title of the presentation | date | ‹#› doing business in estonia wednesday 2 nd october 2013
TRANSCRIPT
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Title of the presentation | Date | 1
Doing Business in EstoniaWednesday 2nd October 2013
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Innovation and Manufacturing
Wednesday, 2October, 13
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Who we are
David Clark CEO- Laser Diagnostic Instruments
Leo O Neill CEO- HML Project Management
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OUR PRODUCTSSpectral Fluorescence Signatures (SFS)
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OUR PRODUCTSLaser Induced Fluorescence LIDAR technology
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OUR PRODUCTSLaser Induced Fluorescence LIDAR technology
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International Client base:
• Microsoft
• Cisco Systems
• Allianz Real estate Germany
• European Parliament
• CBRE
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Overview
Statistics – Production and Trade
Business climate – from a Manufacturing perspective
Political, Labour law, logistics
Innovation
Major sectors - examples
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StatisticsLets get them out of the way first!
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Production and Growth
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GDP by economic activity 20124% 1%
16%
4%1%
7%
11%
8%
2%
5%3%
10%
5%
7%
4%5%
4%1% 1%Agriculture, forestry and fishingMining and quarryingManufacturingElectricity and gas supplyWater supply and waste management Construction Wholesale and retail tradeTransportation and storageAccommodation and food service activities Information and com-municationFinancial and insurance activitiesReal estate activitiesProfessional, scientific and technical activities Administrative and support service activi-ties Public administration and defenceEducationHuman health and social work activities
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Manufacturing Growth
Source: Statistics Estonia 2013
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Manufacturing Growth
Source: Statistics Estonia 2013
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Logistics & TradeFrom a Manufacturing Perspective
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Location
2 International Airports SAS, Lufthansa, Estonian Air, Finnair, Easyjet, Air Baltic
Ryanair Global connections via Coppenhagen, Stockholm,
Helsinki, Frankfurt and Munich
Tallinn Passenger port – 90 min Helsinki, Stockholm overnight
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Logistical Hub
Ports:
Port of Tallinn, largest and deepest (18m) in Baltic Sea
Ice free Sillamäe – Eastern most port in EU
Rail: common gauge with Russia, Central Asia and onwards, RailBaltic
Population within: - 24 hours of Tallinn = 90
million 48 hours of Tallinn = 100
million 72 hours of Tallinn = 450
million
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Estonian TradeTrade 2012
Per capita:
Estonia Ireland - Imports around same level, Exports half.
Greater than UK per capita in both Export and Import
Export Import11
11.5
12
12.5
13
13.5
14
12
12.7
0.5
1.1
2011 2012
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Top Exports and Imports 2o12
Exports
Machinery and equipment 3,590 million euros
Mineral Products 1,870
Agricultural 1,170
Metals 1,040
Wood products 930
Import
Machinery and equipment 3,920
Mineral Products 2,140
Agricultural 1,360
Transport equipment 1270
Chemicals 1,130
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Trade UKMain export
articles to GB & Northern Ireland
2012: Wood and wood products,
wood coal – 20%
Machinery and equipment - 19%
Other manufactured goods (pillows, blankets, furniture) - 17%
Mineral products (fuel oil, peat) - 14%
Precious metals - 5%
Main import articles from GB & Northern
Ireland 2012: Machinery and equipment –
57%
Food, drinks, tobacco - 16%
Transport vehicles - 7%
Mineral products – 4%
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Trade IrelandMain export
articles to Ireland 2012:
Food products (wheat) – 59.5%
Wood and wood products –15.9%
Chemical products – 5.7%.
Main import articles from Ireland 2012:
Machinery and equipment – 42.6%
Prepared food products and beverages – 25.3%
Chemical products – 17.4%.
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Business ClimateFrom a Manufacturing Perspective
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Cultural Proximity
Business Culture English is the 2nd foreign language after Russian All law translated in English by 2015 Similar legal, accounting systems to UK
Plain Speaking, being frank (May I say this is not so with Estonians)
Honesty Flat Hierarchy Keeping Time (May I say again this is not so for our
counterparts)
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Observations
Positive attitude towards international companies
Position between national and international companies is equal
Local proudness for big and medium size companies
Local entrepeneurship is high
Positive future outlook
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Observations
Often local companies are lacking ethical code of conduct
Foreign companies has brought in a lot of behaviour models
The attitude towards Finland is positive and negative Don’t like to be the little brother
Estonians learn fast and in many areas already world class makers
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Recent Development
Economic growth has been positive almost all the time 1997 the Russian crise affected Estonia 2008 the new crise appeared Today it is more and less stable Some risk for over heating exist Lack of specialists in some areas (IT) Risk for cost growth (salaries) Political populism
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Comparison of Labour Market
Ireland Estonia N.Ireland Poland India
Working week
39 hours 40 hours 35 hours 40 hours 50 hours
Paid holidays 28 days 28 calendar days(includes weekends)
28 days 20 days (employed <10 y,26 days (employed for >10 y)
15 days
Public holidays
9 10 10 13 16
Redundancy terms
1 week + 2 weeks pay for every year worked
compensation 1 month for up to 5 worked years2 months after 5 years
1 weeks pay for every year worked over 22, 1.5 after 41years
1 months pay for< than 2 years, 2 mpay 2-8 years, 3 m pay for over 8 years
Notice period ca 1 month, severance payment up to 5 years 10 weeks pay, up to 10 years 20 weeks
Social tax contribution
Paid by employee
33% paid by the employer
Paid by employee
33-37% 24%
Corporate income tax
12.5% 0% (on reinvested profits)21%
23%, dropping to 21% in April 2014
19% 30-40%
Minumum monthly salary
Ca 1,460 EUR 320 EUR Ca 1,440 EUR
384 EUR 39 EUR
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European Vs Baltic Markets
Drag picture to placeholder or click icon to add
Baltic market expected to grow despite European standstill
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Innovation
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Innovation
More VC investment per capita in 2013 than UK
Estonia one place behind Ireland in Community Innovation Survey 2010 (7th place)
2 Universities in Global top 500
Rapidly Growing Biotech Sector
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Innovation
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Success Stories
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Rare metals for hi-tech: Silmet acquired by Molycorp 2011 (3% of global rare earth metal production)
Oil shale mining/extraction Enefit (largest privately owned oil shale in utah
Also: Metal construction and antennas for ground stations for satellite communications - Vertex & General Dynamics
Mining Industry Opportunity
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Education -
Lack of
Middle/Senior Management
Engineers
Skilled operators and technicians
Leading in
IT Specialists
Arts & Culture
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Education priorities and needs for the Industry
Management Engineering as bachelor/master as higher education Business administration as second education
Engineers Application engineering, software development,
electrical design, mechanical design, electronics design, testing, project management
Skilled operators and technicians Technical professional education
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Employment Division
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Engineering capacity
Population of Baltic Countries
Baltic's total 6,8 m
Estonia 1,34 m
Latvia 2,2 m
Lithuania 3,23 m
Yearly graduates
in IT, Power engineering, Mechanical engineering
4 universities: Tallinn University of Technology, Riga Technical University, Kaunas Technology University, Vilnius Gediminas Technical University
Estonia Latvia Lithuania
Bachelor degree 358 659 754
Master degree 247 307 374
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Estonian PartnershipsNorthern Ireland & Ireland Success stories in Estonia
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CRH Group Ireland
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What is needed now?
Stable and solid politics
Balanced state budget
Border agreement with Russia
More effective taxation system Less tax on labor work
Education system to be re-organized
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Key Takeaways
Doorstep to wealthy Nordic/Scandinavian countries (logistics, costs)
Most Western mind set of former-USSR, easiest access to Russia
More high skilled labour, management, international experience required
Industry needs a louder voice of support from government
Planning today for the next 2o+ years of Estonian Republic
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Title of the presentation | Date | 51
Doing Business in EstoniaWednesday 2nd October 2013