
“Neither of these things are easy to achieve! Companies here have the advantage of rather natural outlets into neighbouring and even other European markets, so they don’t require a great deal of help in this respect. More help is required when it comes to entering markets further afield, and on other continents. A ministerial presence on economic missions, for example, can open both economic and political doors or establish contacts that might prove particularly beneficial to our companies.
Companies here have the advantage of rather natural outlets into neighbouring and even other European markets.
With regards to attracting foreign companies, whether those that are knocking on our door or those we have been actively approaching, we obviously try to establish how we can best support them and help them to find what they’re looking for. The ideal scenario is to identify companies that would complement the players already operating within Luxembourg, without getting into a cherry- picking situation that would require us to say “yes” to some companies and “no” to others.
We are also helped and supported, of course, by our network of LTIOs, which also identifies investors looking to open branches in Europe and explains why Luxembourg is a worthy contender.”