Transportation and Storage in Lääne-Viru CountyLääne-Viru Development Center2013Investor consultant

Sustainable competitiveness in business services

Estonia offers distinctive opportunities for business service centres for both in-house and outsourced solutions. Estonia is the emerging Nordic location and an excellent gateway between Northern, Western and Eastern Europe and Russia.

Estonia offers sustainable, high-quality, competitive costs and low risk solutions for BPO, IT and financial services shared service centres, customer and technical support centres.

Enterprise Estonia is here to help you achieve and maintain these competitive advantages.

Why Estonia?

Quality technical skills Foreign language skills Competitive costs and taxes Cutting-edge ICT infrastructure Strategic location and global vision Easy to do business Low risk: economic & political stability Room for growth: a sustainable solution Supporting your investment

Why should you set up business in Lääne-Viru County ? •Closeness to important markets: the largest Estonian market in Tallinn and Harju County, the largest Finnish market in Helsinki region, one of the largest Russian markets in St. Petersburg region; • Closeness to important business areas: the largest Estonian business areas in Tallinn, Harju County and Ida-Viru County; Helsinki region ; • Closeness to the largest sources of Estonian labour force: Tallinn, Harju County and Ida-Viru County ; • A good transport network ; • Existing business areas that offer various services (including electricity and gas supply); • Various existing companies: building materials, wood processing, food industry, metal and engineering industry, electronic industry; • A good living environment with a normal social infrastructure and recreation opportunities

Business enviroment in Estonia

• Estonia's economy offers key opportunities for companies in a number of sectors including ICT, electronics, machinery and metalworking, wood processing, logistics/transport and food. The R&D elements of these activities are supported by the country's 10 universities and 25 higher education colleges, which collectively provide a source of graduates, often fluent in English, Swedish, Russian, Finnish and German.

• Estonia has been ranked 16th in the Index of Economic Freedom (2012, Wall Street Journal/The Heritage Foundation), 24th in the Ease of Doing Business Report (2012, World Bank), and 33th in the Global Competitiveness Report (2012, World Economic Forum).

• Estonia has some of the highest credit ratings in the region (Fitch IBCA, Standard & Poor's, Moody's).

Business enviroment in Estonia

• Estonia is a member of euro area as of January 1, 2011.

• 0% corporate income tax is imposed on all reinvested earnings in Estonia.

• The Estonian cost level is still significantly lower than that of neighboring Scandinavian countries.

In Estonia, all capital is treated equally, foreign or domestic. Estonia is a member of the International Center for the Settlement of

Investment Disputes, the Multilateral Investment Guarantee Agency, and the New York Convention.

Estonia is the leading country in Central and Eastern Europe in terms of attracting foreign direct investments.

Estonia is one of the leading countries in the world in creating and implementing e-government solutions and cyber security

Location

• Situated in northern Estonia. Bounded by Ida-Viru County on the east, south and west of Jõgeva, Järva and Harju counties.

• Bounded on the north by Gulf of Finland

• Fifth most populated county in Estonia, with the population of 66 701 people

• Territory is 3609 sq km and we are the third largest county in Estonia.

• Divided into 15 municipalities (13 rural municipalities and 2 towns). Rural population is 55%

• The largest municipality is town Rakvere with 16 570 inhabitants, being the county center as well

Connections

Transport and logistics • Lääne-Viru County has a very favourable logistic location by the sea,

between Tallinn on one side and Ida-Viru County on the other side.

• Rail link with St.Petersburg and Pskov (Russia)

and Riga (the Baltic States, Belarus, the Ukraine)

• Port of Kunda – located 26 kilometres from Rakvere

• Close to Tallinn-Narva highway (Rakvere – Tallinn 98 km, Rakvere – Narva 120 km)

• Rakvere-Väike-Maarja- Vägeva highway (Rakvere – Tartu 135 km)

• Sõmeru- Rakvere –Pärnu highway (Rakvere – Pärnu 178 km)

• International road transport companies: transport operations all over Europe as well in Russia and in the Ukraine

• Storage terminals for chemical and oil products

• Airport in Tallinn – 98 km

Power network • Electric power reaches Estonian households and companies with the help

of Eesti Energia Jaotusvõrk OÜ which provides services for 87,7 % of Estonian electricity consumers.

• Lääne-Viru County is supplied by a network of power lines with a total length of 5235 kilometres, 4520 kilometres of it is made up by overhead transmission lines. In the financial year 2010, over 2.58 million € was invested by the distribution network in the renovation of the power network of Lääne-Viru County. Nearly half of that sum was spent on the installation of underground cable lines.

• In 2011 the focus was on replacing overhead transmission lines with underground cable lines, the company replaced 80 km of lines with underground cable lines. The distribution company invested about 2.88 million € in 2011 in Lääne-Viru County for the construction and renovation of networks. In addition, maintenance and repair work necessary for sustaining the operating reliability is carried out. www.energia.ee

Regional workforce skills and costs• Estonia has relatively low taxes and a simple tax system. Currently

there is no corporation tax ( tax is not imposed on reinvested profit)

• Income tax on dividends forms 21/79 of the dividends received.

• Value added tax is 20 per cent with just a few exceptions.

• The average labor cost per hour worked in transport sector was 5,98 eur (www.stat.ee, year 2008)

• Educational level in Lääne-Viru County

Statistics 2011 (people, thousands)

• Primary education or lower 5.2

• Secondary, post secondary and pre tertiary education 17.3

• Tertiary education 9.2

• Education after secondary education 2.7

• Higher education, mater`s doctoral degree 5.5

Taxes and duties

Rate of tax on income 21%.Additional tax-exemption income when accidents at work or

occupational disease benefit is 64 euros monthly Social security tax is 33%. The minimum obligation base monthly rate

for social security tax is 290,00 euros, which means that the minimum obligation social security tax is 95,70 euros monthly.

Unemployment tax for the worker is 2%, for the employer it is 1%.

Taxes and dutiesThe company must be registered as a VAT payer when from the

beginning of the calendar year, turnover is in excess of 16,000 euros, on a voluntary basis can be registered also earlier.

When the company is registered VAT payer in Estonia and starts to use the imported (equipment, goods) for goods under VAT too, it can deduct VAT paid at customs on these good from its taxable supplies VAT.

Each month for the 20th is needed to present a tax return when registered VAT payer, VAT return form KMD. VAT payer can read from the registration requirement of § 19 VAT law (law is also available in English).

When the company will make special payments or other distributions paid in Estonia, and the company already is registered in Estonia, then you may re-turn to the specific tax questions also directly at jurisik@emta.ee.

Labor costs• The average wages in Estonia in

2011 was EUR 839. The monthly minimum wage for full-time work is EUR 290.

• Approximately three to four times lower labour costs, compared to Scandinavian countries, in miscellaneous business activities sectors.

• More than three times lower labour costs in the computer related services sector compared to the EU27 average.

1,487,4761,551,833

1,559,3551,811,572

1,965,661

2,312,688

3,495,198

4,277,570

4,872,490

5,690,992

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Latvia Lithuania Poland Hungary Estonia CzechRepublic

UK Finland Sweden Germany

Total labour costs, EUR/yearShared service centre/BPO, 80 persons

Benchmark locations

Source: fDiBenchmark.com, spring 2012

Transportation and storage in Lääne-Viru County

• Traditional and advanced sector

• Logistically good location and road network, equal distance to all big cities, Kunda port, Russia`s neighborhood

• Opportunities for professional and additional training to the staff

• Good location for establish the terminals

• Industrial areas (Kunda, Rakvere, Kadrina, Tamsalu, Tapa)

• 189 companies 971 employees

• Revenue 66 691 392 EUR

• Export 7 319 001 EUR

• Profit 5 429 175 EUR

Industrial areas in the RegionRakvere Industrial Area• Reconstructed infrastructure

• Good logistical position of the highway (Tallinn-Narva), railroad and port of Kunda

• Good labor force potential in urban and in near rural municipalities

• Perspective of bringing one of railway line to industrial park

• Perspective of developing airport for serving enterprises

• Existing neighborhood of the Estonian energy and natural gas distribution network

• Possibility of developing the industrial park area existing residential areas and residential land to allow the relocation of labor

• The business environment in addition to a quality living environment

• Opportunity to provide affordable and cheaper production costs, while logistically well-located plots (eg Harju county companies)

Industrial areas in the regionTapa Industrial Area

• The industrial park is located in the south-western part of Tapa. The area has access to a railway line owned by the town and a good entrance road. A water and sewerage network was built on the territory of the industrial park. A new high voltage line and two new substations supply the area with electricity.

• Total area: 50 ha

• Distances: Tallinn 100 km, 70 km by railway Rakvere 30 km,

• Technical networks: Electricity 2*1000 KVA ,substation and 2*630 KVA substation.

• Heating can be purchased from the boiler-house of a

timber-processing enterprise.

• Communications cable available in the centre of the industrial park, water and sewerage available.

The area of business is expected to:- wood products manufacturing industry;- cluster companies servicing companies (wood cluster, metal cluster);

- companies related with logistics- production must be environmental friendly;- production should not be labour intensive.

The area of business is expected to:- wood products manufacturing industry;- cluster companies servicing companies (wood cluster, metal cluster);

- companies related with logistics- production must be environmental friendly;

Industrial area in the regionKunda Industrial Area

• Total area: 130 ha• Vacant area: 113 ha • Location: in the northern part of Kunda• Buildings: none• Tehnical networks: road access, port• Neighbours: AS Port Kunda, AS Baltic

Tank• Restrictions: production area borders the

Gulf of Finland in the north, therefore relevant restrictions under the Law on Nature Protection apply.

• Desired use: production area, storage area• Kunda PORT - The port of Kunda belongs

to AS Kunda Nordic Tsement. At the moment liquid- and dry products’ terminals are operating, in addition to exporting Estonian Cell’s products. Also around a 5000 m2 hangar is being built for weather-sensitive cargo. The port’s territory is 14 hectares and the circulation of products more than 1,7 million tonnes.

• Railroad - Kunda-Rakvere railroad belongs to AS Kunda Trans and is used for transporting cargo.

• Truck transport - Truck transport in Kunda is organised by Lajos, Kunda Auto etc

• Traditional branches of economy:

• production of construction materials

• logistics - railway- and motor transport

• port

• metallurgical industry

• wood production industry

The biggest suppliers in the regionAS Lajos

• AS Lajos is a 100% private capital based company that will celebrate its 20th birthday in 2012. In 1992 AS Lajos started its business in Kunda Lääne-Virumaa by offering national transport services.

• The truck and trailer service area was enlarged in the autumn of 1995, which enabled to offer services to different clients.

• The spare parts shop was opened in 1997 in Kunda.• A new branch, SIA Lajos LV, was opened in 2008 in Latvia.• The new office and service building was completed in the summer on 2009 in Kunda.• In 2010 a new sub company was opened in Lithuania, UAB Lajos LT.• In 2010 the sales turnover of AS Lajos was about 6 million Euros and AS Lajos had 63

employees. The 32 trucks of AS Lajos’ fleet guarantees the client a fast and operative transport service.

• We offer the following services:• National and international transport• Car accessories and spare parts sales• Car and truck repairs• Carwash for cars and trucks

Biggest suppliers in the regionsKunda Trans AS• Main occupation: railway transport, road freight transport, storage. Estableshed at 1997. Basic

capital: 570 000 EUR.• Turnover: (2011) 2 705 999 EUR, (2010) 2 023 608 EUR• Profit: (2011) 658 736 EUR; (2010) 519416 EUR• Export turnover: (2011) 242 773 EUR; (2010) 216 908 EUR;

Kunda Auto AS• Main occupation: road fright transport. Established at1990. Kunda-Auto AS has international

trucking license, International Road Carriers Association license, 18 employees. • Turnover: (2011) 913 109 EUR; (2010) 779 553 EUR• Profit: (2011) 68 047EUR; (2010) 55 128 EUR

Kunda Mobil AS• AS Kunda Mobil oestablished at1995. Main occupation: domestic trucking with tipper semi-

trailers. Teostame ka rahvusvahelisi autovedusid. AS Kunda Mobil has been member of International Road Carriers Association since1996.

• Turnover: (2011) 803 512 EUR; (2010) 638 247 EUR• Profit/loss: (2011) 13 650 EUR; (2010) -52 476 EUR

Foundation Lääne -Viru Development Centre

Investor consultant

ar@arenduskeskus.ee

Phone nr: + 372 32 58 028

www.arenduskeskus.ee