Investors 'returning to EU after crisis'

PHOTO: SMU

After years of crisis, Europe is finally ready to be a top destination for investors again, according to a top European Union (EU) official.

Mr Jyrki Katainen, a vice-president of the European Commission, told a lecture here yesterday that after many years of reports of Europe's economic decline, surveys are showing that investors are confident on growth prospects and economic dynamism again.

A recent EY poll of 800 global investors, for example, ranked Europe as the world's top investment destination, with about 59 per cent believing that its appeal would further grow over the next three years, he said.

Mr Katainen, who was speaking at the Presidential Distinguished Lecturer Series staged by the Singapore Management University, shared three initiatives the European Commission has launched to generate more investment.

The first involves raising at least €315 billion (S$500 billion) of investments, mostly from private investors, in three years to overcome the lack of market financing for higher-risk investments.

"Europe is full of liquidity but... financial institutions' risk-bearing capacities have decreased. That is the reason why we wanted to establish a new fund," he said.

REASON FOR NEW FUND

Europe is full of liquidity but... financial institutions' risk-bearing capacities have decreased. That is the reason why we wanted to establish a new fund.''

MR JYRKI KATAINEN, vice-president of the European Commission

The fund will focus on financing infrastructure, innovation and small businesses.

The second initiative is a Web portal listing investment opportunities in the EU. Public and private entities can detail their projects to gain visibility and investors can assess the investment opportunities through the portal.

The third involves removing sector-specific and other financial barriers to investment. This includes facilitating inter-country online business activity and cross-border financing while also encouraging funding from sources beyond banks.

Ms Elisabetta Gentile, a professor at the economics department at the National University of Singapore, noted in a question-and-answer session that some might perceive the EU to be "an organisation that doesn't seem able to get ahead of certain policy challenges" and that this could limit its ability to attract investment.

Mr Katainen said that while many in Europe thought the EU was the "magnet" for the crisis, the problems were in fact triggered by external factors.

"We were badly exposed because... (member states) had not reformed themselves early enough (to withstand the external shocks)," he said.

The EU was a tool used to deal with the financial crisis and a tool for member states to tackle other challenges, such as the ongoing increase in refugee migration, he said.

A version of this article appeared in the print edition of The Straits Times on September 26, 2015, with the headline 'Investors 'returning to EU after crisis''. Print Edition | Subscribe