Not everyone can immediately locate Andorra on the map, and that is precisely what the country’s Minister of Economy and Enterprise, Jordi Gallardo, intends to change.
Located between France and Spain in the Pyrenees, Andorra has approximately 77,500 inhabitants and an area of 468 km2. In 2021, it recorded a GDP of $3.1 billion, total imports of $1.57 billion and an unemployment rate of 2.5%.
The country’s economy revolves around services, with retail accounting for 17% of GDP, followed by real estate at 15%, the public sector at 14%, and financial services at 12%.
In 2012, a foreign direct investment (FDI) law came into effect, opening the country’s economy to foreign investors. Since then, international investors, whether resident or not, can own up to 100% of any company based in Andorra. The law also eased restrictions on foreign professionals wishing to work in Andorra.
This change in law has proven to be extremely lucrative for Andorra. FDI increased by 7,600% between 2012 and 2021, and by 540% between 2017 and 2021, representing 18.7% of GDP at the end of last year.
Today, the government is on a mission to diversify its economy and stimulate FDI – and it has decided to do so by improving innovation and technology in all sectors.
Gallardo says the Digital Economy, Entrepreneurship and Innovation Act is ready for approval in mid-2022 and will promote entrepreneurship visas and seek to attract digital nomads. It will also create special economic zones (SEZs).
What are the main sectors the Andorran government is focusing on to attract FDI?
The government has embarked on an economic diversification project and has consulted the private sector to help identify priority sectors.
We’ve compiled a list of 12, including blockchain, e-commerce, fintech, esports, health and wellness, biotech, sports, education, media production, green tech, and alternative agriculture.
The public sector will focus on five of them: fintech, esports, health and wellness, biotechnology and sport.
The Digital Economy, Entrepreneurship and Innovation Law is one of the main government initiatives aimed at promoting investment in innovation and technology and diversifying the Andorran economy.
Covid-19 has highlighted new needs and opened up opportunities. Under the new law, the government is seeking to promote entrepreneurship visas, create SEZs, and create cohabitation and coworking frameworks to attract digital nomads and start-ups, which can boost business growth. ‘innovation.
Andorra has good connectivity, low energy prices and a very high quality of lifemaking it the ideal place to create an innovative technological ecosystem.
What are the main attractions of Andorra for foreign investors?
Andorra is a small country, and that should be seen as an advantage rather than a disadvantage. Over the past few years, and especially during Covid, we have proven that Andorra can function as a living laboratory for investors to test strategies before taking on bigger challenges.
During the pandemic, the multinational pharmaceutical and chemical company Grifols was able to use our health data to analyze the behavior of the virus on a small population. She then decided to invest 25 M€ in an immunology research center in Andorra.
This has sparked the interest of similar players, and this is exactly what we are trying to achieve with our diversification strategy and our innovation law.
Tourism was once one of Andorra’s main sectors – what happened during the pandemic and what does it look like now?
Andorra attracts around eight million visitors a year. Before the pandemic, tourism accounted for around 60% of our GDP. The impact of the pandemic has been significant. However, as soon as we were able to reopen, people came back in droves.
We are noticing a change in behavior around tourism following the pandemic. People are choosing destinations that are closer to home and focused on nature and wellness, and Andorra is perfect for that.
Why should investors come to Andorra?
Foreign investors should consider Andorra if they want to drive innovation and liaise with a business-friendly government. Andorra is a virgin market and offers a secure environment. It is not only a good place to invest but also to live.
What are Andorra’s main challenges in terms of attracting FDI?
We must put Andorra on the investment map. We also need to change some of the bad messages of the past. The old perception of Andorra as Fiscal paradise couldn’t be more outdated. We are now tax compliant with the EU, a member of the International Monetary Fund, and have signed the OECD Double Taxation Agreements and adhere to its Common Reporting Standards.
We have worked hard to establish international partnerships and have so far worked with the Massachusetts Institute of Technology, Tech Barcelona and the Israel Innovation Institute, among others.