Ministry for Industry Labour and Trade Greenland business

Ministry for Industry, Labour and Trade Greenland business opportunities Deputy Minister Jørn Skov Nielsen Nordmin; 7 th 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 (c. ASM) calculations for the Greenland Air Traffic system 2015 CASM index Scenario 0, Present situation Scenario 1, GOH and JAV, 1199 m. Scenario 2 a, KEF hub, GOH og JAV >2200 m. Scenario 2 b, direkte CPH, GOH, JAV >2200 m. Source: Air. Insight and Rambøll A/S GOHCPH JAV-CPH UAKCPH 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 Holiday tourists 2015 Holiday tourists 2040 Business tourirsts 2015 Business tourists 2040 1 9 % ca. 44, 000 ca. 13, 000 2 25 % 26, 006 ca. 61, 000 10, 980 ca. 13, 500 2 (supergrowth) - ca. 71, 000 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 1 st 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 91000 86000 81000 76000 71000 66000 Fram Previous tax 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 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 Ø 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. Ø The EKF can provide guaranties and credit facilities for projects where Danish suppliers partake. Ø EKF has outstanding guaranties amounting to 56 billion DKK Ø The Nordic Investment Bank emphasises projects in the Arctic region in its current investment strategy. Ø The European Investment Bank has expressed interest to explore the possibilities to participate in infrastructure projects in Greenland Ø Later this month the Government of Greenland will meet representatives of the bank to discuss these possibilities. Ø 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. Ø 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