MONACO

COUNTRY ANALYSIS

Done By

NITIN LAHOTI

MBA (International)

[email protected]
 MONACO

Table of Contents
EXECUTIVE SUMMARY...................................................................................................................3
OBJECTIVES.......................................................................................................................................4
INTRODUCTION.................................................................................................................................4
PESTEL ANALYSIS............................................................................................................................5
Political..............................................................................................................................................5
Economy............................................................................................................................................5
Social.................................................................................................................................................6
Technological....................................................................................................................................6
Legal..................................................................................................................................................6
Environment......................................................................................................................................6
Culture...................................................................................................................................................7
Globalization In Monaco.......................................................................................................................7
Incidence of Crime................................................................................................................................8
Corruption and Transparency-...............................................................................................................8
Business in Monaco...............................................................................................................................8
Gambling-..............................................................................................................................................9
Monaco Grand Prix-..............................................................................................................................9
Export and Import..................................................................................................................................9
Foreign Investment..............................................................................................................................10
License............................................................................................................................................10
Investors..........................................................................................................................................10
Membership in International Organizations.........................................................................................10
Conclusion...........................................................................................................................................11
Recommendations...............................................................................................................................11
Bibliography........................................................................................................................................12
Appendix-1..........................................................................................................................................14
Appendix-2..........................................................................................................................................14
Appendix-3..........................................................................................................................................15
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Appendix-4..........................................................................................................................................15
Appendix- 5.........................................................................................................................................16
Appendix- 6.........................................................................................................................................17
Appendix- 7.........................................................................................................................................18
Appendix-8..........................................................................................................................................18
Appendix-9..........................................................................................................................................19
Appendix-10........................................................................................................................................20
Appendix - 11......................................................................................................................................21
Appendix - 11

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Objectives
 To study and gather the information about the country.
 To study that how difficult/easy is to do new business in a country.
 To know about globalization affect.
 To know about how much the PESTEL analysis is important before starting a
business.

Introduction
Country Monaco full name is “THE PRINCIPALITY OF MONACO” it is a world number
second-smallest independent country in the world. Its capital is MONACO. It is located in
the Mediterranean coast, and it is surrounded by the three side of France. The full area of the
nation is 1.95 sq. km that is (485 acres). The flag of the country is of two equal horizontal
bands that red and white. Red is on the top and white is beneath.

Under Monarchy Constitution the Prince Albert II had took over the Monaco as a head of the
country, after death of his father, Prince Rainier. Prince Rainier wanted to reduce the Monaco
on tourism and also gambling. He faithfully protected Monaco banking and also the taxation
system from France. In 1959 Prince Rainier III had married the American Film Star Grace
Killy, they have two daughters Caroline and Stephanie. But Prince Albert II wants that more
of more high tech industry should come to Monaco to do the business. Monaco is also
famous for its Monaco Grand Prix which is Formula One car racing, because it is having
most difficult track in world for racing. Monaco is also famous for its Casinos in which
visitors love to gambling.

From 2005 the prime minister of the Monaco is Mr.SEM Jean-Paul Proust, the Foreign
Minister is S. E. Mr. Jean Pastorelli and head of the Monaco is Serene Highness, Prince
Albert II.

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Pestel Analysis

Political
1. The political system in Monaco is known as hereditary and constitutional monarchy().
(Appendix-1)
2. The Prince is Chief of State and he receives power in heredity. The Prince was Prince
Albert II. Also there is a constitutional government which is known as National
Council.(, 2009).
3. National Council is made of 24 members. 16 members are directly elected in elections
and the other 8 members are selected by proportional representation.().

4. The Prince is responsible to make all type of judicial, sensitive and political decisions.
Minister of state controls all administrative services, supervision of the Law and order
and head over the Government Council().

5. In year 1993 Monaco became a member of the United Nations. Its protection, defence
and security are handled by France because it has a treaty with France().

Economy
The currency of Monaco is the Euro. The country has no income tax on its resident. The
gross domestic product was $1.311 billion and per capita income was $40,900 in 2007
according to UN data. The unemployment rate is 0% (2006). (, n.d.)

In Monaco inflation rate was 1.9% according to year 2000. In Monaco, 30,000 jobs are
available, out of which 70% jobbers are from France.(, n.d.)

Monaco has different sector industry like Tobacco, the telephone network, and also postal
service, banking service, which is governed by economic and customs union with France.
Euros (EUR) per US dollar

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2004 2005 2006 2007 2008

0.805 0.804 0.796 0.734 0.682

(, 2009) 4 1 4 5 7

Euro per dollar is decreasing which is good sign because firstly we have to give 0.8054 for
one dollar but now 0.6827.

Social
In Monaco human rights are very much respected. The Constitution of Monaco had
provided freedom of Religion. The Roman Catholic is the Monaco Religion. They had given
the importance to the women that are why women are visible in public and they are also
representing in their professions. They believe in the equal pay for equal work, even though
in the business women are under-represented. That is why the case of violence against the
women is very rare. (, n.d.)

Technological
According to 2008 there were 35,000 telephones lines in use and 22,000 people having
mobile phones. There are 22,000 people who are using internet services. Monaco is
connected with other countries not through satellite. It is connected with cable from French
communication system. (, 2009)

Legal
1. French Napoleonic code is used in Monaco for law jurisdiction and legal system. The
magistrates are selected by the Prince but included only French judges. The legal
system included 4 levels of courts which are single judge, Court of First Instance,
Court of Appeal and the final court is Court de Revision(, 2009).

2. Peoples who have permit to visit France can visit Monaco without any other legal
procedures. Persons who want to start their business in Monaco or if anyone wants to
live in Monaco for more than 3 months then he has to take a residence permit from
the government of Monaco and pass through all legal formalities. There are no
restrictions on an outsider to purchase real estate in Monaco. () (Appendix-2)

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Environment
Monaco is a very beautiful country with the natural scenery and mild, and also about
the sunny climate. The nation had kept a very good control on the pollution levels in the air
and water for the safety of their own people. (, n.d.)
People of Monaco are also encouraged to use the public transport to limit the gas
emission and same Kind of techniques are used to protect the water supply, and also noise
level from industry and transport are also checked to the safe level.

Culture
Business culture of Monaco is very similar to France business culture. It is

➢ Stand on civility and mutual respect

➢ Behaviour is the key to earn trust.
➢ Take appointment in advance and arrive in meeting on time.
➢ Ask quires without afraid and should be direct.
➢ Person should be well-dressed and conventionally.
➢ Avoid high stress plans.
➢ Person should not become friendlier.
➢ The Monaco people usually separate their business and personal lives.

All this gives a lot of respect in business world and help in business. (, 2009)

Globalization in Monaco

 MNC’S in Monaco:
In Monaco, MNC’s are Fairmont (Canada), Novotel (France), Marriott and Le
Meridien (US) are for tourism sector and American Express, Natexis Banque
Populaire (France), Societe Generale, HSBC, ING and UBS, BNP Paribas, Banca
Popolare (Italy), CAIXA General de Depositos (Portugal) and Credit Suisse, Credit
Mobilier (France) are from financial sector.
 Less Effect of Globalization:
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• Limited size of market: In Monaco size of market is small due to less area. It
needs a huge investment to do business in Monaco.
• Limited domestic resources- In Monaco, there is shortage of natural
resources. Also there is shortage of labor due to less population. (Taymaz,
2009)

Incidence of Crime
As per INTERPOL analysis the crime rate is low in Monaco compared to other developed
countries (Appendix-3).

Corruption and Transparency-

Monaco has 35,000 people and it has more than 3,50,000 bank accounts which contain
deposits of more than £80bn. 85% accounts are non-residences and most of account holders
are criminal organization such as Italy Crime Organization, etc. it is because in Monaco there
is no tax on deposit money and bank have secrecy for not to disclose investors accounts to
anyone. Monaco has only 33% finance transparency. (Appendix-4)(, 2009), (Chittenden,
2009).
There is less corruption because there is free law and tax free. Monaco is ranked two of the
World Bank’s Governance Indicators and rates are: (, 2001)

1. Rule of law - 80.5 percentile

2. Political Stability - 85.6 percentile

Business in Monaco
The major industry which takes an important place in economy is tourism. According to
United Nation, around 327000 arrivals and 943000 overnight stays in 2007, mild climate and
geography also supports this industry. Tourists attract in Monaco by the world famous
casinos, harbours, Monte Carlo rally and Monaco grand prix. Other important industries are

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textiles, ceramics, clothing, rubber, plastics and precision engineering. Off shoring is not
popular in Monaco because as per the law of Monaco the companies which make 25% and
more sales outside of the country will pay 33.33% profits tax.

There are some advantages for doing business in Monaco which are as follows
1. As per treaty with France, Monaco is a division of the European Union (EU) customs
zone, although it is not an official part of EU but it had the benefits of EU customs
advantages.
2. International Monetary Fund (IMF) has recognized Monaco’s legal system as secure
and well regulated jurisdiction system.
3. Monaco has no personal income tax, no withholding taxes, no exchange controls if
you are in services sector than no need to pay Profit tax. ()
In Monaco the major industries are tourism, cosmetics, precision instruments, ceramics, food
products, construction, chemicals, and plastics (Appendix-5) (, 2009). In public sector 3,759
people were employed and in private sector 37,949 were employed in that 83.5% were in
services sector, 6.98% in industry, 23.43% in banking sector, 32.02% in construction and
public works, and 11.64% in tourism sector. Tourism and finance sector is very attractive in
Monaco because of the climate the location of the country every year many tourist visit.
Monaco is mainly famous for two things which attract both tourist and investor. (, 2006)

Gambling-
Gambling is started in 1863 in Monaco and now it is the most successful business. In
Monaco, every year there are competition of Monacan Poker and Backgammon. There are
five casinos in Monaco. (, 2006)

Monaco Grand Prix-

From 1929 there is an annual Formula One race held in the streets of the city. It is the most
difficult track in world. Every year numbers of tourist visit to see and play gambling on race.
(, 209)

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Export and Import

Monaco's primarily exports clothing, perfumes, fragrances and pharmaceuticals products.
Monaco considers is a vital internationally recognized trading centre. There are many agents,
consultants as well as import/export trade houses established in Monaco. Largest trade house
of the Monaco is hosted by the Syndicat Monegasque des Establishments de Nice
International (SMENI).

Monaco largely imports basic consumer good and Semi products or non-metallic. From these
Semi products or non-metallic items contribute major share. They are dependent on other
countries like France and Italy for this. It has a very good trade relationship with France and
Italy. (, 2009) (Appendix- 6)

Monaco is trading with all over the world. In 2008, Monaco about imported 560,147,354 €
and exported of 548,753,494 €. It does trade in every field. (Appendix- 7) (, 2009)
(Appendix - 11)

Foreign Investment
In Monaco there are no legal distinctions between foreign and domestic companies. Foreign
investors can purchase domestic company. The investors has residence permit then they can
purchase real estate and they can start their business. There are no limitations or restrictions
on profit, interest, royalties and dividend. Non-residents also open a foreign exchange
account and there is no control on foreign exchange. The taxes are also same for foreign
investors. The people, who are Non-French citizens, have to get work permit to do work in
Monaco. For work permit person has to submit the contract of employment and proof of an
address in Monaco. There is no quota system on foreign workers. Firstly they grant work
permit for one year then renew annually for another two years. Then after three years they
renew for three years and after that they renew for ten years. This system is to apply for
citizenship. (, 2009)

License
All business must obtain license from the government. Business can get license when there is
any real purpose. For license people have to submit the proposal of their business, give name
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of the investors, number of workers, proof of a premise. All the legal formalities take few
months and license is granted for three years. (, 2009)

Investors
Mainly foreign investors concentrated on financial sector and tourism (Appendix-8). In
Monaco, there are 80 banks and financial institutions and more than 350,000 accounts. There
are more than 35,000 people in Monaco in that only 21.6% is Monaco people, and other
78.4% are non-residency. (Appendix-9) (, 2009).

Membership in International Organizations

Monaco is not a member of any International Organization except one that is World
Intellectual Property Organization (WIPO). It is an expert agency of the United Nations. It is
devoted to increasing a reasonable and available international intellectual property system,
which rewards inspiration, inspire modernism and add to economic development while
protecting the public interest. (Appendix-10) (). It is also member of WHO (World Health
Organization) and UNESCO.

It is not member of IMF (International Monetary Fund) and WTO (World Trade
Organization) because IMF is helpful in providing funds to countries and if Monaco needs
funds, it is taking help from France. WTO is helpful in putting rules and regulations on
countries related to trade. Monaco is not a member because there is Prince Albert who is
making rules with help of France for trade.

Conclusion
Monaco is small country with high capital income. In this country there is less transparency
but no problem of corruption. It is tax heaven for all the big investors and made a problem to
OECD nations. The resources are limited so it has to import many goods. It is not a member
of many organizations, not even of EU, and then also it enjoys all the facilities through
France.

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Recommendations
We as a group wants to suggest to that investors who are thinking to invest in Monaco. They
can utilize their money in banking and tourism sector. Banking sector because of 3,50,000
accounts are there and these accounts are huge in number due to less tax rate and tourism is
also because of 5 billion tourists due to gambling and formula one car racing every year. So
these two businesses can give a high return.

Bibliography
About WIPO. (n.d.). Retrieved Jan 19, 2010, from www.wipo.int: http://www.wipo.int/about-
wipo/en/what_is_wipo.html

Background Note: Monaco. (2009, 07). Retrieved 12 01, 2009, from .state.gov:
http://www.state.gov/r/pa/ei/bgn/3397.htm

Central Intelligence Agency. (2009, November 27). Retrieved December 5, 2009, from
www.cia.gov.com: https://www.cia.gov/library/publications/the-world-
factbook/geos/mn.html

Chittenden. (2009, April 09). Monaco tries to ward off extinction. Retrieved Jan 20, 2010,
from news.bbc.com: http://news.bbc.co.uk/2/hi/europe/7991758.stm

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Countries and their cultures. (n.d.). Retrieved December 7, 2009, from

www.everyculture.com: http://www.everyculture.com/Ma-Ni/Monaco.html

Country Brief MONACO. (2009, May 09). Retrieved Jan 18, 2010, from
www.estandardsforum.org: http://www.estandardsforum.org/system/briefs/284/original/brief-
Monaco.pdf?1254987853

Cultural Training. (2009). Retrieved Jan 18, 2010, from www.startupoverseas.co.uk/:

http://www.startupoverseas.co.uk/starting-a-business-in-monaco/cultural-training.html

(2009). Jurisdiction Report - Monaco. Monaco: Tax Justice Network.

Monaco. (n.d.). Retrieved 12 01, 2009, from .ifacca.com:

http://www.ifacca.org/directory/country/monaco/resources/

Monaco (MC). (2009). Retrieved Jan 19, 2010, from www.wipo.int: www.wipo.int/about-
ip/en/ipworldwide/pdf/mc.pdf

Monaco. (2001). Retrieved Jan 18, 2010, from www-rohan.sdsu.edu: http://www-

rohan.sdsu.edu/faculty/rwinslow/europe/monaco.html

Monaco. (2009, 12 01). Retrieved 12 01, 2009, from .infoplease.com:

http://www.infoplease.com/ipa/A0107792.html

Monaco Economy. (2006). Retrieved jan 19, 2010, from www.economywatch.com:

http://www.economywatch.com/world_economy/monaco/

(2009). monaco en chiffres. P r i n c i p a u t é d e M o n a co.

Monaco Gambling. (2006). Retrieved Jan 19, 2010, from www.worldgamblingreview.com:

http://www.worldgamblingreview.com/gambling/monaco/

Monaco Political. (n.d.). Retrieved 12 01, 2009, from .culturalpolicies.com:

http://www.culturalpolicies.net/web/countries-resources.php?pcid=1330

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Monaco Politics. (n.d.). Retrieved 12 01, 2009, from http://www.nice-city-

vacation.com/monaco-politics.html

Nation. (n.d.). Retrieved December 7, 2009, from www.nationencyclopedia.com:

http://www.nationsencyclopedia.com/Europe/Monaco-ENVIRONMENT.html

Q Finance. (n.d.). Retrieved from www.qfinance.com: http://www.qfinance.com/country-

profiles/monaco

Set Up a Company in Monaco. (n.d.). Retrieved Jan 20, 2010, from

www.healyconsultants.com: http://www.healyconsultants.com/company-incorporation/set-
up-a-company-in-monaco.html

Taymaz. (2009, April). Economics of Small States and Globalization. Retrieved Jan 20, 2010,
from www.kafsam.org: www.kafsam.org/dp/kafsam_dp0902.pdf

The Government in Monaco. (n.d.). Retrieved 12 01, 2009, from .spainexchange.com:

http://www.spainexchange.com/guide/MC-government.htm

The World's Greatest Motor Race. (209). Retrieved Jan 19, 2010, from cars.about.com:
http://cars.about.com/od/alternativetransport/a/monaco_gp.htm

Visit Monaco. (n.d.). Retrieved December 7, 2009, from www.monacoconsulate.com:

http://www.monacoconsulate.com/pdf/DP_Monaco_Protection_Environnement_GB.pdf

Why Start A Business In Monaco? . (2009). Retrieved Jan 20, 2010, from
www.startupoverseas.co.uk: http://www.startupoverseas.co.uk/starting-a-business-in-monaco

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Appendix-1

().

Appendix-2

Appendix-3
Per 100,000 population (2001)

Crime Monaco USA Japan

Murder 3.33 5.61 1.05

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Rape 0.0 31.77 1.75

Robbery 0.0 148.50 5.02
Aggravated assault 46.67 318.55 26.68
Burglary 180.00 740.80 238.59
Larceny 863.33 2484.64 1550.41
Motor vehicle theft 73.33 430.64 49.71
Total 1166.76 4160.51 1873.21
(, 2001)

Appendix-4

The Key Financial Secrecy Indicators (KFSI) list is as follows:

Opacity
1. Provides banking secrecy;
2. Does not put details of trusts on public record;
3. Does not comply sufficiently with international regulatory requirements
4. Does not require that company accounts be available on public record;
5. Did not respond to Tax Justice Network requests for information;
6. Does not participate in the European Union Savings Tax Directive;
7. Has few tax information agreements;
8. Does not have adequate access to banking information;
Transparency
1. Does not allow company redomiciliation;
2. Does not allow protected cell companies
3. Does require that beneficial ownership of companies is recorded on public
record;
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4. Does maintain company ownership details in official records;

(, 2009)

Appendix- 5

(, 2009)

Appendix- 6
Type of Products Import (2008) Export (2008)
Money in € % Money in € %
Agriculture, Forestry, Fishing 3275129 0.72 3939181 0.58
Food-processing industries products 64039373 9.03 49525207 11.43
Energy Products 256197 1.02 5603998 0.05
Metal, Metal Work Produced 17560668 2.64 14483586 3.14
Non Metallic, Semi-products 224550179 24.13 132424460 40.09
Possessions Professional Equipments 36992493 9.13 50115479 6.6
Electronic Medical Material 13356799 2.11 11562103 2.38
Automobile Equipments 95707718 9.81 53811668 17.09
Utility Equipment - Ground Transport 40891682 8.61 47264449 7.3
Basic consumer goods 60094046 29.05 159434494 10.73
IT Service Companies 3423070 3.75 20588869 0.61
Total 560147354 100 548753494 100

(, 2009)

Appendix- 7
Geogaphical Zone Import (2008) Export (2008)
EUROPE 384969303 68.73 375264395 68.38
AFRICA 85059859 15.19 35353618 6.44
AMERICA 38088039 6.8 41387469 7.54

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ASIA 47064580 8.4 93260549 16.99

OCEANIE 4965573 0.89 3487463 0.64
Total 560147354 100 548753494 100

(, 2009)

Appendix-8
Financial institutions that have operations in Monaco:

1. American Express,
2. Natexis Banque Populaire (France),
3. Banque de Gestion Edmund de Rothschild, Banque du Gothard (now part of the BSI
group of Lugano, Switzerland),
4. Banca di Roma, Banque Pashe (Switzerland),
5. BNP Paribas, Banca Popolare (Italy),
6. Barclays Bank, Banco Atlantico (part of Banco Sabadell ofSpain),
7. Caisse Mediterraneennee de Financement (France),
8. CAIXA General de Depositos (Portugal),
9. Credit Suisse, Credit Mobilier (France),
10. Credit Lyonnais, Credit du Nord Credit Foncier (France),
11. Lloyds Bank, Monte Paschi Banque (Italy),
12. Societe de Paiements (France),
13. Societe Generale, HSBC, ING and UBS.
Among the hotel companies that have operations in Monaco

1. Fairmont (Canada),
2. Novotel (France),
3. Marriott and Le Meridien (US). (, 2009)

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Appendix-9

NATIONALIT POPULATIO Percentag

Y N e
Monaco 7634 21.6
France 10029 28.4
Italie 6596 18.7
Grande
Bretagne 2666 7.5
Belgique 976 2.8
Suisse 894 2.5
Allemagne 894 2.5
USA 350 1
Autres 5312 15
Total 35351 100

(, 2009)

Appendix-10
Membership of International Bodies

1. Membership of WIPO Treaties:

• WIPO Convention, since March 1975.

• Paris Convention (Industrial Property), since April 1956.
• Berne Convention (Literary and Artistic Works), since May 1889.
• PCT (Patents), since June 1979.
• PLT (Patent Law Treaty), Signatory since June 2000.
• Madrid Agreement (False or Deceptive Indications of Source on Goods), since April
1956.
• Madrid Agreement (International Registration of Marks), since April 1956.

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• Madrid Protocol (International Registration of Marks), since September 1996.

• Hague Agreement (International Deposit of Industrial Designs), since April 1956.
• Nice Agreement (International Classification of Goods and Services), since April 1961.
• Rome Convention (Performers, Producers of Phonograms and Broadcasting
Organizations), since December 1985.
• Strasbourg Agreement (International Patent Classification), since June 1976.
• Geneva Convention (Unauthorized Duplication of Phonograms), since December 1974.
• Budapest Treaty (Deposit of Micro-organisms), since January 1999.
• TLT (Trademarks), since September 1996.
WTO: Not a member.
Year Export Import Balance
Membership of
2009 15.6 37.5 -22.0 Other
2008 62.7 22.3 40.5 bodies/treaties:
2007 42.8 21.4 21.3 EPO, UCC.
2006 33.5 31.6 1.9
2005 16.8 37.5 -20.7 • Member of EPO
2004 18.2 23.0 -4.9 since December
2003 50.3 21.6 28.7 1991.
• Member of UCC
since June 1955. (, 2009)

Appendix - 11

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