BANK OF FINLAND MONTHLY BULLETIN ---"'-_ ... _._-------- Vol. 41 No.3 MARCH 1967 ----_.... __ .. _-_._-- GOVERNMENT POLICY ON FOREIGN DIRECT INVESTMENTS The Govel'mnent of Finland has recently provisions is essentially dependent on their issued a policy statement which reaffirms administrative application, on which, as a its attitude towards foreign direct invest­ rule, decisions are reached before the respec­ ments in Finland. At the same time, the tive investments are made. The Government Government has appointed a Commission the and the authority ·entrusted with the control purpose of which is to aid foreign investors of foreign exchange, the Bank of Finland, by providing information and advice and will apply these provisions very liberally. by assisting in the processing of investment 3. The fiscal and other incentives at pres­ applications wit.hin the administration. ent in force for the promotion of invest­ The text of this policy statement, which ments apply equally to foreign and domestic was recorded in the Minutes of the Council entrepreneurs. In order to maintain this of State on January 19, 1967, contains the equitable treatment the Government does following. not regard it as justifiable to grant special 1. It is estimated that the natural increase incentives to foreign investors. in the labour force and the movement of 4. A complete reform of Finland's tax labour from agriculture to other sectors of system is being prepared at the moment. In the economy in Finland will over the next this connection it is intended to abolish or few years average about 30 000 persons an­ ease t.hose fiscal provisions which in some nually. Taking into consideration the crea­ cases have allegedly tended to operate to tion of new employment opportunities and the disadvantage of foreign investors. Certain also economic growth and foreign exchange legislative amendments to this eff-ect have policies, the Council of State thinks it desir­ already been made. able that foreign capital should be attracted 5. As Finland's natural resources of raw also in the form of direct investments to materials are rather limited, the Government contribute to the establishment of new in­ does not, however, deem it advisable that dustry in Finland. In this respect, Gov­ direct foreign investments in the forest and ernment wishes to draw the attention of mining industries be accepted. foreign investors to the following. 6. The Government has appointed a Com­ 2. Finnish legislation on foreign invest­ mission to deal with matters pertaining to ments does not contain provisions which would discriminate unreasonably against for­ eign investors. The effect of these legal 7295-67 2 No 3, 1967 foreign investments. This Commission, which Mr. Reino Honkamnta, Director of the is subordinated to the Ministry of Com­ Commercial Department of the Ministry for merce and Industry, shall Foreign Affairs; (Mr. Tankmar Horn, Dep­ - provide foreign entrepreneurs with the uty Director of the Department) necessary information and advice on lib'. Pekka Rekola, Director of Industry opportnnities for making direct invest­ Division, Ministry of Commerce and Indus­ ments in Finland, try; (Mr. Timo Alhos, Chief of Bureau of - forward snch applications, together with Industry of the Division) the Commission's views, to the relevant Mr. H eikki Tuorninen, Director of the authorities, Budget Department, Ministry of Finance; --- disseminate general information regard­ (Mr. Erik Tornqvist, Director of the Eco­ ing foreign investment in Finland. nomic Department, Ministry of Finance) The following persons were appointed by the Council of state to be members of the Commission; the personal deputy of each The address of the Commission is appointee is indicated in parentheses: Mr. Olavi Salonen, Minister of Commerce Commission for Foreign Investments "and Industry, as C h air man; (Ulkomaisten investointien neuvottelu­ kunta) Dr. Reino Rossi, Member of the Board of Ministry o·f Commerce and Industry Management, Bank of Finland, as Vic e Aleksanterinkatu 3 D Chairman; (Mr. Jouko J. Voutilainen, Helsinki 17, Finland Director, Bank of Finland); February 24, 1967 3 BANK OF FINLAND Mill. mk BALANCE SHEET Assets ! I I I ! Ordinary note cover .................. 637. 2 944·I i 685.2 686·5 674·9 702.3 Gold ............................. 143·9 267·5 143·9 143·9 143·9 144.0 IMF gold tranche ................ .. 100.0 45·6 100.0 100.0 100.0 100.0 Foreign exchange .................. 312.0 548.4 358.8 363.5 351•8 379.1 ; Foreign bills ...................... 56.4 53·5 57.6 54.2 54·3 54·3 Foreign bonds .................... 24·9 29·1 24·9 24·9 24·9 24·9 Supplementary note cover ............. I 063.7 640 •0 757·4 762.6 770 .3 825.2 Inland bills discounted In foreign currency .............. 36·3 45·5 39·5 39·5 39·5 39·5 In Finnish currency ............ .. 112.2 24.8 106.8 105·5 104·6 101.0 Rediscounted bills ................ .. 915.2 569.7 6u.I 617.6 626.2 684·7 Other assets .....•.................... 42 4.6 I5I·3 509-4 437-7 502.2 45I •O Finnish bonds .................... 284·8 51.6 368.2 296.3 363-3 312.5 Cheque accounts .................. 2.1 1.4 1.3 2.2 2·4 3.8 Finnish coin ..................... .. IL7 8·7 15·4 15·4 15·9 15·7 Other claims ..................... .. 126.0 89·6 124.5 123.8 120.6 II9·0 Total 2125·5 1735·4 1952.0 1886.8 1947·4 1978.5 Liabilities Notes in circulation I I06.2 943· I 968.7 944·3 948.I 964-5 Liabilities payable on demand .......... I79·6 92 .6 I6I.8 I06.I 99·9 I37·8 Foreign exchange accounts .......... 61.2 42·3 46.1 47.1 47.2 47·7 Mark accounts of holders abroad .... 16.2 10·7 13.2 13.6 13·5 13·5 Cheque accounts Treasury ....................... 39.8 1.6 1.1 0.8 1.0 8·9 Post Office Savings Bank ......... 17·3 3·9 5-3 1.1 0.1 7·3 Private banks ................... 13.8 12.1 73·4 21.2 16·3 39·5 Other .......................... 2.8 1.4 1.9 3.1 1.7 1.6 Other sight liabilities .............. .. 28·5 20.6 20.8 19·2 20.1 19·3 Term liabilities ....................... I26·3 85·3 II9·5 I33·5 I94·8 Foreign ........................... 84·6 45.6 84·6 84·6 84·6 Finnish ........................... 41.7 39·7 34·9 48·9 IIO.2 Equalization accounts ................. 266·9 I84·9 252·5 252 •6 253·9 230 •0 Bank's own funds ..•.................. 446.5 429.5 449·5 450 .3 450·7 49·4 Capital ........................... 300.0 300.0 300.0 300.0 300.0 300.0 Reserve fund ..................... .. II2.6 II2.6 129·5 129·5 12 9.5 129.5 Profits undisposed ................. 14·7 16·9 16·9 16·9 16·9 Earnings less expenses ............. 33-9 2.2 3. 1 3·9 4·3 5.0 Total 2 125.5 1735·4 1952.0 1886.8 1947·4 1978.5 STATEMENT OF NOTE ISSUE Right of note issue Ordinary cover ...................... 944.1 685.2 686·5 674·9 Supplementary cover (Upper limit 500 mill. mk; since Nov. 30, 1966, 700 mill. mk) ............. 700.0 500.0 700.0 700.0 700.0 Total 1337.2 1444.1 1386.5 1374·9 1402.3 Note issue Notes in circulation .................. 1106.2 943.1 968.7 944·3 948.1 964.5 Liabilities payable on demand ......... 179.6 92 .6 161.8 106.1 99·9 137.8 Undrawn on cheque credits ........... 4·9 5·6 5·8 4·9 4·6 3·2 Unused right of note issue ........... 46·5 402.8 248.9 331 .2 322.3 296.8 Total 1337.2 1444.1 1385.2 1386·5 1374·9 1402.3 Rediscount rate since April 28, 1962, 7 per cent. 4 BANK OF FINLAND Mill. mk Gold and foreign accounts Treasury I End of year and Gold and ILiabili~e. Foreign Other Other Net Bills Other Liabilities, Net claims month foreign on foreIgn exchange foreign foreign foreign and claims, Cheque on the exchange exchange reserve assets liabilities assets bonds net account Treasury I accounts (1-2) (3+4-5) (7+8-9) 1 2 3 4 5 6 7 8 9 10 1959 730.7 21.2 709·5 92·5 158·4 643·6 103·3 37·6 64·2 76.7 1960 686.0 40.6 645·4 67.0 142·7 569·7 37·5 32·4 61·9 8.0 1961 691.5 13·4 678.1 87·5 128·4 637.2 27·7 5·9 1.1 32.5 1962 637·7 17·1 620.6 67·7 u4·9 573·4 - 28·9 5·5 23·4 1963 752.2 18.2 734.0 65.6 100·5 699·1 - 18·9 0.2 18·7 1964 973·4 84·7 888·7 76·3 82.8 882.2 - 8·9 5·4 3·S 1965 860·9 44.8 816.1 83·8 56·S 843·4 - - 1.1 1.1 - 2.2 1966 555·9 61.2 494·7 81.3 100.8 47S·2 u·S - 1.1 39.8 - 29·4 I I , I I I 1~66 ! I Jan. 861·5 42·3 819·2 I 82.6 S6·3 84S·5 -- 1.1 1.6 - 2·7 Feb. 914·2 39.8 874·4 I 81.8 52.8 903.4 -- 1.1 2·5 - 3·6 March 819·9 41·4 778·S 83·7 70.6 791•6 16·5 - 1.1 o·S 14·9 April 767·5 39·0 728.5 89.2 68·4 749·3 16·5 - 1.1 6.6 8.8 ! I May 760.6 40.6 720.0 86·5 1 2 I6·S - 1.1 ! 65·3 74 .