The anniversary year 2019 has come to a close, a year in which Liechtenstein not only celebrated its founding 300 years ago, but also its economic success story since then.
“In the heart of Europe, Liechtenstein stands for entrepreneurship, short decision-making channels, stability, legal certainty and openness to innovation”, explains Prime Minister Adrian Hasler the Alpine country’s business approach in the Country Report Liechtenstein of the American weekly magazine International Newsweek. The highest AAA rating from Standard & Poor’s in June 2019 once again confirmed the country’s financial stability – as one of only ten countries worldwide – and the government of Liechtenstein was praised in particular for its future-oriented and effective economic policy.
Partly as a result of this political strategy, which is intended in particular to promote entrepreneurial spirit in sustainable industries, Liechtenstein is “one of the most industrialized countries in the world,” notes Deputy Prime Minister Daniel Risch.
At present, about 43 percent of the gross value is generated by industry and manufacturing, the EU average being 25%. General services account for 28 percent, financial services for 23 percent and agriculture and households for 7 percent.
"In the heart of Europe, Liechtenstein stands for entrepreneurship, short decision-making channels, stability, legal certainty and openness to innovation. "
Adrian Hasler, Prime Minister
“Liechtenstein is a country of entrepreneurs and that spirit is at its core. We have approximately 4,700 active companies—one for every eight inhabitants. Last year, they were responsible for 3.78 billion Dollars in exports—that was up by 8.4 percent and it keeps on rising,” Daniel Risch continues.
The decisive advantage for exporters from Liechtenstein is not only the network of free trade and double taxation agreements, but also direct access to two important markets, adds Prime Minister Adrian Hasler, “We have a customs and currency union with Switzerland, and we have access to the European Union (EU) single market through membership of the European Economic Area. Moreover, finance companies in Liechtenstein have access to the European market through the EU passport”.
In addition to this generally advantageous geopolitical situation and economic policy, the Principality, with its short decision-making paths, is predestined for constant change and innovation. At the same time, all important European and other international regulations are observed, a central factor in Liechtenstein’s attractiveness. In the Country Report, Risch states that ” Our good standing in the world is crucial and this plays a huge role in the competitiveness of our businesses”.
In a personal interview in the July issue of International Newsweek, Fritz Kaiser, Chairman of Kaiser Partner, underscores this locational advantage: “Liechtenstein is a unique wealth and investment hub, where you can find highly professional and dedicated people.”
In addition, “early on, we recognized the innovative power of blockchain,” reports Prime Minister Hasler, “we believe there is potential in a significantly broader scope of application of this technology that goes far beyond today’s business models.” However, a high degree of legal certainty is required for the potential mentioned to unfold. Therefore, a Blockchain Act is expected to come into force in early 2020 to provide a framework for the “token economy” and clear guidelines for service providers.
Furthermore, the government of the Principality embraces the digital revolution, digital initiatives are a clear focus in all ministries as well as in research and development.
But is a breeding ground for innovation at the same time a unique potential for investors? Asked about this by International Newsweek, Fritz Kaiser reacts rather cautiously: Liechtenstein is “a very small country with mainly locally and privately owned successful businesses”. Despite a general recommendation for investments in Liechtenstein, Fritz Kaiser points out that “there are only limited opportunities for outside investors. In any case, Liechtenstein is good for investors who like truffle hunting.”
"Liechtenstein is a unique wealth and investment hub, where you can find highly professional and dedicated people."
Fritz Kaiser, Chairman Kaiser Partner
The truffle hunting seems to continue in the coming years: In the most recent review on 29 November 2019, the rating for Liechtenstein was again confirmed by Standard & Poor’s with the best rating of Triple-A with stable outlook. According to a statement issued by the Liechtenstein government, “the healthy financial situation of the public budgets” was the decisive factor in maintaining the top rating. Liechtenstein has the lowest government ratio of all European countries: State expenditures amount to about 24% of the gross domestic product (GDP), while the EU average is about 46%.
For the coming years, Standard & Poor’s forecast an increase in government spending in the areas of investment and social affairs, but without a negative impact on the economy and finances, which according to the rating agency will continue to develop well.
Prime Minister Adrian Hasler does not see the renewed award of the top rating as a matter of course, but needs, according to the statement, “ongoing development”. However, the Triple-A rating confirms “the correctness of the chosen path and the attractiveness of Liechtenstein as a business location”.
300 years after its founding as sovereign state, all the signs in Liechtenstein continue to point to success – thanks to innovation at all levels.