PORT PLAN The extension and refurbishment of Port Hercule, currently under way, will boost the luxury yachting sector and increase cruise tourism
CONSIDERING that it is only about
as large as New Yorks Central Park, the Principality of Monaco has been
extraordinarily successful in attracting worldwide attention.
Extending over an area of less than one square mile, it is the second smallest independent state in the world, after Vatican City. Size, however, is more than compensated for by the Principality's location on the Côte dAzur, just 11 miles east of Nice.
Monaco has long been known for its glamorous lifestyle. In recent years, however, it has enjoyed a growing reputation as a center for business, attracting international companies due to its access to European and Mediterranean markets, advanced telecommunications services, and well-developed financial sector.
In addition to political stability, Monaco offers investors and entrepreneurs a winning combination of a high standard of living, low taxes, and a prestigious pro-business environment. The close proximity of everything from government agencies to financial institutions adds to the appeal.
Monaco has no natural resources of its own to exploit. Instead, the Principality has had to rely on innovation and ingenuity to create a dynamic and diversified economy, focused primarily on tourism, finance, and trade.
Although not a member of the European Union, Monaco has adopted the Euro as its official currency and enjoys unlimited access to the EU market through full monetary and customs union with France. It has been an official member of the United Nations, with full voting rights, since 1993.
The Principality is widely recognized as a true economic center, says Michel Pastor, Chairman of the Economic Development Chamber of Monaco (CDE). Political stability, security of property and people and respect for the quality of life and the environment all contribute to its harmonious development.
The CDE is actively promoting the Principalitys economy by supporting the expansion of local companies and working with investors.
monopolies exist in several sectors, including tobacco, the telephone network,
and the postal service, but the private sector labor force outnumbers those
working in the public sector by almost ten to one. Some 4,500 companies operate
there, including 1,500 retail traders.
Economic development has intensified under Prince Rainier II, whose dedication to expanding the Principalitys infrastructure through a policy of strong public investment has earned him the nickname the Builder Prince.
Monaco has successfully diversified into services and small, high-value-added, non-polluting industries.The Principality is home to more than 100 industrial enterprisesmost of them to be found in Fontvieille, a newly constructed area reclaimed from the sea.
There are no mines or heavy industry. The authorities favor the establishment of non-polluting companies with a high capital gains factor. Around half of total industry turnover is generated by the state-of-the-art chemical, pharmaceutical, and cosmetics sectors. Other notable sectors include plastic material processing, and electrical and electronic equipment manufacturing.
The services sectorranging from IT to insurance, telecommunications, transport, and shippingaccounts for almost half of the economic activity (46 percent). This is followed by the tourism and hotel sector (17 percent), retail (12 percent), industry (11 percent), banking (7 percent), and construction and public works (7 percent).
Unemployment is virtually nonexistent. Monaco has almost 40,000 jobs for its 32,000 inhabitants, and thousands of French and Italian nationals enter the Principality to work there every day.
The Principality is free of external debt and its foreign currency reserves are reported to be well in excess of $1 billion.
One of the most obvious ways in which Monaco stands out is its approach to taxation. Direct taxation was abolished as long ago as 1869, and half of tax revenues come from Value-Added Tax.
There is no capital gains tax in Monaco, and no withholding tax on interest or dividends paid. There are no restrictions on the opening of accounts by residents, non-residents or offshore companies.
However, the Principality has no desire to be regarded as a tax haven and does not seek to promote itself as an offshore jurisdiction for businesses,
|PHILIPPE DESLANDES Minister of the Interior|
small country economy must find a means of differentiating itself from a large
country economy, says Philippe Deslandes, Minister of the
Interior. One of the possible levers to attain such differentiation is
fiscal policy. However, all international agreements concerning taxation, money-laundering
and so forth will be bound to have an effect on Monaco.
In a country where wealth is so concentrated, security and crime prevention are important considerations. Around 40,000 people cross Monacos borders every dayduring the Grand Prix, the number rises to more than 100,000creating unique problems in protecting the both the Principalitys residents and its visitors.
However, top-level security, for people and for property, is one of Monacos major assets. The ratio of one police officer to every 73 inhabitants is one of the highest in the world. Spot checks are carried out on the floating population and the principality is extensively covered by both public and private surveillance systems.
We have a policy of zero tolerance towards crime that is very similar to that of New York, says Mr. Deslandes.
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