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Germany remains attractive to foreign investors

2023-05-28 20:44:59, Kosova & Bota CNA

The growing interest of firms from the USA, Great Britain and Turkey continues to keep foreign investment in Germany at a stable level, despite the energy crisis.

According to the data of the federal association for the promotion of the economy "Germany Trade & Invest" (GTAI), last year in Germany there were 1,783 openings of new enterprises and expansions of existing enterprises from other countries. This figure is 23 less than in 2021, but 101 more than in 2020.

"Given the difficult conditions like the war in Ukraine, the energy crisis and developments after Corona, you can say that this is a success," GTAI executive director Robert Hermann told Reuters on Monday.

Germany remains attractive to foreign investors

Chancellor Olaf Scholz and CEO of Wolfspeed during the inauguration ceremony of a semiconductor manufacturing plant

"Germany remains an attractive country for foreign investments".

This is also related to the fact that foreign firms invest more in future technologies, such as in the field of semiconductors, battery production and recycling. About 15 percent of international firms want to manufacture in Germany or do research and development.

Number 1 Investor: USA

The main investor remains the USA, which has 279 projects in Germany.

"This figure is significant, taking into account that in the US there is a great incentive for investments in the country through the so-called law for the reduction of inflation (Inflation Reduction Act, IRA)", said Hermann.

Switzerland follows in second place with 208 projects and Great Britain with 170 projects.

"Both countries are not EU member states, but they want to have a foot in the EU and often decide for Germany," says the executive director.

Germany remains an attractive country for foreign investment

While in fourth place is China with 144 projects, the lowest number since 2014.

"The Corona pandemic has certainly had an impact," Hermann says.

Business trips have not been possible due to the strict Zero-Covid policy of the People's Republic of China, which has made it difficult to reach deals, postponed them or prevented them altogether. In fifth place is Turkey with 139 projects, a record number.

Disadvantage for Germany as a place of investment: lack of spaces for the construction of enterprises such as the one of the Tesla concern in Grynehaide

The number of new jobs expected to be created has increased by about ten percent, reaching 33,500. The announced investments have reached 25 billion euros, most of which is related to the engagement of the American semiconductor manufacturer Intel. But even without this, with eight billion euros of investments, the result achieved in 2021 would have exceeded one billion euros.

"This is a remarkable figure," says Hermann.

Recyclable energies factor for choosing the country to invest

In the process of attracting investors, the availability of renewable energies, such as wind energy or energy produced by photovoltaic elements, is becoming more and more important. "Whether for Microsoft, Apple or small firms that provide data centers or even for battery manufacturers like Northvolt – for all of them this is an important argument", says GTAI expert Achim Hartig.

Renewable energies, such as from the use of wind, a factor for choosing Germany as a place to invest

"Having renewable energies has meanwhile really turned into an advantage for Germany."

The share of renewable energy in gross energy consumption increased in 2022 to 46 percent and by 2030 it is expected to reach 80 percent.

Lack of spaces for the construction of enterprises

But the lack of spaces for the construction of enterprises is emerging as a disadvantage.

"Space availability is a problem," says executive director Hermann.

For big investors like Intel or Tesla, areas of 100 hectares or more are often needed, but such spaces are hard to find, especially in the western countries of Germany. However, the lack of specialized forces is not an obstacle for the opening of foreign enterprises in Germany.