Ministry for Industry, Labour
and Trade
Greenland business opportunities
Deputy Minister Jørn Skov Nielsen
Nordmin; 7th of May 2015
1
The general economic
development
 Since 2011 Greenland has experienced a fall in the
national income although employment is now again
growing thus indicating renewed growth.
 The Government of Greenland policy to stimulate
growth and employment includes:
 Competitive and stable framework conditions for
the extractive industries.
 New national strategy for the development of
tourism
 Enhanced credit facilities
 Review of growth incentives offered to private
businesses
 National job creation plan
2
Extractive industries
 Despite an apparent world wide lull
in investments in the mining
industry several projects continue
progress :
 Anorthorsit in the Kangerlussuaq
Fjord
 Zink/lead in Citronen Fjord – in the
extreme north of Greenland
 Rare earth/uranium at Kuannersuit
(Kvanefjeldet) – near Narsaq
 The list is non-exhaustive.
3
New national tourist development strategy
 The Government of Greenland devotes
special attention to further the
development of tourism.
 The new national tourist development
strategy focuses on
 New Infrastructure.
 Taxation and fees leaved upon
tourism.
 The successful implementation of
exclusive rights within tourism in
order to enhance investment.
4
Key elements in the tourist
development plan
 Accessibility
 ‘Reasonable fares’
 Direct flights – extension of selected runways
 Developing several geographical regions – not just one.
 A coherent infrastructure within each region.
 Easy and non-expensive transport possibilities within each region
 High reliability of local transport facilities
 Sufficient bed capacity
 Privat sector henceforth covered the need to increase capacity as the
market developed – which is expected to continue to be the case.
 Sufficient activities/attractions
 Excursions
 Good service – experienced quality.
5
A considerable potential for lowering fares through
construction of new infrastructure
Cost of available seat mil (cASM) calculations for the Greenland Air
Traffic system 2015
CASM index
Scenario 0,
Present situation
Scenario 1,
GOH and JAV, 1199 m.
Scenario 2a,
KEF hub, GOH og JAV
>2200 m.
Scenario 2b,
direkte CPH, GOH,
JAV >2200m.
Source: AirInsight and Rambøll A/S
GOHCPH
JAV-CPH
UAKCPH
100
100
100
91
92
86
79
80
62
72
71
56
The potential for growth
Scenario 1: Modest extension of run way in Ilulissat and Nuuk (1199 m).
Scenario 2: Longer extension of run way in Ilulissat and Nuuk (2199 m).
Scenario
Price
reduction
1
9%
2
25 %
2 (supergrowth)
-
Holiday
tourists
2015
Holiday
tourists
2040
Business
tourirsts
2015
ca. 44,000
26,006
ca. 61,000
Business
tourists
2040
ca. 13,000
10,980
ca. 71,000
ca. 13,500
ca. 13,500
Comments
• The total number of tourists is 36.645 based on the number of guests staying in hotels in
Greenland 2014.
• Holiday tourists are assumed to count for 70 pct. of total
• The effect of price reductions will take 5 years to reach new equilibrium
• Apart from an assumed general annual growth of 1.5 % only changes in price and
accessibility are taken into account in the forecast
• For holiday tourists the elasticity is estimated to be -3.2 and for business tourists to be -0.5.
7
Source: Rambøll A/S
Cruise passenger tax reduced from
1.6.2015
 Inatsisartut has passed new legislation reducing pax-tax for cruise
passengers
 Until now 525 DKK per passenger
 From 1st of June 2015 1.10 DKK per GRT per port of call
 The new regulation gives in average a reduction of 74 % compared to
former rules
 Relatively more for large vessels with few ports of call
 Relatively less for smaller vessels with many ports of call
8
Example of the effect of new rules
New tax - Fram 7 ports, AIDA
Bella 1 port
Passagerafgift pr. skib
Ved fuld belægning
1.400
1.200
1.000
DKK 800
Tusinde 600
400
200
0
95000
1.313
90000
85000
80000
145
61 105
71
400
MS Fram
AIDA Bella
276 passagerer
2.500 passagerer
Island
Svalbard
Grønland
Previous tax
75000
70000
65000
Fram
AIDA Bella
New tax
9
Airport duties and fees
 Especially high duties and fees for charter flights has been abolished.
 The airport duties and fees remain relatively high
 Political agreement that ”a reduction in costs for air passengers is a
priority”.
 A substantial part of the reduction will come as a consequence of new
infrastructure and enhanced competition.
 A part of the reduction will take the shape of reduced airport duties and
fees.
10
Regional Visitor Centres
The various regions must offer opportunities, excursions, events and activities to make
the tourists enjoy the full potential of Greenland.
 To contribute to that we have a vision of creating visitor centres in the various regions
 Disko Bay
 Central Greenland
 Western Greenland
 Eastern Greenland
 South Greenland
 These investments to be financed
 Primarily by philanthropic investors/funds
 Secondary by the Government of Greenland and the municipalities.
11
Ilulissat Isfjord Centre – the first project
The centre will high light both the local and the global
significance of the Ice Fjord:
 Knowledge about the UNESCOs world heritage
 The cultural history of Greenland
 Climate change
The centre will largely be financed by philanthropic funds:
 Capital expenditure:
108 mio. DKK
 The “Real Dania” fund
75 mio. DKK
 Other philanthropic funds
10 mio. DKK
 Government of Greenland
23 mio. DKK
12
Landing and berthing facilities for our cruise
guests often leave something to be desired
13
Investment in better landing and berthing
facilities
 Better landing and berthing facilities will make it more attractive for cruise
ships to call at a port or at a settlement and more passengers will go ashore.
 Capital expenditure is estimated to 50.8 million DKK.
 Capex in settlements
2.0 million DKK
 Capex in Ilulissat
5.0 million DKK
 Capex in Qaqortoq
3.8 million DKK
 Capex in Kangerlussuaq
40.1 million DKK
 9 small projects in settlements have a total capex of only 2.0 million DKK
 The various initiatives will be planned and financed within the framework of
the general harbour development plan.
14
New credit facilities open to investors
in Greenland
 The Danish Export Credit Fund (EKF), which is owned and
guarantied by the Kingdom of Denmark, can now finance part of
capital expenditure in projects in Greenland.
 The EKF can provide guaranties and credit facilities for projects
where Danish suppliers partake.
 EKF has outstanding guaranties amounting to 56 billion DKK
 The Nordic Investment Bank emphasises projects in the Arctic
region in its current investment strategy.
 The European Investment Bank has expressed interest to explore
the possibilities to participate in infrastructure projects in Greenland
 Later this month the Government of Greenland will meet
representatives of the bank to discuss these possibilities.
 The new European Fund for Strategic Investments will – in all
likelihood – be able to support investments in the oversea
territories associated with member states of The European Union –
and thus also projects in Greenland.
 The fund will mobilise funding for at least 315 billion euros.
Review of general business
incentives
 The Government of Greenland is currently reviewing the general business
incentives offered to innovators and (small) private businesses.
 Product development subsidy
 Basic advisory aid for new companies
 Export advise
 Efforts to enhance production of Greenlandic alimentary products
16
Labour market policy
 Employment in Greenland is in these years shifting
from hunting and fishing and work in the related
industries to employment in the tourist and service
sector. Mining will also in the long run become
important.
 The Government of Greenland is currently
implementing the strategy ”A well balanced labour
market/Et trygt arbejdsmarked”. The strategy contains
16 initiatives to curb unemployment.
17
Labour market strategy
 INITIATIVE 1: A national and free Job Portal
 INITIATIVE 2: Merger of the municipal employment offices and the adult
vocational training centres (Piareersarfiit).
 INITIATIVE 3: Enhancement of general work force qualifications
 INITIATIVE 4: A sharp reduction in youth unemployment
 INITIATIVE 5: Enhanced work force mobility
 INITIATIV 6: Tighter control of influx of foreign workers
 INITIATIVE 7: More people should benefit from rehabilitation programs
 INITIATIVE 8: Use of match grouping
18
Labour market strategy






INITIATIVE 9: Mobilisation of deferred public construction projects.
INITIATIVE 10: Mapping of fishing industry in the settlements
INITIATIVE 11: New and permanent jobs in growth industries
INITIATIVE 12: IBA as a tool to provide local jobs
INITIATIVE 13: Development of fisheries and living resources
INITIATIVE 14: Structure policy initiative, development of incentives and
education policy initiative
 INITIATIVE 15: Subsidies to enhance employment in settlements
 INITIATIVE 16: Construction of small unmanned airfields in small towns
19
Thank you
for your
attention
Pictures from Visit Greenland – Mads Pihl, Glenn Mattsing,
Kunuk Abelsen og Thomas Nørby Mogensen