Norway’s Minister of Trade and Industry Trond Giske believes that in addition to capitalising on the major export potential in the nation’s oil industry, Norway needs to ensure that innovation and technology development also takes place in other industries, not just the oil and gas sector, to maintain its economic buoyancy. He also highlights an array of Norway’s attractions for international investors.
How is Norway’s economy currently performing?
The macroeconomic figures at the moment are quite good. We are definitely one of the European countries with the strongest growth figures. Last year we had to upgrade our growth rate forecast in 2012 from 2.7% to 3.7%. We have the strongest increase in private employment experienced in Norway since 2005 and we have had record low unemployment rates. And all of this in the midst of the European crisis. Our main trading partners are either experiencing slow growth, or no growth at all.
There are many reasons for this. One is that global demand for crucial natural resources remains high, so oil and gas production and investment is still very strong. At the same time, Norwegian oil and gas clusters are gaining market share worldwide. We are now actually exporting more goods and services in the oil and gas sector than we are in other sectors. So this is going to be an internationally competitive business cluster, independent of what we invest in the North Sea or the Norwegian continental shelf.
Employment has increased in a wide range of sectors. A lot of this has to do with strong consumption levels in Norway and the fact that consumer confidence is high. Consumption is continuing to increase. Then you have this myriad of small and medium-sized companies (SMEs) in a number of sectors. You are talking about innovations and new technologies and new companies in other sectors, besides the oil, gas and energy sectors. We see it in microelectronics and the marine and fish farming sectors, as well as equipment, research, etc., connected to fish farming.
An MoU (memorandum of understanding) has been signed to enhance collaboration between industry-led biotech projects in Norway and the UK in renewable chemicals, bio-energy, clean manufacturing processes and environmental technology, etc.
Could you please tell us about the whole concept of developing clusters in Norway? What tools do you have at the Ministry to create a framework for growth and international reach?
First of all, we have to develop them at home. We have a three-year programme to support environmentally friendly technology and we have a huge programme that is connected to our climate goals on energy efficiency. We have established a huge fund which will be strengthened in the years to come to support businesses, energy producers and factories that are using a lot of energy to become more efficient. These technologies will have export potential when they are developed.
Not many people know that Norway has strong solar energy clusters. We have a strong metal industry and this has developed into a strong competency in solar energy. One of the factories producing these solar products was bought by a huge Chinese company. The production is still here, but the Chinese thought the technology and the products were so interesting.
There is strong public management of companies here in Norway, but there is also a private side to it. What is the best way to communicate the structure of public companies to a world audience?
The state has quite a substantial share in listed companies. Many of the largest companies in Norway are at least partly state-owned. Altogether I think our share of the Norwegian stock exchange is around 30%. But all the commercially oriented companies are run on a commercial basis. They are co-owned by state and private owners, and they have one aim: to maximise their value potential. Of course, we have private owners’ expectations of industrial development, but it is run like a business. There is no rebate in the stock value because of the state ownership.
Fully private companies and state companies that have the same turnover and engage in the same activities will be valued the same on the stock exchange. We have decades of experience in terms of running these companies and we let the board and management do what they are supposed to do – to run the business professionally. The biggest foreign operator in Brazil is Norwegian, and Norwegian oil activities are in Angola, Southeast Asia and other countries. They are looking into shale gas in the US.
They are truly international companies.
Given Norway’s strong growth, I think the returns on investment reflect this growth situation. Growth is scarce in Europe, but I think Norway is a very good place for investment. We also have a strong exchange rate.
Some people look at the map of the EU and do not see Norway in it; for many of them this may stereotype Norway as a country that is not as business-friendly as other countries. But at the end of the day, economically speaking Norway has the same advantages of the free market and it is more integrated than many others…
Yes. I think that many readers will realise that we are very well positioned because we are fully integrated in the market. There is free movement of goods and services, and you can create a value chain where Norwegian goods or services are an integrated part of the end product.
You can travel freely between Norway and other European countries, and we are even a part of Schengen, whereas Britain is not. So in that way, we are even more integrated.
On the other hand, we are not part of the euro, which many people will agree is an advantage right now. There are other areas where we are not a member, like fisheries, agriculture and foreign policy.
My personal view is that we have found a very good communication platform with the EU where we participate fully in development. We even contribute to the least developed European countries, but at the same time we still maintain our independence in some crucial areas.
Companies in Europe can create business-to-business (B2B) partnerships with any company in Norway, and all products, standards and requirements which the EU would set are already met if you operate in Norway. There is no extra bureaucracy, tariffs or border control. For a British company looking for a partner in Norway, it is just like finding a partner in Germany, France or Spain.
We are basically seeing a transition, with Norway having a more environmentally friendly framework by providing clean energy to the world in the future. You have talked about capacity building and investment in education in other interviews. What is your view of empowering people in untapped sectors, such as renewable energies, to create this transition?
The economy is switching from industry to services. Over the past 10 years or so, employment in industry has been stable. But we had a lack of engineers, so over the past seven years we have increased our capacity of engineers by 50% to meet the demand.
That is a sign of industries being quite successful. One area is energy. We are a big partner in British wind power capacity projects. We are also building a new cable between Norway and Britain for hydroelectricity (green power). This is very important if combined with wind power, because you need stable balancing power with wind power to provide electricity when there is no wind. I think this is ideal for the UK when it comes to switching to more green energy.
What message would you like to send to the readers about bilateral relations and investment?
We are an island of growth in a sea of recession and unemployment. We have a very investor-friendly climate. We have high VAT and personal income taxes, but we have quite reasonable and low company tax for foreign investors. We have a very stable political climate with long-term predictability for investors. I also think we have a huge amount of talent. SMEs are developing truly innovative solutions and technologies to serve a global market. Since we are already at full capacity and since there is only so much domestic investment capital in Norway, I think these growth companies with new technologies would very much appreciate international investors to help them grow further and bring them to bigger markets.
Tourism will also be a big market. Britain is very attractive for Norwegian tourists, and Norwegians have their favourite British football team. London is of course one of the major tourist destinations. I think a lot of people in Britain would find Norway a very interesting place to travel to not only because of the northern lights etc., but also because the culture is similar. People speak English and are quite friendly and hospitable. The combination of differences and similarities makes Norway an ideal tourist destination.