Liechtenstein - Services

Liechtenstein's economy is increasingly service-based, as in most of western Europe. Services contributed to 53 percent of GDP, and about 10,000 people were employed in the sector in 2000. It particularly expanded over the last decade of the 20th century. In addition to the catering branch (made of 42 hotels and inns, and 81 restaurants and cafes), the public administration, insurance companies, and the health and educational systems, this sector is specially characterized by a vigorous presence in international commercial and financial transactions and in fiduciary business.

Finance in Liechtenstein is traditionally a very well-developed sector. Apart from the presence of the Swiss banks due to the monetary and customs union and the geographical and cultural proximity between the 2 states, 13 local banks exist. These include Liechtenstein-LGT Bank, an international private bank, claiming to be the largest banking operation in the country; Bank von Ernst, a financial institution providing Swiss private banking services, portfolio management, and family foundation; and Liechtenstein-VP Bank Group, a private bank founded in 1956, providing a wide range of financial services, holding assets worth some $5.5 billion, and employing about 600 people (but currently facing some serious legal troubles, as shown below), as well as the Centrum Bank AG, Liechtensteinische Landesbank AG, Neue Bank AG, Verwaltungs-und Privat-Bank AG, and Vorarlberger Volksbank AG. The largest banks in Liechtenstein belong to the Swiss Banking Association and recognize most of its rules, as do all the Swiss banks.

The Liechtenstein banks, which administer 112.5 billion Swiss francs (US$70 billion), have been known for their liberal policies and privacy, yet, following some serious money laundering allegations in 2000 described below, they intend to end anonymous accounts and carry out identity checks on their customers. Legislative changes to that effect are being pushed through parliament in hopes of averting possible sanctions from European Union countries and the United States following the scandals. However, bankers are reluctant to give up their judicial independence.

Tourism is also an important contributor to the economy. Despite its small size, alpine Liechtenstein is a diverse country with various communities offering a mix of attractions for all tastes. Situated between some of the most attractive tourist regions in Europe, the Swiss and Austrian Alps, the tiny principality often appears on their visitors' itineraries. Museums, banks, boutiques, dining establishments, historical sites, vineyards, and sports (particularly skiing and hiking) facilities are varied and charming. Liechtenstein is considered a microcosm of the European continent. Apart from the 42 hotels and 81 restaurants, the sale of postal stamps by the state post offices, galleries and shops offering art objects, local handicrafts, and souvenirs are also a significant source of revenue.

Retail is well-developed and targeted at serving the tourist clients as well as the local customers and commuters, but the small size of the market is still more conducive to small family-owned stores. Retail trade experienced a marked upswing over the 1990s as a result of increased specialization of stores, so that a wide range of diverse products is now available. As the Swiss retail sector is developing towards large-scale self-service and discount chain stores, Liechtenstein retailers have had to face fierce competition from the large Swiss shopping malls in the vicinity. Many of the small family-owned shops, relying basically on local customs, went out of business during the 1990s. Some 1,600 retail and wholesale trade enterprises are united in the Liechtenstein Chamber of Trade and Commerce as an umbrella organization. Trade enterprises cater mainly to the domestic market and contribute to the efficient infrastructure of the country.

Companies specializing in serving the offshore "letter box" companies' various needs in Liechtenstein include the Gestina Trust, specialists in the development and management of offshore companies, legal structures, and settlement advice; the Vazus-Syndikus Treuhandanstalt, offering financial advice and consulting in economic and legal matters, accounting, and contracts; the Vazus-Wanger Group, a law and patent firm in commercial law and asset management, and many others.