• Madrid Investment Attraction

Overview of a critical year, also for FDI. MIA strengthens itself to tackle new challenges in 2021

December 2020

2020 is coming to an end with a dark outlook in the economic sphere and in international investment in particular. Despite the hopes placed on vaccines, which will alleviate the global health crisis in the medium term, economic and investment decisions, by definition long-term commitments, do not show signs of brightening soon, beyond increases in the stock market values of listed companies.

UNCTAD has forecast declines in world investment flows of around 40%, and it seems that these declines may extend beyond 2021, although they will be less marked. The perception indices of foreign investors, such as fDi Intelligence’s  fDi Index support this trend. The latter shows a decrease in the corresponding index to October of 34.4% in relation to the same month of October 2019.

In this context, Madrid, it should be remembered, received 14.3 billion euros of foreign investment last year, 61.8% of the national total. With 330,640 million euros of accumulated stock and more than 5,400 subsidiaries of foreign companies in the region, the capital knows that the best way to face this crisis is to put foreign companies already established in Madrid in the foreground.

According to INE’s statistics of foreign subsidiaries in Spain, which were published at the end of September,  these subsidiaries barely represent 1.5% of the total number of companies in the region in the industrial, commercial sectors and non-financial services, but have a very significant impact on the economy. Thus, they are responsible for 47% of the total turnover in the region, 30% of employment and 39% of personnel expenses, and 58% of regional exports. These figures have also continued to grow in recent years, registering the latest year available record highs in all variables.

The investment data available for the first half of 2020, which must be taken with caution, since significant corrections are expected until the end of the year, indicate that Madrid has absorbed 5.5 billion euros, 75.4% of the national total. The operation of the Swiss stock exchange SIX Group on BME (Bolsas y Mercados Españoles) represents an important part of this figure. In Spain as a whole, foreign investment registered a 38% drop between January and June compared to the same period in 2019, whereas Madrid registered a 22% decline. Despite the bad news, these decreases are notably lower than world figures (49%) during the same semester.

With this in mind, Madrid City Council’s Office for Investor Assistance MIA, which is soon going to be three years old, has prioritized aftercare actions, giving them the importance they deserve. This is critical in the current circumstances, in which Investment Promotion Agencies around the world have opted for conserving and taking care of the investment already present in their territories, as it is frequently a source of  new projects. Thus, in September, in collaboration with Madrid’s business association, CEIM, a specific service in this field was launched, with the aim of setting up a communication channel with established foreign companies to learn about their problems first-hand and their plans in Madrid.

The pandemic has forced modifications on another of the services provided by MIA, Softlanding, to adapt it to the new workplace safety protocols. Thus, MIA has had to reduce the capacity of the coworking space in which free temporary accommodation is offered to foreign companies in the installation phase in Madrid by 50%. However, the demand for the service has also been impacted by the new circumstances, and MIA has been able to offer safe and quality accommodation to foreign companies requesting the service.

The Plenary of the Madrid City Council has understood that attracting foreign investment and talent to the city is crucial for the recovery of the City, and this is stated in the Villa Agreements approved unanimously last July. Among the 352 measures for the reactivation of Madrid’s economy is a 30% increase in MIA budget for 2021.

With this increase MIA will be able to afford better specialized intelligence and offer communication and investor services that will surely result in a municipal service of higher quality and value for foreign capital investors, as well as increase Madrid’s visibility as an investment destination.

In addition, MIA will continue to use its antennae for capturing investment projects in Beijing, London and Miami, to which it will add a new antenna in Mexico City. This new antenna will address the main Latin American markets.

Actions of a sectoral nature will also have a place in MIA during 2021. Thus, the first sectoral antenna specialized in Fintech will be opened. This is an area in which the potential of Madrid is evident. Not surprisingly, many of the leads that are currently being managed are Fintech companies, attracted by the competitive advantages of the capital within the new regulatory  framework of this sector. For this reason, the General Directorate of Economy of the Madrid City Council has named Fintech one of the key strategic sectors of local economic development

Finally, MIA is strongly committed to Madrid Platform, a private initiative event that will take place from May 10 to 12 at the Palacio de Cibeles with a mixed format – face-to-face and virtual. Madrid Platform is a forum with a vocation for continuity that serves to vindicate Madrid’s potential as a business meeting hub for Europe and Latin America.