Transcript Estonia at a glance

ESTONIA AT A
GLANCE
Märt Helmja
Deputy Director of FDI unit
At the Heart of the Baltic Sea
(Map & location)
• Area 45 227 km2
• Population 1,3 million
• Member of EU, Eurozone,
OECD, NATO and Schengen
• Credit ratings: Fitch A+;
S&P AA-; Moody’s A1
A Message from our President
“Were the internet to have a postal address, it would most likely be here
in Estonia. We have reason to be proud of our highly developed
telecommunications network. Estonia is a place you can take your laptop
into the deepest forest and still hook up to the internet. It is no accident
that Skype was born here.”
“Skype represents an ideal of what we think Estonia should be - a small
group of people come together and come up with a really brilliant idea
that becomes known all over.”
Toomas Hendrik Ilves,
President of Estonia
Welcome to e-Estonia!
Why Estonia?

A unique location and culture combining Nordic roots
and Eastern influences. The Estonian approach is functional and
one that creates timeless value.

A highly progressive environment that offers an
efficient way of doing business. Our e-services, mobile
communications and internet applications are among the most
progressive in the world.

Among the most successful countries in the world in
attracting foreign Investments.
High Position in Business Environment
Rankings
1st in International Tax
Competitiveness Index 2014 Tax
54
Foundation
Ease of Doing Business Ranking 2015
44
8th in Index of Economic
Freedom 2015 /2nd in Europe Wall
Street Journal / The Heritage Foundation 2015
32
29
6th in Trading Across Borders 2015
23 24
World Bank
17
2nd in the Internet Freedom Freedom
House 2014
29th in Global Competitiveness
Report 2015 World Economic Forum
26th in Corruption Perceptions
Index 2014 Transparency International
1
3
5 6
7
8
9
11
20
14
Source: World Bank – Doing Business 2015
Low risk –
Politically and Economically Stable
Political stability.
Risk of political instability, global rank
Estonia is seen
as the most stable country in CEE.
10
9
8
Lowest government debt in
7
Europe.
6
Government debt was 10.0%
9.07
8.39 8.13
7.48
6.54 6.49
6.07
5.49 5.31 5.24
5
in 2013 compared to 54,8% in Finland or
4
38% in Latvia for example.
3
2
1
A
balanced
and
oriented state budget
future
0
with a
growing interest in entrepreneurs and
foreign investors.
The higher the rank, the lower the risk
Source: IMD World Competitiveness Yearbook 2014
Estonian GDP by Economic Activity
2014
Administrative and
support service
activities
4%
Agriculture, forestry and
fishing
Health and
4%
social work
4%
Financial and insurance
activities
4%
Manufacturing
18%
Education
5%
Wholesale and
retail trade
14%
Information
and
communicati…
Professional,
scientific and
technical
activities
5%
Public administration and
defence
8%
Construction
8%
Source: Statistics Estonia
Real estate activities
12%
Transportation and storage
9%
GDP Growth and Inflation, 2004-2016
15
15
10,2
10
9,2
10
7,1
7,6
5
3,2
3,1
2,2
0,8
0,5
2013
2014*
3,1
3,6
2016*
2017*
0
0
2005
-5
5
2006
2007
2008
2009
-3,6
2010
2011
2012
2015*
-5
-10
-10
gdp growth, %
-15
-14,1
* forecast
Source: Bank of Estonia (10.06.2015)
-15
Main Economic Indicators, 2012-2014
2012
2013
2014
GDP real growth (%)
3.2
0.8
0.5
GDP (current prices, billion EUR)
17.0
18.4
19.5
Consumer price index (%)
3.9
2.8
-0.1
624.4
621.4
624.8
Growth of labour productivity
0.7
-0.2
0.3
Unemployment rate (ILO)
10.2
8.6
6.3
Average wage (EUR)
887
948
1,039
Wage real growth (%)
1.7
4.9
6.3
Labor force (thousands)
Source: Statistics Estonia
FDI Inflow by Country and Activity
Stock as of 31.12.2014
Sweden
Finland
Netherlands
Norway
Russian
Federation
Cyprus
Denmark
Lithuania
Latvia
USA
United Kingdom
Germany
Austria
Other
26%
22%
10%
6%
6%
3%
3%
3%
3%
2%
2%
2%
2%
10%
Source: Bank of Estonia (27.03.2015)
Financial and insurance activities
Real estate activities
27%
17%
Wholesale and retail trade; repair of motor
vehicles and motorcycles
15%
Manufacturing
13%
Professional, scientific and technical activities
8%
Transport and storage
6%
Administrative and support service activities
3%
Information and communication
2%
Agriculture, forestry and fishery
2%
Electricity, gas, steam and air conditioning supply 2%
Other
5%
Total Exports Across All
Commodities (EUR)
14,000,000,000 €
12,083,423,528 €
4,000,000,000 €
12,297,264,120 €
6,000,000,000 €
8,743,007,248 €
8,000,000,000 €
12,003,360,298 €
10,000,000,000 €
12,521,145,705 €
12,000,000,000 €
2012
2013
2014
2,000,000,000 €
0€
2010
Source: Statistics Estonia (18.03.2015)
2011
Estonian Foreign Trade - Commodities
(EUR bln)
16
13,8
13,7
13,7
12,6
12,5
12,3
12,1
12,1
14
12
11,4
10,7
10
8,2
8
7,7
8
10,9
7,6
6,7
6,5
6,2
6
9,2
8,8
8,5
4,7
4
2
0
2004
2005
2006
2007
2008
Exports
Source: Statistics Estonia
2009
2010
2011
Imports
2012
2013
2014
Commodities Exports by Country
and Commodity 2014
Sweden
18,0%
Finland
15,3%
Latvia
10,7%
Russian Federation
9,8%
Lithuania
5,3%
Germany
4,9%
Norway
3,9%
United States of America
3,7%
Netherlands
2,7%
Denmark
2,6%
United Kingdom
2,4%
Others
Source: Statistics Estonia
20,7%
Machinery and transport equipment
Miscellaneous manufactured articles
Manufactured goods classified chiefly by
material
Mineral fuels, lubricants and related
materials
Crude materials, inedible, except fuels
Food and live animals
Chemicals and related products
Other
34%
15%
15%
11%
8%
8%
6%
3%
Commodities Imports by Country
and Commodity 2014
Finland
Germany
Sweden
15%
12%
11%
Latvia
Lithuania
9%
8%
Poland
Russian Federation
8%
6%
Netherlands
China
4%
4%
United Kingdom
3%
Italy
3%
Other
Source: Statistics Estonia (11.03.2015)
19%
Machinery and transport
equipment
Manufactured goods
classified chiefly by material
Mineral fuels, lubricants and
related materials
Chemicals and related
products
Miscellaneous manufactured
articles
Food and live animals
Crude materials, inedible,
except fuels
Beverages and tobacco
Other
37%
15%
13%
11%
10%
8%
4%
3%
1%
Estonian Foreign Trade - Services
(EUR bln)
Services exports represent 24% of Estonia’s GDP
5
4,5
4,3
3,9
4
3,5
3,3
3,4
3,2
3
2,9
3
2,7
2,6
4.7
1,8
2
3,2
2
2,2
2,3
1,8
2,1
1,4
1
0
2004
2005
2006
2007
2008
Exports
Source: Bank of Estonia
2009
2010
Imports
2011
2012
2013
Services Exports and Imports by
Country 2013
Exports
Imports
Finland
24,8%
Finland
14,8%
Russia
11,8%
Sweden
8,9%
Sweden
7,8%
Latvia
Lithuania
7,1%
Germany
7,1%
Latvia
6,9%
UK
6,2%
Germany
4,8%
Russia
4,6%
UK
4,4%
Lithuania
4,5%
USA
4,2%
France
4,2%
Norway
3,3%
Poland
4,2%
Switzerland
3,3%
Cyprus
4%
Denmark
2,7%
Norway
3,8%
Others
18,9%
Others
29,7%
Source: Bank of Estonia
8%
Simple and Favourable Tax System
 * 0% Corporate income tax on reinvested profits
All distributions are subject to income tax at the rate of 20%
of the amount of taxable payment
 Personal income tax: flat rate 20%. The same rate applies
for expats
 VAT: 20%
 Social tax: 33% (20% for social security and 13% for health
insurance)
 Unemployment insurance: 2,6% of the gross salary. (The
employer pays 0,8% of the salary and the employee 1,6%.)
 No property tax
Tax rate on corporate
income, 2014
ESTONIA
Lithuania
15.0%
Latvia
15.0%
Hungary
19.0%
Czech Rep
19.0%
Poland
19.0%
 The land tax is from 0,1% to 2,5% on the assessed value of
the land, rate established by local government (i.e in Tallinn
2,5%).
Sweden
 Easy administration - All the taxes can be declared via E-
Finland
tax/e-customs (an electronic service desk of the Estonian
Germany
Tax and Customs Board)
0.0% *
UK
22.0%
23.0%
24.5%
29.6%
0.0% 10.0% 20.0% 30.0% 40.0%
Source: KPMG
Information Society Indicators

100% of schools and government organizations are ICT equipped

Entire country is covered with a broadband connection

97% of businesses use computers

80% of homes have broadband connection

99,8% of bank transfers are performed electronically

95% of income tax declarations are made via the e-Tax Board

25% of votes were cast over the internet on 2013

66% of the population participated in the census via internet in 2012

More than 93% of the population has an ID-Card
Labour Market and Education
System

77universities
universities(6(6public,
public,11private)
private)- -ca
ca
43,647
49,400students
students

Total labour force: 674,400

The unemployment rate: 6,3% in Dec
2014
o
General working time: 8 hours a day, 5
days per week. The duration of one shift
may not exceed 12 hours
o

Overtime is allowed by mutual agreement
o

The duration of the annual vacation: 28
days

10 Public holidays a year

The average wage in Estonia in 2014 is
EUR 1 039. The monthly minimum wage
for full-time work is EUR 390 / 2.34 €/h.

o
o
o
o
University of Tartu – 14,179 students
 University
ofTechnology
Tartu – 15,800
students
Tallinn
University of
– 12,926
students
 Tallinn University of Technology
Tallinn–University
– 9,391 students
12,900 students
Estonian
University
of Life–Sciences
– 3,905
 Tallinn
University
10,300 students
students
 Estonian University of Life Sciences –
Estonian
Academy
4,300
students of Arts – 1,102 students
 Estonian
Academy
of Arts and
– 1,130
students
Estonian
Academy
of Music
Threatre
–
702students
Estonian Business School – 1,442 students
22 other professional higher
 17
education
other professional
institutionshigher
– ca 15,400
education
students
institutions – ca 11,500 students
48 vocational schools - ca 26,200 students
 47 vocational schools - ca 25,200 students
214 gymnasiums (high schools) - ca
24,000
students
 204
gymnasiums
(high schools) - ca
23,400 students
Key Sectors

ICT

Transport and logistics services

Shared services

Industrial machinery and metalworking

Electronics
ICT

Estonia is the host country for NATO's Cooperative Cyber Defence Center of
Excellence and the EU IT Agency’s headquarter.

The computer security company McAfee ranks Estonia as having a reliable
cyber security structure.

Estonia is second in the internet freedom in the world, according to Freedom
House.

Estonia is the global pioneer in adopting electronic government and numerous
ID-card based e-services.

The development center of Skype is located in Estonia. Besides that also
companies like Symantec, CGI, Fujitsu and many others have their base in
Estonia.

2,560 companies are active in the ICT sector, contributing 5% of total sales in
business activities in Estonia. Over 19,500 employees – 3,1% of total
employment in Estonia.
Transport and Logistics Services

An impressive infrastructure – 5 key international ports, 4 free zones,
10 border posts to Russia, block trains to Moscow and Beijing,
shortest EU flight time to China.

Estonia is the geographical midpoint of Northern Europe and therefore
the best place to set up distribution centres and to generate added
value.

Europe's most effective rail operator, Europe's most modern and up to
date airport and the largest port at the Baltic Sea are all located in
Estonia.

Estonia is ranked 7th out of 189 economies for the ease of Trading
Across Borders.
Shared Services

Sustainable, high-quality, competitive costs and low risk solutions for
BPO, IT and financial services shared service centres, customer and
technical support centres.

Estonia is the regional market leader in IT shared services.

55% of the workforce are fluent in one or more foreign languages.

Top language skills: Russian, English, Finnish, German, Swedish.

Solid track record in shared services: Kuehne+Nagel, Statoil,
TeliaSonera, AGA (Linde Group), Stora Enso, Transcom, Arvato
(Bertelsmann).
Industrial Machinery and Metalworking




Estonia offers a dynamic, internationally focused mechanical
engineering ecosystem, excellent accessibility, a sustainable, highquality skills base and competitive, low-inflation costs.
1,370 companies are active in the machinery and metalworking sector,
ca 20,400 direct employees.
EUR 1.8 billion revenues, of which 50% is generated from exports.
3 main branches:
Metals and metal products – 57% of total revenues;
o Transport equipment – 21% of total revenues. 88% of transport equipment
production is exported;
o Machinery, tools & equipment – 18% of total revenues.
o

Examples of companies in Estonia: ABB, Hanza Tarkon, Metalliset
Group, Ruukki
.
Electronics

Estonia offers distinctive opportunities as a near-shore electronics
hub for both in-house and outsourced production and distribution.

200 companies are active in electronics sector, ca 10,800 direct
employees.

EUR 2.3 billion revenues, of which 91% is generated from exports.

2 main branches:

o
Computer, Electronic & Optical Products – 76% of total revenues;
o
Electrical Equipment – 24% of total revenues.
Examples of companies in
Electronics, ABB, PKC Group.
Estonia:
Ericsson,
Stoneridge
Rail Baltic
Total Capital Costs – € 3,5 Billion
Estonian Investment Agency
EIA is a division within
Enterprise Estonia
Our mission
• to ensure a competitive business environment for
foreign investments in Estonia
• to establish and develop business relationships with
international companies
Our representations:
We provide
• Information services and investment preparation
• Investment proposals and tours
• Consulting and project management
• Facilitating contacts, negotiation with authorities
• Organizing recruitment and identifying suitable
properties
• Post-investment / aftercare services
•
•
•
•
•
•
•
•
Tallinn, Estonia
Hamburg, Germany
Helsinki, Finland
Stockholm, Sweden
Silicon Valley, USA
Tokyo, Japan
Shanghai, China
Saint-Petersburg, Russia
THANK YOU!