$Unique_ID{COW01650} $Pretitle{422} $Title{Iceland Banking and Credit} $Subtitle{} $Author{Maryanne B. Lyons and Maria H. Rauhala} $Affiliation{U.S. Department of Commerce} $Subject{iceland percent icelandic bank goods investment foreign tax united commercial} $Date{1990} $Log{} Country: Iceland Book: Marketing in Iceland Author: Maryanne B. Lyons and Maria H. Rauhala Affiliation: U.S. Department of Commerce Date: 1990 Banking and Credit Banking System: Up to 1989, Iceland's banking system consisted of seven commercial banks, a large number of savings banks, and some deposit departments run by cooperatives. Three of the seven commercial banks were wholly State-owned until 1988. These were The National Bank (Landsbanki Islands), the Agricultural Bank (Bunadarbanki Islands), and the Fisheries Bank (Utvegsbanki Islands). After the bankruptcy of one of its major creditors, the Fisheries Bank ran into difficulties and was made into a private shareholder's bank in May 1988, with its majority holdings temporarily assumed by the National Bank. On January 1, 1990, the Fisheries Bank, the Industrial Bank, the Commercial Bank, and the Peoples Bank merged to from the Bank of Island (Islandsbanki). It is second in size only to the National Bank, which has acquired a majority share of the Cooperative Bank. The three commercial banks in Iceland are now the National Bank, with 49 percent of the country's banking business, the Bank of Island, with 29 percent, and the Agricultural Bank with 22 percent. There are also a small number of Savings banks, whose combined size is small than the Agricultural Bank. A new law on banking was enacted in 1986. Its major provisions, which expanded the range of banking services and made the Icelandic system more compatible with developments in the international financial market are as follows: Deregulation of interest rates, allowing banks to set their own rates for deposits and loans. Minimum capital-ratio requirement of 5 percent Maximum fixed-asset ratio of 65 percent of capital and reserves. Right to establish new branches without official approval. Right to own shares in other financial companies. Permission for foreign banks to set up representative offices in Iceland. Notes are issued by Iceland's Central Bank, which has all the traditional central banking functions. The principal monetary authority in the country, it also serves as the bank of the Treasury and other banks. The Central Bank was established in 1961. Before that its functions were handled by the National Bank, currently the largest commercial bank in Iceland. The Board of Directors is elected by the Althing for a term of 4 years. The Governors of the Bank are appointed by the Minister of Commerce and Banking. Sources of Financing: Public investment funds play an important role in supplying long-term financing for the Icelandic economy, and are the most important source of financing of private fixed investment. The three main funds are the Fisheries Loan Fund, the Agricultural Loan Fund, and the Industrial Loan Fund. Their capital is mainly from government grants, earmarked taxes, the unemployment fund, compulsory savings by young people, a proportion of incremental bank deposits, and domestic borrowing. Other important funds are the Development Fund of Iceland, which channels long-term financing to the various investment credit funds and to major public investment projects, and the Export Loan Fund and Export Credit Guarantee Fund, which help to finance exports. The Icelandic Investment Corporation was founded under joint, private, and government sponsorship. Its functions include equity participation in businesses (including joint ventures with foreign partners), as well as financial support for innovative Icelandic firms. Other Financial Institutions: Iceland also has an insurance system that includes private insurance companies, private pension funds, and a comprehensive system of social insurance. The pension funds and social insurance system are operated privately by labor unions, but come under the financial regime of the Government. The major Icelandic banking and financial institutions, including public agencies as well as private commercial and savings banks, are listed under Financial Institutions in the Addresses Section. Currency and Foreign Exchange: The Icelandic currency is the krona. On January 1, 1981, the currency unit of Iceland was changed. One new krona equals 100 old kroner, and one new eyrir equals one one-hundredth of a new krona or 1 old krona. At the time this change was implemented, the new krona was roughly equivalent to 16 U.S. cents. The krona is now worth about 1.6 U.S. cents; $1 is equivalent to approximately 60 kroner. The Central Bank determines the exchange rate of the krona, subject to government approval, and quotes buying and selling rates of foreign exchange. For goods dutiable on value, foreign exchange is converted into Icelandic currency. The krona was devalued 3 times in 1988, resulting in a 21.85 percent rise in the trade weighted average exchange rate of foreign currencies. Trade Regulations Trade Policy: Iceland is heavily dependent on foreign trade and maintains an open policy aimed at the long-term liberalization and expansion of international commerce. Iceland's effort to reduce tariff barriers and trade restrictions took on added momentum at the time of its accession to the GATT in 1968. Import liberalization since then has reached over 90 percent of total imports. Licenses now are required for relatively few commodities and about 90 percent of imports enter duty free. Iceland actively supports organizations working for free trade, as seen by its membership in GATT, the Organization for Economic Cooperation and Development (OECD), the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD), and the European Free Trade Association (EFTA). Iceland participated in the Tokyo Round of Multilateral Trade Negotiations held under the GATT in the 1970s, but only joined the industrial tariff agreement. It was implemented without any staging on January 1, 1980. Tariff Structure: Iceland adopted the Customs Cooperation Council Nomenclature (CCCN) in 1963, simplifying its own tariff structure, and eliminating certain very high duties. In January 1988 Iceland's tariff system was entirely reformed, lowering or abolishing many duties. The present tariff schedule has two columns. The first lists the general duty rates. The second lists preferential rates applied to imports from other EFTA countries and from EC countries. Where no figure appears in the second column, the rate in the first applies to all countries. Current duty rates range from 0 to 30 percent ad valorem. Products with high rates of 30 percent include telecommunications equipment, military equipment, motor vehicles, electrical equipment, automatic goods vending machines, potatoes and vegetables, plants, and miscellaneous consumer goods. Some goods which now have no duties are meat products, fish, cereal, fruits, nuts, dairy products, coffee, tea, ores, minerals, chemical and pharmaceutical products, plastics, rubber, wood, paper, books, glass, iron and steel, tools, nuclear reactors, electrical machinery and aircraft. For further information on specific tariff rates contact the Department of Commerce Iceland Desk Officer at the number listed in the Commercial Information Sources Section. Licensing: Most goods may be imported without license. The Ministry of Commerce, after consulting the Central Bank, makes the ultimate decision on matters concerning import licensing for goods on the restricted list. Import licenses are issued by Iceland's two largest privately owned banks, the National Bank of Iceland and the Fisheries Bank, and are valid for 3-16 months. Import Restrictions: Restricted commodities are: live animals; meat and edible offals; dairy products and eggs; cut flowers; coffee; lard and other animal fats; margarine; grape must; crude bituminous or petroleum oils; non-aviation gasoline; distillate and residual fuel oils; and paint brushes, plastic-mounted brushes, brooms, squeeges, and mops. Importation of certain items, though not quantitatively restricted, is limited in other ways. Fertilizers are imported only by the State Fertilizer Plant under the general supervision of the Ministry of Agriculture; alcoholic beverages, tobacco, industrial alcohol, and matches by the Liquor and Wine Authority under the Ministry of Finance; electrical line, telephonic, and telegraphic apparatus by the Post and Telecommunications Administration; tree seedlings by the State Forestry Agency; and fresh vegetables by the Agricultural Production Board. A number of products must be tested or inspected before entry into Iceland. Agencies responsible for technical regulations on specific goods are listed in the Address Section of this report. Customs Requirements: For customs clearance, shipments to Iceland must be accompanied by the original invoice or a copy covering the imported goods or consignment. The original or the copy is retained by the customs authorities. Regulations on the preparation of the commercial invoice and must be carefully followed to avoid a possible fine of 10 percent of the duty. Copies of these regulations may be obtained by writing to the Customs Authority. The commercial invoice must include the following information: a careful description of the goods; name and address of the consignor and consignee; location and date of issue; date of delivery of the consignment to Iceland and the transportation method used; number of packages and their gross weight; net weight of each article and number of articles; and types of packages and number of both inner and outer packings of packages. Should a consignment consist of more than one container of different kinds of products, the invoice must indicate the products in each container, and specify gross weight. The invoice must also state the country of origin of the goods, the selling price of each individual product and the unit price and aggregate price. All amounts on the invoice must be added up and a total amount clearly stated. The number of articles, discounts and other reductions must also be included. Other information required includes: date of sale and terms of delivery (f.o.b., c.i.f., etc.); currency in which the invoice price is specified; terms and conditions of payment; and the seller's statement that only one invoice has been issued to cover all the goods found in a particular consignment. It must also be shown that the goods are entered at the price for which they are sold, and that to the seller's knowledge the price stated is not lower than the market price of identical or similar goods for export at the time and place of purchases. When the market price is lower, it must be given in the invoice along with the sale price. Consignees of imported goods must submit a bill of lading or waybill for customs clearance. Documents are also required for charges and other matters not covered in the commercial invoice, bill of lading, or waybill, such as commissions and agent's fees, packing expenses, a packing list, and a certificate of chemical analysis, if appropriate. Customs authorities may require documents or data to provide verification of statements specified in the customs declaration and invoices, such as information on the type of product, its composition, quantity, and price. These papers may be required in duplicate. Marking and Labeling: Special labeling requirements must be met for certain items at the retail level, including food, processed meat products, and other consumer goods. Margarine must be labeled and include the name of the producer and the word "Utlent" (i.e., "foreign"). The shipper should make sure that packing has sufficient strength to withstand not only the sea voyage but also possible transshipment over Iceland's rough roads and between its ports. Occasionally, because of a shortage of warehousing facilities, packages are exposed to rain and wind in open and unsheltered storage areas. Special care should be taken in wrapping and waterproofing all shipments to Iceland that might be damaged by exposure to moisture. The quantity and contents of packages must be marked clearly to conform with the commercial invoice, with materials durable enough to withstand rain and rough handling. The mark of the country of origin on imported merchandise is not required, but it is forbidden to use marking which might mislead the purchaser as to its origin or identity. U.S Senate Concurrent Resolution 40, adopted in 1953, invites U.S. exporters to inscribe on the external shipping containers in indelible print of a suitable size, insofar as practicable, "United States of America." While such marking is not compulsory, U.S. shippers are urged to cooperate in thus publicizing American made goods. Samples and Advertising Matter: Unsaleable samples are free from duties, but those of commercial value are subject to the same duty as a commercial shipment of the same product. Samples carried into Iceland in a traveler's luggage may, upon request, be exempted from duty for a specified period, not to exceed 1 year. When entering Iceland, the traveler must submit a list of samples and post a deposit to cover the duties. The list and samples are reexamined by the customs authorities and the deposited money returned when he leaves. The traveler is responsible for duties on any unaccountable articles. Simplified procedures for temporary importation of samples is available to U.S. traders as a result of Iceland's accession in 1970 to the Customs Convention of the A. T. A. Carnet for the Temporary Importation of Goods. Under its provisions, commercial samples of goods accompanied by a carnet can be entered into various foreign countries, including Iceland, without posting bond at each border. Carnets are issued in the United States by the U.S. Council of the International Chamber of Commerce, 1212 Avenue of the Americas, New York, NY 10036. As a signatory to the International Convention to Facilitate the Importation of Commercial Samples and Advertising Material, Iceland permits advertising matter printed in a foreign language to enter duty free. Advertising matter printed in Icelandic and imported from EFTA or EC member countries is also duty free, but is dutiable at 15 percent if imported from any other country. Investment Icelandic Investment Policy: Because Iceland's investment policies has favored local investors, foreign investment in Iceland is minimal. However, the Government is now interested in cooperation with international corporations to further develop the country's power intensive industries, and is revising its investment regulations to meet EC standards. Details on the new regulations are not yet available, but restrictions on investment in the fisheries sector will remain. The new regulations will be phased in over several years. One of the more important current regulations on foreign investment in Iceland is the requirement that the majority of the founders of a company have had residency in Iceland for the last 2 years. The directors of Icelandic branches must also be nationals and have residency in the country. If the company owns Icelandic real estate, the nationality requirements are even stricter. Special requirements for Icelandic majority ownership of equity capital and total Icelandic board membership govern trading companies and industrial enterprises. Foreigners may not buy land without permission, and foreign service companies are not permitted. While commercial transactions in Iceland are for the most part free of control, capital movements are not. They are under the direct supervision of the Ministry of Commerce and the Central Bank. Borrowing to finance imports of consumer goods is severely limited, but some allowances are made for long term credit financing of imported capital goods There are no standard incentives or guidelines for foreign investment in Iceland. Major investment projects are negotiated individually between the contracting parties. Taxation, deliveries, capital transfers, ownership and all significant issues are negotiated as part of the comprehensive agreement. U.S. and Other Foreign Investment In Iceland: The aluminum smelter in Straumsvik owned by Icelandic Aluminum Co. Ltd. (ISAL), with a net investment of over $150 million, is the largest foreign investment in Iceland. It is a wholly owned subsidiary of Alusuisse and produces more than 80,000 tons of aluminum per year. The second largest foreign investment is a ferrosilicon plant, Jarnblendifelagid (Icelandic Alloys Ltd.). Located at Hvalfjordur on Iceland's west coast, it is owned 30 percent by Elkem A/S of Norway, 15 percent by Sumitomo Corporation of Japan, and the rest by the Icelandic government. Total net investment is about $20 million. Annual production is about 60,000 tons. The only U.S. investment in Iceland is Kisilidjan Ltd., a diatomite plant owned jointly by the Icelandic Government and Manville Corporation. In 1989, the U.S. investment rose from 40 percent to 48.6 percent following the purchase of additional shares from the Icelandic Government. The U.S. share is valued at about $2.2 million. Deposits of diatomite found at the bottom of Lake Myvatn in northern Iceland use geothermal steam available in the area for the manufacturing process. It is primarily exported to Europe for use as an industrial filter and abrasive. Total sales for 1989 were about $8 million. A consortium composed of U.S. company Alumax and Dutch and Norwegian partners is currently negotiating with the Icelandic Government to build a new aluminum smelter. This project is expected to be approved in the near future. Icelandic Investment Abroad: Iceland's direct investment in the United States is also relatively low. Two U.S. subsidiaries of Icelandic firms are engaged in preparation, packaging, and distribution of Icelandic fish (especially cod). Icelandic investment in the United States is estimated at about $26 million, around 85 percent of total Icelandic foreign investment. Iceland also has a fish processing facility in the United Kingdom. Forms of Business Organization: The standard forms of business organization in Iceland are: (a) partnerships or single proprietorships; (b) limited liability companies (stock companies; and (c) cooperative societies. The limited liability company is the usual form taken by a business organization. Under Icelandic law, a limited liability company is one in which the shareholders, individually, are not responsible for any act or liability of the company beyond the paid-in portion of their respective shares in the capital stock of the company. A company may be established by five or more persons with a minimum share capital of 20,000 kroner (about $500). A minimum of about $250 must be paid before a company can be registered. Foreign limited liability companies may be registered in Iceland with the Limited Liabilities Registration Office, provided they are legal concerns in their own country and obtain the necessary license for doing business in Iceland. A company can normally be organized in a short time by an Icelandic lawyer. Registration requires filing of the following documents: 1. Copies of the Memorandum of Association and bylaws of the company. 2. An official certificate, endorsed by a consul in the country of incorporation, signifying the legality of the company and its address. 3. A certification from the board of directors, verified by a notary public, stating that the company will adhere to Icelandic law and that its representative in Iceland will be authorized to act for the company in Icelandic courts. 4. An exclusive power of attorney executed in favor of the representative, which the company is required to appoint for purposes of its business in Iceland. Any subsequent change in the data required above also must be reported. The company may be required to submit its accounts to the Registrar within 90 days after the end of the fiscal year. Entry and Repatriation of Capital: While commercial transactions in Iceland are for the most part free of control, capital movements are not. They are under the direct supervision of the Ministry of Commerce and the Central Bank. Borrowing to finance imports of consumer goods is severely limited, but some allowances are made for long term credit financing of imported capital goods. Intellectual Property Protection Protection of U.S. Interests: Iceland is a signatory of the 1934 revision of the Paris Convention for the Protection of Industrial Property (patents, trademarks, commercial names, and industrial designs), to which the United States and 92 other countries adhere. Under its provisions, U.S. business representatives and inventors are entitled to receive national treatment in Iceland, i.e., treatment equal to that accorded Icelandic citizens. Patents: Under Icelandic Law, patents are granted for a period of 15 years from the issue date. Applications are examined for technical adequacy and eligibility, based on relevance to other patents in force. If a corresponding patent application has been filed abroad, the Icelandic patent will not be granted before the foreign patent is granted. If foreign application is filed, a novelty examination will be made by the Ministry of Industries. Applications are open for public inspection for 12 weeks, during which oppositions can be filed. Beginning 5 years after the date of issue, the owner of the patent must make it available to interested parties if it is inadequately worked. If the patent is needed to work another patent, compulsory licensing is mandatory after 3 years from the date of issuance. U.S. nationals are entitled to the protection of patents against arbitrary forfeiture for nonworking. After first filing a patent application in the United States, they have a 1 year "right of priority", in which to file a corresponding application in Iceland and receive in that country the benefit of the first U.S. application filing date. Matters pertaining to patents should be addressed to the Secretary General, Ministry of Industries. Trademarks: Trademarks are protected under the Icelandic Trademarks Act No. 47 of May 2, 1968. Iceland has adopted the Nice International Classification System for registration purposes (34 products and 8 service classes). Trademark registrations are valid for 10 years from the date of registration and are renewable for like periods. The "right of priority" period for trademark applications is 6 months. The first applicant for a trademark is entitled to registration and exclusive ownership rights. However, if another party can prove prior use within 5 years of the registration date, that party may have the mark cancelled and reregistered. After 5 years, a registration becomes incontestable on grounds of prior use. After examination, any application found acceptable is published. It may then be contested during a 2 month period before it enters into force. Icelandic or foreign official emblems or words, or markings contrary to public order or good morals, cannot be registered as trademarks. Use of a mark is not compulsory. Foreign registrants must appoint an agent in Iceland. For some foreign registrants, there is a prior home registration requirement, but this does not apply to U.S. applicants. Trademark applications should be sent to the Office of the Chief Magistrate, Trade Secretary. Industrial Designs: Copyrights: Iceland is a member of the Universal Copyright convention, to which the United States and 79 other countries adhere. Works of American authors, first copyrighted in the United States, are thereby entitled to automatic protection in Iceland. The author need only show the year of first publication and the symbol "c" in a circle to obtain copyright protection on such works. Iceland is also a member of the "Berne Union" Copyright Convention. Although the United States is not a member of this Convention, U.S. authors may obtain protection in Berne Union countries by publishing a work in a member country at the time it is first published and copyrighted in the United States. Protection of copyrights in Iceland is governed by the Copyright Statute of May 29, 1972. Protection is for the life of the author plus 50 years. It covers all literary, dramatic, musical, and artistic work, and includes the sole right to produce and reproduce the work or a translation of it, to perform it in public, and to authorize others to do so. Taxation The Icelandic Government initiated an overall tax reform in 1988, which is to be fully implemented by the end of 1991. This reform was undertaken to streamline a system which had become cumbersome due to a series of tax concessions introduced during the 1980s, and to stabilize and broaden the tax base. Individual: All persons who are residents of Iceland are subject to taxation on all income and property on a world wide basis. Non-residents of Iceland are subjected only to limited taxation on income from sources in Iceland and on property from which such income is derived. In 1988 the government changed the entire income tax system by bringing in a single tax rate applicable to everyone regardless of income. The rate was initially set at 37.7 percent, and was to have been reduced further by the end of 1991. However, after the introduction of the Value-added-tax (VAT) in July 1989, the rate was increased to 39.79 percent, which includes a national rate of 32.8 percent and a municipal rate of 6.99 percent. A personal allowance, revised every July 1st on the basis of the loans index, is exempt from taxation. Withholding is on the basis of current income. Child benefits, first-home benefits and other deductions are paid directly to recipients by the tax authorities. The final tax is assessed on the basis of a tax return filed after the end of the year. After taking into account tax credits, child benefits, and mortgage interest credits, the net personal income tax is about 11 percent of income, slightly higher than before the reform. Corporate: The tax base for all resident corporations and taxable entities is their world wide income after deduction of business expenses. Corporations, cooperatives, partnerships, and other entities registered, chartered, or having their place of effective management in Iceland, are residents of Iceland for tax purposes. Nonresident companies are taxed on income from Icelandic sources. The corporate tax rate was reduced from 51 percent to 48 percent in 1988, but raised to 50 percent in 1989. It is levied on the previous year's net income, after subtracting paid-out dividends up to 18 percent of share capital and subtracting a reserve fund contribution of up to 25 percent of net income less deductible dividends. The reserve fund contribution is taxed ultimately at 20 percent normal rates, unless used to meet operating losses at some time before being dissolved. Permissible deductions from gross income include operating losses carryover from previous years, rent, wages and salaries, interest on borrowed money or bonds, maintenance and repair charges, and royalty payments for the use of a patent or copyright. Normal depreciation is also allowed on the full acquisition cost of assets. Only the straight line method is allowed, at rates fixed by Icelandic law. Assets are classified as movable, immovable, and intangible. Accelerated depreciation of 12 percent of the acquisition cost of movable property is permissible under the straight line method and can be spread over the lifetime of the property, but is limited to 2 percent of the full acquisition cost of the property in any given year. Normal depreciation must first be used, and accelerated depreciation can be used simultaneously or later, but cannot be used if it results in business losses. Value-Added-Tax (VAT) and Excise Taxes: An Icelandic VAT of 24.5 percent, levied on a broad base of goods and services, went into effect in July 1989. It replaced a general sales tax of 25 percent, which had been levied on the value of both imported goods and domestic goods. Some services, admission charges, utilities, license fees, and subscriptions are exempt from the VAT. The VAT on milk, fish, meat, and fresh domestic vegetables will be refunded to reduce the effective rate to 14 percent. There are additional excise taxes on the following imported and locally produced items: sugar and chocolate confectionery, 7 percent; soft drinks, and preparations for making soft drinks and beer, 17 percent; potatoes, 50 percent; goods made from potatoes, 40 percent; and motor vehicles and motor cycles, 7-37 percent. Other Taxes: Property tax is assessed on the net wealth of all taxable individuals, corporations, and other entities, based on the property's cost of acquisition calculated according to its valuation on December 1 of every year. Nonresidents are taxed the net worth of their assets as well, provided that they are connected to derivation of taxable income in Iceland. A special property tax of 1.4 percent is levied on all office buildings and commercial buildings used for wholesale and retail business. A capital tax of 1.6 percent plus a surcharge of 0.016 percent is levied on the net wealth of individuals, corporations, and other entities. Net wealth in most cases is the normal or cost price of property, less indebtedness, such as mortgages. For individuals, the rate is 1.2 percent plus 0.012 percent on net wealth less specified exemptions of from 114,000 to 171,000 kroner ($2,000-$3,000). A municipal tax of 0.33 to percent 1.3 percent may be levied on all business operating expenditures of individuals, corporations, and other taxable entities. Individuals are also subject to a municipal tax on income. The rate varies from one municipality to another. Non-residents dwelling temporarily in Iceland and deriving income from Icelandic sources for employment during their stay, are subject to taxation on such income. Icelandic income sources derived from employment, directors fees, committees fees, pensions, grants, independent personal services, and artists performances are subject to taxation. The rates applicable are the same as for residents, but tax credit and children's benefits are not granted. A special pollution tax, levied by weight, is levied on all automobiles in the country. Tax Treaty with the United States: Iceland and the United States concluded a double taxation treaty in 1975. It provides Transportation and Utilities Airlines: Airline operations are comparatively more important to Iceland than to other countries in Europe, accounting for about 4 percent of total GNP. The country's two international airlines are Icelandair (Flugleidir) and Eagle Air (Arnarflug), both of which operate out of Keflavik International Airport. Icelandair, the largest private company in the country, maintains daily flights to twelve European destinations and to Chicago, New York, Boston, Baltimore, and Orlando in the United States. Eagle Air provides island service and also flies to the Netherlands year round and to Switzerland and the Federal Republic of Germany in the summer season. Icelandair uses primarily U.S.-made aircraft on its North Atlantic and European routes. Five Fokker aircraft are used for domestic flights. Road System: Iceland has neither railways nor inland waterways. Most land transportation is by motor vehicle. Truck and bus services are available to all major towns and districts, although traffic is disrupted at times in the winter. There are over 12,000 kilometers (8,000 miles) of roads in Iceland, of which close to 4,000 kilometers are main roads. Iceland has one of the highest rates of car ownership per capita in the world, with approximately 450 automobiles per 1,000 inhabitants, compared with about 550 for the United States. Ports: The main port at Reykjavik handles 90 percent of Iceland's imports and exports. There are also a number of small ports around the country, all of which are regulated by the Icelandic State Shipping Authority. There are no free ports in Iceland, but adequate docks as well as refrigerated and bulk liquid storage facilities are available at most ports. One American shipping company provides service between the United States and Iceland. That line, Rainbow Navigation, operates one vessel every 21 days from east coast ports to Keflavik and Njardvik. Sailing time is about 1 week each way. The largest shipping line in Iceland, Eimskip, operates 17 vessels which provide weekly service to major northern European ports. Eimskip has service every 2 weeks to North America, and monthly service to Baltic ports. Samband Line, the other major shipping line, has regular weekly services to most northern European ports, and also makes three call per week to Baltic and to U.S. ports. Iceland's other shipping lines provide mainly domestic service. Utilities: All the Icelandic population has access to electricity. It is conservatively estimated that harnessable electrical power from rivers and geothermal sources in Iceland is 50,000 GWh per year. The present use of electrical energy, however, is only about 8 percent of the minimum potential, or 4,000 GWh. Hydro and geothermal reserves are vast in relation to the size and population, making power potential one of the country's principal natural resources and a crucial factor in the future development of Icelandic industry. Power is produced and transmitted to industrial customers at a negotiated price which is lower than the standard rate. Because of the very small general power market in Iceland, each new industry requiring a substantial block of power must be associated with a new hydroelectric development. Geothermal heat is an important source of energy in Iceland. It occurs in about 250 low temperature thermal areas, characterized by natural steam. The capacity of each thermal area can be found only by considerable research and drilling. Aggregate natural heat dissipation of these areas has been roughly estimated at 1 million kilocalories per second and the bedrock heat reservoir at about 1 billion per second. Between 1 percent and 10 percent is recoverable, providing a heat resource equivalent to several hundred million tons of oil. This type of energy is distributed fairly evenly throughout the country. Several of Iceland's geothermal areas lend themselves to industrial exploitation and various other direct uses because they are near population centers and transportation lines. Those in remote areas are more suitable for power generation. Three electric generating plants, with installed capacity of 40mW, are driven by geothermal steam. The largest, with a capacity of 30mW, is located at Krafla and began operation in 1979. Geothermal heating is used to heat most Icelander's homes directly, including all 115,000 inhabitants of the Reykjavik area. Nearly all of Iceland's households have telephone service. There are 525 telephones per 1,000 inhabitants, a rate comparable to the United Kingdom, but lower than the United States, which has 760 per 1,000 inhabitants. The country's two television stations transmit to approximately 80,000 television receivers. Video cassette use has also become popular over the past few years. Over $500,000 worth of such cassettes are imported each year, mainly from the United States and the United Kingdom.