AMCHAM: Mr. Arendt, please introduce yourself to our AMCHAM readership explaining your background, career and relevant personal history to our readers so they understand you and the values which drive your decision making.
DAVID ARENDT: I had an unusual professional career inasmuch as I pursued different occupations in different locations. After University I started working as a young lawyer at my uncle’s firm (which became the leading Luxembourg law firm). I later moved to New York where I took an LLM in Law at New York University and the bar exam. I was associated with the Wall Street firms Debevoise & Plimpton (I also worked at that firm’s Paris office for a spell) and Shearman & Sterling for a total of six years. I then moved to investment banking where I worked at Merrill Lynch in their New York and London offices. These were challenging (work-wise) but also exciting years. I returned to Luxembourg in October 1994 to join BGL as Head of Corporate and Institutional Banking. Later I became CFO & EVP of one the bank’s corporate clients, Cargolux. I spent 11 years at the airline which I left in 2012 to lead an exciting project, build a freeport for storage and handling of valuable goods at the Findel airport. I saw to this greenfield project from start to finish and was proud to deliver the project on time and on budget in September 2014. Since February 2017 I am an independent director in Luxembourg-based companies and investment funds. I sit on the board and board committees of a bank, an insurance company, a company managing airports, the Luxembourg Export Credit Agency and GP’s of funds active in the real estate, infrastructure, direct lending, agri-food spaces but also on the board of a school (the ISL) and the ACL (Luxembourg Automobile Club). At each career move I had to reinvent myself, learn a new trade or business, work with new colleagues, adapt to a new environment. I enjoy working with people having different cultural and personal backgrounds. My values are professional excellence, integrity and ethics. I am a quick learner, highly motivated in what I do and target orientated.
Please share your assessment of the current business environment within Luxembourg.
The good news is that we now have a business-supportive government understanding the multiple challenges that the country faces to maintain its current standard of leaving (and improving it for the – too many – people in the country who are not so well off) and willing to act quickly. Unfortunately our new government will have to deal with strong headwinds. In the backdrop of an increasingly worrisome geopolitical environment we have recently learned that both the economy and the State finances are not in good shape which gives limited headroom to implement the ambitious tax reforms that the country needs. The government will have to prioritize reforms and foresee longer implementation periods.
What is the comparative attractiveness of Luxembourg as an international business location as compared to other competitive European locations?
The strong points of Luxembourg as an attractive business location are well known: multi- cultural environment, easy access to decision makers, pro- business legislation, generally safe environment for families, triple A status of the country, convenient gateway to access the other EEA countries to offer goods and services… The challenge will be to maintain and strengthen our advantages in light of competing offers from abroad. I am confident that our new government will do what it takes to get there.
What are the issues of most concern to the international business community and what solutions are they looking for?
The new government will reduce corporate headline taxes to bring them closer to the other OECD countries but will not reduce the working time (legislation to allow for more flexibility of the work time is likely, however). We should also expect tax incentives to invest in new businesses, in particular in projects transitioning towards a greener economy and digitalize business processes as well as measures to cut the red tape and speed up the political and administrative decision-making processes. The latter point is crucial to revamp the ailing construction sector and shorten the time to obtain the necessary clearances to launch new projects and businesses. The visa rules have recently been loosened to facilitate the move to Luxembourg of talents that the country badly needs, as well as their families. Next, the dearth of affordable housing needs to be addressed. Lastly, families willing to move to Luxembourg to take up employment must be able to place their kids in high quality international schools.
Is the current coalition government considered by the international business community to be sufficiently business-friendly as compared to potential alternative locations?
Time will tell but the preliminary answer is that the business community should be happy with the outcome of the recent elections indeed.
Is it correct to say that Luxembourg is gradually losing its relative competitive advantage as a European Headquarters location and what are the most significant issues driving this loss of attractiveness?
Other jurisdictions are not standing still. In addition to a favorable tax environment for the HO and its employees many other factors come into play, including location, safety, good schools, affordable housing…
Please tell our readers the reasons and suggested solutions associated with the Micro housing initiative you are working to develop.
Micro-lodgings are autonomous apartments (i.e., not co-lodgings) to be made available at rents below € 1000/month to single expats willing to take up employment in Luxembourg City and other communes offering good access to public transportation and willing to support the project. In doing so they will help and support the tax payers established in their commune and on the tax revenues of which they rely to finance their other social programs.
In what ways are you both optimistic and pessimistic about Luxembourg retaining its economic prosperity going forward into the future?
We have managed so far to create and maintain prosperity for (most of) our inhabitants. I express the hope that this will continue in the future which requires the country to be vigilant, agile and innovative. Unfortunately, past performance is no guarantee of future successes.
Please identify and answer any addition questions you think are important to discuss.
I think it is important to maintain social cohesion in our country to avoid possible populist backlashes that other countries are experiencing. This requires keeping our COLA (salary indexation system), subject to temporary tempering if needed and an urgent package to eliminate poverty and in particular the working poor population. Finally, the country must develop a vision and a long- term strategy with goals and milestones for a sustainable and inclusive economy.
