Overview of Business opportunities in other areas of Denmark —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. In 1985, however, Greenland left the union and has not been a member since. The Greenlandic government is actively working to attract investments to Greenland to diversify the economy and integrate it into the world 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 responsibilities 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 already acquired control over taxation, fisheries, internal labor negotiations, natural resources, and oversight of offshore labor, environment, and safety regulations. Denmark continues to have control over the Realm’s foreign affairs, security, and defense policy, in consultation with Greenland and the Faroe Islands. 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 USD 585 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 greater development of fisheries, extractive resources, and tourism. Key initiatives include improving access to financing for new businesses and enhancing Greenland’s corporate tax competitiveness.
- Capital city Nuuk and Ilulissat, Greenland’s primary tourist destination, have seen extensive construction activity in recent years and the planned expansion of their respective airports will lead to further growth and facilitate expansion of tourism
- In the mineral extractives sector, two smaller mines (ruby and anorthosite) are in production. One company was granted an exploitation license to restart a gold mine in southern Greenland. Two other companies applied for permission to extract rare earth elements in southern Greenland. 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 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 factor income in the Faroe Islands. About 94 percent of goods exports are fisheries. Salmon alone accounts for 42 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 higher than normal prices, even while prices have dropped significantly in the European market.
- The Islands exported DKK 9,539.6 million (USD 1.43 million) worth of goods in 2019, 93.7 percent of which were fish products, with the remainder being marine vessels, and aircraft resales. In recent years, construction, transportation, banking, and other financial services sectors have grown, and offshore oil and gas exploration is developing, though commercially viable finds have not been made. In 2019, the majority of goods exports went to Russia (23.4 percent), followed by Denmark (11.1 percent), the United State (10.1 percent) and the UK (9,1 percent). Goods imports totaled DKK 8,147.6 million (USD 1.222 million) in 2019. Most imports came from Europe in 2019; 1.4 percent originated in the United States. Denmark provided 36.5 percent of imports, Germany 10.4 percent, Norway 7.5 percent, China 6.1 percent, and the Netherlands 5.2 percent. Imports consist of input to industry (Machinery and transport equipment, 30.1 percent, Mineral fuels, lubricants and related materials 15.4 percent), items for household consumption (Food and live animals 16.3 percent, Manufactured goods 25.1%).
- 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 upholds an annual block grant of DKK 642 million – roughly USD 96 million.