Attractiveness of France/“Invest in France Month” event
THE MINISTER – Ladies and gentlemen,
Thank you for being here. I’m in New York for the General Assembly week. I wanted to be with you this morning to launch an operation that my country is conducting in 50 countries around the world, which we’ve named “Invest in France Month”. Like here this morning, our ambassadors in 50 countries have met or are going to meet economic decision-makers, like you, in order to present and discuss France’s strengths. There are many of them. I’ll come back to that.
In the United States, we would like to strengthen our already very dynamic economic relations. The US is the leading foreign investor in France. It is also the largest foreign employer. But we can do more to attract even more American investment to France.
France has many strengths: our geography, our culture, our demography, our creativity, and of course our… gastronomy! All of that makes France a unique and attractive country.
Some people talk about decline, but I don’t know if there are many countries that have received in the same year the Nobel Prize for Literature, the Nobel Prize in Economics, and the Fields Medal for Mathematics.
We defend France’s uniqueness because that’s where its strength lies, but we are often the first to criticize our own country, which isn’t the best way to attract foreign investors, I admit.
We’ve decided to promote these strengths more actively through this “Invest in France Month” road show, but also through the “Creative France” campaign, coordinated by our agency Business France. It will be launched on Monday in Tokyo by the French Prime Minister. Furthermore, some of you have been able to take part in the “Best of France” event, which I had the honour of inaugurating last Saturday. Broadway was painted in the colours of French excellence in all areas: the high-tech industry, tourism, art, fashion, gastronomy and wine etc.
I would like to tell you what we’ve done, what we are continuing to do for foreign investors, especially American investors.
France is an economy at the heart of Europe and is open to the world. Every week, 19 firms decide to invest in France. Our infrastructure ranks among the most efficient in the world. For example, Amazon chose to establish its logistics centres for Europe in France. Facebook announced at the beginning of June 2015 that it would establish an artificial intelligence research centre in Paris. The software company Salesforce inaugurated a research and development centre just a few steps from the Eiffel Tower in June 2015. Like Intel, which has just opened its first European research centre devoted to big data.
France is now a sought-after destination for major technology companies seeking to open research centres. The quality of our labour force goes without saying. Its productivity is as high as that of our German neighbours, and we are proud of France’s excellent academics and researchers. Since the creation of the Fields Medal, it has been won by no fewer than 12 French mathematicians. We have good schools, we are known for high-calibre research, and we now have very effective tax incentives to promote research and innovation, as well as internationally renowned competiveness clusters. Finally, I want to emphasize that France offers lower set-up costs than in the United States. The cost of establishing a company is lower than it is in our partner countries, and we have Europe’s lowest electricity costs.
REFORMS/TAX POLICY/LABOUR MARKET REGULATION/SIMPLIFIED ADMINISTRATIVE PROCEDURES
Can we do better? Of course. We all know that international competition is becoming stronger, and that it concerns all sectors: trade, investment, higher education, research and tourism. We know that the mobility of international capital and talented people is growing. In this context, I want to make it clear that France has chosen reform and openness to the world.
Our motto is reform. We strive to do better to make France a more attractive “site” for foreign investors. That is the purpose of the economic policy that we conduct. We know that three areas are essential for investors, and that these three areas are ones in which France can improve: taxation, labour law and the administrative framework.
Tax policy should send clear signals. Our tax credit for competitiveness and employment has led to a decrease in corporate tax of up to 6% of payroll. We have exonerated companies from employers’ social security contributions for employees on the minimum wage. We have begun to decrease the corporate tax rate. We have lowered the cost of doing business. All in all, some €40 billion have been earmarked to ease companies’ production costs. Never before has such an effort been made.
Concerning the regulation of the labour market, the government is pursuing its efforts to make it simpler and more flexible, more growth-friendly. We have already adopted reforms aimed at improving social dialogue and simplifying the collective redundancy procedure, which now has a shorter timeframe and better meets companies’ needs.
Lastly, as regards the administrative framework, an unprecedented simplification approach has been initiated. We have increased the number of one-stop contact points. We have simplified accounting obligations. We have strengthened the legal certainty of procedures, especially in tax matters. We are working tirelessly to simplify administrative procedures and make the institutional environment easier to understand.
In parallel to these major economic policy choices, we are also taking action with a series of targeted measures to enhance our attractiveness.
I will give you an example: during this year we will establish a specific, four-year residence permit, issued after a simplified administrative process, especially for international entrepreneurs and business managers. This so called “Talent Passport” will simplify the process of settling in France.
We are doing a lot, but what we are doing is not always seen outside our borders.
I will conclude with a few more words on the subject of innovation, the true engine of growth today.
With “French Tech”, we have an effective tool to support the start-ups and talents that are paving the way to the future, particularly internationally. In this regard, I want to applaud the commitment and hard work of the community of French start-uppers in New York who, with the help of our various agencies, have built the New York French Tech Hub, a veritable bridge between the innovation ecosystems of France and New York.
As part of this initiative, we have just created a mechanism to motivate young talents who wish to create a start-up in France to move to our country. It’s called the French Tech Ticket, and it combines an award, office space in a business incubator, and help with obtaining a residence permit.
This is a concrete example of the sort of things we want to do: to get French entrepreneurs involved in promoting our innovation ecosystem, and to bring entrepreneurs to France by providing them with concrete, helpful services based on their needs. It must not be forgotten that France invented the word “entrepreneur”.
I imagine that that’s exactly what inspired French entrepreneurs to come here. Some are here this morning, and I want to thank them. You are the products of our high-quality education system, our innovation ecosystem, and you are also its ambassadors. Your success is remarkable; it is the embodiment of a successful France. And I want us to be capable of creating value in France, just like you are doing here.
I have already spoken for too long. My goal today is not to give a lecture, but to listen to your advice and try to answer your critical comments. That is why I am very much looking forward to hearing about the experiences of three very distinguished speakers, Jean-Christophe Flatin (President of Mars Chocolate), Leonard Levie (Chairman of AIAC) and Loic Moisand (CEO of Synthesio).
I am sure that these experiences will add to my demonstration of why smart investors choose France or why they should do so.
Thank you very much for your attention.
Firstly, I’m very happy with what we have heard. I must say that there was no rehearsal beforehand.
Obviously we have improvement and there are always improvements to implement. But because of your reaction, which is very kind and very honest, we have to be better in explaining what we are doing, that’s for sure. And we have to think about why there is a difference and it’s not only a practice of French-bashing or something, why there is a difference between the reality, which is sometimes excellent or good, and the reputation, which is not good.
Now, as far as Europe is concerned. I’m a strong believer in Europe because we have an enormous amount of assets: we are the first economic power in the world, we benefit from excellent infrastructure, good education, democracy – which is very useful – and many things. The general setting is not so bad because the euro is not expensive; our energy is not expensive, because the European Central Bank is doing a great job, very pragmatic. There are a lot of assets. The question can come from Europe itself, that’s the point.
What will happen with the United Kingdom’s future in the European Union? Our friend David Cameron has decided to hold a referendum. Our British friends are not always lovers of Europe if I may say so. There will be a referendum next year, I hope it will be a success and keep the United Kingdom in the EU, but it’s a big question mark.
Secondly, there are some countries – Spain, for instance – in which there is a tendency not to think in terms of the nation but to have a more local approach.
Thirdly, we have this issue of migration and we have to deal with these consequences of what happens, today and in the future, in the Middle East and in different countries because we’re close to them geographically. Obviously it’s not very easy. Therefore, I would say that from a general point of view, Europe has enormous assets but the question is the following one: will we be able to master all that, to remain united, flexible and at the same time, acknowledging that nations do exist, but acting more as Europeans. I see different examples. Recently, I travelled to Bangladesh with my German colleague and friend, Mr Steinmeier. I can assure you, when Germany and France go to a country together people say, “Well, Europe, it means something.”
Therefore, to answer your question, it will depend on our [inaudible].
COP21 TARGETS/VOLKSWAGEN DIESEL VEHICLES/FRENCH ELECTRICITY COSTS
Q. – I have a question for the Minister. Europe has set its carbon targets for the negotiations coming up in Paris. But those were based on the assumption you’d have a sudden high and rising penetration of light diesel vehicles. Now that we’ve seen that there is an issue with Volkswagen emissions and testing for these diesel vehicles, will you have to change the mix, will you have to suspend or put an asterisk next to that commitment or change the policy based on what are clearly uncertainties for a large fraction of the diesel engines in Europe, in Germany really, in particular?
And I have a question for M. Levie which is on what part of the competitive advantage of France has been low electricity cost for some time (Minister Fabius might also have a comment) as the French reactor fleet is repowered and restructured. Are the costs of that going to raise French electricity costs to equal or above the other costs in Europe because they are right now rather economic and could become less so as they have to be restructured. What is the path, relative path for French electricity costs given this necessary reconstruction?
THE MINISTER – So far as the INDCs, the commitments of the United Nations, are concerned, as you know, Europe delivered its own INDC recently. It’s very ambitious and I think that the fact that diesel will go this way or that way is obviously important by itself, but it will not change the whole result. Because you know, when it comes to the details there are different parameters. Maybe one of the parameters will change.
You know I am very much involved with this subject because at the end of this year we will have the very famous COP21 in Paris which I will preside over. I am struck by the fact that Europe is both ambitious and rather pragmatic and it will help to find a good result. Now, I begin to become actively optimistic because it is awfully difficult to have a consensus of 196 countries in a very complex matter. But the last conversations I have had and the latest figures have made me more optimistic. For instance, maybe you don’t know that yet, but every country has to deliver an INDC, what we called commitment for the future 2025-2030, and yesterday, out of 196, we already had 133, representing 75% of CO2 emissions. We have to keep in mind that in Kyoto, which was the best one, it was only 15%. Coming to your point, I noticed that things are changing and maybe this gentleman will be more competent on this than I am.
But now the companies are beginning to understand that it is a real question and if you have not understood what renewable energy and decarbonized growth are, you will not be independent.
On the second point, obviously you will answer but you have to bear in mind the figures. Today 75% of our electricity comes from nuclear plants. The objective is 50% and 50% is still the highest in the world. The idea is to try to have a balance, because if you put all your eggs in the same nest, it’s very difficult. We shall have more renewable energy. The cost of renewable energy will change dramatically. Therefore, our aim is that the cost of energy in France will have to remain highly competitive.
Q. – Do we have any more questions from the Audience? Let me fill the silence while you’re thinking of your next question. Something strikes me again, I used to be an economist, so I look at these issues from a sort of less useful vantage point, but the thing which strikes me about France is, when you look at the statistics, is this extraordinary high rate of productivity. I think you mentioned it, Minister: France has one of the highest output-per-hour-worked ratios in the world, higher than the US, and yet I think it’s not wrong to say a problem of chronic slow growth and it actually pre-dates the beginning of the crisis. France has had a growth problem for quite a while. How does one explain those two statistics, that there are extremely effective, highly trained people who in their work are very productive, but the economy is not setting records at the moment… What’s going on there?
THE MINISTER – From a purely economic viewpoint, productivity is decisive but you have to multiply productivity by the number of hours. But there are many factors and as economists, civil servants or actors, maybe the point is to find new ways for innovation. It’s not only true for France but also for Europe more generally. The rates of growth are not high enough. Therefore, it is the reason why, with all of you, we have to encourage businesses to create. Because we are not creating businesses, we have to help businesses to create in order to innovate. It’s our job and it’s true that up to now the rates are not enough. Well obviously in very highly developed countries the rates cannot be as high as they used to be before. As the Minister of Foreign Affairs, I also deal with tourism. I don’t know why but tourism in France has been considered a non-economic sector, even though it represents 7% of GNP and it’s excellent. The figures are impressive. Today you have one billion international tourists in the world and in 15 years, the figure will rise to two billion. When you ask people “where do you want to go?”, France is always the first answer. We have a real national treasure, and it’s not old-fashioned. But now tourism is about the Internet, about its services, its human approach… And therefore we have to innovate, to create new rules, and to give this creative spirit, which must be the French flavour.
Q. – I’m really very happy that you said this because as an American, I’m astonished that the French government has not emphasized in a serious way the magnitude and the possibilities of the tourist industry. And there are certain things that are so easy to accomplish, for example signs in French and English and Chinese and German that would be easier for tourists. Also opening up the days and the hours of certain retail shops. It would have an enormous impact. More funds available for schooling and the hospitality industry. But there is this notion that high-tech gets a lot of the attention, as a joke, and that the service industry is [retro?]. France has an enormous opportunity.
THE MINISTER – I agree with you completely. Many of you speak French, and in French the traditional way of speaking about tourism and tourists was to say “c’est un touriste”, which means you don’t take it seriously. And we have to change things: if someone says “c’est un touriste!”, then that’s a whole story. You have to take a practical decision and let me tell you about the Chinese example. Last year, we decided that now the visa for the Chinese would be delivered in 48 hours, and the growth rate of Chinese tourism in France has been 56%.
WEEKLY WORKING HOURS/RETIREMENT
Q. – That’s quite a market too. On the question I raised about productivity and output of course, Minister, you put the finger on the whole arithmetic here, it’s output power multiplied by hours of work. And I’m often struck by the way, by how French analysts in almost the same sentence praise the French approach to the work-life balance and deplore the fact that the working hours are so low. You can’t have it both ways. If you want people to have full lives and valuable lives away from the workplace, that has an implication for hours. So temperamentally I’m with France on this 100%, but what about early retirement? What about participation at that end of the age distribution?
People in France retire early and increasingly, people have to spend 25-30 years in retirement. Are industrial countries set up for that? That seems unsustainable.
THE MINISTER – On the question of hours, some of the gentlemen will know the figures: the average weekly working time is about 39 hours. In a way, it’s another example of the difference between the reputation [and the reality] – people have the feeling that in France we are lazy and in Germany they’re working hard. No, also in Germany they’re working 39 hours per week. About retirement, we had to make reforms, we had to do it, because life expectancy is increasing, therefore you have to adapt, and everyone can understand that. But every country, every single country is going in this direction, and it is the same with France.
Q. – Do you see a difference in the receptivity of different countries to that model? Would you go so far as to say that there is more willingness in France to adopt those kinds of flexible working time in France than you would see in other countries – for instance, Germany? I think it’s very common now in the US.
THE MINISTER – I’d say France has caught up, so I wouldn’t say France is ahead, but I wouldn’t say France is behind on this point. So I find it equally easy to have cross-generational fertilization or a training programme, whatever you call it, in France as in any other country.
Q. – I’m a scientist and we’re building a large co-working space for biotech start-ups, here in New York City and also in Lyon, and I wanted to ask about the importance of diversity in these small growing companies that you’d like to attract to France. I think part of the reason why New York City has been so successful in the tech sector has been a lot of young diverse men and women entrepreneurs building these companies and I’d like you to just speak about the importance of recruiting these people to France.
THE MINISTER – So, we have to improve on this. We have a paradox. In France, we have the largest education channel at international level. We have the best one. Which is excellent in order to encourage our own companies and entrepreneurs to go abroad, but, the other way around, we are not good enough at attracting foreigners to France and I think it’s one of the main areas on which we have to improve.
Q. – There is one macro issue that I would like to raise, which is apparently stubbornly increasing indebtedness that has reached a very serious level, and while we recognize what you try to do to stimulate the economy, there is a real limit to what is possible under the current circumstances and as I said it stubbornly continues to increase. Is there any way we can see that decrease one day?
THE MINISTER – You’re right, the question of debt is a very serious one. In the forecast of the government, public debt is a bit less than 100%, you have other countries which are lower, some other countries that are higher, but I agree with you that there are limits, and it has something to do with public expenditure and growth as well. Today, the rates of interest are very low, particularly for France, which, after Germany, is the best one, but we have to be careful, because we could always have a problem. It’s the reason why we have to be reasonable and more reasonable on public expenditure. Which includes not only the government, but also social security and local authorities. Efforts are being made, but they have to be supported and continued.
(Business leaders speak)
THE MINISTER – I am concerned, because you know, what I call economic diplomacy, I spend some of my time travelling around the world and explaining to the different national authorities why it’s so important to deliver this permit to French companies, and we truly have a lot of bureaucracy and complexity, but honestly, we can’t complain./.
¹ Questions and answers were given in English.