|
|
Business / Commerce
Contact Us
|  |
Country Commercial Guide
Chapter 6: Investment ClimateThe Icelandic government encourages foreign investment, particularly in energy-intensive industries that can take advantage of the country's abundant renewable energy resources. According to Forbes (Feb. 2006) Iceland ranks third on the list of most hospitable countries for investors. Icelandic laws regulating and protecting foreign investments are consistent with OECD and European Union (EU) standards. The major law governing foreign investment is the 1996 Act on Investment by Non-residents in Business Enterprises, which grants national treatment to non-residents of the European Economic Area (including U.S. citizens). The major exception is limits on investments in fishing, energy production and airlines. Waivers are not available to these restrictions, although the government is considering opening the energy sector and some aspects of the fishing industry to foreign investment in the medium term. Icelandic law also restricts the ability of non-EEA citizens to own land, but this may be waived by the Ministry of Justice. Icelandic courts uphold the sanctity of contracts as a matter of course. There is no automatic screening of investors, although bidders in privatization sales may have to go through a pre-qualification process. Potential U.S. bidders in privatization auctions need to follow the process closely, since the procedures are often ad hoc and deadlines can be short.
The U.S. does not have a bilateral investment treaty (BIT) with Iceland.
Icelandic law provides for full convertibility and transferability of dividends, profits, interest on loans, debentures, mortgages, lease payments and invested capital. As far as the U.S. Embassy is aware, the Icelandic government has never expropriated a foreign investment. No major investment disputes have occurred in recent memory. Iceland has ratified the major international conventions governing arbitration and the settlement of investment disputes. Iceland accepts binding arbitration of investment disputes. None. Other than fishing, energy, and airlines, foreign entities are free to establish and own any type of business enterprise and engage in all forms of legal remunerative activity. Icelandic law treats private and public enterprises with equality when it comes to market access and other business operations. Foreign investors are permitted to participate in privatization of government-owned businesses, subject to restrictions imposed by the government. Iceland adheres to key international agreements on property rights (e.g., Paris Union Convention for the Protection of Industrial Property). Trademarks, copyrights, trade secrets and industrial designs are all protected under Icelandic law. As with many other issues, Iceland is following the European lead in protection of property rights and will likely soon adhere to the European Patent Convention of 1973. Icelandic laws regulating business practices are consistent with those of most OECD member states, and are increasingly based on European Union directives as a result of Iceland's EEA membership. Much of Iceland's financial regulatory system was put in place only in the 1990s, thus transparency is occasionally a concern (i.e. in public procurement, and in privatization sales where the process is established by the government on an ad hoc basis). Iceland has a modern financial sector that provides a full range of services. There are no significant impediments to the market-determined flow of financial resources. The private sector has access to a wide variety of credit instruments, and there are numerous venture capital funds. Iceland’s largest banks and investment banks can facilitate portfolio investment and securities transactions. Iceland is a politically stable democracy, and politically motivated violence is not a threat to foreign holdings. Isolated cases of corruption occur but are not an obstacle to foreign investment. A 2004 survey by Transparency International (2005) ranked Iceland as the least corrupt country (the U.S. was 17th) out of 133 surveyed. The U.S. does not have a bilateral investment treaty (BIT) with Iceland. Iceland is a member of the Multilateral Investment Guarantee Agency (MIGA). OPIC is not involved in projects in Iceland. The Icelandic workforce is highly skilled but low unemployment has led to shortages of labor. Increasing immigration has helped fill low-wage service and industrial jobs. The labor force totaled about 165,900 at the end of 2005, with an unemployment rate of 2.7 percent. The government has imposed mandatory mediation when strikes have threatened key sectors in the economy such as the fishing industry. Foreign investment statistics: The following tables reflect data available as of July 2005. Figures on investment position refer to book value. These figures are limited to companies in which a single foreign investor holds 10 percent or more of the equity capital and do not include foreign ownership interests via third party investment. Investment flow statistics are based on market value. Major foreign investors: Under Icelandic law, investment statistics gathered by the Central Bank and Icelandic Bureau of Statistics cannot be released on a company- or project-specific basis. Major U.S. investors in Iceland include: Century Aluminum, Alcoa (aluminum), and deCODE Genetics (biotech). Many U.S. companies are represented through Icelandic agents. Information in this chapter was primarily obtained from the Central Bank of Iceland.
Table 0: Average exchange rate ISK/$1
Year
| 1999
| 2000
| 2001
| 2002
| 2003
| 2004
| 2005
| Avg. Rate
| 72.42
| 78.87
| 97.76
| 91.46
| 76.76
| 70.12
| 62.86
|
Table I: Foreign Direct Investment in Iceland by Country (Million ISK)
Year
| 1999
| 2000
| 2001
| 2002
| 2003
| 2004
| Total FDI/World
| 34,660
| 42,136
| 70,652
| 64,305
| 84,622
| 110,410
| U.S.
| 10,535
| 10,631
| 28,101
| 18,474
| 13,109
| 16,116
| Sweden
| 964
| 1,687
| 804
| 1,875
| 1,305
| 1,652
| Belgium/Lux
| 2,023
| 4,391
| 10,152
| 10,040
| 25,213
| 46,598
| Switzerland
| 12,125
| 13,757
| 15,068
| 13,183
| 10,615
| 9,073
| UK
| 1,556
| 1,609
| 1,880
| 1,338
| 146
| 131
| Denmark
| 3,203
| 4,472
| 4,013
| 4,935
| 4,180
| 4,351
| Japan
| 445
| 396
| 442
| 13
| 45
| 44
| Europe
| 23,509
| 30,853
| 41,861
| 44,451
| 70,701
| 93,914
| FDI/GPD (%)
| 5.64
| 6.30
| 9.42
| 8.22
| 10.43
| 12.48
|
Table II: Foreign Direct Investment in Iceland by Industry (Million ISK)
Year
| 1999
| 2000
| 2001
| 2002
| 2003
| 2004
| Metal & Mechanical Products
| 20,784
| 23,619
| 29,914
| 25,178
| 21,510
| 26,507
| Financial Activities
| 1,781
| 2,455
| 3,376
| 3,013
| 1,341
| 727
| Trade & Repairs
| 3,615
| 5,284
| 6,101
| 11,203
| 2,974
| 3,293
| Software,Research
& Management
Holding, etc.
| 4,196
| 4,756
| 19,255
| 9,061
| 39,511
| 59,085
| Food Products
| 1,076
| 1,753
| 2,320
| 2,613
| 2,983
| 3,220
| Telecommunications
| (-1)
| (-157)
| (-113)
| 2,099
| 2,739
| 835
|
Table III: Icelandic Foreign Direct Investment abroad by Country (Million ISK)
Year
| 1999
| 2000
| 2001
| 2002
| 2003
| 2004
| Total FDI/World
| 32,972
| 56,170
| 86,770
| 101,273
| 122,507
| 255,121
| U.S.
| 7,043
| 13,133
| 17,945
| 12,315
| 11,307
| 11,125
| Belgium/Lux
| 3,457
| 11,392
| 16,311
| 33,690
| 36,463
| 53,979
| France
| 2,906
| 3,544
| 4,968
| 4,389
| 5,009
| 8,937
| UK
| 5,308
| 6,660
| 13,585
| 16,789
| 25,626
| 61,220
| Netherlands
| 1,317
| 4,547
| 5,920
| 5,191
| 6,391
| 8,163
| Canada
| 1,270
| 1,532
| 1,813
| 1,469
| 3,944
| 3,995
| All Europe
| 21,164
| 39,224
| 64,492
| 84,578
| 104,477
| 227,999
| FDI/GPD (%)
| 5,36
| 8,39
| 11,57
| 12,94
| 15,10
| 28,83
|
Table IV: Icelandic Foreign Direct Investment abroad by Industry (Million ISK)
Year
| 1999
| 2000
| 2001
| 2002
| 2003
| 2004
| Real Estate & Business Activities
| 4,530
| 17,678
| 23,814
| 39,708
| 39,378
| 63,006
| Food Products
| 11,146
| 10,444
| 21,792
| 21,438
| 22,975
| 39,720
| Petroleum, Chemical, Rubber & Plastic Prod.
| 1,763
| 6,118
| 7,013
| 8,668
| 12,115
| 18,241
| Trade & Repairs
| 8,858
| 6,231
| 14,159
| 9,142
| 17,597
| 19,590
| Transport & Communcation
| 2,343
| 5,415
| 4,944
| 4,274
| 4,589
| 9,331
| Finance Activities
| 580
| 5,148
| 8,717
| 12,878
| 19,465
| 97,390
|
Ministry of Finance:
http://eng.fjarmalaraduneyti.is Ministry of Industry and Commerce:
http://eng.idnadarraduneyti.is Ministry for Foreign Affairs:
www.mfa.is Statistics Iceland:
www.statice.is The Central Bank of Iceland:
www.sedlabanki.is
All contact information for Icelandic government institutions, other institutions and associations mentioned in this chapter can be found in chapter 9.
|
| back
to top ^ |
|
|
