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Handels- og investeringsministerens tale til Dansk Eksportdag 2011 (ENGELSK)

Trade and Investment Minister Pia Olsen Dyhr's speech at the Danish Export Day 2011 in Hobro/ Danish Exports towards New Horizons

Danish exports towards new horizons. 

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Thank you for welcoming me. And thank you to the parties behind this year's export day: Væksthus North Jutland, Mariagerfjord Trade Council - and a special thanks to SpaceCom for hosting the event. I've been looking forward very much to coming here today. And I have been looking forward especially since last week when I read in Børsen that some companies still consider that the conservative parties in parliament are best at leading business policy and creating jobs.

It is my mission over the coming years to disprove this view. And today I want to present my ideas on how Danish exports can and must be boosted through innovative thinking, aggressive measures and hard work from all of us.

First, I would like to add the mitigating circumstances of Børsen's story in that it was based on a survey among the fastest growing companies. I think it's fair enough that the gazelles want to size up the new government considering that from their perspective everything is actually going fine as it is.

For the vast majority of businesses however, the naked truth is unfortunately that Denmark is in a massive growth crisis. A massive growth crisis which since 2008 has cost 180,000 private sector jobs. Many of the jobs lost were linked to domestic consumption and construction, but a large proportion of them were lost in export companies. Most of your companies have also undoubtedly been affected.

When the crisis hit, our exports fell by nearly 20 per cent throughout the entire business. This year in the Foreign Ministry we expect that exports will end at a growth of just under 11 percent compared to 2010. Compared to the financial crisis year 2009 this is a growth of 20 per cent, indicating that now we are roughly on a par with the situation before the financial crisis hit in autumn 2008. But the outlook is extremely fragile at the moment.

The OECD has just come with a new assessment pointing to a mild recession in Europe in 2012 and we have already seen Danish exports level off here in late summer. The Export Outlook, which we have just presented, anticipates a growth in export goods of only 3.8 per cent in 2012, and we actually expect growth to come right down to ½ per cent in Western Europe in 2012. These are very low growth rates - in fact, it is negative real growth when we factor in current prices - and the only reason why we nevertheless believe in positive growth as a whole is that we still expect 2-digit growth in exports to several BRIC countries and also fairly good growth for the U.S.

Denmark, as we all know, is a small part of a huge open economy and heavily dependent on exports. Total exports are equivalent to approximately half of Denmark's gross domestic product and produce around 700,000 jobs alone. Therefore everyone also agrees that exports are an absolutely crucial way out of the crisis for Denmark. So far there’s nothing new in that. The problem has been simply that in recent years we have been looking to export our way out of the crisis with an outdated world view and without adequate strategic sense.

An entire 71 per cent of Denmark's exports goes to neighbouring markets in Europe and 7 per cent to the US. Only 22 per cent goes to the rest of the world, including the emerging markets. Thus, Denmark exports a comparatively large amount to Europe and USA, which the crisis has hit particularly hard, and both of which are struggling with large national debt problems. At the same time, going on underneath is a shift in global economic power towards Asia and Latin America, which we have seen coming to light these weeks where the EU had to go cap in hand to China. What we've talked about for so long - that the world economic map will change - is already happening now. We don’t need to wait 10-20-30 years to see the world changing. We are witnessing it right now.

It's funny - and some would think it gallows humour to say - that if the G20 had been established in 1970, then Denmark would have been a member! Yes it's true. Denmark was the world's 20th largest economy in 1970. Now we have moved down to somewhat below 30th place. Similarly, we have been accustomed to thinking of a G7 dominated by European members: France, Germany, Italy and Britain. Now projections indicate that no European economies will be among the world's 7 largest in some 30 years.

The global financial and economic crisis has thus accelerated the shift in global economic power in favour of the so-called "emerging market economies". And to such a degree that PricewaterhouseCoopers - the world's largest auditing and consulting company - in their report "The World in 2050" earlier this year, predicts that the size of the current G7 economies measured by purchasing power parity, even before 2020 will be overtaken by the "E7" - i.e. China, India, Brazil, Russia, Indonesia, Mexico and Turkey.

It is indeed a new world we face out there. And in truth, we are the old West facing a serious challenge. Moreover, a challenge which in Denmark's case is twofold.

For not only does Denmark and our neighbouring region trail behind the dynamics of the emerging economies; but neither have we managed to keep pace with the countries we normally compare ourselves with when it comes to productivity, innovation and the ability to export to new growth markets.

I know it may be a tough realisation for many, but it can’t be denied, not even with border controls: just a snug place in the middle is no longer all that is at stake for Denmark. Without innovative thinking and aggressive action, we in Denmark can look forward to a decoupling from globalisation's locomotive and prolonged low growth. With innovative thinking and aggressive action, we have a chance to hook Denmark up to the global growth track and maintain high standards of living, employment and welfare - and to continuously invest in Danish innovations and competitiveness.

We must seize this opportunity. And that’s precisely why I and the government stand for innovation and aggressive action in the struggle for stronger growth, exports and employment.

It doesn’t mean we want to tear down everything that is good and works. We also recognise and fully agree that favourable business conditions are extremely important. That’s why the government also wants to take a wide range of initiatives to improve the business environment. These include the tripartite talks that will lead to an improvement in wage competitiveness, a productivity commission aimed at providing concrete recommendations to enhance productivity in Denmark, less bureaucracy to ease the burden on business, and an improvement in the efficiency of competition legislation. Furthermore, we will ensure more venture capital to enterprises, and have already in our state budget proposal strengthened the Get-started loan scheme by 150 million Danish Kroner to the end of 2012. This means that an additional 300 start-up companies will be able to get guarantees for loans of up to 1 million Danish Kroner.

But my point here is that the "Framework conditions" must no longer be a familiar refrain for Danish grievances. Even if we lowered the corporate tax rate to 0 per cent it would not be a solution. In fact, Denmark already has a corporate tax which is almost 2 percentage points below the average in the EU15. And there are many other factors that determine whether it is worth investing in Denmark. Not least, how we use government spending for example to ensure a well trained workforce, infrastructure and environment as well as social conditions that ensure a stable development of society. Furthermore, developments in Iceland and Ireland, which have relatively low corporate tax rates, I think illustrates that one should be wary of a total reliance on that instrument.

No, we simply have to think anew and act more aggressively to restore Denmark as a winning nation in globalisation. We have to promote a more strategic national approach to creating growth. I know for certain that many of you have called for this, and I have been really pleased with the many contacts from you and your organisations since I took over this position, with ideas and invitations to cooperate on this project. I would like to thank you for this.

So what is it that I particularly want to focus on as trade and investment minister. Here I want to suggest five points which deal with:
1. openness to the world
2. focusing on growth sectors through smart growth,
3. an aggressive trade policy via the EU
4. Danish focus on emerging markets, and
5. a special effort for small and medium-sized enterprises
Firstly, it is crucial for a small open economy such as the Danish, that we are also considered as open. It goes without saying that it is detrimental to the Danish economy if foreign trading partners and investors regard us as closed and insular. I will do my best to end this.

The government decided as a matter of priority to cancel the agreement on the installation of border controls to our neighbouring countries. And here we have already received many positive responses from our foreign partners. We will also take steps to ensure that Danish embassies are instructed to actively communicate that such border controls are now dead and buried. This sends a strong signal to our political and economic partners abroad.

In general, Denmark's reputation in the world is something I am very concerned to strengthen. After 10 years where the former government time after time showed the world around us that we didn’t need anyone else, it is now time once again to present the Denmark that I think many Danes are so proud of. An outgoing and open Denmark which is seen as a country that builds bridges and not a country that sets boundaries.

Consequently, Danish representations worldwide must spearhead our communication for everything that Denmark stands for. Danish representations abroad shall work to foster understanding and dialogue about our values and policies, and promote Danish companies' products and expertise so jobs and growth come to Denmark. We intend to strengthen this. And this effort must go hand in hand with a greater concern for foreign companies' investments in Denmark, which in addition to new jobs, also adds new knowledge, new technology and new products. The same applies to foreign workers and researchers that we need to be better at welcoming, among other things, by ensuring more flexible visa rules and greater choice of international schools.

Secondly, both at home and abroad we have to think more about growth sectors and what I would call smart growth. We can see that the BRIC countries - Brazil, Russia, India and China - and indeed the rest of the world are increasingly demanding basic things like clean water, energy, a clean environment and access to food and health. Today, we are already seeing considerable shortages and rising world prices. This trend will only increase, and Denmark is well-positioned in exactly those areas which are going to be major "scarce resources" of the future. It is precisely in these areas that Denmark has strong clusters of expertise. We need to exploit this in a much more purposeful and ambitious manner in the future.

Does this mean that I’m going to pursue a "pick the winners" strategy? Both no and yes. Denmark should aspire to having the best overall business climate in the world. And we as politicians should not try to determine which companies or which technological solutions will create growth and employment.

But - if Denmark is to be a winning nation in globalisation - and we must - it is of paramount importance that we increasingly focus on linking global challenges and global demand with Danish core competencies.

That's why we in the government intend to establish a number of special target areas, openly and in cooperation with the business community. These target areas have to satisfy three requirements: There should be the prospect of increasing demand on the world market, Denmark should have specific strengths and potential in this area, and they must deliver solutions that in any event we prioritise. My suggestions for five future target areas for Denmark are the following: 1) environment and water, 2) health and welfare, 3) climate and energy, 4) the experience and creative industries economy, and 5) sustainable foodstuffs.

Again, I would like to stress that the business community generally needs to have favourable conditions for growth, and even better conditions than in the past ten years. In the areas mentioned, we have to make an extra effort. This involves, among other things, the establishment of binding partnerships between the public sector, business and research institutions. We have to become far better at converting innovative research into business. And we need to interact more energetically at home and beyond in the marketplace, for example through consortia.

Such an integrated approach within the target areas means in practice that national decisions such as the establishment of hospitals must also have in mind the growth of Danish technology suppliers and export opportunities. Worldwide, we see a trend in health. Some say outright that health has become a religion. We Danish are really good at creating health systems that ensure management and efficiency - and on the whole at developing the Danish welfare model's strong business competencies, which we must become better at exploiting internationally.

It also means that we need to work especially hard with regard to the political regulations that all five target areas are covered by everywhere in the world. As companies, you need an overview of political factors and access to decision- makers if you are to take advantage of globalisation's opportunities. Here, the Foreign Ministry and our approximately 100 representations abroad have unique knowledge and access in individual countries and internationally, and I will bring all the Ministry's tools in play as a lever to promote Danish positions of strength as solutions to global challenges.

For example, we will use the Climate Summit COP 17 in South Africa starting in ten days as a window of opportunity to the world for Danish technology. And again when the UN discusses sustainability in Brazil during the Rio + 20 Summit next year. In our own backyard we need to be proactive given that OECD countries are planning to reduce public expenditures through energy optimisation.

And when we see that the world's 4.5 billion poorest people - the bottom of the pyramid as this group is called - may represent a new market segment, we have to use our knowledge from development assistance to meet the needs of low income groups while creating new market opportunities for Danish companies. The possibilities are enormous when we think across sectors and create synergies among all the tools available. With my ministerial colleagues, I want to take steps to intensify the efforts of a business-oriented public affairs within the framework of our foreign policy objectives.

Thirdly, we must right now take care to exploit the potential which our EU Presidency in only 6 weeks provides to spread knowledge of Denmark and Danish strengths both inside and outside Europe. This applies, for example, to organising meetings in a climate and energy-friendly way as well as the marketing of Danish foodstuffs and Danish design throughout the presidency.

A new pro-active direction altogether is what counts towards the EU. Whether we like it or not, we share the fate of Europe. As chairman for trade matters, I aim to ensure that the EU looks outwards and cooperates.

It is important - especially perhaps in a time of crisis - that we keep in mind what free trade can do for people worldwide. We must never lapse into protectionism. We know this in Europe better than any others. It was precisely the establishment of economic cooperation within Europe after the Second World War that in one go sealed the peace in Europe and laid the foundation for the prosperity we have today.

The EU must therefore not fall into the protectionist trap, where we gradually shut out the outside world through actions that might in the short term protect or create European jobs, but in the slightly longer term just push global trade into a vicious spiral where globalisation is rolled back. The EU's trade policy must be part of the solution to how we boost growth once again in Europe. And the solution requires openness and an eye for common global challenges such as climate change.

Trade policy enables us to make a very significant contribution to making the global economy greener. It will also help to bring Europe out of the crisis. And that is why we want to prioritise the work of several EU free trade agreements with a pronounced green profile. For me it is a must that the EU stands together to create more openings for European firms in global markets. This applies in the developed economies like Japan and the U.S., and not least in the newer emerging economies like China and India.

Fourthly, in parallel with our efforts in the EU we must on our own focus more on emerging economies, where as a country we are simply not doing well enough today.

It doesn’t mean that we should neglect our neighbouring markets, but it is imperative that we make an extra effort to cultivate emerging markets.

As I previously mentioned, Danish exports are being hit especially hard because we sell a smaller proportion of our goods in rapidly expanding markets in Asia, Latin America and Russia. Looking solely at Danish exports to the BRIC countries, Denmark's export deficit in 2010 was approximately 14 billion Danish kroner compared to Germany and Sweden.

I am fully aware that increased exports to emerging markets is not something that happens by itself. A significant barrier in the BRIC countries is that they are characterised by an interweaving of politics and trade which we are not accustomed to in the West. It is more difficult, more expensive and riskier to begin exporting to China, Russia or Brazil than it is to Sweden, Norway and Germany - but on the other hand, the potential for growth is also greater.

The Government is therefore committed to bolstering efforts to increase Danish exports to the BRIC countries as part of developing close partnerships with these key economic and political powers of the future.

In my own area of the state budget, I have had allocated an additional 50 million Danish Kroner over the next two years for initiatives to reinforce the promotion of exports and investment in the BRIC countries and other high-growth countries like South Africa, South Korea, Mexico, Indonesia, Vietnam and Turkey. And I expect this will also be complemented by intensified Danish efforts in emerging countries in areas such as export financing schemes, cooperation in knowledge and innovation, cooperation on green technologies, on health and welfare technology, and so on.

These strategies will be prepared in close dialogue with the business community, and they will largely be focused on help and guidance for small and medium-sized enterprises, which need special backing in order to enter the emerging markets.

I plan to present the BRIC strategies together with the Business and Growth Minister early next year, but they will only be a first step. It is my ambition that in addition to providing immediate concrete steps to reinforce the export and investment drive, we have to pave the way for a general Danish readjustment in mindset and prioritising of resources towards the world's emerging markets.

A great many visionary Danish companies, researchers, journalists, etc. have already made that adjustment - and in strong partnership we now have to connect Denmark to the world's new centres of growth.

Fifth and finally, I want to focus especially on small and medium-sized enterprises. 10 per cent of Danish companies account for all our exports. That percentage has to be increased because exports create growth. We need to strengthen the breadth of exports and the ability of more companies to expand via a foothold in export markets. This is especially true among small and medium-sized enterprises that have at their disposal a large untapped potential.

Once again it's about seeking to exploit the opportunities of globalisation. English has become a world language. Plane tickets are cheaper. Trade is easier. And people are looking more to other countries and cultures than before. All things being equal, there are fewer barriers to exports today, so companies need fewer resources to start or increase exports. We have to exploit this. Still, I know it's difficult - and particularly difficult as far as emerging markets are concerned.

That's why you should know that the Trade Council is there for you. In Copenhagen, our export people in regional incubators, and our 250 advisers in more than 60 markets. And we are never further away than our free hotline on 3392 0500.

One tool we know is effective for small and medium-sized enterprises is the joint promotional campaigns. The campaigns have a built-in SME priority and about 800 SMEs a year participate in our campaigns, which as a result have an average SME-share of over 60 percent. We need to continue this work and in cooperation with professional business organisations continuously develop the campaigns so they match the needs of business.

Additionally, I have five forward-looking considerations for the specific prioritisation of SMEs:

Firstly, I intend to further develop our successful Vitus Programme. Since summer 2010, when the Trade Council launched Vitus as a specific initiative for enterprises with high-growth potential, 20 companies have been through the programme. Later in the day, Scan Speak will tell us about their entry into the Chinese market as they participate in Vitus.

Secondly, I will ensure simpler and more targeted support and advice. There should be one access point to the Trade Council for export companies - for example, specialised one-stop-shops concerning tenders for public contracts and export certificates among other things, and advice about the various options for SME companies.

Thirdly, we will offer a more targeted and customised sales effort. Not analysis and report work, but a dedicated sales staff with local networks and expertise that almost becomes a part of your business and which pursues specific export orders for you. This collaboration is likely to proceed over an extended period - 12 months or more - and if we can hopefully find the money, at a reduced price. The experience gained with the VITUS programme shows that there will be demand for such a product, especially for the more tricky emerging markets.

Fourth, with regard to our BRIC strategies, we will try to focus more on business consortia that target specific projects and business opportunities in the major emerging markets. We must be able to deliver complete solutions provided by Danish expertise where large companies work with small enterprises. This endeavour must be linked to networks and clusters in Denmark within the targeted sectors - green technology, water, welfare and health technology, the experience and creative industries economy and sustainable foodstuffs. In this way, I hope that more smaller businesses can be pulled along by the larger ones.

Fifthly, I will take steps to target a service for small and medium-sized high-tech companies. The service will be called "Innovation Growth" and will provide small and medium-sized technology companies access to very specific advice on everything from aligning their business plan to commercial innovation to searching for capital, or research and development networks in key markets. Thus, we can help to develop companies’ business in the global market and we can draw on the Danish Innovation Centers in Silicon Valley, Munich, Shanghai and in a week’s time also in Hong Kong.

* * *
Speaking of smaller high-tech companies, I would like to end with a special thanks to SpaceCom for your fantastic hospitality. An event such as the Danish Export Day is a handful, and it has previously been held by some of Denmark's largest companies. We have been very pleased to collaborate with you. And you’ve not only baked cakes for the guests - you have built a new production area! We need more of that in the future.

So a sincere thanks - and thank you for listening.
 

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