Address by the Prime Minister at Edmonton Economic Development Corporation

Ladies and Gentlemen,

It is a pleasure for me to address the Edmonton Economic Development Corporation here in these beautiful surroundings – the Art Gallery of Alberta, which I had the opportunity to visit earlier this morning.

My government took office last spring and amongst its key foreign policy priorities is to strengthen political and economic relations to our neighbours in the West, not least Canada.

There are limits to what can travel through the internet and I am confident that the direct flight connection between Reykjavík and Edmonton will assist us in strengthening existing relations and forging new ones, not least in the economic arena. To this end, my delegation also features members of the Icelandic business community, which is eager to meet with you and explore opportunities here and, in a few days, take some of you back to Iceland and present the possibilities in my home country. 

And there are opportunities and possibilities to be found in Iceland, which are now, through Icelandair, more accessible to the city of Edmonton and the Province of Alberta. Let me focus on four things on the more macro level and, then, attempt to localise the opportunities as I see them emerging. 

Firstly, although the political debate sometimes may suggest otherwise, Iceland now enjoys political stability after difficult and stormy years. The last elections resulted in a good parliamentary majority of two parties that share a clear vision on how to bolster trade and investments in Iceland. This centre-right coalition, these two parties, which have long co-operated in government in the past, have a good record in increasing economic growth, lowering public debts and keeping state finances in good order. 

My government understands how this audience here today – economic leaders and businesses - relies on stability and predictability. This applies to the macroeconomic environment, legislation and how we manage our main industries. 

Secondly and related to the first point, Iceland is slowly but surely resurfacing from the financial crisis that hit my country severely in 2008. It is a marathon, not a sprint, but the economic indicators are turning in a very positive direction.

Economic growth is on the rise and is expected to be 2,6% this year and reach 3,7% next year. Inflation is getting lower and is expected to be close to 2,5% this year. Granted, not as impressive as the Edmonton figures I have seen but we are not far behind. The state finances are in good order and the budget for 2014 is without a deficit – the first surplus budget in years, something this government takes pride in. Unemployment is decreasing and is predicted to drop below 4% this year. Purchasing power is rising as well as private consumption.

Our currency, the Icelandic crown, which devalued immensely during and in the aftermath of the financial crisis, is regaining strength. Although not without its faults, the Icelandic crown proved valuable in navigating through the high financial seas and has been instrumental in Iceland´s economic recovery. This government has faith in the crown and is willing to underpin its foundations through sound economic policies. 

Third, the basic infrastructure for business and investment in Iceland is strong. We have a well-educated and hard-working labour force, social cohesion and a safe environment. The business legislation and regulations are in harmony with those of Europe and are being further looked into by my government with simplification in mind. We are also in the process of simplifying the tax system and aim to make changes to the corporate tax environment to encourage further investments. We have ample sustainable energy resources and reliable power supplies, and low cost land for industrial sites.

And fourth, you only have to look at the map to see the strategic location Iceland can offer between Europe and North America – something that Icelandair has taken full advantage of. Iceland is a member of the European Economic Area, which provides access to a market of more than 500 million people. Iceland is also a member of the European Free Trade Association, which negotiated a free trade agreement with Canada in 2009. Let me also mention that Iceland has recently concluded a free trade agreement with China and was the first European nation to do so. Therein lie many opportunities still to be discovered but one could, for example, imagine a partnership between Icelandic and Canadian companies in exploiting some of these.

In addition, developments in the Arctic, with the receding of the ice cap, are changing geography and bringing Asia closer, also in the commercial sense – an evolvement that you, as Canadians, are equally aware of as we are in Iceland. 

Ladies and gentlemen,
My government was unfortunately not in the position of starting its journey with a clean slate. In fact, we inherited a long record of unresolved and difficult issues – many of them related to the financial crisis and its immediate aftermath. 

Capital controls, which were established with an emergency act in 2008, are one of those difficult issues and sometimes attract attention. Although necessary at the time to ring-fence the economy and support the currency, my government fully realises that capital controls have detrimental effects. They can make investments difficult and they reduce our competitiveness. It is, however, important to note that capital controls do not apply to new investments. Therefore, within the current environment, new investments can readily be made.

Nevertheless, the government is determined to lift capital controls and do so in a gradual manner without jeopardising economic stability. Disciplined fiscal policy will assist us along the way and we have encouraged stakeholders to settle the debts of the failed financial undertakings in a way that allows the lifting of the controls. This will not be done overnight but, again, we will make sure that it will be done in a responsible manner and, again, capital controls do not affect new investments.

Ladies and gentlemen,
I have outlined the broad policy framework and I hope you can take from my comments that investing and doing business in Iceland is becoming a feasible option. But how can we capitalise on this new connection between Reykjavík and Edmonton and more broadly between Iceland and Canada? 

Typically, entrepreneurs and businessmen are better at spotting the opportunities than politicians are. This is why businessmen conduct businesses and politicians engage in politics. Still, let me offer you some thoughts. 

First, although increasing, trade between our countries is relatively modest. In terms of export markets for Iceland, Canada features around twentieth place. We should do better. Direct and regular flight connections to Edmonton and later this spring Vancouver (and before we have Toronto and Halifax) provide opportunities on both sides of the Atlantic to boost trade. Icelandic seafood to Edmonton and Alberta immediately comes to mind to name just one example.

As I mentioned earlier, there is an EFTA free trade agreement in place and my government is interested in updating it – for it also to include services and investments. We welcome foreign investment in Iceland and have good and recent examples and experience from Canada in this respect, including Methanex and Alterra, which have, respectively, invested in biofuel and geothermal energy in Iceland.

My second point regards tourism. Canadians travelling to Iceland are increasing in numbers – last year around 24.000 visited Iceland. Here we can also do better and, of course, vice versa with more Icelanders visiting Canada. Icelandair offers the opportunities and will cover the provinces of Nova Scotia, Ontario, now Alberta and later British Columbia in their direct itinerary. We must together seize these opportunities.

The opportunities (and challenges) pertaining to the Arctic also offer spheres of increased co-operation. Here, in Alberta, you possess a lot of experience in oil exploration and extraction – and services related to those. In Iceland we have for the last two years issued three licences for prospecting, exploration and production of hydrocarbons in the so-called Dragon area northeast of Iceland. Icelandic parties are also preparing for servicing this sector, as well as the growing mining industry in Greenland and the alternative shipping routes circumventing the North. Although your experience is mostly inland and our prospects are mostly off shore I am confident that we can learn and benefit from your and each other´s experience in these fields. And if you are interested in renewable energy sources my country has valuable experience in both hydro power and geothermal energy to offer. 

My fourth and final point regards education. Icelandic youngsters often pursue higher education abroad, not least in Scandinavia, the United Kingdom and the United States. In my mind, Canada should be an obvious choice as well. The flight connections are there, tuition fees are more affordable and you have some excellent universities, including here in Edmonton – the University of Alberta.

Ladies and Gentlemen,
Canadians have a special place in the hearts and minds of the Icelandic people and we regard you as our next of kin. We share a common history and heritage and some 200.000 Canadians of Icelandic origin currently live in Canada, many here in Edmonton and Alberta. Interacting with you, doing business with you should almost feel natural.

Edmonton is a fast growing economy and home to over 47.000 businesses. Iceland is becoming an attractive option for investing and doing business in. This is a good match – the opportunities are for us to seize. 

Thank you again for inviting me to address the Edmonton Economic Development Corporation, and may the relationship between Iceland and Canada continue to grow and prosper.