Implementation of Iceland’s Industrial Policy is progressing well, with four actions completed
Overall, implementation of Iceland’s Industrial Policy is progressing well, despite delays in certain individual actions. This is the main finding of the first progress report on the implementation of Iceland’s Industrial Policy, which has been presented to the Industrial Policy Council and the Ministerial Committee on Economic Affairs. According to the report, four of the 35 actions have been completed, 23 are in progress and 8 are in preparation. Work has commenced on all actions.
Iceland’s Industrial Policy – A Growth Plan to 2035 was approved by the Government in March and published in April, together with its first Action Plan for 2026–2027. The policy’s main objective is robust growth in exports driven by high-productivity industries. The 35 actions fall under the responsibility of ten ministries and aim, among other things, to strengthen infrastructure, streamline the regulatory framework, support science and innovation and ensure the right skills for the future.
Four Actions Completed
The first progress report identifies four actions that have already been completed:
- Increased Investment Flexibility for Pension Funds. Legislative amendments that entered into force on 1 July provide pension funds with greater investment flexibility, including to support innovation and industrial development.
- Legislation on Screening of Foreign Investments. New legislation was adopted in June and will enter into force on 1 January 2027. It establishes a clearer legal framework for screening foreign investments in relation to national security and critical infrastructure.
- Support for Innovation in Carbon Capture from Industrial Sources. Two innovation projects received grants totalling ISK 360 million from the Climate and Energy Fund to develop technological solutions that contribute to reducing industrial emissions.
- Strengthening Marine Research for the Fisheries Sector. Legislative amendments were adopted in April, strengthening the legal framework governing the Marine and Freshwater Research Institute and clarifying its role and long-term strategic planning.
Industrial Policy Council Welcomes Progress but Highlights Challenges
The Industrial Policy Council welcomed the first progress report and the progress made in implementing the actions, including efforts to streamline administrative procedures in environmental and energy matters, increase the investment flexibility of pension funds, and improve the processing of work and residence permit applications for foreign experts.
The Council also expressed concern about delays in reforming the regulatory framework for aquaculture and the operating environment for data centers. Furthermore, the Council urged the Government to pay particular attention to the tax reimbursement scheme for research and development (R&D) expenditure and to consider extending the period of tax relief available to foreign experts from three to seven years, bringing Iceland into line with most other Nordic countries in this regard.
For more information, see the minutes of the Industrial Policy Council’s meeting on October 21.
“We welcome the fact that a comprehensive overview of the implementation of the Industrial Policy is now available and that important steps have been taken. At the same time, delays must be addressed, and clear indicators must be established to measure the outcomes of individual actions. Regular and transparent monitoring is essential to keeping implementation on track,” says Robert-Jan Smits, Chair of the Industrial Policy Council.
Regular Monitoring of Industrial Policy Implementation
The report is the first in a series of regular progress reports and is part of regular monitoring of the Industrial Policy’s implementation. Progress reports are expected to be prepared on a quarterly basis, with their main findings made publicly available.
The reports will cover both the implementation status of individual actions and developments in the nine indicators established to monitor the performance of Iceland’s Industrial Policy through 2035.