Iceland’s government denied Chinese billionaire investor Huang Nubo permission to purchase land in the island’s north, saying such a transfer of property would be “incompatible” with the country’s laws.
The government won’t let Huang, through his company Beijing Zhongkun Investment Group Co., proceed with a planned acquisition of 300 square kilometers (116 square miles) of land, the Reykjavik-based Internal Affairs Ministry said in an e-mailed statement yesterday.
Icelandic law “imposes strict conditions on corporations wishing to acquire ownership or the right to utilize Icelandic properties and it’s clear that the company in question doesn’t fulfill any of the requirements,” the ministry said.
Huang planned to invest about $200 million to build a resort with a hotel, golf course and racecourse, according to an Oct. 26 article in China Dialogue. In a September interview with Bloomberg News, Huang said he was in talks to buy the land for $8.8 million from a group of farmers and was awaiting approval from the government. Huang is estimated by Forbes magazine to have a fortune of $1.02 billion.
“Internal struggles between Iceland’s different political parties led to the rejection of the investment,” Huang said in an interview with the official Xinhua News Agency on Nov. 26. “A fair and reasonable international investment environment should not mean eyeing money in Chinese people’s pockets, while guarding against the Chinese in every possible way, and fearing they will take away the country’s resources,” Xinhua quoted Huang as saying.
Yao Chen, a Beijing-based public relations official at Zhongkun, said Huang wasn’t available to comment when contacted by Bloomberg News today.
Huang, 55 when he was interviewed on Sept. 25, said then he planned to establish resorts in nations such as Denmark, Finland and Sweden within five years. The Iceland land purchase would have been the biggest by a foreigner, according to Huang.
“If I have the site in Iceland, then I’ll expand to other Nordic countries,” Huang, who said he’s a poet and has climbed Mount Everest three times, said in Shanghai in September. “I’ll buy land and build resorts in Nordic countries, but they won’t be the magnitude of the project in Iceland.”
Huang said his connection with Iceland started 30 years ago when he was studying at Peking University. His roommate and good friend back then was from Iceland and later married a politician. Huang donated $1 million last year to set up an Icelandic-Chinese poet-exchange program.
Iceland, which is emerging from the failure of its bank industry in 2008, is now enjoying faster economic growth than the average in the euro area, the International Monetary Fund estimates. Iceland’s gross domestic product will expand 2.5 percent this year and next, compared with 1.6 percent in the 17-member euro area this year and 1.1 percent in 2012, the IMF said Sept. 20.
Since its financial meltdown, Iceland’s $12 billion economy has renewed its focus on core industries such as fishing, energy and tourism.
“The question is not how can we turn down direct foreign investment of this magnitude, but rather how can one nation do anything else but comply with the laws it has passed for itself?” Internal Affairs Minister Ogmundur Jonasson said by phone. “It would have been easy to circumvent these laws, by establishing an Icelandic limited liability company. That reminds us of the necessity to reconsider these laws from top to bottom.”
Iceland ended a 33-month program with the IMF in August. The government was forced to seek external support in 2008 after its biggest banks defaulted on $85 billion in debt, triggering a currency sell-off and sending the economy into a recession. GDP sank 6.9 percent in 2009, and contracted a further 3.5 percent last year, the Organization for Economic Cooperation and Development estimated in May.
“I’m not concerned that this will have any effect on direct foreign investment in Iceland,” Jonasson said. “Investors will have more confidence in a nation which abides by its own laws.”