Q: Can you give us an overview of the Austrian economy?

A: Austria is a relatively small nation with 83,000 square kilometers in size and a population of 8.3 million. The capital city of Vienna is the largest city in Austria with a population of nearly 1.8 million and Graz, Linz, Salzburg and Innsbruck are among other large cities.

The GDP in 2007 was $374 billion with the services sector accounting for 67% of that and industry for 31%. The agriculture sector accounts for only 2% of the country’s economy but it is advanced and competitive.

In 2007, Austria exported $156 billion of iron ore, steel products, timber, paper and chemical products and imported $155 billion of machinery, vehicles and steel and metal goods.

Although Austria is a homogenous nation with 90% of the population speaking German, however, in the last two decades there has been significant immigration from former Yugoslavia and Turkey.

Austria, which joined the EU in 1995, is one of the richest nations in the union after Luxembourg and Holland. Austria has sustained high economic growth in the first seven years of this decade on the back of high growth in exports to Central and Eastern Europe and Balkan nations as well as strong growth in its traditional trading partners Germany and Switzerland.

In 1999, Austria introduced the Euro for accounting purposes and later on, in 2002, it officially introduced the currency.

Trade with EU-27 countries accounts for 73% of Austrian imports and exports and Austria has focused in expanding trade with countries that recently joined the EU between 2004 and 2007. Austria has traditionally played a “bridge-to-the-East” role and continues to do so but expanding its ties to emerging nations further east.

Foreign investors find Austria attractive owing to its membership in the EU and historic commercial relations in the banking and insurance sectors with central and southeastern Europe.

These days Austria is facing a decline in its GDP and the economy is expected to shrink between 3% and 6% this year and stabilize in 2010. But for the last 12 months Austria has been outperforming the European Union but the current worldwide crisis has hit Austria hard because the main markets for Austria are Germany and Eastern Europe, both of them suffering very hard from the ongoing economic crisis.

Q: Will foreign investors continue to find Austria as the bridge to the East?

A: That has been the case in the last two decades and we think that it is still a strategic location maybe not for the same countries. In the nineties, it was Czech Republic, Hungary and Slovakia and now the focus is more on Ukraine, the former Soviet Union countries, Bulgaria and Romania.

Q: What are the strategic advantages that Austria can bring to potential foreign investors?

A: In 2005, Austria revised its tax regime and lowered its corporate income tax to 25% from 34%, thus becoming competitive to the neighboring eastern nations. Also, with the system of group taxation Austria allows a company to adjust profits in the country with losses abroad. Holding companies, joint ventures and regional headquarters can also benefit from group taxation and, unlike Germany, Austria does not charge wealth or net worth tax or trade tax.

The tax cuts have attracted several companies to relocate their regional headquarters in Austria and nearly 350 foreign companies have invested in the country and most have expanded their original investment.

Austria has skilled and knowledgeable intensive labor force, so the country is keen to welcome high tech industries that are capital, research and development and knowledge intensive. There are special incentives for companies that are linked to research and development in pharmaceuticals and electronics chip design and manufacturing. Austria is keen to work with companies that are environmentally friendly because of its strict environmental laws.

The country offers financial and tax incentives within the EU framework for companies who are willing to invest in economically underdeveloped areas in the southern and eastern borders. Austria does not require local residents to be partners in foreign investment but at least one manager must meet residence and other legal requirements. In addition, there are no restrictions on cross border capital transactions including profit repatriation and capital gains from the sale of assets or investments.

What is more, Austria has bilateral investment agreements with 55 countries in Europe, South America, Asia, Middle East and Africa.

Q: Would you elaborate on the demographics and labor pool skills?

A: Austria has roughly 8.3 million inhabitants so it is a relatively small country. The population is still growing but only because of immigration. I think that in 2014, the population is estimated to be at least 9 million inhabitants.