NEW DUTCH FINANCE STATE SECRETARY - A FRIEND TO BUSINESS

Identifier: 
07THEHAGUE937

UNCLAS SECTION 01 OF 02 THE HAGUE 000937

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EUR/UBI, EUR/ERA

E.O. 12958: N/A
TAGS: EFIN, ECON, EINV, ELAB, PGOV, PINR, NL
SUBJECT: NEW DUTCH FINANCE STATE SECRETARY - A FRIEND TO
BUSINESS

REF: A. THE HAGUE 325
B. THE HAGUE 642

THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE
ACCORDINGLY.

1. (SBU) SUMMARY. In a meeting with Ambassador Arnall, new
Finance State Secretary de Jager credited recent reductions
in corporate tax and withholding rates for strengthening the
Dutch investment and business climate. He said the new
coalition government was considering measures to address
rigidities in existing labor regulations and suggested the
Netherlands might benefit from U.S. experiences in increasing
access to financial capital markets for small- and
medium-sized enterprises. De Jager's 1992 experience in
starting up his own company should make him a friend to
business and may influence his approach to formulating Dutch
customs and fiscal policy. END SUMMARY.

INVESTMENT AND BUSINESS CLIMATE IMPROVING . . .
--------------------------------------------- --

2. (SBU) On May 10, Ambassador Arnall paid an introductory
call on Jan Kees de Jager, who took up his position in
February as State Secretary for Finance in the center-left
Balkenende IV cabinet (ref A). De Jager, who has the lead on
customs and fiscal policy at the Ministry of Finance (MOF),
said the Dutch investment and business climate was steadily
improving. In January, the GONL reduced corporate taxes from
29.6 to 25.5 percent and dividend withholding rates from 25
to 15 percent. Such changes were already starting to have a
positive effect, de Jager noted, and the Netherlands was now
even more competitive in attracting foreign investment and
companies. While many viewed the Dutch regulatory
environment as inflexible and burdensome in comparison with
the rest of the world, de Jager suggested that it fared well
when compared with other EU countries.

DESPITE RIGID LABOR MARKET . . .
--------------------------------

3. (SBU) On the labor front, De Jager said a primary
complaint from foreign companies operating in the
Netherlands, including some American Chamber of Commerce
members, were the costs and difficulties related to laying
off or firing employees. To annul an employment contract, he
explained, third party consent (a court decision) was often
needed. Judges in such cases usually ruled in favor of the
employee and required that the company compensate the
terminated employee with a cash award. De Jager said the new
coalition government was looking into ways to remove this
third party consent requirement and to simplify overall
hiring and firing regulations, especially for small- and
medium-sized enterprises. He expected a decision on the
matter in the coming weeks.

AND CAPITAL SHORTAGES
---------------------

4. (SBU) The Netherlands was witnessing an increase in the
number of small business start-ups, de Jager noted, but
financial capital shortages remained a challenge. While
sufficient capital for start-ups and financing for large
companies existed, he said there was a lack of capital for
companies with revenues between 200,000 and 2 million euros
($270,880 and $2.7 million). He suggested that the
Netherlands might benefit from U.S. experiences in increasing
access to capital markets for such companies.

COMMENT/BIO INFORMATION: "A FRIEND TO BUSINESS"
--------------------------------------------- ---

5. (SBU) Former Treasurer for the Christian Democrats (CDA)
and former Chair of the party's youth wing, de Jager (38) is
known as a brilliant mathematician with a strong business
background. He previously served with Prime Minister
Balkenende on the national "Innovation Platform" and helped
draft the financial policy section of the CDA's election
platform last fall. His experience in starting up his own
company (Spectra Vision BV in 1992) should make him a friend
to business and is likely to influence his approach to
formulating customs and fiscal policy, for which he will have
the lead at the MOF. Meanwhile, it remains unclear how the

THE HAGUE 00000937 002 OF 002

more conservative, business-oriented de Jager will work with
new Finance Minister and former PvdA (Labor party) leader
Wouter Bos (ref B), who is expected to support more
social-oriented spending interests.
ARNALL