Interview with Katrine Winding, Director General of the Danish Business Authority

28 Nov Interview with Katrine Winding, Director General of the Danish Business Authority

BF: Denmark’s economy experienced one of the lowest declines during the COVID-19 pandemic and saw 3.8% growth in 2022. In August, the country lifted its economic forecast for 2023 due to a significant boost in pharmaceutical exports and employment. What are some key reasons for Denmark’s economic resiliency in the past decade?

Katrine Winding: We are ranked high for our business environment and are number one in the IMD World Competitiveness Yearbook. The World Bank used to produce a global index for ease of doing business and we ranked number one in the European Union. According to the OECD list, we are the best ranking country when it comes to product market regulation, which is a proxy for whether regulation hinders competition.

We’re a highly digitalized country. Not only in terms of individuals but also public services. Many of the key functions in our society are fully digitalized. For example, business registration now takes a matter of minutes. It is also easy to get any necessary help from different authorities and the user journey is digital from a single point of entry as well. We have an excellent electronic identification solution and many digital interactions between citizens and businesses.

We are a politically stable country with very low corruption rates. There is a lot of trust in Danish society between the public sector and businesses, between businesses and other businesses and citizen to citizen, which lowers many of the transaction costs when doing business. Our skilled labor force is also highly digitalized. There’s “flexicurity” too; it’s quite easy to hire and fire workers. We have a social security net and a labor market where one can easily find a job. There is also very close public-private cooperation regarding frameworks and conditions for businesses.

BF: The Danish Business Authority has worked hard to monitor and promote private-sector participation in the economy since it was established in 1964. The agency currently works under the Ministry of Industry, Business and Financial Affairs. Can you give our readers an overview of the Danish Business Authority’s role and responsibilities? What milestones has it passed under its current growth strategy?

Katrine Winding: Our mission is to make it easy and attractive to run a business in Denmark. We underpin the ecosystems for entrepreneurs and industrial strongholds in Denmark in our biggest sectors such as green technologies and life sciences, but also maritime, food and shipping. We are also pushing new potential strongholds such as power to X, newer green technologies, bio-solutions and quantum technologies.

Nearly 99% of Danish enterprises are small and medium-sized enterprises. Our role is to not only underpin our export strongholds but make it easier to abide by regulations as a local SME. Most companies want to be responsible and do what is necessary to pay their taxes, file their reports and so on. We need to make it easier for them to do so.

One thing we work on is automation. Nobody sets up a business because they love bookkeeping, but we all agree that it is important. We are working toward automating the entire administration of companies, starting by making it mandatory to have a digital bookkeeping system. This way we do not have to regulate all businesses as they would, by default, be abiding by bookkeeping regulations. The software is quite cheap because there is a lot of competition. It is a private market, with enterprise resource planning (ERP) vendors big and small. The platform also increases portability. Data is not yours; it is your customers. It should be kept safe. It should be easy to move from one vendor to another and to prepare e-invoicing from business to business. If companies provide standardized data throughout the entire value chain, ERP vendors can automate everything. It is something like regtech or fintech but applied from the public sector.

We need to work in close cooperation with the market and it takes trust to be able to develop digital solutions between the public and private sectors. The public sector could never do it alone. Since 2005, we have had mandatory e-invoicing between the public and private sectors. We buy via e-invoicing and have mandatory digital correspondence between citizens, businesses and the public sector. Our electronic identification is mandatory and an integral part of our public services. We lean on the private sector for their innovative solutions and they benefit from the public sector. We work hand in hand with one another.

BF: In 2019, SMEs represented 98.7% of all local enterprises and 39.1% of all full-time employees in Denmark. Although funding for these companies experienced a dip between 2019 and 2020, it has come back in full force, including an investment of €30.9 million from the EU’s European Investment Fund. How would you assess the amount of support received by Denmark’s SMEs and startups? What is the Danish Business Authority doing to ensure entrepreneurs continue to innovate?

Katrine Winding: Regarding funding, we administer some of the EU structural funds that go into helping SMEs become more digital and sustainable in terms of innovation and a more skilled labor force. We also make sure that the framework conditions entice SMEs to be more digital and sustainable. We’re a small and open economy and small enterprises will not survive long if they are not innovative and competitive.

Traditionally Danish companies have thrived in the global economy. They have been exceptionally good at specialization and reacting to changes in the market. This is evidenced by the amount of investment flows for job creation and setting up production facilities in the US, where companies are also shifting focus. This goes both ways, as the US is the largest investor in Denmark. Given the new geopolitical situation, we need to make sure our close relationship continues. We benefit from international trade and innovation, but we are not naive when it comes to safeguarding critical infrastructure and technology. I think we will probably see businesses turn more toward Western and like-minded markets in the future.

BF: Denmark is a world leader in green technology in many sectors, including offshore wind, energy efficiency and life sciences. Denmark passed the Danish Climate Act in 2020 that targets a 70% reduction in greenhouse gas emissions by 2030 and becoming net zero for carbon by 2050. How important is sustainability to Denmark’s national identity and how does the private sector position itself?

Katrine Winding: There is currently a lot of regulation at the EU level. Danish businesses have embraced the vision of these regulations to move traditional investments toward more sustainable investments in all areas. New companies in Denmark are very purpose-driven regarding sustainability. Businesses should not be making decisions based only on financial numbers but also on sustainability data and this is moving quickly: we have yet to implement regulations and SMEs are already doing it. In my view, we are looking toward a future where we will not get investments unless we are sustainable, we will not get liquidity from banks unless we are sustainable and we will not be able to hire anyone unless we are sustainable. Nobody wants to work for a company that is not sustainable.

BF: Given that exports account for around 60% of the country’s gross domestic product, its largest trading partners play a significant role in Denmark’s stable economy. The US is currently Denmark’s largest non-European trade partner and more than 400 US companies are currently active in the local market. What kind of new opportunities are we seeing in the private sector that might be of interest to US investors and what is the government doing to reinforce commercial and political ties between the two markets?

Katrine Winding: The US is the country where Danish companies invest the most. Our minister was the first to say that the US’s Inflation Reduction Act was a business opportunity. We have a lot of the green capabilities that are required for the American green transition in terms of knowledge transfer and investment. We do not mind being in the US to do that and it is a great business opportunity for Danish companies in many areas, including wind and other green segments. For example, we are becoming a power-to-X country and are working on carbon capture usage and storage. We are also focused on bio-solutions in the food sector and life sciences sector. Alternatively, if American citizens want to set up a company here, there is no wrong-door policy. They can call the Danish Business Authority and we will answer, no matter what questions they have. I invite American companies and citizens to come and see Denmark for themselves.

BF: You took up the role of director general of the Danish Business Authority in 2017 after a long and successful career in the public sector and you now play a key role in ensuring the positive growth of the economy. It’s inspiring! What are your current top priorities as director general? What vision do you have for the country in the next decade?

Katrine Winding: My top priorities are three-fold. The first is to enhance the ease of doing business in Denmark, which means cutting red tape with the vision of businesses being able to automate their entire administration. The second is to further the sustainable transition for all companies — both the large ones and SMEs — to make sure they reap the benefits of new markets. And last but not least, we want to help Danish companies adapt to the new geopolitical situation and make sure they benefit from the way the world is turning.