What has changed in Andorra which makes it more attractive to investors now than it was before?
To attract investors it is first necessary to establish a climate of confidence. In order to create trust, the strengthening of the legal security is key. In this sense the law of economic openness allows investors to arrive with no limit on the percentage of capital, in a way that is completely transparent. Also the creation of a fiscal framework which is complete, comparable and competitive helps create some clear rules of the game and is favourable to the creation of businesses, especially when it also facilitates working in the sense of implementing double taxation agreements that allow them to be more competitive in the provision of services from Andorra. From this point of view, I would like to stress the importance of improving public finances that we have reached in this term of office: being on the way to a balanced budget is a generator of trust and credibility, which meanwhile allows us to guarantee the stability of the fiscal framework that we have designed and implemented. At the same time, we have become aware of the need to guide investors better, either by modifying legal provisions and regulations to accelerate and strengthen the process of business creation or creating information structures and promotion, as it is done through Actua Corner, which includes assistance to the investor but also to the business community as a whole, in collaboration with the CCIS (Chamber of Commerce). But beyond the legal frameworks which are a necessary condition, what has to change is the mentality to go searching for results, taking on risks as entrepreneurs do, having ambition. Having the ambition to strengthen the competitiveness of existing industries: tourism and commerce. Having the ambition to open up new sectors of activity: especially in the world of health and IT, as well as in education.
What is the main attraction that would interest a foreign investor to open up a business in Andorra?
It depends a lot on the profile of the investor or of the sector in which they aim to carry out their activity. In any case, there are cross-cutting elements that always apply like institutional and political stability, which is a very important factor. The high degree of human development with a distinct identity compatible with a diverse multilingual and multicultural society: this brings with it a strong ability to understand each other and it is an asset that we sometimes don’t value highly enough. Also the good quality of life, including concepts such as the level of public safety, the richness of the educational model, the coverage of the health and social welfare systems, environmental quality and the accessibility to the natural and cultural heritage. But also the proximity of large centres such as Barcelona and Toulouse with their infrastructures and services. In the broader economy, a high per capita GDP, healthy public finances and being on the path towards a balanced budget, a competitive fiscal framework, and a modern infrastructure, especially in terms of the Internet.
Where can a foreign investor or entrepreneur go to for advice on how to roll-out a business initiative in Andorra?
Obviously, they will have access to all consulting professionals that there are in Andorra. In addition, they’ll have the Actua initiative at their disposal whose mission, through Actua Corner, is to provide information on the creation of business initiatives.
What measures have been implemented by the Government of Andorra to streamline the setting up of businesses?
During the last three years several changes have been made to streamline the creation of businesses and to help towards stimulating economic activity. The period needed to open up a business has been reduced to zero days with the declaration of compliance procedure; the change of ownership of businesses has been simplified; a single business has been allowed to have multiple purposes; the requirement for authorisation by the administration for the incorporation of companies has been removed; social security contributions for the self-employed have been reduced… It is clear that the work on this front will never be finished, but it is also clear that a lot of work has been carried out by the Ministry of the Economy in this regard.
What, in your opinion, should be on Andorra’s agenda in the coming years to continue implementing economic openness?
The agenda will continue to be marked by progress towards greater international transparency, the construction of a network of double taxation agreements that continue to guarantee our commitment to openness and access to new markets, and the approach to the European internal market. And here we have a good example with the case of Liechtenstein and its membership in the European Economic Area.
In particular, what measures do you think the Government should implement in order to adapt the services of the Administration that are involved in the process of opening up businesses to the new direction? The majority allege that, behind the door opened by the Law of Foreign Investment, there is a wall of bureaucracy.
I remember, when speaking for the first time about openness in December 2011, that the head of Government said economic openness was mainly a matter of open-mindedness. And it is obvious that it has been difficult for all of us: the paradigm has changed and it has done so radically, and now we all need to adapt to these changes. There have been efforts to reduce paperwork and bureaucracy and there is still more to do and it will continue to be done, especially with the implementation of electronic administration. The changes, whether in public administration or anywhere else, are not made from one day to the next. But be careful not to over-exaggerate the bureaucracy; the change in mentality involved with economic openness not only has to be made by the Government and the public administration, but also by business associations, professional associations, trade unions, etc.
Is it essential to have an Andorran partner in order to create a business in Andorra?
No. Another issue is that experience has shown that having local partners is often preferred, but there is no obligation in this regard.
Does the new fiscal framework diminish competitiveness in Andorra?
On the contrary, the new fiscal framework allows it to compete with better prospects for the future. For two reasons: firstly, the new fiscal framework allows the Andorran economic model to be compared and, therefore, puts us on the playing field to compete: it’s what allows us to open up conditions, sign double taxation agreements and attract productive and positive foreign investment. And secondly, the fact that it follows a moderate type of fiscal model provides good conditions for competition and, in addition, provides security. For years we had been in a state of uncertainty: everyone knew that the Andorran fiscal framework would evolve but no one was clear where it was headed or with what intensity. Now we know, now we know to what it is committed. And this gives security to the potential investor. A security that is enhanced by a rigorous management of the deficit and debt. And this security is also essential in order to compete.
What sort of results is the economic openness process giving?
If what you want are the numbers, beyond feelings or subjective interpretations: in 2 years the volume of investments has reached 60 million euros. To put it in perspective: this is equivalent to 2.4% of GDP. Or, if you want the numbers that could bring us closer to the people: more than 300 net jobs have been created. Or if you want numbers that bring us closer to the street: 280 new shops and some 40 acquisitions of existing businesses. It is no coincidence that the balance between the number of open and closed businesses has returned to positive figures immediately after the coming into force of the Law of Economic Openness. These are some figures accumulated in the first two years from the adoption of the law in June 2012. But more importantly are some of the dynamics detected: the pace of investment has accelerated every six months compared to the previous six months, and the share of initiatives coming from France and other countries has grown each half-year compared to the previous one. It allows us to believe that we are reaching more potential investors and less those who were already knowledgeable about Andorra.
When you go abroad to talk about Andorra, how do the people you talk to react?
We must bear in mind that we are a great unknown. Further away, they don’t know us very well and, close by, sometimes by clichés that no longer are so true. I would say that we tend to generate surprise and interest when we go further away because of the ignorance they had about us. For example both the numbers of tourists and visitors impresses them. And when we go nearer to home the profound changes experienced in a short time impress people. This willingness to face the changes and implement them effectively in the legislature usually generates a certain recognition. I would say that abroad, at times, they are listening to us more and understanding us better.
Gilbert SABOYA
Ministre d’Afers Exteriors
