| Overview
Aside from its prosperous fishing
industry, Iceland’s main selling points are a highly educated workforce
and cheap, high capacity electricity, which has mad a big pitch for both
IT and energy-intensive industries. So far, despite a six-year intensified
campaign to woo new industries, there have been relatively few foreign
direct investment projects in Iceland. This is the legacy of the times
when the country was locked in semi-isolation and foreign ownership severely
curtailed FDI.
Would you set up sales offices in Iceland? Would
you expand it?
Iceland certainly has the technology
infrastructure in place to successfully support almost any kind of business.
Local markets are easy to win because of deep national media penetration,
close-knit social patterns and the responsiveness of Icelandic consumers.
With over 50% of the population in and around Reykjavik, it is easy to
market to this group, particularly since the national media is based here.However,
Iceland’s resources tend to be centered on the this southwest region of
the country, wear Reykjavik is located. It would be difficult for a new
company to access suppliers, customers, and financial resources on the
outskirts of the country. Not to mention these areas are not as well connected.
Expansion is advisable if it is in and around the southwest region. At
this time, it would not be advisable to expand to the sparsely populated
northwestern regions.
Would you set up a manufacturing center?
Iceland’s small population makes
it difficult to successfully support manufacturing businesses. Because
its size made it unprofitable to run large-scale manufacturing Iceland
has historically had a high level of state ownership. In addition, Iceland’s
work force is more educated and technically skilled than many other countries,
which means it is advantageous for the country to seek competencies in
knowledge work as opposed to manually intensive industries. It is most
advisable to set up a manufacturing center only if it supports the countries
vast fishing industry.
How easy is it to get support for network infrastructure?
Iceland has a highly skilled labor
force, but the unemployment rate is a mere 2%, which means IS professionals
can be costly and difficult to find. Companies do have the advantage of
building their business on sophisticated telecommunication facilities.
Fiber-optic cable connections offer reliable direct international links
for telephone, fax and data networks. There is also an extensive cellular
mobile phone system. Iceland linked up with CANTAT in 1995, the first fibre-optic
cable between North America and Europe to use synchronous digital hierarchy
technology with the capacity to carry B-ISDN and asynchronous transfer
mode services. In 1995 Iceland also became the first country in the world
to have a completely digital public telephone system. Telephone charges
are among the lowest in the OECD, and the number of Internet hosts in the
country are the highest per capita in the world, which provides a strong
IT foundation for businesses.
The following represents a list of
the primary pros and cons to consider when investing in Iceland:
Pros
-
Cheap and abundant energy
-
Well-educated and skilled workforce
-
Excellent telecommunications
-
Conveniently located for trans-Atlantic
trade
Cons
-
Lack of investment incentives
-
Most raw materials have to be imported
-
Labor costs are set to rise
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