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2012 Investment Climate Statement - Sweden


2012 Investment Climate Statement
Bureau of Economic and Business Affairs
June 2012
Report
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Openness to, and Restrictions Upon, Foreign Investment

General Conditions

Sweden is generally considered an attractive country in which to invest. Sweden offers an extremely competitive, largely corruption-free economy with access to new products and technologies, skills and innovations. As the largest market in the Baltic Sea region, it is an attractive location and gateway to Northern Europe/the Baltic Sea region. Low levels of corporate tax, the absence of withholding tax on dividends and a favorable holding company regime combine to make Sweden particularly attractive for doing business.

Combined with a well-educated labor force, outstanding telecommunications network, and a stable political environment, Sweden has become more competitive as a choice for American and foreign companies establishing a presence in the Nordic region. In the World Economic Forum’s 2011-2012 report, Sweden ranked third out of 140 countries in overall competiveness and productivity. The measure includes multiple indicators, summarized in the following excerpt:

“Sweden: Like Switzerland, the country has been placing significant emphasis on creating the conditions for innovation-led growth. The quality of its public institutions is first-rate, with a very high degree of efficiency, trust, and transparency. Private institutions also receive excellent marks (3rd), with firms that demonstrate the highest ethical behavior (3rd), supported by strong auditing and reporting standards (2nd) and well-functioning corporate boards (1st). Goods and financial markets are also very efficient, although the labor market could be more flexible (25th). Combined with a strong focus on education over the years (2nd for higher education and training) and a high level of technological adoption (2nd), Sweden has developed a very sophisticated business culture (2nd) and is one of the world’s leading innovators (2nd). Last but not least, the country boasts a stable macroeconomic environment (13th), with an almost balanced budget and manageable public debt levels. These characteristics come together to make Sweden one of the most productive and competitive economies in the world.” (World Economic Forum: The Global Competitiveness Report 2011-2012: Country Highlights)

Also in 2011, Transparency International ranked Sweden as one of the most corruption-free countries in the world, fourth out of 183. Sweden’s economy has strong potential to benefit from intensifying, technology-driven global competition. Sweden already hosts one of the most internationally integrated economies in the world. Sweden’s competitiveness is manifested by large flows of trade, capital, and foreign investment. It is seen as a frontrunner in adopting new technologies and setting new consumer trends. Products can be tested in a market with demanding customers and high levels of technical sophistication.

Sweden, like other EU countries, has been highly affected by the ups and downs of the global financial crisis. Swedish GDP contracted severely in 2009, rebounded in 2010, and then continued to grow at a moderate and steady rate in 2011, as the Euro zone crisis failed to reach resolution. Comparatively speaking, Sweden ranks high on the list of desirable places in Europe to invest: Its growth rate is in the EU’s upper range; trade is still at high levels; public finances are sound; and there is an international confidence in the long-term viability of the Swedish economy in the aftermath of the financial crisis. Export volumes increased by 10 percent through 3 Q 2011. Sweden’s current account surplus continued to strengthen during 2011; trade in goods and services resulted in a surplus of SEK 64.0 billion for the third quarter -- trade in goods contributed SEK 26.3 billion to the surplus while the trade in services contributed SEK 37.7 billion.

In 2010, the United States was Sweden’s sixth largest export market after Germany, Norway, Denmark, the United Kingdom, and Finland. Innovation and exports drive Sweden’s economy, and the government recognizes the need to support those exports through promoting innovation. The government’s innovation strategy aims to improve the business climate for SME’s, education, and the flow of research from the lab to the market. Sweden spends the highest amount per capita on research and development in the European Union, and Parliament recently approved record levels of spending on research. Leading business and political leaders support this in the form of Sweden’s “Innovation for Growth” project.

Surveys conducted by investors in recent years ranking the investment climate in Sweden show rather uniform results: positives mentioned are well-trained and educated workforce; low corporate tax rates; excellent infrastructure and good access to capital. On the negative side are the high cost of labor, rigid labor legislation, high individual tax rates, and overall high costs in Sweden.

In Nordic labor markets, labor and management do not see each other as enemies but strive for consensus. Labor market relations are characterized by mutual respect for negotiated contracts among employers and union. Labor unions are positive toward new technology. Swedish unions have helped implement business rationalization, and strongly favor employee education and technical progress. For most of the 20th century in Sweden, political legislation played a smaller role in regulating labor market relations than voluntary agreements between strong unions and equally strong employer’s federations, often at the national level. Unions in Nordic countries more or less adhere to the view that sick leave and unemployment insurance systems should be shaped in ways that are both generous and promote growth. About 71% of the Swedish labor force is unionized, although membership is declining. For most unions, there is a counterpart employers' organization for businesses. Unions and employer organizations are independent of both the government and political parties, although the largest federation of unions, the National Swedish Confederation of Trade Unions (LO), has always maintained close links to the largest political party for most of the last century, the Social Democrats. There is no national minimum wage. Instead, wages are set by collective bargaining. In recent years, the government has increased flexibility to negotiate wages at the company level. Swedish law requires union members be represented on the board of any company with over 25 employees. This law also requires management to negotiate with the appropriate union or unions prior to implementing certain major changes in company activities. It calls for a company to furnish information on many aspects of its economic status to labor representatives. But in the end, management has the final say. Labor and management usually find this system works to both sides' benefit.

Having only 9.5 million people, Sweden is highly dependent on exports. It is one of the most pro-free trade countries in the world. Low barriers to trade is combined with collective risk sharing through social programs and labor market institutions that have provided a form of protection against the risks associated with economic openness. There is little product market regulation, and Nordic countries rank very high in product market freedom according to OECD rankings.

The General Government Attitude toward Foreign Direct Investment

Until the mid‑1980s, Sweden's approach to direct investment from abroad was quite restrictive and governed by a complex system of laws and regulations. Sweden’s entry into the European Union (EU) in 1995 has greatly improved the investment climate and attracted foreign investors to the country. In 2010, the stock of foreign direct investments in Sweden amounted to 76 percent of GDP, placing Sweden in 7th place among OECD countries, after Luxemburg, Belgium, Ireland, Switzerland, Iceland and Estonia. The 2010 OECD average was 31 percent of GDP.

Swedish authorities have implemented a number of reforms to improve the business regulatory environment that benefits investment inflows. The Moderate Party-led coalition government (the so-called Alliance Government) elected in September 2006 set a goal of selling some $31 billion in state assets during the time period 2007-2010 to further stimulate growth and raise revenue to pay down the federal debt. In 2008, the Swedish government sold liquor company V&S (Vin & Sprit AB) to French Pernod Ricard for some $8.3 billion and the Swedish OMX stock exchange to Borse Dubai/Nasdaq for $318 Million. Further progress in terms of deregulation was taken at the beginning of 2010 as the state-owned and former Government-run pharmaceutical company Apoteket was split up in a State-owned and a privately-owned part. This trend was reversed by an opposition-led majority vote in March of 2011 in Parliament that put a halt to the sale of stakes in SBAB bank, telecom firm TeliaSonera, power utility Vattenfall and Posten – the Swedish postal service. Such a consolidated opposition indicates that the future of privatization will be a function of politics, and thus is difficult to predict.

Sweden is also actively seeking ways to ensure wider ownership in Swedish industry, which it believes will increase competition and lead to greater efficiency on the markets. As a result, foreign ownership in Sweden has increased rapidly in the last decade. Approximately 50 percent of foreign-owned firms are acquisitions, and 30 percent are new establishments. Foreign‑owned firms now employ almost 25 percent of the work force in the business sector. To an increasing extent, those employees work in service and manufacturing industries. Foreign ownership in urban areas of Sweden is dominated by Norway and EU countries. The United States is the single largest foreign employer.

The Alliance government has pursued a macroeconomic policy favorable to the business sector. While the government lost its majority in Parliamentary elections in September 2010, due to an independent nationalist party wining 20 out of 349 seats, the election results were considered an endorsement of the government’s economic policies. The Social Democrat-led opposition fared poorly in the elections. The Moderate Party led coalition has continued its pro-business sector policies as a minority government.

FDI inflows to Sweden surged in the second half of the 1990s, a trend fueled by accelerating globalization, deregulation in Sweden, devaluation of the Swedish krona in 1992 and the country’s entry into the European Union 1995. For example, the number of foreign subsidiaries in Sweden increased sharply from the mid 1990s, from just over 3,000 to over 10,000 ten years later. Despite the substantial FDI inflows, the stock of Swedish assets held abroad still exceeds the stock of foreign assets in Sweden.


In a 2003 public referendum on whether or not to join the European Monetary Union (EMU), a majority voted for Sweden to remain outside. In 2009, public opinion shifted somewhat and a majority of Swedes viewed the Euro positively for the first time ever. However, the 2010 debt crises in the euro-zone have caused public opinion to once again favor retention of the Swedish crown which has fared the financial crisis well. We do not expect the EMU issue to be put to the electorate in the current four year political cycle.

In 2010, foreign companies in Sweden employed about 590,000 employees. Approximately 1,300 U.S. companies with 71,300 employees are established in Sweden, many of which are active in computer software or hardware, pharmaceuticals, telecom or finance. In terms of number of employees in Sweden, the U.S. is still the largest individual investment country.

Financial Crisis and Recovery


Although conditions in Sweden are better than in many other countries, Sweden and Swedish banks have been affected by not having access to long-term funding, and by commercial bank exposure to the Baltic region. Swedish banks experienced a similar crisis in 1990-1994 involving real-estate loans and defaults on high figure loans. Swedish banks since then became more restrictive with loans. The experience from 1990-1994, and reforms put in place since that crisis, helped prepare the government and banks to respond quickly and successfully to the 2008/2009 global financial crisis.

By 2008/2009, Swedish banks had a relatively high reliance on wholesale funding, with deposits ranging from 30 percent to 40 percent of total liabilities at the larger banks. As funding in international capital markets became more difficult in 2008, Swedish authorities responded with a bank support package that included $205 billion of guarantees for new debt issuance, a $6 billion recapitalization, doubled deposit insurance coverage to include savings of up to SEK 500,000 ($65,400) per customer and bank, and creating a fund to be prepared to take direct stakes in banks. The Central Bank lowered its main steering rate for the economy, the repo rate, to 0.25 percent, and the balance sheet of the Central Bank tripled during 2008, mainly due to increased lending facilities to commercial banks.

The Swedish banking sector is highly concentrated, with the four large banking groups – Nordea, Svenska Handelsbanken, Swedbank and SEB – accounting for roughly 80 percent of sector assets. Due in part to the lessons learned in the Swedish banking crisis of the 90s, those banks managed to navigate through the global financial turmoil without any bankruptcies. They did, however, have substantial credit losses. Those credit losses decelerated in 2010, and by the end of 2010, all the four major banks exceeded expectations in key indicators such as operating income, net profit, and net interest income. Continued conservatism on the part of the banks in 2011 secured their position as some of the healthiest banks in Europe, but they are bracing for a difficult year in 2012; all four banks are hedging dubious income prospects with cost cutting measures, an increased customer-relationship focus, and higher reserve ratios.

The global economic downturn of 2008-2009 and its aftermath have had significant effects on the non-banking economy in Sweden as well. GDP contracted by nearly 5 percent in 2009, then regained the full amount in 2010. Third quarter results for 2011 showed a 4.6% GDP gain over the third quarter of 2010. However, slowed growth of Euro Zone countries has precipitated a fall in export orders, and exports are expected to be even weaker in 2012. As a result, the Central Bank lowered its growth projections for the Swedish economy. For 2012, the Bank’s Executive Board now expects a GDP-growth of 1.3 percent, compared to its previous assessment of 1.5 percent. The situation is expected to improve in 2013; where the Executive Board projects a return to 2.3 percent growth.

Because inflationary pressures remain low, in December 2011 the Central Bank cut its main steering rate (the repo rate) by 0.25 percentage points to 1.75 per cent, and shifted to a lower repo-rate path. The repo rate is expected to remain low in 2012.


The Stockholm Stock Exchange Index OMXS30 fell by just over 40 percent during 2008, but regained in value during 2009 as the Index OMXS30 experienced a record year and closed at an increase by around 50 percent. It rose a further 21 percent in 2010, while in 2011 it followed the general European trend, dropping off by 6.2% in August of 2011, and then recovering weakly in the third and fourth quarters. The Swedish krona dropped sharply in value both against the dollar and euro at the outset of the financial crisis, in a sharp display of the dangers of having a small, marginal currency. However, during 2010 the Swedish krona returned to the levels prevailing before the financial crisis and appreciated at a rate above original forecasts while the US dollar and EU have been weakened by uncertain economic prospects and low expected policy rates, and the euro-zone crises. Finally, in 2011, the krona lost some of its gains against the dollar, presumably the result of ongoing concern about its EU export dependency.

Laws/Rules/Practices Affecting Foreign Investment

During the 1990s Sweden made considerable progress deregulating its product markets. In a number of areas, including electricity and telecommunication markets, Sweden has been on the leading edge of reform. These reforms have resulted in more efficient sectors and lower prices. Nevertheless, a number of practical impediments to direct investments remain in Sweden. These include a fairly extensive, though non-discriminatory, system of permits and authorizations needed to engage in many activities and the dominance of few, very large players in certain sectors, such as construction and food wholesaling.

Regulation on foreign ownership in financial services has been liberalized. Foreign banks, insurance companies, brokerage firms, and cooperative mortgage institutions are permitted to establish branches in Sweden on equal terms with domestic firms, although a permit is required. Swedes and foreigners alike may acquire shares in any company listed on the Stockholm Stock Exchange.

Government monopolies: Despite extensive deregulation, foreign and domestic investors are still barred from retail sale of alcoholic beverages. In early 2010, the Swedish Government went through with the privatization of pharmaceutical company Apoteket, allowing for private retailing of pharmaceuticals. Approximately 600 pharmacies have been sold to private enterprises, and the total amount of pharmacies in Sweden is expected to rise sharply to reach the same level of saturation found in other European countries. The previously monopolized market for vehicle emissions testing was also opened to certified private parties as of July 1, 2010. As mentioned above, this privatization trend has slowed and its future will depend primarily on political factors.

Legal Aspects: Swedish company law provides various forms under which a business can be organized. The main difference between these forms is whether the founder must own capital and to what extent the founder is personally liable for the company’s debt. The Swedish Law, Act (1992:160) on Foreign Branches, applies to foreign companies operating some form of business through a branch and also to people residing abroad who run a business in Sweden. A branch must have a president who resides within the European Economic Area (EEA). All business enterprises in Sweden (including branches) are required to register at the Swedish Companies Registration Office. An invention or trademark must be registered in Sweden in order to obtain legal protection. A bank from a non-EEA country needs special permission from the Financial Supervision Authority to establish a branch in Sweden.

Taxes

Sweden’s taxation structure is straightforward and corporate tax levels are low. Sweden has a corporate tax of 26.3 percent in nominal terms. The effective rate can be even lower as companies have the option of making deductible annual appropriations to a tax allocation reserve of up to 25 percent of their pretax profit for the year. Companies can make pre-tax allocations to un-taxed reserves, which are subject to tax only when utilized. Certain amounts of untaxed reserves may be used to cover losses.

Due to tax exemptions on capital gains and dividends, as well as other competitive tax rules, such as low effective corporate tax rates, deductible interest costs for tax purposes, no withholding tax on interest, no stamp duty or capital duties on share capital, and an extensive double tax treaty network, Sweden is among Europe’s most favorable jurisdictions for holding companies. Unlisted shares are always tax-exempt, meaning no qualification time or minimum holding of votes or capital. Listed shares are exempt if the holding represents at least 10 percent of the voting rights (or is contingent on the holder’s business) and the shares are held for at least one year.

Personal income taxes are among the highest in the world. Since public finances have improved due to extensive consolidation packages to reduce deficits, the government has been able to reduce the tax pressure as a percentage of GDP. Currently, it is below 50 percent for the first time in decades. One particular focus has been tax reductions to encourage employers to hire the long-term unemployed. The government introduced additional cuts for personal income taxes in 2008, followed by additional cuts in January 2009 and 2010. Expectations are that the taxes will stay at this level during the year and will not increase or decrease because of the financial instability. In 2011 the breaking point for state taxes increased. It is now only at an income over SEK 32,967 (approx. $4800) per month that a state income tax of 20 percent will be levied. When earnings exceed SEK 46,741 (approx. $6800) per month, an additional 5 percent state tax is applied.

One tax reform to help bring foreign experts to Sweden is a reduction of key foreign personnel’s income tax. The tax is based on 75 percent of the person’s income for the first three years of employment in Sweden. Likewise, their employers pay social security contributions on only 75 percent of the taxable salary. This tax relief applies to all salaries and benefits in kind, as well as stock options and other compensations offered by the employer. This applies to foreign key personnel, such as executives, researchers and experts, employed by a Swedish company. The tax relief is not applicable to individuals assigned to Sweden by a foreign company that has no operations in Sweden.

Dividends paid by foreign subsidiaries in Sweden to their parent company are not subject to Swedish taxation. Dividends distributed to other foreign shareholders are subject to a 30 percent withholding tax under domestic law, unless dividends are exempt or taxed at a lower rate under a tax treaty. Tax liability may also be eliminated under the EC Parent Subsidiary Directive. Profits of a Swedish branch of a foreign company may be remitted abroad without being subject to any other tax than the regular corporate income tax. Sweden has no foreign exchange controls or restrictions.

The Swedish system of allowing A/B preferred stock has been identified by some, both in and outside of the EU, as an obstacle to takeover efforts of Swedish companies and the free flow of capital. A and B stocks differ from common and preferred stocks in that owners of A stocks have a greater number of votes than owners of B stocks. Both A and B stocks have the same right to dividends.

Incentives: The Swedish government offers certain incentives to set up a business in various targeted depressed areas. Loans are available on favorable terms from the Swedish Agency for Economic and Regional Growth (Tillvaxtverket) and from regional development funds. A range of regional support programs, including location and employment grants, low rent industrial parks, and economic free zones are also available. Regional development support is concentrated in the lightly populated northern two-thirds of the country. There are also several European funds that offer subsidies for starting enterprises and a range of incentives to research and development programs provided by the Swedish Government.

Stock options: There is no exit taxation and no specific rules regarding taxation of stock options received before a move to Sweden. Instead, cases of double taxation are solved by applying tax treaties and cover not only moves within the EU but all countries, including the United States.

Index/Ranking: For ease of comparison, we have included some reputable international ranking indexes.

-- 2011 World Economic Forum Global Competitiveness Report: Sweden was ranked third out of 140 countries.

-- 2011 Transparency International Corruption Index: Sweden was ranked number four out of 183 countries.

-- 2012 Heritage Foundation Economic Freedom Index: Sweden was ranked number 21 out of 179 countries.

-- 2011 World Bank Doing Business: Sweden was ranked number 11 out of 183 countries in overall ease of doing business

Conversion and Transfer Policies

There are no foreign exchange controls in Sweden, nor are there any restrictions on remittances of profits, of proceeds from the liquidation of an investment, or of royalty and license fee payments. A subsidiary or branch may transfer fees to a parent company outside of Sweden for management services, research expenditures, etc. In general, yields on invested funds, such as dividends and interest receipts, may be freely transferred. A foreign-owned firm may also raise foreign currency loans both from its parent corporation and credit institutions abroad.

Expropriation and Compensation

Private property is only expropriated for public purposes, in a non‑discriminatory manner, with reasonable compensation, and in accordance with established principles of international law.

Dispute Settlement

There have been no major disputes over investment in Sweden in recent years. The country has written and consistently applied commercial and bankruptcy laws, and secured interests in property are recognized and enforced.

Sweden is a member of the International Center for the Settlement of Investment Disputes and is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards. The Arbitration Institute of the Stockholm Chamber of Commerce is one of the leading arbitration centers in the world, with many of its cases originating in East‑West business relations. An agreement between the American Arbitration Association and the Russian Federation Chamber of Commerce, stemming back to the 1990’s, provides for arbitration to take place in Sweden under the rules of the United Nations Commission on International Trade Law, with the Stockholm Chamber of Commerce administering the cases and acting as appointing authority if needed.

Performance Requirements/Incentives

Sweden imposes no performance requirements on presumptive foreign investors.

Right to Private Ownership and Establishment

Rights of this kind are not specifically written into Swedish law, but individuals and Swedish entities are well protected by the legal system. Private and public enterprises enjoy equal access to markets necessary for conducting business operations.

Protection of Property Rights

Swedish law generally provides adequate protection of all property rights, including intellectual property. As a member of the European Union, Sweden adheres to a series of multilateral conventions on industrial, intellectual, and commercial property.

Patents ‑ Protection in all areas of technology may be obtained for 20 years. Sweden is a party to the Patent Cooperation Treaty and the European Patent Convention of 1973, which both entered into force in 1978.

Copyrights ‑ Sweden is a signatory to various multilateral conventions on the protection of copyrights, including the Berne Convention of 1971, the Rome Convention of 1961, and the WTO's trade related intellectual property (TRIPS) agreement. Swedish copyright law protects computer programs and databases. Sweden became known as somewhat of a safe haven for internet piracy, due to excellent internet connections, a lag in implementing EU Directives, and weak enforcement efforts. Over the course of 2009, however, Sweden implemented the EU’s Intellectual Property Rights Enforcement Directive (IPRED) 2004/48/EC, and continued to step up its enforcement against internet piracy. The last few years also saw the conviction of the operators behind the Pirate Bay.org, a notorious BitTorrent tracker for illegal file-sharing, and an increase in legal file-sharing. The 2010 appeal trial upheld the guilty verdict, signaling that Sweden is no longer a safe haven for internet piracy. Legislative measures, combined with added resources on the enforcement side, and the emergence of successful legal alternative such as Sweden-based sites Spotify and Voddler all contributed to a substantial increase in 2010-2011 for music and film distribution using legal means.

Trademarks ‑ Sweden protects trademarks under a specific trademark act (1960:644) and is a signatory to the 1989 Madrid Protocol.

Trade secrets ‑ proprietary information is protected under Sweden’s patent and copyright laws, unless acquired by a government ministry or authority, in which case it may be made available to the public on demand.

Transparency of the Regulatory System

As an EU member, Sweden has altered its legislation to comply with the EU’s stringent rules on competition. The country has made extensive changes in its laws and regulations to harmonize with EU practices, all with a view to avoiding distortions in or impediments to the efficient mobilization and allocation of investment.

Efficient Capital Markets and Portfolio Investment

Credit is allocated on market terms and is made available to foreign investors in a non‑discriminatory fashion. The private sector has access to a variety of credit instruments. Legal, regulatory, and accounting systems are transparent and consistent with international norms.

The Stockholm Stock Exchange is a modern, open, and active forum for domestic and foreign portfolio investment. It is an official institution and operates under specific legislation.


The banking crisis of the early 1990s changed the structure of the banking sector. A large number of savings banks were converted into commercial banks. Several foreign banks have established branch offices, and several niche banks have started to compete in the retail bank market. A deposit insurance system was introduced in 1996, whereby individuals received protection of up to SEK 250,000 ($32,700) of their deposits in case of bank insolvency. This guarantee was increased to SEK 500,000 ($65,400) in the fall of 2008 in response to the crisis in the financial systems, and altered to cover all types of accounts, regardless of if the account is available for immediate withdrawal or not. December 31, 2010 the maximum compensation was raised again as a result of amendments in the EC directive and is now the SEK equivalent of 100,000 euro ($132,300).

Competition from State-Owned Enterprises (SOE’s)

Private enterprises compete with public enterprises under the same terms and conditions with respect to access to markets, credit, and other business operations.

The Swedish state is Sweden's largest company owner and employer. As of December 2011, fifty-seven companies/concerns are managed through the Government Offices, 43 of which are entirely state-owned, and 14 partially state-owned. A total of some 190 000 people are employed by these companies The government has committed to privatizing some of them, but even after the conclusion of that process -- which has been delayed by the financial crisis -- several major actors will remain. Sectors where there are SOE’s include energy/power generation, forestry, mining, finance, telecom, postal services, gambling, and liquor retail sales.

These companies operate under the same laws as private companies, although the government appoints board members representing the owners. Like private companies, SOE’s have appointed boards of directors, and the government is constitutionally prevented from direct involvement in the company’s operations through the ban against direct Ministerial involvement. Like private companies, SOE’s publish their annual reports, and they are subject to independent audit.

There is no sovereign wealth fund in Sweden.

Corporate Social Responsibility (CSR)

There is wide-spread awareness of corporate social responsibility among both producers and consumers in Sweden. Firms who pursue CSR are viewed favorably, and they often publicize their adherence to generally accepted CSR principles such as OECD guidelines.

Political Violence

Sweden is politically stable and no changes are expected.

Corruption

Sweden has comprehensive laws on corruption, which are fully implemented. It has ratified the 1997 OECD Anti-bribery Convention.

Bilateral Investment Agreements

Sweden has concluded investment protection agreements with the following countries:

Albania, Argentina, Belarus, Bolivia, Bosnia and Herzegovina, Bulgaria, Chile, China, Cote d’Ivoire, Croatia, Czech Republic, Ecuador, Egypt, Estonia, Guatemala, Hong Kong, Hungary, India, Indonesia, Kazakhstan, Kyrgyzstan, Kuwait, Laos, Latvia, Lithuania, Lebanon, Madagascar, Macedonia, Malaysia, Malta, Morocco, Mexico, Oman, Pakistan, Peru, Philippines, Poland, Republic of Korea, Romania, Russian Federation, Senegal, Serbia, Slovakia, Slovenia, Sri Lanka, South Africa, Tanzania, Thailand, Tunisia, Turkey, Uganda, United Arab Emirates, Uruguay, Uzbekistan, Venezuela, Vietnam, Yemen and Zimbabwe.

There is a bilateral taxation agreement between the U.S. and Sweden, but no bilateral investment protection agreement.

OPIC and other investment insurance programs

N/A

Labor

Sweden's labor force of 4.6 million is disciplined, well-educated, and experienced in all modern technologies. About 71 percent of the workforce belongs to labor unions. Swedish unions have helped to implement business rationalization, and strongly favor employee education and technical progress. Management‑labor cooperation is generally excellent and non‑confrontational.

The cost of doing business in Sweden is generally comparable to most OECD countries, though some country-specific cost advantages are present. Overall salary costs have become increasingly competitive due to relatively modest wage increases over the last decade and a favorable exchange rate. This development is even more pronounced for highly qualified personnel and researchers. The leverage in terms of high productivity and skills is substantial and offers investors good value for money.

There is no fixed minimum wage by legislation. Instead, wages are set by collective bargaining. The traditionally low wage differential has increased in recent years as a result of increased wage setting flexibility at the company level. Still, Swedish unskilled employees are relatively well paid, while well-educated Swedish employees are low-paid compared to those in competitor countries. The average increases in real wages in recent years have been high by historical standards, in large due to price stability. Even so nominal wages in recent years have been slightly above those in competitor countries, about 3 percent annually.

Employers must pay social security fees of about 31.5 percent. The fee consists of statutory contributions for pensions, health insurance and other social benefits. For employees under 25, the fee is 15.5 percent.

Sweden has co‑determination legislation, which provides for labor representation on the boards of corporate directors once a company has reached a certain size. This law also requires management to negotiate with the appropriate union or unions prior to implementing certain major changes in company activities. It calls for a company to furnish information on many aspects of its economic status to labor representatives. But in the end, management has the final say. Labor and management usually find this system works to both sides' benefit.

Sweden has ratified most International Labor Organization (ILO) conventions dealing with workers rights, freedom of association, collective bargaining, and the major working conditions and occupational safety and health conventions.

Foreign Trade Zones/Free Ports

Sweden has foreign trade zones with bonded warehouses in the ports of Stockholm, Goteborg, Malmo, and Jonkoping. Goods may be stored for an unlimited time in these zones without customs clearance, but they may not be consumed or sold on a retail basis. Permission may be granted to use these goods as materials for industrial operations within a free trade zone. The same tax and labor laws apply to foreign trade zones as to other workplaces in Sweden.

Foreign Direct Investment Statistics

Swedish Direct Investments abroad resulted in an outflow of SEK 176 billion during the first three quarters of 2011, compared to SEK 82 during the first three quarters of 2010. Foreign Investments in Sweden during the equivalent quarters of 2011 resulted in an inflow of SEK 106 billion, up by 78 billion compared to the first three quarters of 2010. This resulted in a net outflow of SEK 70 billion ($10.1 billion) the first three quarters of 2011, up from SEK 54 billion ($8.3 billion) for the corresponding period in 2010.

Both the origin of foreign direct investments in Sweden, as well as the net result of Swedish direct investments abroad fluctuates greatly from year to year. The major actors are usually the U.S. and countries within the EU.

Table I: Flow of FDI into Sweden (SEK Million)

-------

A positive value indicates that investment is larger than disinvestment.

Figures for 2011 are 1-3 Q

Selection of countries

2009

2010

2011

OECD

57,281

-28,441

60,144

EU27

69,796

-1,697

-18,677

United States

-31,458

-18,300

18,537

Total

76,040

-8,822

106,324

Percentage of GDP

2.4

0.3

4.1

Source: National Board of Trade

Table II: Stock of FDI in Sweden (SEK Billion)

-------

Selection of countries

2008

2009

2010

OECD

2085

2236

2242

EU

1659

1849

1857

United States

208

164

147

Asia

27

25

34

The Nordic countries

474

567

538

       

Total

2173

2355

2339

Percentage of GDP

68

76

76

Source: Statistics Sweden

Table III: Flow of Swedish FDI abroad (SEK Million)

---------

A negative value indicates a net out-flow from Sweden

Figures for 2011 are 1-3 Q

Selection of countries

2009

2010

2011

OECD

-108,689

-27,884

-2,651

EU27

-123,638

49,031

1,817

United States

2,974

-54,963

9,770

Total

-199,005

-134,429

-175,901

Percentage of GDP

6.4

4.1

6.9

Source: National Board of Trade

Table IV: Swedish Stock of FDI Abroad (SEK Billion)

--------

Selection of countries

2008

2009

2010

OECD

2188

2182

2161

EU

1648

1588

1471

United States

341

358

395

The Nordic countries

684

671

635

Asia

104

112

130

Total

2462

2461

2423

Percentage of GDP

77

79

73

Source: Statistics Sweden

Major Foreign Investors

Major foreign investment in the past few years has been in the chemical and pharmaceutical industry, as well as in the energy sector. Other sectors that figure prominently are the IT-sector, consulting services, staffing services, and the defense industry.

Major U.S. investors, in terms of number of employees in Sweden:

Company

# of employees in Sweden

Manpower

10,800

General Electric

7,300

IBM

3,200

Ernst & Young

1,800

Hewlett Packard

1,400



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