Transcript Estonian Economy

ESTONIA AT A
GLANCE.
Estonian Investment Agency
» investinestonia.com
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. Foreign direct investments
account for 85% of Estonia’s GDP.
High Position in Business Environment
Rankings
75
11th
in Index of Economic
Freedom 2014 Wall Street Journal /
Ease of Doing Business Ranking 2014
The Heritage Foundation
54
7th in Trading Across
Borders 2014 World Bank
2nd
45
in the Internet Freedom
21 22
Freedom House
32nd in Global
Competitiveness Report
2014 World Economic Forum
12 14
10
9
1
2
24
27 29
17
4 5
28th in Corruption
Perceptions Index 2013
Transparency International
Source: World Bank – Doing Business 2014
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
2013
Source: Statistics Estonia
GDP Growth and Inflation, 2004-2016
15
15
10.2
9.2
10
10
7.5
7.6
7.1
5
3.5
3.2
3.1
2.5
0.8
0.5
0
0
2004
2005
2006
2007
2008
2009
-3.6
-5
-10
5
2010
2011
2012
2013
2014*
2015*
2016*
-5
-10
gdp growth, %
inflation, %
-15
-14.1
* forecast
Source: Statistics Estonia
-15
Main Economic Indicators, 2012-2017
2012
2013
2014*
2015*
2016*
2017*
GDP real growth (%)
3.2
0.8
0.5
2.5
3.5
3.4
GDP (current prices, billion
EUR)
17.0
18.4
19.0
20.1
21.4
22.8
Consumer price index (%)
3.9
2.8
0.3
1.9
2.5
3.0
Employment (15–74 years
old, thousands)
624.4
621.4
622.1
622.1
620.9
628.4
Growth of labour productivity
0.7
-0.2
0.3
2.5
3.7
3.8
Unemployment rate (ILO)
10.2
8.6
6.8
6.4
6.4
6.1
Average wage (EUR)
887
948
1,005
1,066
1,134
1,208
Wage real growth (%)
1.7
4.9
5.7
4.1
3.8
3.4
* forecast
Source: Ministry of Finance Summer 2014 forecast
Structure of FDI Inflow (EUR m)
Total stock: EUR 15,6 bln
Source: Bank of Estonia
Structure of FDI Outflow (EUR m)
Total stock: EUR 4.8 bln
Source: Bank of Estonia
FDI Inflow by Country and Activity
Stock as of 31.12.2013
Sweden
26,7%
Finland
21,3%
Netherlands
10,2%
Norway
5,8%
Russia
Financial and insurance activities
25,0%
Real estate activities
16,0%
Wholesale and retail trade
15,3%
5,3%
Manufacturing
14,3%
Lithuania
3,0%
Professional, scientific, technical activities
8,4%
Cypros
3,0%
Transportation and storage
5,5%
UK
2,5%
Administrative and support service activities
3,2%
Denmark
2,3%
USA
2,1%
Agriculture, foresty and fishery
2,7%
Luxembourg
2,1%
Information and communication
2,1%
Other
15,7%
Other
7,5%
Source: Bank of Estonia
FDI Outflow by Country and Activity
Stock as of 31.12.2013
Cyprus
28,4%
Lithuania
21,2%
Transportation and storage
27,4%
Professional, scientific, technical activities
20,3%
Latvia
16,8%
Ukraine
5,4%
Financial and insurance activities
16,8%
Russia
4,6%
Real estate activities
12,7%
Finland
4,1%
Wholesale and retail trade
8,9%
Manufacturing
4,6%
Other
9,3%
Netherlands
3,1%
Belarus
2,0%
Others
14,4%
Source: Bank of Estonia
Estonian Foreign Trade - Commodities
(EUR bln)
Commodities exports represent 67% of Estonia’s GDP
16
13.8
14
12.6
12
11.4
10.7
10
8.2
7.7
8
8
12.1
12.3
10.9
8.8
8.5
9.2
7.6
6.7
6.5
6.2
6
12.5
13.7
4,7
4
2
0
2004
2005
2006
2007
2008
Exports
Source: Statistics Estonia
2009
2010
Imports
2011
2012
2013
Commodities Exports by Country
and Commodity 2013
Sweden
16,8%
Machinery and appliances
28,1%
Finland
16,1%
Mineral products
10,5%
Russia
11,4%
Wood and articles of wood
8,6%
Base metals and articles of metals
7,2%
7,1%
Latvia
10,4%
Lithuania
5,9%
Miscellaneous manufactured
products
Germany
4,5%
Transport equipment
6,6%
Norway
3,7%
Chemical products
5,7%
Food products
4,2%
Live animals, animal products
3,8%
USA
2,9%
UK
2,4%
Textile products
3,4%
Others
25,9%
Other
14,8%
Source: Statistics Estonia
Commodities Imports by Country
and Commodity 2013
Finland
15,1%
Machinery and appliances
27,7%
Germany
10,5%
Mineral products
12,7%
Sweden
10,1%
Transport equipment
10,5%
Latvia
9,6%
Chemical products
7,8%
Lithuania
8,9%
Base metals and articles of metals
7,5%
Poland
8,0%
Food products
6,1%
Russia
5,8%
Plastics and rubber
5,0%
UK
4,2%
Textiles and textile articles
4,3%
China
3,4%
Wood and articles of wood
2,7%
Netherlands
3,3%
Live animals, animal products
2,5%
Others
21,1%
Other
13,2%
Source: Statistics Estonia
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 21%
of the amount of taxable payment
 Personal income tax: flat rate 21%. The same rate applies
for expats
 VAT: 20%
 Social tax: 33% (20% for social security and 13% for health
insurance)
 Unemployment insurance: 3% of the gross salary. (The
employer pays 1% of the salary and the employee 2%.)
 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
Estonia is Part of the Nordic
Electricity Market

Estonia is part of Nordic electricity market and Estonian electricity
system is connected also with Russia and Latvia.

Estonian energy system is the only predominantly oil-shale-based
energy production system in the world.

The biggest energy producer in Estonia is Eesti Energia, a 100%
state-owned company.

The price of electricity consists of four components: electricity,
network service, renewable energy support and excise duty.

Electricity market is 100% open starting January 2013.
Natural Gas Market



Natural gas is imported into Estonia
from Russia and Latvia.
Estonian natural gas company is
Eesti Gaas.
Network services to all participants
of the natural gas market on the
territory of Estonia are provided by
EG Võrguteenus.
14
Gas price for industries, 2013 (EUR per GJ)
12.8
12.2 12.2
12
10
9.9
9
9.9
10.1
10.6
10.9
9.3
8
6
4

The price of gas consists of three
elements: gas, network service and
excise duty.
2
0

The price for industrial users is a
matter of negotiations.
Source: Eurostat
Property Market
Indicative range for rents (excluding VAT and operating expenses) in major towns
of Estonia for class A and B1 office premises and industrial space (EUR/m2 per
month).
Type of space
Tallinn
Tartu
Pärnu
Narva
Office
8.0 – 16.0
4.8 – 11.5
4.0 – 8.0
3.1 – 5.5
Industrial
2.8 - 5.0
2.0 - 4.0
1.6 - 4.4
1.9 - 3.8
Source: Colliers International
Labour Market and Education
System

Total labour force: 680,000

The unemployment rate: 8,6% in 2013


General working time: 8 hours a day, 5
days per week. The duration of one shift
may not exceed 12 hours
Overtime is allowed by mutual agreement

77universities
universities(6(6public,
public,11private)
private)- -ca
ca
46,600
49,400students
students
o
o
o
o
o
o

The duration of the annual vacation: 28
days

10 Public holidays a year

The average wages in Estonia in 2013 was
EUR 948. The monthly minimum wage for
full-time work is EUR 355.
o
University of Tartu – 15,800 students
 University
ofTechnology
Tartu – 15,800
students
Tallinn
University of
– 12,900
students
 Tallinn University of Technology
Tallinn–University
– 10,300 students
12,900 students
Estonian
University
of Life–Sciences
– 4,300
 Tallinn
University
10,300 students
students
 Estonian University of Life Sciences –
Estonian
Academy
4,300
students of Arts – 1,130 students
 Estonian
Academy
of Arts and
– 1,130
students
Estonian
Academy
of Music
Threatre
–
700students
Estonian Business School – 1,500 students
22 other professional higher
 17
education
other professional
institutionshigher
– ca 15,400
education
students
institutions – ca 12,500 students
48 vocational schools - ca 26,200 students
 47 vocational schools - ca 25,700 students
214 gymnasiums (high schools) - ca
24,000
students
 204
gymnasiums
(high schools) - ca
22,500 students
Room for Growth:
Number of Students and Graduates
Universities & vocational colleges: student base = 85,000
Number of students
Name of
faculty
Social
sciences,
business &
law
Natural- and
applied
sciences
Name of the
study
programme
Number of graduates
2011/2012
2012/2013
Social and
behavioural
sciences
3,746
Journalism
1,161
1,067
Business
Administration
16,427
15,637
Law
3,448
3,124
Bio science
1,497
1,460
Physcis
1,283
1,250
383
353
7,104
7,284
Math and
statistics
Computer
sciences
Source: Ministry of Education and Research
Name of
faculty
3,487
Social
sciences,
business &
law
Natural- and
applied
sciences
Name of the
study
programme
2010/2011 2011/2012
Social and
behavioural
sciences
679
626
Journalism
234
210
3,870
2,284
Law
708
688
Bio science
292
277
Physcis
220
249
71
79
957
1,029
Business
Administration
Math and
statistics
Computer
sciences
World class talent: according to the World Economic Forum’s 2013-2014 Global
Competitiveness Index, Estonia was ranked 24th in the world and the highest in CEE and
Russia for the quality of its higher education.
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
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!