Attitude toward Foreign Direct Investment
Norway welcomes foreign investment as a matter of policy and generally grants national treatment to foreign investors. Norwegian authorities encourage foreign investment particularly in the key offshore petroleum sector, mainland industry, and in less developed regions such as northern Norway. In 2013, the Government established “Invest in Norway”, Norway’s official investment promotion agency, to help attract and assist foreign investors.
The policy vis-a-vis third countries, including the United States, will likely continue to be governed by reciprocity principles and by bilateral and international agreements. The European Economic Area (EEA) free trade accord, which came into force for Norway in 1995, requires the country to apply principles of national treatment in certain areas where foreign investment was prohibited or restricted in the past. Norway's investment regime is generally based on the equal treatment principle, but national restrictions exist on ownership of some natural resources and on some activities (fishing/ maritime/ road transport). State ownership in companies can be used as a means of ensuring Norwegian ownership and domicile for these firms.
Other Investment Policy Reviews
Norway has not undergone UNCTAD or OECD Investment Policy Reviews in the last ten years.
As an EEA signatory, Norway continues to liberalize its foreign investment legislation to conform more closely to European Union (EU) standards. Current laws, rules, and practices follow below.
Norway has traditionally barred foreign and domestic investors alike from investing in industries monopolized by the government, including postal services, railways, and the domestic production and retail sale of alcohol. In 2004, Norway slightly relaxed the restrictions, allowing foreign companies to bid on providing certain postal services (e.g., air express services between countries) and railway cargo services (notably between Norway and Sweden). The government may allow foreign investment in hydropower (though limited to 20 percent of equity), but rarely does so. However, Norway has fully opened the electricity distribution system to foreign participation, making it one of the more liberal power sector investment regimes in the world.
Ownership of Real Property
Foreign investors may generally own real property, though ownership of certain real assets is restricted. Companies must obtain a concession to acquire rights to own or use various kinds of real property; including forests, mines, tilled land, and waterfalls. Foreign companies need not seek concessions to rent real estate, e.g. commercial facilities or office space, provided the rental contract is made for a period not exceeding ten years. The two major laws governing concessions are the Act of December 14, 1917, and the Act of May 31, 1974.
The Petroleum Act of November 1996 (superseding the 1985 Petroleum Act) sets forth the legal basis for Norwegian authorities' awards of petroleum exploration, production blocks and follow-up activity. The act covers governmental control over exploration, production, and transportation of petroleum.
Foreign oil companies report no discrimination in the award of petroleum exploration and development blocks in recent licensing rounds. Norway has implemented EU directives requiring equal treatment of EEA oil and gas companies. The Norwegian offshore concession system complies with EU directive 94/33/EU of May 30, 1994, which governs conditions for awards and hydrocarbon development. Norway's concession process operates on a discretionary basis, with the Ministry of Petroleum and Energy awarding licenses based on which company or group of companies it views will be the best operator for a particular field, rather than purely competitive bids. A number of U.S. energy companies are present on the NCS.
The Norwegian government has dismantled former tight controls over the gas pipeline transit network that carries gas to the European market. All gas producers and operators on the Norwegian Continental Shelf (NCS) are free to negotiate gas sales contracts on an individual basis, with access to the gas export pipeline network guaranteed.
Norwegian authorities encourage the use of Norwegian goods and services in the offshore petroleum sector, but do not require it. The Norwegian share of the total supply of goods and services on the NCS has remained approximately 50 percent over the last decade.
Norwegian legislation granting national treatment to foreign investors in the manufacturing sector dates from 1995. Legislation that formerly required both foreign and Norwegian investors to notify and, in some cases, file burdensome reports to the Ministry of Industry and Trade if their holdings of a company's equity exceeded certain threshold levels, was repealed in July 2002. Foreign investors are not currently required to obtain government authorization before buying shares of Norwegian corporations.
Financial and Other Services
Effective January 1, 2004, Norway liberalized restrictions on acquisitions of equity in Norwegian financial institutions. Current regulations delegate responsibility for acquisitions to the Norwegian Financial Supervisory Authority and streamline the process. Financial Supervisory Authority permission is required for acquisitions of Norwegian financial institutions that exceed defined threshold levels (20, 25, 33 or 50 percent). The Authority assesses the acquisitions to ensure that prospective buyers are financially stable and that the acquisition does not unduly limit competition.
The Authority applies national treatment to foreign financial groups and institutions, but nationality restrictions still apply to banks. At least half the members of the board and half the members of the corporate assembly of a bank must be nationals and permanent residents of Norway or another EEA nation. Effective January 1, 2005, there is no ceiling on foreign equity in a Norwegian financial institution as long as the Authority has granted permission for the acquisition.
The Finance Ministry has abolished remaining restrictions on the establishment of branches by foreign financial institutions, including banks, mutual funds and others. Under the liberalized regime, Norway grants branches of U.S. and other foreign financial institutions the same treatment as domestic institutions.
Media ownership is regulated by the Media Ownership Act of 1997 and the Norwegian Media Authority. No individual party, domestic or foreign, may control more than 1/3 of the national newspaper, radio and/or television markets without a concession. National treatment is granted in line with Norway's obligations under the EEA accord. The introduction and growing importance of new media forms (including those emerging from the internet and wireless industries) has raised concerns that the existing domestic legal regime (which largely focuses on printed media) is becoming outmoded.
For more information on starting a business in Norway visit: https://www.altinn.no/en/Start-and-Run-a-Business/
Altinn is a web portal for electronic dialogue between the business/industry sector, citizens and government agencies. Altinn serves as a one stop shop for establishing a company and contains the necessary forms. The business registration processes are clear and complete and open for foreign companies. Please note however that registration of Norwegian Registered Foreign Business Enterprises (NUF) cannot be done electronically. A guide for establishing a business is available at the following address: https://www.altinn.no/Global/Starte%20og%20drive%20bedrift/Guider/Starting_your_own_business.pdf
Norway’s Export Promotion Agency, Innovation Norway is also in charge of facilitating foreign investment, through its network Invest in Norway. Invest in Norway can provide a wide range of services and an extensive network to help foreign companies establish and run their business in Norway. They act as the first point of contact, providing information and assessing business opportunities, as well as creating contacts with relevant partners in Norway and facilitating investment processes.
Norway uses the EU’s definition for MSMEs. Innovation Norway’s regional development arm offers a series of services supporting the establishment of MSMEs.
Limits on Foreign Control and Right to Private Ownership and Establishment
Screening of FDI
Investment applications, when required, are processed by the ministries concerned. For example, the Ministry of Trade, Industry and Fisheries handles applications to acquire real property in Norway when permission is required. The Finance Ministry handles cases involving financial institutions. The Ministry of Culture is responsible for media cases. Decisions are normally taken at the Ministerial level. However, in some cases with significant political implications, the minister(s) may ask the entire cabinet to make the decision.
The processing time for acquisition applications depends on several factors, but is normally from one to three months. The government may set conditions when a concession is granted, which is commonly done in cases involving more than one-third foreign ownership. Concession agreements do not permit a company to engage in business activities other than those specified. In general, the government screens investments on a case-by-case basis based on the "public interest" principle. This principle is vague and permits broad discretion.
Current legislation governing competition went into effect on May 1, 2004, and is enforced by the Norwegian Competition Authority (NCA). Under the authority of the Ministry of Trade, Industry and Fisheries the NCA is authorized to conduct non-criminal proceedings and impose fines, or "infringement fees," for anti-competitive behavior. The size of the fees may vary according to a number of factors, including company turnover and severity of the offense. The 2004 legislation also empowers the NCA to halt mergers or acquisitions that threaten to significantly weaken competition. Companies planning such transactions are obliged by law to report their plans to the NCA, which may conduct a review. However, if the combined annual turnover in Norway does not exceed NOK 1 billion (USD 130 million) or the annual turnover of one of the companies NOK 100 million (USD 13 million), notification is not required.
Pursuant to its obligations under the EEA, Norway implemented EU legislation on public procurements on January 1, 1994. Norway is also a signatory to the WTO Government Procurement Agreement (GPA). The EEA/EU legislation and WTO agreement oblige Norway to follow internationally recognized, transparent procedures for public procurements above certain threshold values.
All public procurement contracts exceeding certain threshold values must be published in the Official Journal of the European Union and in the EU's Tenders Electronic Daily (TED) databank. Norway instituted an electronic notice database more than a decade ago and currently transmits all tender notices electronically through this database to the TED system.
The rules apply to procurement by the central government, regional or local authorities, bodies governed by public law, or associations formed by one or more such authorities or bodies governed by public law. In addition, special rules apply to the procurement by certain entities in the "utilities" sectors of water, energy, transport, and telecommunications.
Public agencies must publish general annual plans for purchases of goods and services, as well as general information on any major building and construction projects planned. No later than two months after a contract has been awarded, a notice must be published stating which company won the contract. All notices must be published in an EU language.
Discriminatory technical specifications may not be used to tailor contracts for a local or national supplier. Any technical standards applied in the procurement process must be national standards that are harmonized with European standards. If no such standards exist, other international or national standards may be applied. All specifications that are to be used in evaluating tenders must be included in the notice or in the invitation to tender.
In general, public procurements are non-discriminatory and based on open, competitive bidding. There are exceptions, however, notably in defense procurements where national security concerns may be taken into account.
The Complaints Board, an independent review body, offers suppliers an inexpensive complaint process for bid challenges. The board can issue “non-binding opinions” and review the legality of the procurement in question. More serious disputes may be taken before the European Surveillance Authority (ESA), or the courts, but the decision making process can be lengthy.
Discriminatory/Preferential Export/Import Policies
An export promotion organization, Innovation Norway, assists export-oriented firms to market their goods and services internationally. Norway also maintains an export credit institution (Eksportkreditt Norge AS) and an export guarantee institution (GIEK).
Norway's agricultural sector is highly protected from external competition through a variety of tariffs, subsidies, and other barriers. Norway imposes high, variable tariffs on farm product imports that compete with domestic products, largely excluding them from the market.
According to the WTO, Norway’s simple average applied tariff in 2013 was 51.3 percent for agricultural goods -- in comparison to less than one percent for non-agricultural products -- and can range up to several hundred percent. Agricultural export subsidies are also high.
With limited exceptions, Norway has since 1996 effectively banned the importation of agricultural biotechnology products. Harmonization with relevant EU regulations may open the Norwegian market up to these products in the future.