Belgium

Originally published: Oct-25-2006

Topics covered:

Government

Belgium is a hereditary constitutional monarchy. The current monarch is King Albert II.

The government is made up of three branches: Executive - King (head of state), Prime Minister (head of government), Cabinet. Legislative - bicameral parliament (Senate and House of Representatives). Judicial - Supreme Court of Justice

As a result of the 1993 constitutional revision, there are now three levels of government (federal, regional, and linguistic community) with a complex division of responsibilities. The responsibility for areas of interest to business such as foreign trade, environment, investment regimes and incentives is increasingly becoming the responsibility of the regional governments.

Legal System

Belgium has a civil law system influenced by English constitutional theory and judicial review of legislative acts. It accepts compulsory International Court of Justice jurisdiction, with reservations

Belgium's legal system is independent of the government and is a means for resolving commercial disputes or protecting property rights. As in many countries, the Belgian courts labor under a growing caseload and backlogs case delays.

People

• Population: 10,379,067 (July 2006 est.)
• Population growth rate: 0.13% (2006 est.)
• Languages: Dutch 58%, French 32%, German 10%

Geographically and culturally, Belgium is at a crossroads of Europe. Consequently, it is one of Europe's true melting pots with Celtic, Roman, Germanic, French, Dutch, Spanish, and Austrian cultures having made an imprint.

Belgium is divided ethnically into the Dutch-speaking Flemings and French-speaking Walloons, the 70,000 residents of the eastern German cantons, and the bilingual capital of Brussels. The population density is the second highest in Europe, after the Netherlands.

Economy

Belgium is located at the heart of one of the world's most highly industrialized regions and has a highly developed market economy. With a geographic area about equal to that of the State of Maryland in the USA, and a population of 10.4 million, Belgian per capita GDP ranks among the world’s highest.

As the first country to undergo an industrial revolution on the continent of Europe in the early 1800s, Belgium developed an excellent transportation infrastructure of ports, canals, railways, and highways to integrate its industry with that of its neighbors. It is one of the founding members of the European Community (EC), and strongly supports deepening the powers of the present-day European Union. Brussels is the headquarters of the European Union and the North Atlantic Treaty Organisation (Nato).

Except for coal, which is no longer economical to exploit, Belgium has virtually no natural resources. It imports raw materials and semi-finished goods that are further processed and re-exported, making its economy unusually dependent on the state of world markets. Most traditional industrial sectors are represented, including steel, textiles, refining, chemicals, food processing, pharmaceuticals, automobiles, electronics, and machinery fabrication. Services account for 74.6% of GDP; agriculture accounts for only 1.4%.

Currency: Euro (EUR) – 0.79286 EUR per US dollar (10-23-2006)

Leading Markets (2005): Germany 19.4%, France 17.3%, Netherlands 11.7%, UK 8.2%, US 6.4%, Italy 5.3%

Leading Exports-commodities: machinery and equipment, chemicals, diamonds, metals and metal products, foodstuffs

Leading Suppliers (2005): Netherlands 17.8%, Germany 17.2%, France 11.4%, UK 6.8%, Ireland 6.5%, US 5.4%

Leading Imports-commodities: machinery and equipment, chemicals, diamonds, pharmaceuticals, foodstuffs, transportation equipment, oil products

Top Industries: engineering and metal products, motor vehicle assembly, transportation equipment, scientific instruments, processed food and beverages, chemicals, basic metals, textiles, glass, petroleum

Economic Indicators

(e) estimate (f) forecast

Comparative Economic Indicators - 2005

Business Climate

With exports equivalent to over two-thirds of GNP, Belgium depends heavily on world trade. Belgium's trade advantages include its central geographic location and a highly skilled, multilingual, and productive work force. About 75% of Belgium's trade is with fellow EU member states. Belgium is seeking to diversify and expand trade opportunities with non-EC countries.

Regulations: Belgium applies the European Union (EU) rules that are in force in all European Union countries. While there is a rather liberal foreign trade policy, there some restrictions, especially on farm products.

Patents and Brands: Belgium is part of the agreement of Paris for the industrial protection and the agreement establishing the World Intellectual Property Organization (WIPO). A single registration to The Benelux Trademarks Office (BTO) protects trademarks in Luxembourg, Belgium and in the Netherlands.

Conversion and Transfer Policies: Payments and transfers within Belgium and with foreign countries require no prior authorization. Transactions may be executed in euros as well as in other currencies.

Transparency of Regulatory System: The Belgian government has adopted a generally transparent competition policy. Nevertheless, foreign and domestic investors in some sectors face stringent regulations designed to protect small- and medium-sized enterprises. The American Chamber of Commerce has called attention to the adverse impact of cumbersome procedures and unnecessary red tape on foreign investors, although foreign companies do not necessarily suffer more from this than Belgium firms.

Corruption: Bribing officials is a criminal offense in Belgium.

Business and Cultural Practices

Business Dress: In common with most continentals, Belgians have a highly developed dress-sense and will immediately assess your level of professional achievement and social standing in the light of your taste and the quality of your clothing. Men should wear dark woolen suits, white cotton shirts, silk ties, and highly polished leather shoes; simple but elegant suits or dresses are the standard attire for women.

Conversation: In general, Belgians never discuss personal subjects. It is inappropriate to begin a conversation with a question like “What do you do?” Endeavor to remain modest about your own wealth and professional accomplishments. Self-aggrandizement is despised.

Addressing Others: First names are still generally reserved for close friends, so you should always use the standard courtesy titles followed by the surname.

Gifts: It is not usually part of Belgian business culture to give or receive gifts. If you do wish to give a present to a particularly close business associate, you should not include your business card with it or give anything featuring your company logo.

Business Cards: Exchanging business cards is a standard practice in Belgian business culture. It is recommended that you have your business card translated with one side in English and French or Dutch on the other depending on the main language of the region that you are visiting. You should present your card with the language of your colleague facing him or her.

Acceptable Public Conduct:

• You should make a point of shaking hands with everyone, including administrative staff. Maintain steady eye contact and never look away as you are shaking hands. Men should stand when meeting and greeting a woman and should wait for women to extend their hands first.
• When conversing, you should always allow an arm's length of personal space. Talking with your hands in your pockets is perceived as a sign of bad manners, and you should try to avoid gesturing.

Driving: The rules of the road are strict and strictly enforced. Speed traps are commonplace and fines for speeding are heavy. Foreign drivers must pay on the spot and your vehicle may be impounded if you cannot pay.

Credit and Collections

• Collection Experience: Good
• Exchange Delays: 2 months
• Preferred Credit Terms: 60 day sight draft
• Minimum Credit Terms: open account

Payments:

The bill of exchange is a common means of payment in Belgium. In the event of default, a protest may be drawn up through a bailiff within two days of the due date whereby the bearer can initiate proceedings against the bill's endorsers.

Checks are commonly used and issuing non-sufficient funds (NSF) checks is a criminal offence. The Belgian public prosecutor's office is frequently willing to press criminal charges for claims over 5,000 Euros. NFS checks (like protested drafts) are equivalent to an acknowledgement of debt and, when needed, can be used to obtain an attachment order.

Although bank transfers are the fastest means of payment (all major Belgian banks use the SWIFT system), they do not offer a foolproof guarantee of payment as the transaction is very much dependent on the buyer's good faith.

Risk Assessment

Coface Country Risk Rating: A1 - The steady political and economic environment has positive effects on an already good payment record of companies. Very weak default probability.

Ducroire Delcredere Political Risk Rating: 1 – very low political risk
Ducroire Delcredere Commercial Risk Rating: A – very low commercial risk

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Bangladesh. For further information, contact info@abc-amega.com.

This report represents a compilation of information from a wide variety of reputable sources.

Economic Indicators: Variety of sources including the CIA World Factbook, COFACE Country Ratings, Economist Country Briefings, Federation of International Trade Associations (FITA) Country Profiles.

Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere

Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," December 2007.

Historical Exchange Rates: OANDA.com The Currency Site.