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Presentation on theme: "WHAT CAN ESTONIA SOLVE FOR YOU?"— Presentation transcript:

KRISTI TIIVAS Estonian Investment Agency »

2 A few words of introduction
Area 45,227 km2 (similar to Denmark or Netherlands), about 50% forest, At the heart of the Baltic Sea Currency Euro Population 1.3 million (68% Estonians, 25% Russians) Capital Tallinn (403,000) Member of EU, Eurozone, NATO, Schengen, OECD As you know, Estonia is a very small country at the heart of the baltic sea with just over 1.3 million people. Member of EU, NATO, Schengen, Eurozone High credit ratings -> high creditability of the country -> very low risk of default -> reliability of Estonian business environment for foreign investors This is backed up by a relatively good financial situation of the country - government debt is the lowest in the EU. Credit rating - measure of creditworthiness of the country. Credit ratings are calculated based on past history and current financial market participant, and based on estimates of the size of their property and entered into by the debt. Indicate a very low probability of default. The major worldwide rating agencies are Moody's, Standard and Poor's and Fitch Ratings. Credit ratings Fitch A+ S&P AA- Moody’s A1

3 Steadily growing economy
Exports represent about 91% of Estonia’s GDP Except in 2008 and 2013, inflation has well exceeded the GDP growth numbers. Exports represent about 91% of Estonia’s GDP – World Bank 2013. GDP per capita according to different calculations – EUR. Total GDP 18,4 Billion EUR Eesti majanduskasv on 2013. aastal põhinenud jätkuvalt sisenõudlusel. See on tulenenud eeskätt majapidamiste sissetulekute ja tarbimise suurenemisest. Ekspordi tugi on jäänud Eesti majandusele varem prognoositust väiksemaks, kuna aasta esimesel poolel oli Eesti peamiste kaubanduspartnerite kasv oodatust kesisem. Eesti majandus oli seetõttu 2013. aasta esimesel poolel languses. Kuigi kolmandas kvartalis majanduskasv taastus, jääb aastane kasv siiski tagasihoidliku 1% juurde. Majanduskasv kiireneb eksporditurgude kosumise toel 2014. aastal 2,6%ni ning 2015. aastal 3,9%ni. * forecast Source: Statistics Estonia and Ministry of Finance

4 How did we do it? According to OECD Economic Survey, our strong recovery from the economic crisis has benefited from structural strengths of the Estonian economy: flexible labor force, business friendly regulation, well capitalized financial institutions, successful transition to euro, and sustained credibility of fiscal policy 2013 Unemployment 8.6% Average salary EUR Minimum salary 320 EUR 0% corporate income tax on reinvested profits – favourable for growing companies Lowest government debt in EU Estonia is one of the most successful countries in CEE in attracting FDI

5 Our business environment is best for international business
Establishing a company in 15 minutes 0% income tax on reinvested profits Flat-rate income tax at 21% (lowered to 20% in 2015) Remote access – e-residency to be launched in Dec 2014 No restrictions to free movement of capital Minimal government intervention, lowest government debt in Europe Foreign investors Can own company 100% Can own land, real estate Residence permits for directors and specialists Same rights as local investors

6 Small nation must be flexible
Estonians are in the lead in CEE in terms of educational level 99% of high school students are learning English at school; 71% of profesional workforce is fluent in ate least one language Forward-looking mindset of universities Tallinn Tech – active cooperation with major universities in the world Tartu University - one of the oldest universities of Europe (1632) Over 60% of the population is engaged in the services sector Cost base is more efficient than in most of Western Europe Estonians rather break their arm than a promise People are our most valuable resouce. We are not great in numbers, so we have to invest in knowledge, forward thinking

7 High ratings in business environment rankings
11th in Index of Economic Freedom Wall Street Journal / The Heritage Foundation 6th in Trading Across Borders World Bank 2nd in the Internet Freedom Freedom House 29th in Global Competitiveness Report World Economic Forum 28th in Corruption Perceptions Index Transparency International Source: World Bank – Doing Business 2014

8 The future is here Citizens/residents have unique online identity: 1.2 million active ID cards (population: 1.3 million) 100% of schools and government offices have broadband connection 70% of homes have broadband connection 110% mobile penetration 98% of the bank transfers are performed electronically 95% of the income tax declarations made via the e-Tax Board

9 Digital ID gives us access to wide array of public e-services
digital signature e-elections e-school e-Tax Board e-Customs e-Health e-police Mobile parking Mobile payments Internet banking Citizen’s Registry and many more…

10 The history of e-Estonia
2000: Launch of e-Tax Board 2000: Launch of m-Parking 2003: Launch of ID bus ticket 2005: i-Voting was introduced 2007: Launch of e-Police system 2008: Launch of e-Health system 2010: Launch of e-Prescription 2013: X-Road Europe introduced 2013: Online Border-Crossing Queue System 2014: e-residency In 1990s govt program ‘Tiger Leap’ to connect all schools to internet, wifi human right Whole country covered by broadband by 2015

11 More start-ups per capita than in any other country in Europe
ERPLY - POS and ERP tools. Largest customers have 10k employees. Fortumo – Fortumo provides simple platform for creating mobile services in various countries. Recently US technology giant Intel and venture capital company Greycroft has bought shares of Fortumo. The deal is reportedly worth 10 million dollars. Transfer Wise - cheap money transfers. Charges a fraction of the price that banks and others charge for currency conversion. Co-founded by Skype’s first employee. Seedcamp alumni. NOW Innovations – mobile parking and payment solutiuons GuardTime – keyless signatures service, to authenicate electronic data , proving signing time and signing entity. The solution relys only on hash trees, not cryptographic keys. Their clients are Japanese companies (Rakuten Bank, Brother), Estonian organisations (SEB Bank) and other organisations. Grabcad – community of mechanical engineers & engineering workflow tools. Modesat Communications - provides of high capacity modular-demodular DSP cores for wired and wireless broadband solutions. ZeroTurnaround - Java productivity tools, loved by developers. – provides virtual fitting room solutions to online clothing retailers and brands. ...

12 So this is why Estonia: Stability Connecting East and West
Excellent economic growth numbers since joining EU and NATO Successful management of economic crisis, lowest government debt in EU Connecting East and West Accessible – geographically, logistically and socially Communication technology makes distances in Estonia irrelevant Ease and efficiency of doing business Ranked among top 20 in most of pertaining indices by World Bank Group Low bureacracy and corruption, advanced e-society Significant cost efficiency compared with EU average – labour, taxes, property, energy Smart people Ranked 4th in the world in natural sciences, 11th in math studies by PISA #1 in Europe for startups per capita Country of foreign investors Foreign investors have played a decisive role in building Estonian economy Attracting FDI not with incentives, but with favorable business environment Great demo country to implement and test innovations! Since regaining its independence and historically, Estonia has turned to the direction of Scandinavia both culturally and in terms of business. Needless to say, 70 years of Soviet rule also prepared us well for business relations with our Eastern neighbors.



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