3/2008

on FICE legalities

Jaak Aaviksoo Estonia's Minister of Defence Photo: NATO

Photo: Kadi Asmer

strategy will be successful remains to be seen, but from my perspective it might for their Russian-Finnish relations.

Anders Hedman The roots of these problems are the US – Russian relations. Chairman Here I must say that the US has missed an opportunity SCCE to make Russia an allied for the last 10 years. To make it short, the US has tried to dance wiener waltz in cowboy boots after having some gallons of Coors beer down the throat. Finally the bride said, enough is enough, I do not want to dance with you anymore! This final point was Kosovo independence support in combination with the Dear Reader, rocket base in Poland. Having this in mind, it is not so surprising that Russia decided to teach everybody a lesson in Georgia. This Time for a Russian development is good only for idiots like Castro and Chavez, but long term it is bad for Russia, Europe and US. Instead strategy these three parties should sit down and form an alliance for peace and prosperity in the world. That would also pave the Since the beginning of August a lot of the media road for an improvement of the Estonian-Russian relations. focus in Estonia as well as in the rest of the world has been on Georgia and Russia. Independent from this Estonia must think over what road Estonia want to go in the future; either be the leader of the Living in the former Soviet Republic of Estonia, with its 50 anti-Russian block in NATO and EU or to go together with years of Soviet-Russian occupation, it is not surprising that Finland for a more broader strategy. Is Estonia ready for the support for Georgia has been overwhelming and even it? to a degree too overwhelming. Estonian press, which is known for being rather right wing oriented compared to the traditional left wing press in Sweden, has sometime missed Car policy in Estonia to take an objective stand, if that was at all an issue here. At least it seems so to me. I read www. balticbusinessnews. com a lot because it’s simply the best Baltic daily business news source in English language. During the last months’ cars has somewhat been in focus for many reasons; car dealers in bankruptcy, higher petrol prices etc., but I think it is time that Estonia develops a well thought over there has also been strategy concerning Russia and their bilateral relations, two other interesting where not only the need for independence and own interest reasons; firstly the of expressing opinions are taken into account, but where Scandinavian/Italian also other factors are taken into account, such as foreign book about the rise investments, trade relations, tourism etc. Today that kind and fall of the Estonian economy where the authors of productive long-term strategy does not exist to my criticized and made fun of the Estonian love for big luxury observation. cars and secondly Minister Parts very poorly timing of getting himself a new Audi A6 as a ministerial car. This Finland is a country with a long experience of Russian gave him some critics from the PM Ansip, who is said to relations and these were after WW2, maybe not making have read the book mentioned above. the Finns proud from the point of view of the free word and the right to express your opinions (remember Kekkonens This was for me interesting because it seems like there influence over editorials). But from a trade perspective starts to be a sense of normal approach here from the PM it was a success and it helped to pave the road to what concerning politicians’ cars. Finland is today. Today the Finns seems to speak with 3 tongues, the President takes a more understanding position I am glad that the PM has started to move away from the towards Russia, the PM is neutral and the Foreign Minister African approach, meaning the poorer the country, the speaks more open about NATO membership. Whether this bigger the politicians’ cars. I have an easy proposition for Mr Ansip; I think every MP should drive a car like Volvo S30, Now I will do my bet: the Ministers a Volvo S50 and the President the S80. The car brand is open for competition every third year and let the car - The Estonian economy will continue to fall during the dealers compete with the best offer. This would save a lot of autumn. money to the state and it would signal a trend brake in the - More companies will go bankrupt during the autumn former East Europe. The country really needs a moderate car and people will be laid off. dress code for its politicians. - There will be no salary increases for next year. - House prices will continue to fall and the banks will have more bad loans. - Unemployment rate will go up and after one year Financial forecast from now we will see the bottom of the downturn. - 2009 will be the worst year. In Sweden there was a joke some 20 years ago when the - 2010 the trend will turn upwards again. news program Rapport started to appoint “The Swede of - GDP 2008: -2 %, 2009: -4%, 2010: +2%. the year”. First out was Hans Holmér who failed to catch Olof Palme’s murderer, next was Dr. Refaat El-Sayeed, who turned out not to be a Dr. later on. After this they stopped Les jeux ne va plus! The roulette ball is rolling! with this because every possible candidate became afraid of becoming the Swede of the year as it usually brought bad luck for the appointed person. Enjoy reading nr 3, 2008!

Anders Hedman Chairman SCCE

In Estonia this title does not exist, but instead we have experts or financial analysts’ working for the banks. This year has not been an easy one and unfortunately it has shown that the forecasts are rather useless. After failing to predict the downturn to the extent they have during the spring, they should simply stop calling themselves experts. May I instead suggest guesser or gambler instead, as a more appropriate title. The Swedish Chamber of Publisher is published by the Swedish Chamber of Commerce in Estonia - SCCE. Commerce in Estonia

Address: The Swedish Chamber of Commerce in Estonia – SCCE - is a non-profit The Swedish Chamber of Commerce in Estonia association registered in Estonia. Since its foundation 1991 the SCCE has Rüütli 9 grown considerably and today the Chamber unites close to 140 member EE-10130 Tallinn companies and organizations headquartered in Estonia, Sweden as well as Estonia other countries. E-mail: SCCE is in many ways a mirror of the intensity in Swedish-Estonian commerce and trade. [email protected] Sweden is the biggest foreign direct investor in Estonia and in terms of export and import Tel: (+372) 501 9813 Swedish-Estonian business is among the top three.

A main task of SCCE is to create an environment for networking and exchange Editorial content and articles of information. The Chamber act as a meeting place by arranging seminars, SCCE accepts business lunches, company visits, hosting business delegations as well as editorial content and arranging social events for the members. articles for the magazine promoting Following a SCCE initiative, FICE - Foreign Investors’ Council in Estonia was the commerce founded in August 2008. FICE is a lobby group acting through contacts with the and trade between Estonian Government and Estonia’s Governmental bodies. Together, the nine Estonia and Sweden countries represented among FICE’s members had a more than 80% share of primarily. The author the total foreign direct investments in Estonia during the first six months 2008 of editorial texts and [source: Eesti Pank]. articles published is Special and unique SCCE member benefits include listing in the SCCE Trade responsible for the Directory, an opportunity to a further market content. introduction in the Member in HighLight section of SCCE welcomes the Chamber’s website as well as taking advantage contributions to the of a steady flow of Special Offers. magazine and reserves the right to The fee for basic membership in the Swedish refuse publishing of Chamber of Commerce in Estonia is EEK 5.900:- content not being in per year and EEK 20.000:- per year for Royal line with the Statutes Membership (2008). Membership is only granted to of SCCE. legal entities.

Advertising For more information about SCCE, please visit The advertising www.swedishchamber.ee. You are also welcome to pricelist is available take a direct contact with SCCE’s Ombudsman Kristiina Sikk: at www.swedishchamber.ee [email protected] or tel. (+372) 501 9813.

Subscriptions and additional copies In this issue: The magazine is distributed free of charge to the members of the p. 3: Editorial Swedish Chamber of Commerce in p. 6: Legalities Estonia. p. 9: focus met: Jaak Aaviksoo Companies not yet being members of p. 12: 90th Anniversary of the Republic of the SCCE as well as private individuals can subscribe to . Estonia SCCE also provides additional p. 16: focus on the Economy copies of for SCCE member’s own distribution of the magazine to p. 23: Baltic Dynamics customers and business contacts to a p. 25: Taxes net printrun cost. p. 27: focus on Tour Please contact Kristiina Sikk for p. 33: FICE – Foreign Investors’ Council in further information: kristiina@ swedishchamber.ee Estonia p. 36: Eastern European Safari: Romania and Printed in the EU by KNT Meediad OÜ, Tallinn, Estonia. Bulgaria p. 38: Newsflashes All rights reserved. p. 47: ps. 6 on legalities

What to do if you don’t get paid

As we are surrounded the claim to collect it in addition to by statistics showing a service fee. If you want to handle that the Estonian your company’s own claims, you Karolina Ullman economy is no longer should consider filing for expedited growing the way we are procedure. Karolina holds a Master of Laws used to and the head from Stockholm University from lines in the newspapers The expedited procedure was 1998. She did her Swedish court state that bankruptcies introduced in Estonia in 2007 and practise 1999-2001 in Bollnäs District Court. are increasing, it is is a simplified procedure to get a always useful with court order for payment of debts In 2001 she joined MAQS Law some guide lines on that can be executed by a bailiff Firm’s Stockholm office as an what to do if you do not (Est: kohtutäitur, Swe: kronofogde), associate, assisting MAQS Law get paid on time. if needed. There is no court hearing Firm’s clients with an interest in and if the debtor does not provide Estonia. First of all, always make the court with a trustworthy legal sure that you have valid ground as to why the payment has Since 2002 she has worked part and signed agreements in original with all your counterparts. not been made, the court will issue time in Estonia and as from 2004 Without that, the risk is high that you have limited options a court order for its payment. If full time. In October 2005, MAQS when demanding payment. This is almost impossible to cure the debt is still not Law Firm opened its full service when the problems are already a reality. paid, you law firm in Estonia were Karolina is can turn one of five partners. If you suspect that a company you are doing business with the with is in financial trouble as they pay their court order Karolina speaks Swedish, invoices later and later, you should take to a bailiff Estonian and English. She is this as a strong warning sign. A with the court a member of the Swedish Bar Association and an associated very good indicator on the health order to have it member of the Estonian Bar status of a company is the free- executed. Association. of-charge information from Krediidiinfo’s web The cost for filing a claim under the MAQS Law Firm is a dynamic service. expedited procedure is a minimum full service law firm within Go to www.krediidiinfo.ee and select “Tasuta of 250 EEK or 1% of the claim. This business law with offices firmapäring” (Eng: free-of-charge company enquiry) for the procedure can only be used for in Stockholm, Gothenburg, company you are interested in. The information available claims up to 100.000 EEK. The form Malmö, Copenhagen, Warsaw here is updated every day and is gathered from all the major to be used to file a claim under this and Tallinn. banks, the collection agencies procedure can be found here: (Est: inkassofirmad, Swe: inkassobolag) as well as the Tax Board. You will get information about missing leasing payments, Karolina Ullman unpaid taxes, non submitted tax declarations etc.

If the company seems to be doing well, but is still not paying you invoice you should consider turning to a collection agency or go directly to court in a so called expedited procedure. A collection agency would normally charge a percentage of http://tarkmeestaskus.just.ee/mison_maksekasu_ kiirmenetlus

You will have to file the claim in Estonian language. If you have a claim exceeding 100.000 EEK it is advisable to turn to a lawyer. Some smaller law firms can still agree to do this type of work for a success fee or a lower fixed fee in combination with a success fee. Always discuss these issues at the first meeting and make sure to have a signed agreement also with your law firm outlining the agreed fees.

Larger law firms usually do not engage in collection issues but they can come in handy in case the issue is more 164 spacious rooms, complicated than just an unpaid invoice. Business lawyers are usually skilled negotiators and this can be of great value meeting facilities, in some cases. restaurant and café Mademoiselle, If you suspect that your counterpart is becoming insolvent sauna with whirlpool, and heading for a bankruptcy, be aware that the trustee in casino, the bankruptcy (Est: pankrotihaldur, Swe: konkursförvaltare) beauty salon may have the right to claim back payments made after the debtor became insolvent to the estate of the bankruptcy (Est: pankrotipesa, Swe: konkursboet).

If you happen to be on the other end of the problem with no payment; if your company is the one not paying – remember it is always better to start negotiating payment plans immediately than to wait for a court order or to be hunted by bailiffs and collection agencies. This way you will have business partners also after you have survived the bad times, or at least you will leave them with the feeling that you tried 41 cozy rooms, your best! café Mademoiselle, In addition, be aware of the fact that if you are a management summer terrace, board member you have an obligation to call for an extraordinary shareholders’ meeting if the net assets of the private functions company has fallen below 50% of the registered share capital and you have under certain circumstances an obligation to file for bankruptcy. If not dealt with properly, personal liability under the law may occur.

Written by Karolina Ullman, MAQS Law Firm OPEN 2009

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mote crisis areas from January 1st to June 30th this year.

- Estonia’s defence cooperation with Sweden also includes Appointed Estonia’s the Baltic Defence College in Tartu. Called BALTDEFCOL Minister of Defence in and internationally renowned as a very effective Baltic joint 2007, the former Tartu venture, it is an international military educational institution and Swedish officers have been and still are working at the University Rector and college. Minister of Education and Culture, Jaak Aa- - On a Nordic and Baltic level we are keeping up the contacts viksoo took office at an and cooperation through regular Minister of Defence meet- intensive period of our ings. Study visits are frequent among us and I could recently time. The need grows welcome a delegation from Sweden’s Parliamentary Defence Committee. Just like members of the Swedish Chamber of for cooperative inter- Commerce in Estonia did in September, they also visited the national engagements in several foreign conflict NATO Centre of Excellence in Co-operative Cyber Defence. areas around the world. The relations with Russia are not the best. Important decisions have to be - International defence cooperation also involves taking care prepared on the future shape of the air-policing of the aftermaths following a war or a conflict. One example set up for the three Baltic States. is the sea mines we still have in the Baltic Sea following both World War I and II. Sweden and Estonia have together with several other nations performed mine sweeping missions through the years and this huge mission is by far not yet Internationalization completed.

- Contributing to securing national sovereignty is of course the main issue of any country’s defence forces, said Jaak Aa- viksoo. But, just like it is in the world of commerce and trade, Baltic air surveillance national defence forces are today becoming more and more internationalized. and policing

- For Estonia, NATO-led operations have priority and Estonian Estonia is Defence Forces are for example present in Iraq and Afghani- considered stan. Being an EU-member Estonia also takes an active part well equipped in the European Security and Defence Policy work and Esto- to monitor its nian soldiers and officers are, together with colleagues from airspace but other EU-countries, taking part in the largest EU military currently lacks operation ALTHEA in Bosnia and Herzegovina. the national and necessary - Estonia also took part in EU’s peace-supporting Nordic capability for Battle Group. Led by peacetime air- Sweden this group policing of its consisted of defence sovereign airspace. Since the Baltic States joined NATO in forces from Finland, March 2004, several NATO nations have policed the airspace Norway and Ireland over Estonia, Latvia and Lithuania. Based at the Lithuanian in addition to our Zokniai air base a typical deployment consist of four fighter two countries and aircraft with some 50 to 100 support personnel and these the Nordic Battle deployments are changed and rotated among the participat- Group was kept ing NATO countries every fourth month. ready and alert for rapid EU-ordered - The current Baltic air-policing agreement with NATO is deployment to re- valid up until 2018, said Jaak Aaviksoo. During 2010 the 10

agreement calls for Estonia, Latvia and Lithuania to come up of view, is a rather new battlefield. with a proposal on how the air-policing should be handled after 2018. - Maybe we can also look upon our national achievements within IT as a human resource basis for a further develop- - Teams of specialists here in Estonia, Latvia and Lithuania ment and an answer to President Ilves’ call for an Estonian are currently evaluating all available and relevant options for Nokia – moving from a production oriented to a more knowl- a long term solution on the air-policing in the three Baltic edge oriented economy. States. This is not only a question of fighter aircraft, it is also a question of a proper ground support organization and the adaption of existing air force bases to NATO standards. A Defence Minister’s - It is an extensive project and our final decision will naturally include quite a lot of different business opportunities, both for profile Swedish suppliers as well as suppliers from other countries. A good advice to potential suppliers is to keep the dialogue “He must be able to take command in a more powerful way open with us. than the military themselves. He must be a technological genius to understand what the military is talking about when they demand new equipment. He must be an oracle in terms of foreign policy to determine what is needed and From Tiigrihüpe to what might just be nice to have. And above all, he must be a Cyber Defence very good friend of Sträng!” That’s how the former Swedish Prime Minister Tage Erlander Tiigrihüpe (Tiger’s leap) became put up the profile of his Minister of Defence as Erlander, with a national project undertaken by a troubled face, saw Sweden’s defence expenses skyrocket Estonia 1996 to heavily invest in towards the end of the 1950’s and the beginning of the 1960’s. development and expansion of ‘Sträng’ refers to Gunnar Sträng, a somewhat legendary the country’s computer and IT Swedish Minister of Finance 1955 – 1976. network infrastructure, with a particular emphasis on educa- - Well, smiled Jaak Aaviksoo, I’m sure that was right down tion. to the spot in Sweden during those days. Discriminating between what is important and what is not so important is - It was actually three men behind the creation of the Tii- indeed still a crucial issue. The ability to cooperate and nego- grihüpe project, said Jaak Aaviksoo. It was Toomas Hendrik tiate is another quality I would put up on the Defence Minis- Ilves, at that time Estonia’s Minister of Foreign Affairs, it ter’s profile. Not only on the national Governmental, political was me and it was Johnnie Walker in the shape of a tax-free and public level but also on the international arena. Finally, bottle. making the things happen is a prime quality that I believe is important, not only for Ministers but also for all decision - Our President at that time, Lennart Meri, supported our makers in the public and business sectors. proposal and Tiigrihüpe was launched in 1996, continued Jaak Aaviksoo. Looking at the outcome today, 12 years later, Interview – July 31st, 2008: Megazine - Tallinn I believe I can say that it became a success. Tiigrihüpe is re- garded to be a main contributor to Estonia’s current reputa- tion as the most ‘wired’ country in Europe. Jaak Aaviksoo

Graduating cum laude in the - But above all, our initiative contributed to the development speciality of Theoretical Physics at of Estonian human resources within IT know-how and IT the University of Tartu 1976, Jaak expertise. This came to serve us well as cyber attacks were Aaviksoo was named Professor of Optics and Spectroscopy at the same launched on Estonian servers in the aftermaths of the street university 1992 – a professorship riots in connection with the relocation of the Soviet World War that he still holds. II memorial in Tallinn last year. His career at Tartu University continued as he was appointed - The cyber attacks were indeed a hands on reminder of how Prorector 1992 – 1995 and Rector of vulnerable we all are today, both as a society and as private the University 1998 – 2006. individuals. Luckily enough for us the idea on building up Additional studies within his field of competence within cyber defence wasn’t new, we actually technological expertise during the started to build up this expertise already back in 2003. 1980’s, 1990’s and early 2000’s have taken Jaak Aaviksoo to Novosibirsk, Stuttgart, Osaka and Paris and he has participated in more than 100 scientific conferences in - We managed to hold our fort and our cyber defence strate- 23 foreign states. gy, tactics and techniques created international attention and On the Estonian political arena Jaak Aaviksoo served as Minister publicity. Todays’ Estonian based NATO Centre of Excellence of Culture and Education 1995 and Minister of Education 1996. in Co-operative Cyber Defence is a spin off from our success- ful defence efforts in cyberspace which, from a military point He was appointed Minister of Defence 2007 and represents Isamaa ja Res Publica Liit (Pro Patria Union and Res Publica, Estonia's two right-conservative parties who voted to merge and form the biggest centre-right political power in Estonia in June 2006) in the current Estonian Government coalition.

12

October 2008 - the month of different ethnic nationalities in Estonia

Following the Estonian during a period of the first Republic. schools as the September- theme of the 90th Anni- 1943/44 the vast majority of the Estonian-Swedes fled the versary of the Republic, war and the following Soviet occupation. Among those few October will be dedicated who stayed, many perished in the war or got deported and to the 121 different ethnic a population census 1989 accounted for only 297 Estonian- nationalities residing in Swedes living in Estonia. The first Estonian Estonia. Constitution provided national minorities a chance to estab- lish cultural autonomy, at that time an initiative that made As the Estonian- Estonia innovative in Europe. October 2008 will now see the Swedes started to slogan “A country built together” put up front. return following Estonia’s restored In- During November the Anniversary theme will be the Gov- dependence 1991, the ernment of the Republic. State Authorities supporting the number of Estonian- functioning of Estonia will be highlighted and seminars and Swedes living in exhibitions will take a look into the future. Estonia permanently or seasonally has The 2008 Anniversary Year will last until November 28th, grown considerably. Today the Estonian-Swedes have es- which marks 90 years since the first battles of the War of tablished cultural autonomy in Estonia with Kulturrådet för Independence, and will be concluded with a concert at the den Svenska minoriteten i Estland/Rootsi vähemusrahvuse Estonia Concert Hall in Tallinn. kultuurinõukogu Eestis (the Cultural Council for the Swed- ish minority in Estonia) as its governing body. Estonian-Swedes Estonian-Swedish culture and traditions Statements on the right to cultural autonomy for nation- Estonian-Swedish associations al minorities were already supported and contributed to included in the Estonian the efforts of keeping Estonian- Declaration of Independence, Swedes together and their culture signed in Pärnu February and traditions alive during the 24th 1918, as well as in the Soviet occupation. Nowadays a following Estonian Constitu- number of events, activities and tion and these rights became a law 1925. projects, many of them on a yearly basis, highlight the Estonian- Estonian-Swedes were first mentioned in written in a Hapsal Swedish culture and traditions of (Haapsalu) document 1294. Through the years they have the past and of today. focus has populated Nuckö (Noarootsi), Ormsö (Vormsi), Runö (Ruhnu), visited some of them this summer. Odensholm (Osmussaar), Rågöarna (Pakri saared), Nargö (Naissaar) and, over time they also settled in Hapsal and Tal- Olofsdagen linn. Up until 1940 Estonian-Swedes were the predominant population group in many of these areas and islands. The first Swedes settled on Ormsö (Vormsi) during the 13th century Totalling more than 9.000 persons, the Estonian-Swedes and according to an old legend (not scientifically verified) were the third biggest national minority group during the first Ormsö’s church was established 1219. The church was Estonian Republic. At a peak period during this time, they had named S:t Olai/S:t Olof after Olaf Haraldsson, more known as 19 elementary schools, a secondary school in Hapsal and a Olof den Helige/Olaf the Holy, king of Norway 1015 – 1028. residential college in Birkas (Pürksi). The Estonian-Swedes political party, Det Svenska Folkförbundet (The Swedish S:t Olof church on Ormsö served its congregation well People Alliance) was represented in the Estonian Parliament through hundreds of years but, on Saturday afternoon, July 138

15th The miller was an important person on Ormsö in the old 1944 the days. Crops needed to be milled and bread baked from the church resulting flour. One Ormsö Estonian-Swede told focus that bells the miller was considered so important that he got a small were amount of money as a fixed remuneration every month. It tolling a wasn’t much, but the arrangement still created some envy last time among the other Ormsö islanders. for many years to Today a road sign next to the windmill says ‘Tere Tulemast’ on come. Practically all Ormsö Estonian-Swedes had left the one side and ‘Välkommen’ (Welcome) on the other side. The island and during the Soviet occupation the church’s benches Rälby windmill is used as a handicraft and souvenir shop and were thrown out and used as fire wood and the church itself has become a popular stop for passing tourists. is said to have accommodated potatoes, crops and hay. Ormsö Following an Hembygdsgård initiative from local Ormsö inhabitants, Pearsgården – Pers church renova- Gård (Per’s farm) on tion works was Ormsö – is one of the few approved by the Estonian-Swedish farms Soviet authorities that survived a big fire and could start in in Sviby June 13th 1932. 1988. The initiators Bought by Ormsö Hem- had stated that the bygdsförening/Vormsi church should be Kodukandi Ühing (Ormsö used as a ‘meeting Folk Association) in the place for the community’ which obviously was the key for the spring of 2000 it is also one of the few farms that look like the successful outcome of their application. Estonian-Swedish Ormsö farms did just before World War II.

The renovation works received financial and hands on sup- Nowadays called Ormsö Hembygdsgård/Vormsi Talumuu- port from Estonian-Swedish associations as well as private seum (Ormsö Folk Museum), individuals and the church was reopened on Olofsdagen (the Pearsgården is open for the public. The farm is a time docu- Olof day) July 29th 1990. ment and the buildings and the interiors look like the farmer and his family has just left for a short visit somewhere some focus visited the Midnight Mass in Ormsö’s S:t Olofs church 70 years ago. this summer. This traditional Mass is celebrated July 28th, the night before Olofsdagen, and is dedicated to the memory of the Estonian-Swedes and Ormsö inhabitants now buried at 20 meters Estonian-Swedish history the church’s cemetery. Following the Mass a candle walk is On display at Aiboland’s Museum arranged from the church to the cemetery and this is indeed in Haapsalu, a 20 meters long a very solemn and emotional tradition. wall tapestry depicts Estonian- Swedish history up until our days. Rälby väderkvarn Inspired by the medieval Bayeux It looks old, the Rälby tapestry, windmill on Ormsö but, this Aibo it actually only dates wall tapestry was designed by Jorma back to 1999. It was Friberg, who is also the ship building built as a kit by the meister of the Runbjarn Jahta. The Estonian-Swede Egil tapestry work began in 2001 and the Hamnholm on Mjölkö in embroidery was done by a group of the Stockholm archipel- sewing- and embroidery-skilled ladies ago and was mounted known as Torsdagstanterna (the Thurs- up in Rälby during July day ladies). 1999. In time for Egil Hamnholm lived in Aibolands Rälby as a boy and the Museum’s windmill is constructed inaugura- according to the old tion, May time Ormsö traditions. 5th 2002 in the 14

presence of the President of Estonia and the Swedish King at: and Queen, the Aibo wall tapestry was ready and is since then www.swedishchamber.ee/estonianswedes on display in the museum. A Will to Be Free Aibolands Museum is located at Sadama 31/32 in Haapsalu and is open Tuesday – Saturday, 11 – 16 during the winter On Estonia’s 90th Anniver- season and 10 – 18 during the summer. Website: www.aibo- sary Independence Day land.ee. February 24th the exhibi- tion ‘A Will to Be Free. 90 Stora Svenskdagen 2008 years of the Republic of Estonia’ opened at the Es- Estonian- tonian History Museum’s Swedes took Maarjamäe Palace. an active part in the celebra- The exhibition is com- tions of Esto- prehensive and gives nia’s restored an overview of Estonia’s Independence history from 1917 until the August 20th as radical changes in the end of the 1980’s and the beginning of Stora Svenskda- the 1990’s. gen (the Great Swedish Day) The exhibition is open Wed-Sun 10-17 at the Estonian History was arranged in Museum - Maarjamäe Palace, Pirita tee 56, Tallinn. Birkas (Pürksi). Connections The event was arranged and supported by several Estonian-Swedish organi- Both sea and air transport options between Estonia and zations, among them the Swedish Chamber of Commerce in Sweden existed during the first Estonian Republic but, Estonia, and SCCE’s member Vävars OÜ was one of the main traveling between Tallinn and Stockholm was a bit different sponsors. at that time.

The Swedish Market was open throughout the day offering the visitors handicrafts and books. Folk mu- sic and folk dancing was performed and documentary films shown. An exhibition, created following an initiative by the Swed- ish Embassy in Tal- linn, on the history of the Estonian-Swedes Built at the was up on display. Swedish Gävle-based Stora Svenskdagen shipyard O.A. 2008 also marked Brodin 1892, three 20th year’s the steam- Estonian-Swedish ship S/S jubilees; back in 1988 Kalevipoeg the perestroika made it possible for many Estonian-Swedes took her to visit their homeland for the first time since many years. passengers The origin of the Cultural Council for the Swedish minority in from Skepps- Estonia was formed the same year and the first Great Swed- bron at ish Days were arranged July 30-31, 1988. Stockholm’s old town to As previously announced a new section has been opened at Tallinn from SCCE’s website giving Estonian-Swedish organizations an the beginning of the 1920’s up until the first Soviet occupation opportunity to inform about their upcoming events and also to 1940. Sailing under Estonian flag and known as ‘Kalle på väg’ publish links to their own websites. The section is available in Stockholm the steamship offered a peaceful voyage if the 15

Baltic Sea showed itself from its Jüri Uluots - best side. Prime Minister

Following the opening of acting as the Stockholm-Lindarängen President of seaplane air port in May 1921, the Republic Svensk Lufttrafik AB (Swedish Air traffic Ltd) started up air Following his death traffic between Lindarängen and and burial at the Tallinn’s Lennusadam (seaplane Forest Cemetery air port) July 19th the same year. in Stockholm 1945, The seaplane used was a single- the remains of Jüri engined Junkers F13 seating 4 Uluots were brought passengers. back to Estonia in May this year and reburied with national honours in Kirbla, August 31st. The trip took some three up to three-and-a-half Jüri Uluots was the hours pending the winds Prime Minister of the Republic of Estonia 1939 and became and the Swedish adver- Prime Minister acting as the President of the Republic in July tising text said ‘Flygplan- 1940. As the Soviet Union began its reoccupation of Estonia et är väl uppvärmt varför 1944, Uluots appointed Otto Tief as the Prime Minister of the passagerarna ej komma Republic of Estonia and gave him a task to form the Govern- att känna något obehag ment of the Republic. av kölden’ (the aircraft is well warmed up and the passengers will not be discomforted by any coldness). These assuring Jüri Uluots and parts of Otto Tief’s Government managed to words were however only valid for the cabin. The pilot was flee to Stockholm, where Jüri Uluots died shortly after arriv- seated in an open cockpit and was consequently dressed like ing. a civil version of the Red Baron. Estonia’s Government in exile operated from 1944 and laid Svensk Lufttrafik AB didn’t manage to fill up the cabin in their the groundwork for the continuance of the Independence of pioneering Tallinn traffic and the route was closed after a the Estonian State in exile. The existence of the Government couple of months. as a constitutional institution in exile allowed for the resto- ration of the Independence of the Estonian state in 1991 by As the Finnish airline Aero Oy started flights between Helsin- relying on legal continuity. ki and Tallinn and the Swedish airline ABA - AB Aerotransport flew with Junkers F13’s between Stockholm-Lindarängen and Helsinki, passengers got an option for a connecting flight to Tallinn via Helsinki in 1925. Since this schedule called for an overnight stop in Helsinki, it is very doubtful that the effective travel time could compete with S/S Kalevipoeg’s somewhat slower but nonstop crossing of the Baltic Sea.

DHL Estonia AS Betooni tn. 6 Tallinn 11415, tel. +372 680 8555, e-mail: [email protected] 16

January – June 2008. Our strong capital base and liquidity Mostly positive for position provide continued opportunities to long-term grow our business and thus to be offensive in overall defensive Swedish banks markets. Swedish owned banks dominate the banking Swedbank and SEB are the main actors in terms of credit sector in Estonia and the Baltic States and it was volumes in the Baltic States. with some anxiety the market waited for their Nordea’s half year report 2008 was in line with the 2nd quarter reports 2008. expectations of the market.

The reports were mostly positive with Swedbank on top of - I am pleased that we have been able to maintain a high the positive list. activity level and report record results in customer areas in a period with weakened and volatile financial markets, said - The profit of SEK 6.5 billion Christian Clausen, President and Group CEO of Nordea. We [Edit: EEK 10.78 billion] for continue to deliver on our growth initiatives and we stand the first six months 2008 by our long-term financial targets although increasing is our highest ever, said macroeconomic uncertainty and volatile financial markets Swedbank’s President and CEO put some pressure on the short-term development of risk- Jan Lidén. The Baltic region’s adjusted profit. macroeconomic development was weaker than expected Handelsbanken presented January – June 2008 operating during the second quarter, profits amounting to an impressive SEK 6,3 billion [EEK 10,4 partly as an effect of economic billion]. uncertainty in the rest of Europe. While this will affect “Loan losses increased to SEK 571 million [EEK 946,7 Baltic Banking´s development, million]”, said Handelsbanken in a written comment. “Around the business area is expected two-thirds of the loan losses derive from one exposure in to maintain a robust earning Sweden.” capacity and net profit. Credit quality remains high in both - Handelsbanken’s credit loss feels like thunder from clear the Baltic region and Sweden. skies, said the Swedish economic analyst Tomas Ullman. But, it should be remembered that Handelsbanken’s businesses Economic analysts noted that Jan Lidén expected Swedbank’s look good for the future. total credit losses not to exceed 0,7 percent [or SEK 1,3 billion / EEK 2,15 billion] of the bank’s total lending. This means that Inflation Swedbank’s total credit losses SEK 400 million [EEK 664,1 million] during the first half of 2008 will more than threefold As Estonia is struggling with a 11% during the remaining six months of the year. inflation, Sweden fights a record high 4,3% inflation and the Euro area noted a 4,0% inflation, Zimbabwe is dealing - Even if Swedbank adjusts their Baltic credit loss prognosis with a 2 200 000% inflation [all figures upwards, it is still lower than we previously thought, said as per August 2008]. Tomas Ullman, a Swedish economic analyst. Known as hyper-inflation, Germany’s Weimar-Republic inflation during the In addition to Swedbank, SEB’s report also contributed to 1920’s is probably one of the most well known. cooling down the worried feelings on the credit situation in 6 the Baltic States. As this German hyper-inflation reached 3.25 x 10 % per month in 1923, it meant that prices doubled every two days.

- It is satisfying to note that we in a quarter marked by Neighboring Austria was affected and 1921 - 1922, Austria’s inflation renewed financial turbulence can present an income level reached 134%. just second to our all-time high, said SEB's President and 1940’s hyper-inflations include Greece in 1944 when its inflation rate Group CEO Annika Falkengren as she presented SEB’s reached 8.5 billion percent per month and prices doubled every 28 hours. SEK 5,9 billion [Edit: EEK 9,8 billion]operating result for Hungary set a record 1945 – 1946 as its inflation peaked at 4.19 x 1016% per month and prices doubled every 15 hours. 17

indexation should definitely be avoided when determining The Central Banks: wages and the prices of services. No considerable Labour improvements in sight On the international scene Productivity and an prices on energy and food are this year considered as main global ageing population inflation drivers, both having a One year ago focus reported - The external environment considerable impact on every that Eesti Statistika is is likely to stay volatile nation’s economy. In addition to looking for more babies to in the near future and these commodities, Estonia is still be born; “Estonia has a birth there are no considerable struggling domestically with the rate considerably lower than the gross reproduction rate. improvements in sight aftermaths following the tiger- Such a way of behaviour for the second half of the economy’s wage and labour rally can be applied in one, two year, says Eesti Pank (the as well as election promises on or in some cases three Estonian Central Bank) in lowering the income tax. generations, but then its end of August Economic the country in question is doomed to disappearance as Policy Statement. a nation...”

Eesti Pank’s statement got support from their colleagues at Riksbanken (the Swedish Central Bank):

- The [Swedish] picture presented in July largely remains unchanged. Lower The ideal population pyramid growth and high inflation looks like any of the Giza pyramids – a steady flow but GDP growth has so of newborns grow up, start far this year been weaker school, get educated, work, than anticipated, said Riksbanken’s Deputy Governor Svante Labour is still hard to find in several get children and when they Öberg in an end of August speech. Inflation is at its highest Estonian business sectors and there get old a sufficient number of level since the mid-1990s. However, oil and other commodity is an obvious shortage of skilled young and productive people are there to continue the job prices have fallen. At the same time, productivity has been specialists and competent managers. the same way. lower and resulted in increased wage costs. According to Eurostat and despite As the population pyramid Eesti Pank’s Economic Policy Statement continues: the current economical slow down, doesn’t look like a pyramid Estonia’s unemployment is down from any more, Eesti Statistika got massive support from - In light of Eesti Pank's spring forecast, it can be said that 4,8 to 4,1 percent compared to one Eurostat this year. the economy is developing according to the scenario of a year ago. Followed by Denmark, the speedier decline in domestic demand, especially investment Netherlands and Cyprus, this gives - The declining population growth. Therefore it is possible that real growth will be Estonia the lowest unemployment in the EU area means that negative this year. level among the 27 EU member in 2050 there will only be states. The comparable EU 27 average two working persons per pensioner, compared to - The exporting sector has managed satisfactorily so far. unemployment figure is down from 7,1 today, says Eurostat. As for We expect economic growth to recover in 2009. To this end, to 6,8 percent. Estonia the population will resources should be reallocated in order to reinforce the fall 15 percent from today’s export potential even more. Though the Estonian wage growth level by 2060. during the second quarter this year - An ageing population might - In the convergence programme sent to the European slowed down to the lowest level in two halve the economic growth, Commission and the Council of the European Union, the years, double-digit wage-raises still continues Eurostat. Present Government has confirmed that in the medium term, the exist on the Estonian labour market. social welfare systems will budget must be in surplus. This is necessary for reasons be under severe pressure related to the expenses arising from the ageing population, Statistics Estonia reports that the as the costs for pensioners, health- and medical care unexpected events originating from the external environment, average monthly Estonian gross wages accelerates. the international credibility of the Estonian economy, as well during the second quarter increased as national security. with 15.2 percent y-o-y compared with an increase of 19.5 percent in - In addition, the labour market should quickly react to the the first quarter. This could also be changing economic conditions. In Eesti Pank's opinion, compared to the average 20 percent 18

wage growth level which has been in existence during the last A suitable housing for a family five quarters. prepared to pay EEK 1 million was impossible to find in the The Estonian Ministry of Finance expects that this small but suburbs of Tallinn 18 months well needed trend of lower wage growths will continue this ago. Today prices for a two and next year. bedroom suburban apartment start at around EEK 650.000.- Within the Estonian coalition Government, there has been and a one bedroom downtown a debate this year on a temporarily freeze of the current 21 Tallinn flat can be found for percent flat income tax rate. The original plan, and also an around EEK 1 million. Finding a election promise, called for a decrease down to 20 percent in private house for EEK 1 million 2009 as well as further decreases down to 19 percent in 2010 will however take a prospective buyer some 50 kms outside and 18 percent in 2011. Tallinn.

The demands for a balanced Estonian State budget have - We don’t foresee any growth in the real estate sector for included tax incomes as one source for a solution and the another 18 to 24 months time, concluded Eesti Pank’s Natalja proposal of a frozen income tax level has support within the Viilmann her comments. coalition Government as well as from the political opposition and now also from one of Estonia’s beer producers, A. le Coq;

- Estonian voters would understand if several election Food promises wouldn’t be met to 100 percent, said A. Le Coq’s Good international CEO Tarmo Noop in a recent comment. Not lowering grain crops so far the income tax would be a better option than increasing this harvest season, whatever taxes, like VAT. An increased tax pressure leads to have lowered the decreased consumption and a weaker home market. world market food commodity prices, but we still have to Real Estate wait for notable price decreases on retail level.

- We have built more than we are able to buy, said - The retail price adjustments on food stuffs are historically Natalja Viilmann, an analyst at sluggish all over the world, says Marcus Widén at the USA takes national Eesti Pank, as Statistics Estonia Swedish National Institute of Economic Research. Within control on the real reported that the number of the EU it is typically food stuffs that are less processed and estate finance market real estate transactions is containing a high amount of raw material, like flour and down by a third in Q2, 2008 bread, that are among the first to get their prices changed, compared to one year ago. upwards or downwards, in the shops and supermarkets. Supported by the two US Presidential candidates Compared to the first quarter this Retail EU-average prices on food stuff increased in 2001 and Barack Obama and John year, the number of Estonian real 2002, followed by a slow decrease during a couple of years McCain, USA has now taken national control over the two estate transactions increased with until prices started to sky-rocket since some 12 to 18 months gigantic real estate financial 10 percent but, this bigger number back. corporations Fannie Mae and of transactions compared to the Freddie Mac. beginning of the year, represent - As the population on our planet increases, so does the a typical seasonality in the real demand for food, concludes Marcus Widén. It is not likely that In a recent move following estate business. the consequences of the US we will get back to the prices we had a few years back, but subprime financial crisis we can expect a slow and small price decrease up until 2009 (see focus 2/08) the State - There is no reason to talk about – 2010. bought shares in Fannie a revival of the real estate market, Mae and Freddie Mac for said the Statistics Estonia report. The global price development and availability of grain crops 100 billion USD. The State has created a renewed international trend reports FAO – the will additionally guarantee short term credits and will In terms of value, the volume of Food and Agriculture Organization of the United Nations. buy real estate credits on the real estate transactions decreased Financially strong countries are now beginning to secure open market in an attempt with 38 percent y-o-y in the second their need of grain by acquiring and setting up cultivated to restore the confidence for quarter 2008, reports the Estonian areas in other countries. Being a financially strong country this vital part of the financial Land Board. The average value doesn’t automatically mean that you have fertile farm land market. As the saving action is accomplished, the State of a notarised purchase-sale within your own borders. And, the other way around, having will own almost 80% of transaction was EEK 1 million own fertile farm land doesn’t automatically make a country Fannie Mae and Freddie Mac. which is 20 percent less than in the financially strong. In a recent United Nations speech, the FAO same quarter 2007 and 3 percent Director Jacques Diouf, said that the trend might be a sign of Further US Federal actions less than in the first quarter 2008. a new colonialism and called for an international monitoring on the financial market are expected during the autumn. of the development. 19

Oil Internationally agreed emission Oil shale quotas forced Estonia to go from - Which is the fastest being an electricity exporter to Called põlevkivi (combustible stone), Estonia’s oil shale way to become a an importer during the first eight resources is also referred millionaire? months 2008. Statistics Estonia to as Estonia’s black gold. reports that the Estonian domestic Owned by Eesti Energia, the - Invest a billion in an energy production was 29 percent AS Narva Elektrijaamad- lower in July 2008 compared to operated Balti and Eesti airline… power plants supply Estonian one year earlier. consumers with electric Following more than power and the town of Narva 500 days of a continuous - In 2006/07 with thermal power. About price escalation and the Eesti Energia 95% of Estonia’s power needs are supplied by these two mid-July all-time-high paid EEK 150 power plants. Brent oil price of USD millions in 147 per barrel, the above environmental Põlevkivi – the combustible somewhat gloomy tip was given by several CEO’s in the charges, stone – was first mentioned says Rita in 1725 as shepherds used airline industry. Seeing the airlines hitted severely hard by oil shale for starting up record-high fuel prices, an airline industry official said that Strandberg, their fires. In 1918 the first there isn’t any such thing as a low-cost carrier anymore. But M.Sc. in applications of oil shale as there still are low-price carriers operating in an environment Environmental a fuel for various industries of record-high costs. Engineering. and households appeared in Estonia’s north-eastern However, using oil shale district and in 1924 The Brent oil prices stayed between USD 20 – 40 per barrel best available Tallinn’s thermal power plant from year 2000 until the 4th quarter 2004. During this quarter technologies, switched over to oil shale the price took a jump up to USD 50 per barrel, went down to Eesti Energia has managed to combustion. As the Estonian utilization of its oil shale USD 40 in December and in January 2005 the real oil price decrease the emissions from the resources increased, Swedish escalation began. oil shale fuelled energy. Compared interests were partly involved 2005 saw the price rise to USD 60 per barrel. Following a to 2005, 2006 saw the emissions in the mining during the first peak of close to USD 80, 2006 ended with a USD 60 price, of carbon dioxide decrease with Estonian Republic through while 2007 ended with close to USD 100 per barrel. 5%, sulphur dioxide emissions the company ‘Baltiska Oljecentralen’ (the Baltic Oil decreased with 8% and nitrogen central). Following the mid-July all-time-high USD 147, the price dioxide emissions decreased with went down to USD 115 in August. At that time OPEC made a 6%. New fluidized bed furnaces statement on a support from their side on higher oil prices in the new blocks of the Eesti and the rollercoaster-looking story on oil prices will obviously and Balti power plants have continue. reduced the amount of cooling water needed and new filters International energy analysts also argue that speculations have decreased the amount of fly might have had a considerable impact on the oil price ash emitted. Carbon dioxide is a escalation. They have support from the oil industry where greenhouse gas, sulphur dioxide is figures on a ‘speculation effect’ of USD 20-25 per barrel was a prominent part of sulphuric acid Located 5 km from Narva, mentioned as the oil price reached USD 147 per barrel. and thus a contributor to acid rain the Balti power plant is one and nitrogen dioxide is yet another of the largest oil shale-fired power plants in the world. It The private households’ behaviour and the global economic prominent air pollutant. was built in 1959–1965 and slowdown are considered to be of vital importance for the is currently operating within continued story on oil prices. There are clear signs that the - As the Narva and Ahtme power the framework of the united world’s biggest oil consumer USA, with a 25 percent global plants will have to comply with the Baltic States’ energy system. share, has a downward trend in its oil consumption. People EU directive on large incineration plants by 2010, Eesti Energia is Also located in the are changing their transportation habits and are choosing neighbourhood of Narva, more fuel efficient new cars. facing remarkable investments the Eesti power plant is Oil shale holds a special position among the mineral that remain to be made for our oil even bigger and actually resources in Estonia, but as for every source of energy, shale fuelled energy, concludes the largest oil shale-fired there is an environmental price to pay for oil shale Rita Strandberg. power plant in the world. Constructions began in 1963 generated electrical and thermal power too. and in 1973 the plant attained Estonia’s know how in oil shale its design capacity of 1 610 From an aesthetic point of view the surface mining indeed mining and its use for producing MW. minimizes the recreational value of the landscape, but an energy is internationally renowned. At the end of 2007, the total even more serious concern is that surface mining also According to The Jordan Times, installed electric capacity of includes a damage-risk for the area’s ecosystem. Oil shale Eesti Energia has submitted the two Estonian oil shale- combustion and thermal processing generate emissions, a feasibility study, saying that fired power plants was 2 380 waste material and also consumes a lot of water. there is a potential for producing MW. This could be compared to other countries with sizeable oil shale-fired power plants like Israel - 12.5 MW, China - 12 MW and Germany - 9.9 MW.

21

36,000 barrels of oil per day just from one of the Middle East Kingdom’s oil shale findings. When Jordan switches over to Business as usual oil shale fuelled energy production, it is estimated that the country’s energy bill will be reduced by some 40 – 50%. though a renewed Oil shale as an energy resource will be highlighted at an international oil shale symposium in Tallinn next year. east – west political The total world resources of oil shale are conservatively estimated to at least three trillion barrels, which exceeds polarization? currently known oil reserves at least three times. Topics covered during the Tallinn symposium will include Forty years ago the east – west political polarization exploration, mining, retorting, combustion, environment got new fuel as Warsaw-pact troops crossed the and carbon management as well as national oil shale borders to Czechoslovakia just before midnight strategies and related industry developments. August 20th 1968 and the days of Alexander Dubcek’s Prague-spring came to an abrupt end. In the wakes of the current oil price levels, new business During August 2008 the conflict in Georgia has initiatives develop. As an Estonian example, Biodiesel developed to a renewed east – west polarization on Paldiski AS now uses rapeseed oil for further processing the international political arena. to motor biodiesel and the company is aiming at a 100.000 tonnes per year production. From an economical point of view there is a consensus among international analysts that Russia now, after ten As for the airline industry, Sir years of economical progress, is demonstrating super- Richard Branson’s Virgin Atlantic, power ambitions. However, says the analysts, Russia is pioneered biofueled flights earlier risking a cool down in its international economical relations. this year. A Virgin Boeing 747 made a test flight from London to There are fears that the Russian economy will face a Amsterdam with one of the tanks problematic future unless the country manages to develop fuelled up with a 20-percent mix of its international commerce, trade and industry as well as biofuel derived from coconut and increase the productivity. However, that requires international babassu oil [derived from the seeds cooperation and a significant Russian openness towards the of the babassu palm tree, mainly rest of the world. growing in Brazil]. The current escalating east – west political polarization An immediate commercial resulting from the conflict in Georgia is not considered to implementation of aviation biofuels seems politically promote Russia in this international scenario. however doubtful. Critics said that the environmental benefits of biofuels are As the international negligible at best and using crops for fuel protests and the will drive up food costs, deplete arable land east-west polemics and contribute to deforestation. continued the Moscow International - If Virgin alone would power its entire fleet Automobile Salon with biofuel, it would have to use about half of the UK's arable 2008 and the 4th land, said Jos Dings, director of the European Federation of International Transport and the Environment. Automobile exhibition InterAuto was arranged at Moscow’s Crocus Expo August R&D on alternatives to today’s standard aviation jet fuel 26th through September 7th. continues. Boeing is looking at algal based fuel as one option. This was the first time the Moscow-exhibition was ranked - Algae look very promising, said Billy Glover, Boeing's alongside the motor shows in Geneva, Paris, London, Detroit head of environmental strategy. Our search for a fossil fuel and Frankfurt. replacement continues and the Virgin test flight proved that a different type of aviation fuel can be used. Foreign car brands’ share of the Russian automotive business has grown with 47% and in terms of new car sales Russia is on the second place in Europe. All figures so far 2008.

On a European level and a few days before the European Union’s extraordinary summit September 1st on the situation in Georgia, Estonia’s Prime Minister Andrus Ansip said that the EU must review the entire spectrum of relations with Russia to give Moscow a signal that aggression towards another country cannot be left 22

without any consequences. areas than South Ossetia and many regard the military conflict as a tragic mistake in office. Things should have been - In the current situation, the solved through talks and diplomacy. European Union must decide whether it is appropriate to - The Enguri River in the high Western Georgian Mountains enter into a new framework has an enormous potential for hydro power installations contract for cooperation and the proposed between the European Union Khudoni Hydro Power and Russia, according to the Plant will indeed current plans, said Andrus deliver an impressive Ansip. amount of energy if and when realized. It takes quite a lot for the EU to call for an extraordinary - The kolkhoz summit. Before the Monday, collective farm September 1st 2008 summit system never got implemented in Georgia during the Soviet it has only happened in era. Maybe because Stalin was born in the Georgian city Gori connection with September 11th in USA and the Iraqi war. and wanted the farming to continue in the traditional way.

- The EU summit ended with - The outcome today is that a 50 – 100 ha farm is considered strong and united conclusions, big and there is definitely a potential for a more effective said Sweden’s Minister for development of Georgia’s fertile land. Foreign Affairs Carl Bildt. One of my projects in Georgia involves production of Many had speculated in concentrated apple juice and we hope to gradually increase deep differences of opinion the production output towards a level that corresponds to the among the EU member potential. States and there were obvious nuances in the discussions - Georgia and the European Union are getting closer to each as the EU member nations other and the Swedish Head of the European Commission are carrying different Delegation to Georgia, Ambassador Per Eklund, is actively historical backgrounds. But, working for intensified trade relations and a possible free the differences were small and trade agreement. Europe is obviously learning that strength comes from unity. - In addition to the conflict, Georgian business bottle necks do The outcome of the EU summit is that the EU negotiations indeed exist, concludes Gunnar Andersson. The former Soviet on a new partnership agreement with Russia are postponed until Russia has fulfilled the conditions in the cease fire agreement, negotiated by France and its President Nicolas Sarkozy.

The EU summit didn’t declare any economical sanctions on Russia. International political and economical commentators said that the reason why is simply that the EU would lose as much as Russia would lose on such an action right now.

- Though slowly picking up again, most business projects came to a halt as the Georgian conflict escalated during August, says Gunnar Andersson, Managing Director, mindset is still alive and it is many times difficult to make founder and owner of SCCE’s member Nordic Lint. Together people take own initiatives and making the things happen. with a Swedish partner I Financing is typically done at a 20% interest rate level established GG Nordic, a which indeed calls for a set up of sustainable and profitable consultancy company, in Tbilisi business ventures in Georgia. 2006 and started to look for business opportunities in Research and texts: Megazine - Tallinn Georgia.

- Many Georgians I have talked to, ask themselves why the South Ossetian issue developed to an open armed conflict. The majority of Georgia’s business potential is located to other 23 Baltic Dynamics

SCCE’s member, the Nordic Council of demonstrating the viability of hydrogen-based transport Ministers' Office was one of the sponsors systems. of the Baltic Dynamics September 2008 - Several of our conference in Tartu. The conference was projects dealing addressing the challenges facing the Baltic with energy States and many other European and world markets have countries; how to tackle economic slowdowns also developed a and find new strategies for growth. knowledge-based and solutions that address important In his opening speech President challenges the Toomas Hendrik Ilves underscored energy sector the importance of innovation in is facing today, Estonia and as the conference for example the started topics like the Global project "Nordic Context for Innovation, Environment AMR Forum and Energy, Science and (Automatic Technology Parks and a European Metre Reading)" has been developing solutions that could Cooperation for Innovation were contribute to a more flexible and well-functioning electricity covered. market and improved efficiency. Vida Rozite, Senior Advisor at the - Nordic Energy Research cooperates closely with the Nordic Energy Research in Oslo was one of the speakers at Nordic Innovation Centre, so while we support research and the conference and Madis Tilga from the Nordic Council of development efforts, the Innovation Centre can in a later Ministers' office in Tallinn met her for an interview: stage support prospective commercialization of ideas and innovations arising from energy R&D. How would you evaluate your research areas (energy efficiency, hydrogen energy etc) - which one has been - In regard to regional co-operation, all our projects have most successful recently? Can you mention a truly regional participants from at least 3 Nordic countries, and often co-operation network where R&D has resulted in concrete have project partners from the Baltic States and North West outcome? Russia and thus contribute to establishing and strengthening research networks in the region. In addition to this, we also - Nordic Energy Research finances energy research projects encourage multidisciplinary collaboration and participation along the whole knowledge value chain from basic research from the energy sector in our projects. Strong networks to applied research and demonstration projects, which means have been established for example in the fields of biofuels, that the timeframe in which research results can be applied hydrogen, wind energy and in practice or commercialized differs significantly. photovoltaic. Vida Rozite

- This said, many of our projects show interesting results Vida Rozite is a Latvian-Swede - One very important up to date. For example, our "Nordic Centre of Excellence and a graduate from the University regional network that on Hydrogen Storage Materials" has received considerable of Stockholm (BA in political has been developed to science) as well as having a MSc in international attention, and the project participant Thorstein address the specific Environmental Management and Sigfuson has also received an international prize for his work energy challenges faced by Policy from Lund University in Sweden. in 2007. sparsely populated areas, She started her working career at the Latvian namely "Nordsesil - Nordic - The project "New, innovative pretreatment of Nordic Embassy in Stockholm and continued to the network for sustainable Nordic Council of Ministers Office in Riga as a wood for cost-effective fuel-ethanol production", which is a energy solutions in isolated Deputy Director and an Advisor. collaborative project with more than 13 partners and with locations". The project aims a high level of participation from the industry, has shown She has been an active researcher at Lund to significantly improve significant progress and the results could be instrumental in University and since April 2007 she has been the capability of energy contributing to the Nordic countries gaining a leading edge in working as the Senior Advisor in the Nordic using communities in Energy Research. this field. the Nordic region to take practical and effective steps - Other more tangible results include the "Hydrogen Highway to identify, evaluate and Partnership" project that has built their first H2 filling access sustainable energy stations and thus plays an important role in testing and 24

solutions particularly in isolated and Arctic/Baltic areas. facing a different set of challenges than the Nordic countries, which, of course, has had an impact on the resources What would be the best way to encourage people/ available for supporting R&D and innovation. However, rather enterprises to invest more in Energy R&D and co-operate than moving along different paths, cooperation is being across borders? increased and strengthened.

- For small countries such as - That the Nordic and Baltic countries differ in focus the Nordic and Baltic countries on energy research, and hence have different national collaboration and the pooling of comparative advantages in R&D is not a negative. On the efforts and resources makes sense contrary, building on the different R&D and technological and can help our countries to strongholds is the best way of making progress in this area attain a competitive edge and have as a region. a greater impact on the global market. - The issue of how to further develop collaboration is a question that is high on our agenda, for example, several - Due to the high level of attention of the projects in the NORIA-energy programme have been that renewable energy, attainment looking into how collaboration between the Nordic countries, of targets and integration of Baltic countries and North West Russia. renewable energy in the energy system are receiving in the Do the Nordic countries (still) differ regarding their input political agendas of countries in different fields of energy R&D. For example, Denmark as across the world, it is becoming wind energy pioneer, Iceland as hydrogen energy, Finland increasingly clear that strategic as... and concerted efforts in this area are necessary. - Yes, the Nordic countries do differ in regard to strongholds - In order to achieve good R&D results and cooperation in energy research and in it is essential that there is a specific need and a genuine technologies used both due to interest i.e. a drive from users. Cooperation across borders differences in natural resources is, of course, stimulated by the identification and sharing of and policies. However, since common needs. it is increasingly clear that the transition to a sustainable - Many of our projects address issues that are of specific energy system needs to be interest in the Nordic countries for example the project based on a robust mix of "Development and demonstration of an efficient and cost different technologies, this can competitive proton exchange membrane fuel cell system be seen as a strength rather for cold Nordic climate". Proton exchange membrane fuel than an impediment to further cell systems run on hydrogen and are prime candidates collaboration. for vehicle and other mobile applications because of their compactness, however, there are a number of technical - The existing Nordic energy challenges that still need to be addressed. cooperation and common electricity market provides - While the Nordic region has favorable framework conditions an excellent starting point for for investments in sustainable energy systems, there is a attaining a leading position in the need for increased understanding of how the Nordic energy field of integrating renewable innovation system can be strengthened. energy into the energy system. By promoting integration, larger, more stable and more predictable markets for - In 2007 we launched our NORIA-energy programme, which renewable sources of energy will be created. aims to strengthen the Nordic research and innovation (R&I) area in the energy field, and to aid Nordic decision-makers - Furthermore, concerted efforts in this area should provide in developing efficient policies on science, technology and ample opportunities for promoting the Nordic and Baltic investment in new energy technologies and systems. The region as a leading knowledge and competence area for projects are being finalized during 2008 and we will host a renewable energy. workshop on December 1st to present and discuss findings including strategies for encouraging investments and collaboration. Interview: Madis Tilga, the Nordic Council of Ministers' office in Tallinn Are the Nordic and Baltic countries moving on different paths concerning R&D and innovation? To what extent could their efforts be merged/pooled?

- The Baltic countries have been and are to some extent 25 Tax Implications of Moving from Sweden to Estonia The following is the second of three articles outlining how a Swedish citizen (a private person, not a company) who has become a tax resident of Estonia is taxed on their “Estonian income”. The first (published in focus nr 1, 2008) of these three articles explored the process of how a Swedish citizen moves his or her tax residency to Estonia. This article explains how that Swedish citizen is taxed on their income derived from Estonia. The third article will explore how that same Swedish citizen who is a tax resident of Estonia will be taxed, in Estonia, on their worldwide, including Swedish, income.

The assumption behind this article is that a resident or citizen Interest Income of Sweden has moved to Estonia. He or she has relinquished their Swedish tax residency As with all Estonian individual citizens living and has registered their tax residency in in Estonia, interest income earned from Estonia. The steps on how to do this were a registered “financial institution” (e.g. set out in Part 1 of 3 of this series of articles. Hansabank, SEB, Nordea, Sampo, etc.) by a Swede who is a tax resident of Estonia is This article explores, by different types tax free. The Estonian state does not tax of income, how the Estonian tax system interest as income. would tax that Swedish citizen who is a tax resident of Estonia. If however, an individual Estonian tax resident receives interest income from a Salary company (be it an OÜ or an AS) on a loan that he or she has made to that company, or from another The short answer is that the Swedish citizen who is a tax individual to whom he or she has lent money, then the resident of Estonia is treated like any other resident of interest income is taxable at the usual rate (in 2008, 21%). Estonia, including Estonian citizens. On his or her salary, their employer would withhold, during 2008, a personal I would note that if the borrower is a company (i.e. not a withholding tax of 21%. This amount would fall to 20% in private individual) and the lender an individual, then the 2009. Meaning if his gross salary for a month were EEK 10 company is obligated to withhold the tax of 21% (in 2008) 000, then the employer of the Estonian tax resident would on the interest payment and submit the withheld tax to the be required to withhold, by law, EEK 2 100 of the income of Estonian Tax and Customs Board. the resident and forward it to the Estonian Tax and Customs Board. The net salary received by the tax resident of Estonia Dividends would be EEK 7 900/month. This example assumes that the “basic exemption” does not apply to this individual. In Estonia, the corporate tax is paid by the company that is The final tax deducted from the gross salary of every Estonian paying out dividends and the tax resident is 0.6%. This is the employee’s portion of the Estonian individual who receives unemployment insurance or tax. In other words, 0.6% of the dividend is not taxed on that the gross salary of an Estonian tax resident is withheld by dividend income. In other words, the employer and forwarded to the Unemployment Board of the profit made by the company Estonia. is not taxed twice, just once. The company is taxed not on making The employer tax paid by every employer on the gross a profit but upon paying out a salaries of their employees is 33.3% (social tax and the dividend. The Estonian individual employer’s portion of the unemployment insurance), but this tax resident, be he or she an amount does not impact the gross or net salary of the tax Estonian citizen or a Swedish resident of Estonia. citizen, will not be taxed a second time (i.e. upon receiving that This answer assumes that the Swedish citizen has dividend). successfully cut their Swedish tax residency. Once again, this answer assumes the Swedish tax authority (“Skatteverket”) does not have any 26

claim on the dividend received by the Swedish citizen who has successfully transferred his or her tax residency to Estonia. Capital Gains

Estonia does not distinguish between income and capital gains. What would be considered a capital gain in Sweden is simply considered to be income in Estonia.

Once again, a Swedish citizen who is a tax resident of Estonia would be treated like any Estonian individual living in Estonia.

To give a simple example, if a Swede had purchased a piece of land in Estonia for EEK 10 000 (and assuming that this piece of land was not a principal residence), and sold it for EEK 100 000, then the profit of EEK 90 000 would be taxed, in Hillar A. Lauri 2008, at 21%. Meaning the Swedish tax resident would 2004 - be required to pay tax of EEK Near-Shoring OU, Tallinn, Estonia 18 900 (e.g. 21/100 X EEK 90 Founder and Managing 000). Director

2002 - 2004 The above is the general NA Power LLC, rule, but there exist many Director of Business exceptions to this rule. Development Please check the facts of 1996 - 2002 your specific case with our NRG Energy, Inc. (HQ in USA), legal advisor or auditor. Tallinn, Estonia Executive Director Business Development, Next Article Nordic Region

1993 - 1995 The final article in this series The World Bank (HQ in will examine how Estonia Washington, D.C.), Tallinn, Estonia taxes a foreign national (e.g. a Swede) who has Manager of Branch Office, transferred his or her tax Estonia residency to Estonia on his 1992 or her worldwide income Ministry of Finance, Government of Estonia, and capital gains, including Tallinn, Estonia income and capital gains Legal Advisor (western trained arising from Sweden. lawyers were not to be found in Estonia)

1990 - 1991 The author would like The Mortgage Insurance to thank Ruut Mägi for Company of Canada, Toronto, Canada his valuable comments. All errors remain the Solicitor responsibility of the author 1988 - 1989 alone. Fitzsimmons & MacFarlane (Barristers and Solicitors), Toronto, Canada Hillar A. Lauri Associate Lawyer

Languages Near-Shoring OÜ English: Native language Tulika tn. 19 Phone: (+ 372) 650 5190 Founder and Managing Estonian: Fluent French: Fair Tallinn, EE-10613 Fax: (+ 372) 650 5189 Director Russian: Marginal ESTONIA www.near-shoring.com 27

This time focus toured Tallinn and continued to Ormsö (Vormsi) and Hapsal (Haapsalu). We met Swedish, Estonian-Swedish and Estonian owned businesses and we also experienced how the Estonian-Swedes and their ancestors take an active part in the continued future development of Estonia.

We drive while you sleep

- Indeed we do Our customers can let us take care of the whole logistic drive while people, process, or select an assortment of services needed to including our make their logistics work in a complete, smooth and customers, are effective way. Our goal is to create solutions that help asleep, said Thomas our customers succeed. Askenberg, Estonian country branch - Our in-night solution usually involves a tailor made manager at the mix of cargo shipments by air, land and sea, continued Swedish Posten Thomas Askenberg. We focus on transports between Logistik owned the Baltics and the other Nordic countries as well as Logistiikkatalo, as within and between the three Baltic countries. A typical focus met him at the profile on our in-night solution customers involves companys’ Tallinn regular transports and full EDI - Electronic Data cargo terminal. Interchange capability. In-night deliveries before seven o’clock - Daily deliveries of palletized goods to and from the in the morning, is one of our tailor made solutions for Nordic countries and within and between the three having a competitive edge on the logistic market. Baltic countries is another major part of our logistic services. And the same applies for FTL - Full Trailer -- I started up our business here in February 2006 Loads. We offer complete trailer traffic to and from the as HIT Baltics, also owned by Posten Logistik, was Baltics, mainly with a focus on the Nordic countries as established in Tallinn. Posten Logistiks’ 2007 purchase receivers or senders. Posten Logistik of Logistiikkatalo - As for warehousing we included the merge have a unique strength Fully owned by the Swedish Post, Posten of HIT Baltics into the on the market. Suomen Logistik AB is the operations and is a Logistiikkatalo, which company where the Post’s logistical solutions further step towards is the full name of our are collected, further building up an effective company, and Posten developed and offered to the market. The basic services include and solid logistical Logistik have built transports of palletized goods, packages, organization east of the up a solid know-how express deliveries and system-transport concept solutions. Baltic Sea. within logistics and warehousing through Posten Logistik is a full service business partner taking responsibility for the customers logistical - Logistiikkatalo is a the years. We have the and distribution functions. Tulika tn. 19 Phone: (+ 372) 650 5190 one-stop source for advantage of a steady Tallinn, EE-10613 Fax: (+ 372) 650 5189 Posten Logistik’s 2007 purchase of Suomen solutions and services flow of competence Logistiikkatalo and the further expansion in the ESTONIA www.near-shoring.com for managing the transfer from Scandinavia Baltic countries marks a further step towards building up an effective and solid logistical entire supply chain. and Europe to us in the service organization east of the Baltic Sea. 28

Baltics and can thus tailor solutions to support and Estonian reinforce our customers’ operations and add value to production their business. concerns design and sewing of - We focus on a slimmed organization in terms of textile decoration overheads, concluded Thomas Askenberg. This also solutions for serves as a guideline for our personal customer private homes service concept. Our customers have one dedicated and public contact person in our organization and we are proud localities. Curtain of the engagement we have internally in the constant arrangements is interaction between our drivers, terminal workers and a good example dispatchers. of our business in this segment and our two studios are located to Vävars Lasnamäe and Õismäe.

- Our Swedish - Our WW Passaaž shop is right between the port of language related Tallinn and the Old Town and a good portion of our company name customers here are Vävars is closely tourists, told Bo connected to weavers Stenholm. This means and weaving, said that we have a clear Bo Stenholm as he difference in the and Olga Galdina purchase pattern of welcomed focus our customers here to their Tallinn compared to downtown shop in our shops in the WW Passaaž Lasnamäe and shopping mall. I have Õismäe. While textile materials like linen and linseed an Estonian-Swedish are in big demand here at the WW Passaaž shop, family background synthetic materials dominate our assortment in the and way back in time other two shops who my ancestors were mostly serve the local renowned for their customer market. Vävars Home textile and weaving skills. bijouterie shops: - Olga Galdina is Vävars - WW Passaaž - At that time they had the manors and their landlords managing our shops and Aia 3 / Vana Viru 10, as main customers and the textiles produced by them our home textile studios Tallinn

were tailor-made according to the needs and wishes of while I am more focused Vävars – Lasnamäe the landlords and landladies. on our wooden production Mahtra 1, 2nd floor, uus Mustakivi keskus, and I guess you can say Lasnamäe, Tallinn - Todays’ Vävars operates in two main business areas; that this suits me in two Vävars – Õismäe home-textile and wooden products, continued Bo ways, said Bo Stenholm. Õismäe tee 107A, 2nd floor, Õismäe, Tallinn Stenholm. As for the home-textile sector we have My personal Swedish Design and sewing studios: three shops and two design and sewing studios in professional background Tallinn. In addition to the downtown WW Passaaž shop before moving back to Vävars, Punane tee 6, Lasnamäe, Tallinn

we also have shops in Lasnamäe and Õismäe and we my roots in Estonia was Vävars, Õismäe tee 107A, Õismäe, Tallinn focus on home-textiles but also have bijouterie in our in the export trade and Wooden products: assortment. since more or less all of our Estonian made www.vavars.ee

- Most of our textiles are imported and our local wooden products are sold Contact: Bo Stenholm Tel: (+372) 56 22 38 70 Fax: (+372) 65 35 245 E-mail: [email protected] 29 on export markets, this background serves me well in Estonian-Swedes lived here as World War II broke out terms of marketing and sales. and during 1943/44 the vast majority of them managed to flee the war and the Soviet occupation. Today’s - Secondly, my Estonian-Swedish ancestry has also Ormsö is a mix of the islands’ Estonian-Swedish made me a forest owner which secures a certain level background and the efforts of the Estonian-Swedes’ of access to the raw material needed. Our wooden ancestors and the permanent island inhabitants to production is focusing on sauna accessories like secure the future development of Ormsö. stools, benches, headrests, lighting covers, ventilators and doors but we also have production resources for - We are some manufacturing smaller pieces of furniture like chairs 300 people and tables. living year round on - The wooden production factory is located to Kuijõe in Ormsö and our Läänemaa and our machinery include different saws, a school in Hullo moulder, a milling cutter for copy profiling and grinding can count 14 tools. Additionally we recently also invested in a 5-axis pupils, said CNC machinery center, making our production flow Andres-Andi even more smooth and effective. These production Sarv as focus resources also give us additional capability to supply met him at his contract based wood works in smaller or larger and his partner Jaak Kaabel’s Ormsö Pub (Vormsi production series. Kõrts), newly opened in July this year. Our market is obviously in tourism, private events and smaller - Being a forest owner also brings along conference groups visiting our island and I believe responsibilities, concluded Bo Stenholm. A forest has that this business is of vital importance for the future to be cared for. Thinning it out on a frequent basis is development of Ormsö. one of the important tasks you have to undertake. The wood you cut in this process is seldom or never good - We will keep the pub open on a daily basis during the enough for further refining in our furniture production. summer season and plan for keeping it open on week- But, it is indeed good and suitable as fire wood and that ends during the winter. As my partner Jaak Kaabel’s is a small but important part of our total production family is running the nearby Hullo food shop, we had and sales as well. the logistical process for getting our supplies of food and beverages in place when we opened our pub and Ormsö – heading for the this is really crucial when you operate a business like ours on an island. future - Our future plans include a couple of guest rooms Located on the upper floor offering accommodation on a bed between Dagö and breakfast basis and we are also looking at the (Hiiumaa) possibilities of growing the business of accommodating and Nuckö smaller conference and private event groups, (Noarootsi) on concluded the mainland, Andres-Andi Ormsö’s Sarv. (Vormsi) 93 sqkm’s area As for tourism makes it the Ormsö offers a fourth largest unique nature, Estonian island. both in terms of flora and fauna. Close to 3.000 In addition to 30

nature hiking and excursions some also argue for the turned to hovels, set up of organized wild boar hunting expeditions. some buildings didn’t even exist Accommodation anymore as options include they had been boarding houses, demolished houses for rent as and used as fire well as camping wood. Few signs sites. In terms of were visible straight forward, of the former well cooked and open fields and tasty homely meadows and the fare food, focus forests showed few, if any, traces of having been cared can guarantee that Ormsö will not make anyone for. disappointed! Today’s [additional to tourism] businesses on However, bottle necks for Ormsö tourism exist. The Ormsö show clear signs of the ongoing rebuilding ferry connecting Rohuküla port, close to Haapsalu and renovation works taking place on the island. on the mainland, with Ormsö’s Sviby port has limited Architectural drawings and plans, excavation, capacity in terms of the number of passengers and transportation, machinery rentals and building vehicles carried. During the summer season, the 45 construction works are some of the services offered by minutes trip is operated with 4 roundtrips every Friday small, but local Ormsö companies. and Sunday and 3 roundtrips on the remaining days of the week. Further improvements on the roads remains Known as Västra Kustens Skogsägare/Lääne Ranniku to be done on the island and sandy beaches are rare, Metsaühistu (the West Coast’s Forest Owners) and small and hard to find. counting 190 members, this forest owners association was formed in 1999 as Ormsö Skogsförening/ In the old days, mostly farming, forestry, fishing and Vormsi Metsaühistu (Ormsö Forest Association) hunting filled up the daily life of the Estonian-Swedes with 3 launching members. As the Estonian-Swedes on Ormsö. The fields, meadows, forests, villages, eventually got back their land, the need for an houses and barns were at that time mirrors of their association taking care of the forests became obvious work as well kept and active island societies. as the forest owners mostly lived in Sweden and had lost the daily contact with forestry work. Following Estonia’s regained independence the Estonian-Swedes started to get their estates back and Västra Kustens Skogsägare today is a voluntarily many returned to Ormsö. They found an island with service association for forest owners mainly on Ormsö clear traces of almost fifty years Soviet occupation. and in Nuckö on the mainland. Forestry services Ormsö was included in the Soviet military boarder offered to the members include thinning, final cutting, zone and military activities and installations were planting, sales of timber, economical reporting to the consequently on top of the Soviet agenda. Houses had forest owners, tax payments as well as forestry courses for the forest owners.

- The future of Ormsö is of course connected to today’s Estonia and the opportunities Ormsö and Estonia can find in today’s world, said one Ormsö Estonian-Swede to focus. I was ten years old when I and my family left everything on Ormsö and fled to Sweden 1943. Today, we Estonian-Swedes have come quite far in terms of caring for and supporting the preservation of our old culture here but, in addition to 31 this, we must also take a giant leap in time, from the Swedish Chamber of Commerce in Estonia is one of 1940’s to 2008, and contribute to more or less start our sponsors and I really hope that we can arrange up many things from the very beginning again. But, some events together, not only with SCCE’s members now according to the prevailing conditions of today’s but also with their staff and customers. Estonia and the country’s opportunities in the world. Nordic Lint Runbjarn launched to the sea - I guess you can say At a ceremony at the that I have commerce Haapsalu Yacht Club and trade in my blood August 7th, the Ruhnu by now, says Gunnar Jahta (see focus 1/08) Andersson, Managing was named Runbjarn and Director at SCCE’s was duly launched to the member Nordic sea. Lint. I’ve been doing business since more - Runbjarn means Runö- or less exactly forty björn (Runö/Ruhnu bear) in the old Runö-Swedish years and it all started dialect, told Alar Schönberg, project manager at MTÜ in Charlottenberg, a Puulaevaselts Vikan, the association in charge of the Swedish town just at the building and future operations of Runbjarn. As many border to Norway. might remember a bear was sighted on Ruhnu last year and became headline news. - I was running a food and everyday commodity shop there and much of our sales were connected to the - Runbjarn is border shopping market. Some products are cheaper not ready yet, in Sweden and some are cheaper in Norway and but we really consequently there is a steady flow of shoppers in both had to launch directions. her to the sea now rather - Sometimes however the quickly, said stream of customers flows Meister Jorma in only one direction over the Friberg, in charge of building the Jahta. The recent heat border. During the 1970’s the wave dried up the wood and she will now need some price of sugar skyrocketed hours in the sea to seal up. in Norway and more or less overnight I found myself - Our immediate continued building works will take selling 36 tons of sugar per us and Runbjarn to Saaremaa to get the mast and day in my 60 sqm shop! I’m rig installed, continued not totally convinced that all sugar sold ended up in Jorma Friberg. baking cakes and bread, a good part might very well Remaining works will be have ended up in some Norwegian home distillation done here in Haapsalu machineries… and we hope to visit Ruhnu on a maiden - Being a member of Rotary in my Swedish home voyage during September. community, I came to Estonia the first time in the beginning of the 1990’s. We arranged aid shipments to - We will welcome guests an orphanage in Kose and what I saw and experienced onboard for sailing trips touched me deeply. Estonia needed support but I also next summer, concluded realized Estonia’s potential for a future economical Alar Schönberg. The growth. 32

- However, I didn’t start my business activities on you move to. Support in the necessary contacts with this side of the Baltic Sea in Estonia. Russia and St the authorities, finding schools and kindergartens, Petersburg became my first stop outside Sweden. maybe also finding a job for the spouse as well as Since I knew the retail business I entered this Russian straightforward support in everyday issues like market together with a team of partners. We imported explaining that suur piim doesn’t mean sour milk. products like bread from Finland and coffee from Sweden and distributed our assortment through more - Thinking about than 200 shops in the St Petersburg area. As for the it, a package like coffee it was of course Löfbergs Lila, roasted, milled this might also and packed in Karlstad, the biggest city in my Swedish be something for home landscape Värmland. Sweden to offer all their immigrants, - The Russian venture developed very well up until the both those who are Ruble crisis 1998. We decided to wind up our business already settled and in a fair and honest way and I have gained from this those who arrive. through the years since I still have very good relations with my Russian business contacts from those days. - Running a business should be done with the windows to the world being wide open in my opinion, concludes - I founded Nordic Lint Gunnar Andersson. Good opportunities exist in most in Estonia 2000 with the parts of the world and after having learned the mindset basic business idea to and how things work in practice, I started up a company recruit medical doctors in Georgia 2006 [more on this in the economy section and dentists for jobs in of this focus]. I don’t think my international businesses Sweden. Good contacts will stop with Estonia and Georgia. I started up my with the county councils professional career next to a border and it feels kind of in Värmland and Örebro natural to continue crossing other borders as well. made the business take off and it has developed Texts: Megazine, Tallinn and worked out extremely well.

- Since this business concerns medical expertise deciding the treatments administered based on personal contacts with their patients, solid Swedish language training is of vital importance. We provide that here in Estonia with an intensive language training programme run in cooperation with the University of Uppsala in Sweden.

- It is equally important to give our medical experts a good introduction as they and their families settle in Sweden. The Chamber of Commerce in Värmland offers a good introduction package for people moving there and I am using their services and always get a very positive feed back.

- This introduction package might very well be something for the Swedish Chamber of Commerce in Estonia to pick up and offer to Swedes moving here. It is basically about an introduction to the foreign society 33 FICE - Foreign Investors’ Council in Estonia

managers introduce a package with a minimum social tax on salaries for such foreigners for a period up to five years. This way, the companies/universities/ authorities can spend a larger Following a SCCE initiative, FICE is now formally share of the total salary cost launched as a lobby group acting through contacts on the real salary and less with the Estonian Government and Estonia’s on social tax while importing Governmental bodies. know-how.”

Pioneering FICE “Create the necessary members include the prerequisites, e.g. within American, Austrian, taxation, migration of British, Danish, expertise, for making Estonia Finnish, German- a financial hub and a financial Baltic, Holland, center for primarily the Norwegian and Nordic and Northern and Swedish Chambers of Eastern European countries. Commerce, Business Luxembourg is a good and Jens Christiansen – FICE Chairman Clubs and Marketing existing model.” Chairman of the Danish-Estonian Offices in Estonia. Chamber of Commerce since its foundation 2007 and CEO of Together, the nine Energy and Christiansen Consulting OÜ in countries represented environment Tallinn. among FICE’s members had a more than 80% share of Jens has a BSc degree in the total foreign direct investments in Estonia during “The Estonian forest sector’s Engineering and 1988 marked the the first six months 2008 [source: Eesti Pank]. starting point for his professional great potential is a great experience as management opportunity to increase bio consultant and coach practitioner. Quarterly meetings will be scheduled between FICE energy volume and to and the Estonian Government and the members of reduce Estonia’s carbon He has work experience from the participating FICE-organizations will regularly be various industries in different footprints which are the worst invited by the Council to specially arranged speaker positions such as development in EU per capita.” engineer, quality director, head of events. operations, managing director, CEO and business consultant. Fantastic response from SCCE’s In December 1997 Jens established members Christiansen Consulting in Copenhagen and founded Christiansen Consulting OÜ in The proposals and comments delivered by SCCE’s Tallinn in March 1998. members for the Estonian Action Plan for Growth and Jobs 2008-2011 served FICE well as the Council’s His main fields of activities and specialization are Strategy discussions with the Estonian Government now start Development and Execution, up and goes on. Corporate Performance “Create stability on the Management, Balanced Scorecard, energy sector by opening up Coaching, Team Building, Management Development and SCCE really got a fantastic response from its members possibilities to import liquid gas (LNG) to guarantee smooth LEAN. and here are some of the proposals and comments the Jens’ international experiences SCCE members delivered: gas supplies to the Baltics and include Balanced Scorecard creating alternative supply merger and acquisition processes, sources to Gazprom.” major aspects of HR development, Tax system development and execution of complex company development “Keep the simplicity in the business sector - this has “Russia’s importance shouldn’t programmes. been a success so far and Estonia should continue this be under-evaluated. Until Among the latest remarkable way. This includes the simplicity of the tax system, the Europe finds widespread alternatives for the supply achievements can be mentioned flat rate system etc.” global roll-out of Corporate of oil- and gas-energy, the performance management system “To attract foreign experts / specialists / professors / dependency on Russian supply resulting in winning the European Supply Chain Excellence Award 2007. 34

is vital, and their economy will harder to build new houses with continue to prosper.” similar functions and more or less the same location as the Administrative existing ones.” “The introduction of the Euro in reforms Estonia should have first priority on the political agenda. Until the “Merge all the "vallad" into larger Baltic countries adopt the Euro, ones creating local authorities the uncertainties on the value where the decision-makers are of the local currencies will grow not the friends, relatives and/ and new rumours of devaluation or neighbours of its subjects to may follow.” save money and to push down the embarrassing statistics on corruption.” “Become more competitive in subcontracting and tourism, as long as no high tech “Many products sold in Estonia are more expensive industry exists. Prices must go down for labour in than they are in, for example Sweden and Finland. manufacturing and service industries. This can be Make Estonian prices competitive by making done only by lowering wages and having competition comparative statistics and put Estonian State pressure on the labour market. Hence an influx of workers from on the importers.” Eastern Europe, EU- or non EU- “The annual forest growth in Estonia is 12 million m3. residents including Only 6 million m3 are harvested per year so it means Ukrainians and a potential of double volume! 20.000 persons are Russians, is involved in forest and wood processing industry making needed.” it a great opportunity for many more companies and employees. Its contribution to Estonia’s GDP is 6%. “Improve relations A mystery to me is why there is such a low political with Russia, thus willingness to utilize more contribution from the forest increasing the sector.” transit trade.”

Export “Quickly improve the relations between Russia and Estonia and facilitate “Develop Estonia’s export. Important markets are the integration of the Russian minority in Estonia.” Russia and Ukraine – easier to sell there compared with Western Europe and Estonians speak the language “In my opinion, the Government should listen carefully and understand the Russian mindset.” to the business and economic community in Estonia. The need for qualified labour in Estonia is considerable, Education and the current process of the economy reaching a sustainable level will not solve this problem. Migration “Focus on quality throughout the education system. of qualified and specialized labour is a solution, and the The many universities should merge into fewer and try right persons are found on the global labour market, to reach higher on international rankings. There are not only inside the EU area.” too many people with good looking diplomas that do not know anything useful.” FICE wrote a letter and met “Invest in education in foreign languages Prime Minister Andrus Ansip - it is crucial for a smaller country FICE met in August, consolidated to have very good all proposals from the nine contacts with its pioneering FICE member neighbours and be organizations and reached a able to understand what others want to buy.” consensus on 26 issues to be presented under 6 headlines in a “Improve the vocational educational system, which is a letter to the Estonian Government. pity in todays Estonia.” The letter was sent and resulted Business, general in an initial September 26th meeting with Estonia’s Prime “Make it easier to sell existing houses and make it Minister Andrus Ansip. 35

us, Estonians as well as foreign - I welcome FICE’s initiative as a valuable contribution investors, to to Estonia’s Action Plan for Growth and Jobs 2008- work harder 2011 and I totally agree on your major proposals, for the same said Prime Minister Andrus Ansip as he welcomed remuneration. FICE’s delegation to the first meeting at the Estonian Government’s Stenbock’s House. FICE and the Prime FICE’s main goal at the meeting with Prime Minister Minister Ansip was to express a willingness to contribute agreed and cooperate with the Estonian Government for a that there is a clear lack of skilled and qualified labour continued and sustainable economical development in in Estonia and FICE underlined the need for a renewed the country. education system and possibilities for tax-free re- education and training of labour in need of a new - We in FICE are ready to share our experiences with profession. the Estonian Government and give our opinion on local issues with an international outlook, said Jens - Estonia should not be perceived as a low tax paradise, Christiansen, FICE’s Chairman. The fact that Estonia in a European comparison we end up in the middle now is dealing with the national and international economical slowdown not only locally but also by listening and discussing with its community of foreign direct investors is good news that deserves to be told.

During the meeting FICE and the Prime Minister Kristiina Sikk – FICE Secretary focused on three major SCCE Ombudsman since 2006 and issues; the tax system, now also contributing to FICE as the labour and education. Council’s secretary.

Following studies in English - Flexibility on the labour of the scale, said Anders Hedman, Chairman of the language and literature at Tartu market is a key issue, Swedish Chamber of Commerce in Estonia. And University, Kristiina started her said Prime Minister Estonia has to watch up now! Small tax increases here professional career 1983 at the Ansip. We don’t have any Information Department of the and there makes a big total and fuels the inflation. Institute of Cybernetics in Tallinn. traditions on life long Stick to a simple and clear tax system and secure learning yet and I welcome continued foreign investments in Estonia. In 1992 she began a long marketing every support here to get career in the Baltic automotive Estonia to a level where, trade working with brands like Alfa Further issues discussed included the energy sector, Romeo, Lancia, Fiat, Champion, for example, Sweden and corruption, administrative reforms and the need for Teboil, Holts, Kemetyl and Goodyear Finland are today. a streamlining of the approval, management, and the at the Tallinn based importer and payment process of available EU funds. distributor Asmer AS. - Efficiency and delivering In 2001 Kristiina was offered the quality are also key FICE and Prime Minister Andrus Ansip agreed to set position as marketing manager at issues on the labour up a scheme for continued quarterly discussions the newly formed Goodyear Dunlop market, said Paal and also to form work groups for in-depth works on Tires Baltic AS and she kept this Aschjem, representing panBaltic position until she joined specific topics. the Swedish Chamber of Commerce the Norwegian-Estonian in Estonia as Ombudsman in Chamber of Commerce FICE’s next meeting with Estonia’s Governmental January 2006. in FICE. We look forward bodies will be a mutual October brief with the to you Mr Prime Minister Additional courses and trainings Committee of Economical Affairs at Riigikogu during Kristiina’s professional and your colleagues in (Parliament). career have included business the Government to now communication, sales and spread the message to the negotiation techniques at GIS- Estonian people that the International Institute, Denmark Report: Kristiina Sikk – SCCE Ombudsman and FICE and Mercuri International as well time has come for all of Secretary as Swedish language training at Svenska Folkhögskolan, Tallinn. 36

Eastern European safari Romania and Bulgaria; cousins rather than twins

Romania and Bulgaria are recognize many similar words in the Romanian language. often media treated as one Romania is also part of the ”Francophonie” (International or- area, as they were ”re-intro- ganization for French-speaking countries and governments), something which the country is very proud of. It is reported duced” to the wider European that up to 25% of the Romanians speak or understand French, public at the same time last and it is as uncommon to speak Russian in Romania as it is in year. The countries, however, Finland or Sweden. Due to historical bonds, however, Roma- are very different not only in nia has a sizable (6-7%) minority of fully integrated Hungar- terms of size, and language ian speaking Romanians, which also boosts the trade ties to but also culturally and cur- Hungary. rent developments. The Romanian links with Western Europe can also be seen in its food culture. The Romanian food culture has much more elements of Central Europe than that of many of its Eastern Neighbours. You are much more likely to be served a decent, Romania is doing well. fresh salad with a good wine in a middle-class restaurant in Bucharest, than say in Kiev. Foreign Direct Invest- ments (FDI) keep pour- ing into the country, Bulgaria on the other hand is which is a member of NATO and a recent struggling. member of EU. With a relatively young popula- It is also a fresh member of NATO and EU, but has failed to tion of 22 million well attract major industrial investments in the same extent as its educated people, com- northern neighbor. The reason is the relatively small popula- panies such as Renault, tion of seven million people, which is shrinking because of Nokia and Microsoft low nativity and work have made some of their force migration, making work force availability in the long run biggest European invest- a question mark for many corporate decision makers. So far ments in Romania. The the economy has developed well, but inflation is running high Romanian population is also relatively dispersed, with several and there is an amounting risk of overheating. Bulgaria is major cities that can provide workforce also mentioned along Estonia and Latvia as one of the coun- on a large industrial scale. The big do- tries in the EU that are mestic market and the cheap labour has most likely to risk a de- meant that the economy is blooming; the valuation of its currency. GDP growth is still accelerating and the foreign investments into the country dou- Corruption is a big bled during the first half of 2008. problem in Bulgaria (although, to be fair On the cultural side, Romania, unlike it is also a problem in many other Eastern European countries Romania). This has lead does not feel ”Russian” at all. Anyone to a very inefficient gov- familiar with Italian or French will soon ernment structure that has been record-breakingly slow in being able to dis- perse the EU funds granted to the country after member- ship. Many programs have not been started although it is already a year and a half since the country joined the EU. This has meant that many investments into infrastructure have not been made, because it has not been clear exactly on which grounds the Bulgarian government will grant the money for such projects. During this summer EU finally had had enough of this, and froze 500 million euros in EU funds, as a punishment and protest against Bulgarian inefficiency and corruption. On a positive note, this action was widely welcomed by the Bulgarian people, who are also tired of the politicians’ inability to live up to EU standards.

Compared to Romania, the Bulgarian history is much more tied to the Balkans and Turkey. Almost 10% of the Bulgar- Auditing ian population speak Turkish, and there is a decent level of trade between the countries. The Bulgarian language itself is a Slavic language, remotely related to Russian, and Russian Accounting is also widely understood in Bulgaria. Among other reasons, this has made the country a favourite for Russian tourists, Tax Consulting and Russian investors are additionally investing into compa- nies but above all real estate. Legal Consulting

Despite the differences and challenges, both Bulgaria and Romania are extremely beautiful countries that can warmly be recommended both from a business and pleasure point- of-view. With very pleasant climates, beautiful mountains Global Service (with good ski opportunities!) and a rich food cultures, both Rödl & Partner is present where business is present. countries are a pleasure to visit. You will find us at 80 cities in 38 countries. Some of our local and neighboring Sitting on a sunny Bulgarian terrace in October drinking locations are here: wine and eating the delicious local Shopska-salad unstop- pably raises the mental comparison to having a vodka with pickled cucumber in the cold Russian autumn. It is a matter Sweden of taste of course, but sometimes trading a couple invest- Humlegårdsgatan 4 ment margin points for quality of life just might be worth 11446 Stockholm it... Tel: (+46) 8 57 93 09 00 Fax: (+46) 8 57 93 09 10 e-mail: [email protected] Martin Seppälä www.roedl.se

Russia Dr Martin Seppälä has a Ph.D. Moscow (Econ.) in strategic management Estonia Elektrosawodskaja ul. 27 Building 2, 5th oor and is a partner at Excedea. Roosikrantsi 2 10119 Tallinn 107023 Moscow [email protected] Tel: (+7) 495 9 33 51 20 Tel: (+372) 6 805 620 Fax: (+7) 495 9 33 51 21 Fax: (+372) 6 805 621 e-mail: [email protected] e-mail: [email protected] www.roedl.ru www.roedl.ee St. Petersburg Latvia Linija 14, House 7 K. Valdemara iela 33 Vasiljevskij Ostrov 1010 Riga 199034 St. Petersburg Excedea Tel: (+371) 7 33 42 80 Tel: (+7) 812 3 20 66 93 Excedea is a leading management and investment advisor in the Fax: (+371) 7 33 46 20 Fax: (+7) 812 3 20 66 95 Baltics and Eastern Europe. e-mail: [email protected] e-mail: [email protected] www.roedl.lv www.roedl.ru Services provided include supporting Nordic companies and investors to succeed in the Baltics and Eastern Europe through market analysis, Lithuania Germany growth strategy, partner searches and acquisition target analysis. Global Heado ce Tilto Str. 1/2 Individual investors and investment funds are supported for their Äußere Sulzbacher Straße 100 01101 Vilnius investments in the area and high-growth companies are helped 90491 Nürnberg to crystallize their ambition level and strategy, assisting them to Tel: (+370) 5 212 35 90 Tel: (+49) 911 91 93-0 internationalize and to finance the growth. Fax: (+370) 5 279 15 14 Fax: (+49) 911 91 93-19 00 e-mail: [email protected] e-mail: [email protected] Excedea www.roedl.lt www.roedl.de Aia 3-3 Tel: +372 712 0053 10111 Tallinn Fax: +372 627 1221 Estonia [email protected] www.excedea.com 38 Welcome to Estonia Puttingnewsflashes Quality and Jan Palmstierna Jan Palmstierna is Customer Satisfaction on Sweden’s new Ambassador in Estonia. He handed over his credentials to top of the Baltic agenda President Toomas Hendrik Ilves Tuesday September Originally developed in 2nd. Sweden 1989 EPSI (Extended Performance Satisfaction Index) Jan Palmstierna came from puts quality and customer a position in Stockholm satisfaction on top of the agenda as Ambassador and Chief in 20 European countries. Now Coordinator for trade and also launched in the three Baltic investment promotion at States, EPSI Research Services delivers economic, financial the Ministry for Foreign as well as integrated business Affairs. He has previously and organizational indicators served as Ambassador in Vilnius. He has also held for benchmarking and further posts at the Swedish Embassy in Bonn, the Department sharpening of the competitive for Trade at the Ministry for Foreign Affairs, the edge. Riksdag Committee on Foreign Affairs, the Department for Eastern Europe and the Human Resources - I am happy to now establish Department as well as at the Swedish Embassies in EPSI Research Services locally Copenhagen and Santiago de Chile. in the three Baltic States, says Gunnar Ljungdahl, CEO, EPSI Baltic. Our local Baltic main office was recently opened and is located to Riga The Swedish Chamber of Commerce in Estonia with the continued hands-on EPSI Baltic studies performed welcomes Jan Palmstierna to Estonia and looks by local organizations in Estonia, Latvia and Lithuania. forward to a continued close and good cooperation with the Swedish Embassy. - As for the Baltic States we launched our studies here in 2004 with EPSI researches on the banking, telecom and supermarket sectors, says Professor Jan Eklöf, CEO EPSI Good bye Dag Hartelius and Research Services. Today a number of more company- all the best in Poland specific Baltic studies are conducted and our studies As it became official that Dag Hartelius would move here will be significantly from Tallinn to Warsaw as Sweden’s new Ambassador expanded from this year in Poland, SCCE took the opportunity and wished him including studies on the future economic climate all the best in connection with the joint event in Tallinn based on the consumers’ that the Swedish Embassy and SCCE had onboard the sentiment assessment. Swedish East India Ship Götheborg, June 19th.

- EPSI has developed to a SCCE’s Chairman Anders Hedman thanked Dag de facto standard and as Hartelius for a good cooperation and SCCE’s the Baltic States now are Ombudsman Kristiina Sikk handed over an Estonian heading towards sustainable levels of continued economic growth, EPSI is a valuable tool for sharpening the competitive edge of any company and organization, both on the local and export markets, concludes Gunnar Ljungdahl.

Contacts Gunnar Ljungdahl: Tel: (+371) 294 19 055, E-mail: [email protected] www.epsi-baltics.org

Dag Hartelius, Anders Hedman and Kristiina Sikk onboard the Swedish East India Ship Götheborg 3639 art work in glass as a memory of Dag’s years as an Ambassador here 2003 – 2008 and also as a sign of the Chamber’s appreciation for a very good cooperation with him and his Staff at the Swedish Embassy in newsflashes Tallinn. Special interest tours – a concept for more tourists to New Country Manager at the Estonia Swedish Trade Council - Bird tourism, as one Henrik Avasalu has been example of special interest appointed as the Swedish tours, could be further Trade Council’s new Country developed in Estonia, said Manager in Estonia. Marika Mann, CEO of Estonian Nature Tours in a recent Henrik has been working at statement. the Trade Council’s Tallinn office since 2006 coming from - A typical bird watch group a position at Volvo Cars where consists of some 10 – 15 he worked with economy persons, says Ants Ale, owner and landlord of SCCE’s control and cost efficiency member Tuulingu Puhkemaja in the Matsalu National within product development. Park just south of Haapsalu. That is an ideal group size in order not to disturb neither the birds nor the other Henrik Avasalu has a wildlife. Magister degree from the School of Business, Economics and Law at the University of Gothenburg 2003 and he communicates in Swedish, Estonian and English. A lost Jumbo at Stockholm- Arlanda airport

No, it hasn’t got lost, the Boeing 747 recently placed next to the highway entrance to Stockholm’s Arlanda airport. It’s a new hostel now being built in a Jumbo jet that found itself grounded at the airport in connection with an airline bankruptcy 2002.

Reservations for rooms at the Jumbo Hostel can be - We can accommodate eight people here at Tuulingu made from December this year. 25 rooms with three but luckily enough Haapsalu, with its hotels is quite bunk beds in each will be available with one exception; close to us. The same goes for other bird watching the cockpit will be converted to a luxury suite offering a sites throughout Estonia, like Paljassaare – Tallinn, the panoramic view of the airport. North Coast – Rakvere, Ilmatsalu/ Peipsi lake – Tartu and Häädemeeste – Pärnu.

- Like any special interest tour group, bird watchers demand skilled and professional guides as well as good food and beverages being available next to the observation sites, concludes Ants Ale. We have this available in Tuulingu and I believe that the special interest tour concept can indeed be much more developed in Estonia and also include other special interests in addition to birds. Against all odds – the Swedish repo rate went up

Riksbanken, the Swedish Central Bank, went its own way and raised the repo rate from 4,5% to 4,75% September 4th . The repo rate – the interest rate the banks pay when borrowing from the Riksbank – is the Riksbank’s primary instrument for influencing Swedish inflation targeted at 2% with a tolerance margin of plus/minus one percentage point.

As the economic slow down has hitted Sweden as well, the pressure was intensive on Riksbanken not to touch the repo rate and their move came as a surprise for many.

- With a higher repo rate the inflation will decrease and will be close to the 2%-target within a couple of years, said Riksbanken in a comment.

- We have made a miss in our prognosis, said the Swedish State’s National Institute of Economic Research. We didn’t count with any raised repo rate and had a more expansive monetary policy included in our prognosis.

- Riksbanken’s move is totally unnecessary, said Anna-Stina Nordmark Nilsson, managing director at Företagarna – the Swedish Federation of Private Enterprises. As Sweden is seeing an economic slow down the increased repo rate will decrease the growth even more.

- Embarrassing, said SCB - Statistiska centralbyrån (Statistics Sweden) as it became clear that their reported inflation figures had been wrong for several months this year.

- Some 1.000 models of shoes are included in our inflation measurements and a mistake in our data programming resulted in missed new shoe prices related to their base prices, said Peter Nilsson, product responsible for SCB’s consumer price index. 41

Swedish economical commentators said that SCB’s mistake could have misled Riksbanken in their decision to raise the repo rate. newsflashessays Rein Aksalu, Country Manager at Pernod Ricard Estonia. The correct Swedish inflation during the biased period was as follows (SCB’s earlier and wrong figures - Concerning the vodka market, the importance of within brackets): domestic vodka producers has been significant here. Pernod Ricard has not had a vodka brand in the April: 3,3 (3,4) portfolio before and the Absolut brand will now mark May: 3,9 (4,0) our entrance on this market. June: 4,2 (4,3) July: 4,1 (4,4) - As for other brands we are currently negotiating with the brand owners and it is a bit too early to comment August ended with a 4,3% Swedish inflation. on any possible change in our brand portfolio, concludes Rein Aksalu. Pernod Ricard acquired Vin & Sprit Hansabank’s

In a July transaction valued new name is at € 5.69 billion including debt, the French wines and spirits company Pernod Ricard Swedbank acquired 100% of the shares in the Swedish State owned Vin & Mid-September marked the start of a one year process of Sprit. changing Hansabank’s name to Swedbank. ‘Pernod Ricard Nordic’ will now market Pernod Ricard’s - The new name Swedbank will not bring along any essential changes international and local brands for our clients or employees, said in Sweden, Denmark, Finland, Erkki Raasuke, Swedbank Group’s Norway, the Baltic States and Iceland. The company Baltic banking CEO. We’ve always has been created by merging V&S Wine (the leading wanted to be the best bank in north-European wine producer and importer), V&S the Baltics and all our decisions, Distillers (the leading north-European producer and including becoming part of the distributor of regional and local spirit brands) and Swedbank Group, have served this purpose Pernod Ricard Nordic Countries (the current Pernod Ricard distribution subsidiary in the Nordic region). - The core of Swedbank’s brand is service leadership and our main aim is to provide the best service on the markets we Swedish State’s ownership in The acquisition of V&S operate at, said Jan Lidén, leader of the Swedbank Group. business companies to decrease enables Pernod Ricard The Baltic States are important markets for Swedbank to assume co-leadership and we aim to do successful business in the Baltics also Last year Riksdagen, the Swedish of the global wine and further in the future, despite the current cooling down of the Parliament approved a proposal from the Parliamentary Committee on spirits industry. Absolut, economy. Industry and Trade to decrease the the number one premium Swedish State’s ownership in several vodka worldwide, is the The history of Swedbank Group dates back to 1820 with the companies. Political commentators ideal addition to complete establishment of Sweden’s first savings bank in Gothenburg. interpreted the decision as a sign that the current Swedish Government Pernod Ricard’s brand is of the opinion that businesses portfolio and makes the Today the banking group operates in a large variety of should be owned and run by private Group the second-largest international markets including Sweden, Baltics, Russia, interests. player in the US. In Ukraine, Finland, Norway, Denmark, Spain, US, China, and addition, the local brands Japan. It has more than 22,000 employees and serves a total In addition to Vin & Sprit the list of around 9 million private customers and 500,000 corporate presented last year included the V&S brings with it will customers in its home markets of Sweden, Estonia, Latvia Swedish State’s ownership in Civitas add to Pernod Ricard’s and Lithuania. Holding, Nordea, OMX, Sveriges critical mass in the Nordic Bostadsfinansieringsaktiebolag SBAB (the Swedish real estate markets. Swedbank Group purchased 100% of Hansabank stocks financing company) and Telia in the spring of 2005. The Swedbank brand was created Sonera. - Sales of premium wines in connection with the resulting cooperation between and spirits brands are Following the recent speculations FöreningsSparbanken and Hansabank in 2006. on a Lufthansa purchase of SAS increasing in Estonia, - Scandinavian Airlines it can be noted that the Swedish State’s 21,4% ownership in SAS AB, was not included in this list. 42

Christmasnewsflashes Buffet and New Year’s Eve celebrations at Radisson SAS Hotel, Tallinn

Radisson SAS Hotel’s traditional Christmas Buffet The competition is organized every year by Enterprise is served in Estonia as a way of recognizing the country's most Restaurant Seasons successful companies, and increasing awareness of the Tuesday – Friday importance of entrepreneurship. between 12.00 – 15.00. All the tastes - Enterprise of the Year is given to a company that can of Christmas are demonstrate stable growth in Estonia over a period laid up and served in a cosy Christmas of years, said Enterprise Estonia's board chair, Ülari atmosphere. Alamets. Companies are assessed on a scale that includes investments, export development and job Every year as the clock creation. nears midnight December 31st a delicious menu, The Foreign Investor award recognizes a company sparkling wine, an intimate that stands out for the scale of its investment and festive atmosphere in Estonia, and the contribution that it makes to and fireworks are offered Estonia’s economy at Lounge 24 on the top by introducing new floor of Radisson SAS Hotel. technologies and creating Additionally, the 140 sqm high-quality jobs. open top floor terrace is a unique spot where you can ABB’s 2007 revenue in admire all the great New Estonia was $160 million, Year's fireworks in and 24-percent more than around Tallinn. 2006 and the best result in 15 years of operations in Tables for enjoying the the country. ABB invested tastes of Christmas and $9.5 million in Estonia getting a spectacular start in 2007, which helped to of 2009 at Radisson SAS Hotel can be reserved by create 300 new jobs. The phone: (+372) 682 3000 or by e-mail: reservations. Group has invested $61 [email protected]. million in Estonia since its operations started here in 1992.

ABB honoured in About 90-percent of ABB’s Estonian production volume is exported, mostly to Finland, but other destinations include Sweden, Russia, China, Ukraine and Latvia. Estonia Exports in 2007 rose by 46-percent on the previous year and ABB now employs more than 1,000 people in ABB has been chosen Enterprise of the Year and Estonia. Foreign Investor of the Year in Estonia for 2008. Estonia's president, Toomas Hendrik Ilves, presented - Demand for our energy saving products is increasing the award September 18th at a special ceremony in year by year, and we are very glad to be able to make Tallinn to ABB's manager for the Baltic States, Bo a solid contribution to the Estonian economy, said Bo Henriksson. Henriksson. ABB in Estonia manufactures energy and automation products, mainly wind generators and low voltage drives. ABB's head office is in Tallinn and there are ABB factories in Keila, Jüri and Maardu, and maintenance centers in different parts of the country. Meriton Hotels kicked off for the autumn Some one hundred guests gathered at this year’s annual Meriton Hotels’ September corporate event. In today’s internationalized business environment local market expertise in accounting, auditing and The new Meriton tax consulting is not enough. Rödl & Partner opens Conference & Spa hotel the doors both to the national and international was presented and the marketplaces with 2550 experts employed guests could take a look at at 80 cities in 38 countries around the world. a room specially prepared for showing what is coming up as this new hotel opens during the spring next year. Personal Service You always cooperate with one The guests enjoyed a five course Asian style menu and the same person at Rödl & during the event and Ines and her band took care of the Partner. evening’s entertainment. Full service Being entrepreneurs ourselves, we Tallinn Airport’s fully understand our customers need to focus on their business renewed terminal core values. opened Rödl & Partner is a one-stop service organization: As Tallinn Airport’s renewed passenger terminal was opened September 19th, Auditing Estonia’s Prime Minister Andrus Ansip Accounting announced the Government’s decision to name the airport “Lennart Meri Tallinn Tax Consulting Airport”. Lennart Meri passed away 2006 and was Estonia’s President 1992 – 2001. Legal Consulting The renaming ceremony of the airport will take place on Lennart Meri’s 80th anniversary in the spring 2009. Global service The renewed terminal means that Tallinn airport now can Rödl & Partner is present serve up to two times more passengers at the peak traffic where business is present. hours. ce we The new cross terminal building has seven new and two communicate in Estonian, reconstructed passenger bridges and the gallery enables English, German, Swedish two-level traffic for international passengers. The check- and Russian. in area has expanded significantly, a new VIP-complex has been established and separate lounges have been built for Schengen and non-Schengen-passengers.

As the renewed terminal was opened, Tallinn Rödl & Partner Airport reported a 10,3% Roosikrantsi 2 y-t-d passenger growth for the first eight months EE-10119 Tallinn of 2008 compared to last Tel: (+372) 6 805 620 year. Air cargo growth Fax: (+372) 6 805 621 during the same period e-mail: [email protected] amounted to an impressive 192,9%! www.roedl.ee 44

destructive, unfair and discriminates private and long term savings in shares, said one finance commentator. newsflashes - It should be noted that the figures in this Swedish Sweden’s State Budget State Budget were locked before the big drama began on the global financial scene, said Svenska Dagbladet, 2009 presented a major Swedish daily newspaper, in a commenting editorial. - We have a clear focus on getting more people into jobs and encouraging more companies Estonia’s State Budget to start and grow and Sweden now stands on a firm draft 2009 presented foundation, said Sweden’s Minister and debated for Finance Anders Borg as the Swedish State Budget 2009 was presented in Riksdagen [the Parliament] September 22nd .

- Sweden’s position is stronger than that of most other OECD and EU countries. We will now take advantage of this to respond to a poorer outlook in the wake of growing unrest in the financial markets, while providing increased resources to education, health care, social services and other areas.

- The dark clouds hanging over the world economy have thickened during the summer and autumn as unrest has grown in the international financial markets, concluded Anders Borg. In light of this, the Government, like most other analysts, is adjusting the Swedish growth forecast downwards. The Swedish economy is expected to grow by 1.5 per cent this year and 1.3 per cent next year. The Government expects growth to pick up again in 2010. - Though the 2009 draft budget revenues are EEK 800 million lower than the expenditures, it is technically - The lowering of the employment social fees are good balanced, said Estonia’s Minister of Finance Ivari but not enough, said representatives of Swedish small Padar. The budget deficit is some 0,9 percent of the and medium sized entrepreneurs. The Government’s total budget. one percent lowering really doesn’t make any difference. We want to see lower company taxation and On the revenue side the draft a considerably lower social fee. budget calls for the Estonian State to take out larger dividends The Swedish forest industry welcomed the from State owned companies like Government’s planned investments for better roads. Eesti Energia, the Port of Tallinn, Bad roads are estimated to cost the forest industry’s the State Forest Management transports close to SEK 600 million per year and the Centre and the Civil Aviation SEK 400 million the Government now is prepared to Control Centre. Further revenues invest for better roads were indeed welcomed. are planned to come from sales of real estate and State holdings. A Swedish Government promise to take a look at the The income tax level is planned to taxation on savings was also welcomed. remain at 21% during 2009. - The current Swedish taxation on savings are On the expenditure side, Ivari Padar said that the Government has sharply reduced costs of the public - The Gencs sector. Valters Law Firm is a In several respects coinciding with the proposals full service, suggested by FICE, the Foreign Investors’ Council general in Estonia, Prime Minister Andrus Ansip made a practice September 24th budget comment: international business law - Our priority in 2009 is a flexible labour market, said firm with Andrus Ansip. One part of the flexible labour market offices in Riga is lifelong learning. Despite of our people having fancy and Tallinn diplomas we don’t have a qualified workforce. focused in tax, litigation, M&A, corporate, immigration, finance and intellectual property law. We provide - The list of Estonia's priorities also includes legal, tax, corporate finance, management consulting, supporting export, research and development activities, evaluation and due diligence services and here in a strict budgetary policy and simple and clear tax Tallinn, Jevgeni Robakov is in charge of our office. policy, concluded Andrus Ansip. - The law firm has by now grown to include a team of - There will be no recovery in the Estonian GDP 15 lawyers and tax consultants in 3 countries, Latvia growth before 2010, said Erkki Raasuke, CEO of (Riga), Estonia (Tallinn) and Lithuania (Vilnius) and we Swedbank Baltic operations at a September 24th have particularly strong ties with Scandinavian clients, conference. The 2008 and 2009 GDP growth will be concluded Valters Gencs. Further, as a part of the negative and the prognosis for an economic growth by independent law firms network Eurojuris we cover 610 2010 is rather optimistic. different cities and locations in 30 European countries.

Debating the 2009 draft budget, critical voices were Gencs Valters Law Firm is located at Tornimäe 5, 2nd heard in the current Estonian Government coalition: floor in Tallinn and Jevgeni Robakov can be reached at tel: (+372) 619 1000 or by e-mail: jevgeni.robakov@ - The Estonian budget draft 2009 is based on the gencs.eu. assumption of a 2.6% economical growth 2009, said Taavi Veskimägi, a Member of the Estonian Parliament and representing the Pro Patria and Res Publica Union. Unfortunately, this will not happen, concluded Veskimägi. Gencs Valters Law Firm launched their Tallinn office It was a full house as Gencs Valters Law Firm launched their downtown Tallinn office in September. The guests mingled and got intrigued by Estonia’s Triki Mees who, among other magics, managed to move Elvis the Duck from one spot to another without anybody really realizing how he did it.

- No, Triki Mees has no direct connection with our law business, said Valters Gencs, CEO, a lawyer and the founder of Gencs Valters Law Firm. But, he symbolizes that when you know how to do the things the right way, it sometimes seems as magic. 788 79= DOIJHzC ;;IJ? 7: L?I?8B; 7:LEA77:?8{HEE =B?CIJ;:J IJH7KI  F7HJD;HI7:LEA77:?8{HEEB;F?ABK>7uuHB7M?D7:LEA77:?8{HEEBK?=7CE:O >uuB8EH;D?KI7:LEA77:?8{HEEF7KBL7HKB7:LEA77:?8{HEEFE>B7>7BBCu=? 7:LEA77:?8{HEE IEH7?D;D B7M E<;:C7D EI8EHD;9B7HA;7II787BJ7IJB7D:7>EJ;BB?87BJ?9I;797H=E87D9J;987HEDI >EB:?D= 8;H9E E{ 8;IG78 FHE@;AJ @7 A?DD?IL7H7 8B7:>I ;;IJ? 7I 8EEC;H7D= IK89EDJH79J?D= 9?F7N ;;IJ? 9?JO 7?HB?D; :>B ;IJED?7 :F: ;;IJ? ;#8;JEED;B;C;DJ ;;IJ? 7=7 ;B;9JHEBKN ;;IJ? ;H?9IIED ;;IJ? ;IJD7JKH; ;IJED?7D7?H;IJED?7D=EB<9EKDJHO9BK8;L7J787BJ?9;N9;:;7<7HCFB7DJ ;;IJ?7:LEA77:?8{HEEL?HH?=uH:;DEH:B?D7DI7F7DA 9I7 F7HJD;HI >A ?D:KIJH?7B >KC7D I;7H9> >KIGL7HD7 ?< ;;IJ? 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At least in before the Georgian conflict me at email: kristiina@ Estonia where a couple of warm weeks towards the developed to an armed military swedishchamber.ee or by end of July and the beginning of August was what we conflict and our talks with phone: (+372) 501 9813. The got in terms of nice weather. Jaak Aaviksoo concentrated focus advertising opportunities including sizes, prices and on international defense technical requirements are I got the opportunity to dive a bit deeper into the history cooperation with a special available at our website: www. of the Estonian-Swedes this summer as I visited on Estonian – Swedish swedishchamber.ee. Ormsö, Hapsal and Birkas in connection with several past, current and potential major Estonian-Swedish events. future cooperation projects. Latest news on SCCE events to come and fresh reports A Swede visiting Ormsö for the first time actually named The global economical roller on events passed are always the visit The Positive Surprise of the Year. He was coaster ride continues and found at: referring to the food served at Rumpu and said that it from an Estonian point of view www.swedishchamber.ee. was the best ‘husmanskost’ (Swedish styled everyday the timing could have been food) he had eaten since many years. reports on better as it coincides with the Estonian-Swedish events in this issue and personally Estonia’s own way towards I am now anxiously waiting for next summer and an sustainable economical levels. opportunity to offer SCCE’s members a sailing trip with Runbjarn – the Ruhnu Jahta. The second quarter reports from the Swedish banks dominating the Estonian and Baltic banking sector were also reports on FICE, the Foreign Investors’ good, while on the international finance scene Lehman Council in Estonia. Brothers filed for bankruptcy protection. The coming three months periods will most probably demonstrate the As FICE got formally launched in August, Jens impact the international finance market has on Estonia, Christiansen, Chairman of the Danish-Estonian Chamber Sweden and the rest of the globe. of Commerce was elected FICE’s Chairman and I was elected as the Council’s Secretary. FICE got a great take We have a challenging autumn, winter and spring off as the media interest for our initiative was impressive. ahead of us and I look forward to seeing you at the As this ps. is written the FICE-meetings with the Estonian upcoming seminars, meetings, study visits and events Government as well as other important authorities arranged by the Swedish Chamber of Commerce in and organizations have started. A report on FICE and Estonia. FICE’s first meeting with Prime Minister Andrus Ansip is included in this issue of . I hope you enjoy reading this issue of and latest news on SCCE events to come and reports on events Being a former student at passed are always found at: www.swedishchamber.ee. the University of Tartu it was interesting for me to meet its Rector during several recent years; Jaak Aaviksoo. Now in his Sincerely, position as Estonia’s Minister of Defence. Kristiina Sikk SCCE Ombudsman The meeting took place just