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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 9.05 8.77 8.5 8 Lowest government debt in Europe. Government debt was 10.0% in Q3 2013 compared to 54,8% in Finland or 38% in Latvia for example. 7 6 6.49 6.19 6 5.92 5.64 5.29 5.24 5 4 3 2 A balanced and oriented state budget future 1 0 with a growing interest in entrepreneurs and foreign investors. The higher the rank, the lower the risk Source: IMD World Competitiveness Yearbook 2013 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 3.2 3.1 3.6 3.5 3.6 2014* 2015* 2016* 5 0.8 0 0 2004 2005 2006 2007 2009 -3.6 -5 -10 2008 2010 2011 2012 2013 -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 3.6 3.5 3.6 3.8 GDP (current prices, billion EUR) 17.0 18.4 19.2 20.4 21.8 23.3 Consumer price index (%) 3.9 2.8 2.7 2.8 2.9 2.8 Employment (15–74 years old, thousands) 624.4 621.3 635.0 635.0 635.0 635.0 Growth of labour productivity 0.7 0.2 3.2 3.5 3.6 3.8 Unemployment rate (ILO) 10.2 8.6 8.3 7.9 7.5 7.1 Average wage (EUR) 887 948 998 1,061 1,130 1,204 Wage real growth (%) 1.7 2.7 3.4 3.4 3.5 3.6 * forecast Source: Ministry of Finance Summer 2013 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, 2013 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 – 700students 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 = 91,000 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!