Overview of Business opportunities in other areas of Denmark —Greenland and The Faroe Islands.
Other Areas in the Kingdom of Denmark
Denmark continues to exercise control over the Realm’s foreign affairs, security, and defense policy, in consultation with Greenland and the Faroe Islands.
- Greenland is a self-governing region within the Kingdom of Denmark, and geographically a part of the North American continent. Along with Denmark, Greenland was an EU member from 1973; however, in 1985, Greenland left the EU. The Greenlandic government is actively working to attract investments to Greenland to diversify its economy and integrate itself into the global economy.
- Two-thirds of Greenland lies within the Arctic Circle, and its northern tip is less than 500 miles from the North Pole. Its land area is over 50 times that of Denmark, but has the lowest population density in the world, with approximately 56,000 inhabitants (or 1/100th the population of mainland Denmark). Greenland can be reached by air from Denmark or Iceland. There are currently no direct commercial flights to or from the United States. Transportation infrastructure in Greenland is focused on air and sea, due to the climate and geography. Greenland has no railroads or roads to connect towns and settlements, and passengers and goods are transported between regions by sea or air only.
- Greenland’s status within the Kingdom of Denmark is outlined in the Self Rule Act (SRA) of 2009, which details the Greenlandic government’s right to assume a number of competencies from the Danish government, including the administration of justice, business and labor, aviation, immigration and border control, as well as financial regulation and supervision. Greenland has acquired control over taxation, fisheries, internal labor negotiations, natural resources, and oversight of offshore labor, environment, and safety regulations. Denmark also retains authority over border control issues, including immigration into Greenland. Denmark provides Greenland with an annual block grant of DKK 3.9 billion — roughly $614 million — that accounts for roughly 20 percent of Greenland’s GDP and more than half of the public budget.
- The Greenlandic government seeks to increase revenues by promoting economic diversification and greater development of the fisheries value chain, natural resources, tourism, and clean energy. Key initiatives include improving access to financing for new businesses and enhancing Greenland’s corporate tax competitiveness.
- Capital city Nuuk and Ilulissat in the north are Greenland’s primary tourist destinations and have seen extensive construction activity in recent years. The ongoing expansion of their respective airports, which currently accommodate only smaller aircraft, is expected to lead to further growth and facilitate expansion of tourism. Upon completion, expected in 2024, the expanded runways will support large passenger aircraft, and the airports will be able to manage 800 and 600 passengers per hour respectively. South Greenland is also a popular destination for tourists and cruise ships, and plans are in place for an airport in the region’s capital of Qaqortoq.
- In the mineral extractives sector, two small mines (ruby and anorthosite) are in production in Southern Greenland. One company holds an exploitation license to launch a gold mine in the area. Two other companies applied for permission to extract rare earth elements in the same region. The resources in both projects are globally significant, and each would rank in the top five worldwide if they were developed.
The Faroe Islands
- The Faroe Islands are a self-governing region under the external sovereignty of the Kingdom of Denmark. The autonomy of the Faroe Islands was established by the Home Rule Act of 1948. The Faroe Islands have an open economy and multiple trade agreements with other countries. For more than two centuries the Faroese economy has relied on fisheries and related industries. Fisheries (including agriculture, hunting, and forestry) account for 22 percent of domestic income in the Faroe Islands. About 92 percent of goods exports are fisheries products. Salmon alone accounts for 39 percent of exports. As a non-EU member, the Faroe Islands continue to have open access to the Russian market despite Russia’s retaliatory trade embargo on certain food imports from the EU. This has allowed the Faroese to sell increased quantities of salmon to the Russian market at prices higher than in the EU. Denmark continues to have control over the Realm’s foreign affairs, security, and defense policy, in consultation with Greenland and the Faroe Islands.
- The Faroe Islands exported DKK 8.4 billion (USD 1.29 billion) worth of goods in 2020, 92 percent of which were fish products, with the remainder being mainly marine vessels, and aircraft resales. In recent years, construction, transportation, banking, and other financial services sectors have grown. In 2020, the majority of goods exports went to Russia (23 percent), followed by Denmark (11 percent), the UK (10 percent), and the United States (9 percent). Goods imports totaled DKK 8.1 billion (USD 1.24 billion) in 2020. Most imports came from Europe; 1.4 percent originated in the United States. Denmark provided 26 percent of imports, followed by Germany (10 percent), Norway (9 percent), the Netherlands (8 percent), and China (6 percent). Imports consist mainly of inputs to industry, including machinery and raw materials (14 percent), fuels (11 percent), and inputs for construction (11 percent), and items for household consumption (23 percent).
- The Faroe Islands’ small, open, but non-diversified economy makes it highly vulnerable to changes in international markets. The Faroe Islands have full autonomy to set tax rates and fees, and to set levels of spending on the services they provide. Denmark provides an annual block grant of DKK 642 million (approximately USD 96 million).
For more information about Greenland and the Faroe Islands, please go to the Investment Climate Statement website.