The more we repeat the mantra that the war in Ukraine is damaging the Estonian economy, the more likely it is that this will happen. In fact, investment inquiries are at a normal level and interest in investing in Estonia remains high, writes Joonas Vänto, head of the Foreign Investment Center of Enterprise Estonia (EAS) and KredEx.
Recently, opinions have been expressed that the war initiated by Vladimir Putin in Ukraine will also reduce the activity of foreign investors in Estonia. In our work, we communicate with foreign investors on a daily basis, and can confirm that factors such as a stable economic environment, simple tax policy, being the world's best digital nation and having a prominent community of startups, still hold strong appeal.
While the coronavirus pandemic caused foreign investors to take a breather for a while and created a 'wait-and-see' attitude, last year there were clear signs of recovery.
The volume of foreign investments managed with the help of the Foreign Investment Center increased by almost a quarter last year compared to 2020, and the number of jobs created doubled.
Even after the start of the war, several foreign investors have announced plans to grow (their operations in Estonia), including Nordea Bank and Solita, one of Finland's largest IT companies. The international technology company Ensto plans to expand significantly in Estonia and will make large investments here in the coming years.
There is no sign of diminishing interest in foreign visits (to Estonia) since the start of the war, and we have received only positive messages from business delegations accompanying ministers. For example, one large international developer confirmed they will participate in the competition for the construction of offshore wind farms as soon as the planning of the Estonian offshore area reaches the required stage.
Offshore wind farms have great potential to end our energy dependence on our eastern neighbor, as well as to lower electricity prices and bring us closer to a greener economy. The development of large renewable energy production capacities with the support of a foreign investor will also significantly reduce the cost to the Estonian taxpayer, as otherwise wind farms would have to be built by the state.
The International Monetary Fund (IMF) expects Estonia's inflation to reach normal levels in 2024.
"Local companies will also benefit from strategic foreign investment, as cooperation can extend the value chains of the sectors."
Where there already is (investment), there will be more, and where there is nothing yet, there must be opportunities. Local companies also benefit from strong and strategic foreign investors, because the cooperation can extend the value chains of the sectors and create greater added value in Estonia.
Continuing with the example of wind energy, Estonian companies have the ability to produce blades for wind turbines, as well as a range of other parts. However, NPM Silmet, which is located in Sillamäe, is one of only a few places in the world capable of processing the rare earth metals needed, for example, to produce valuable permanent magnets for wind turbines and electric cars.
Estonia's international image is very important for attracting foreign investment, and so far we have been very successful in this. We can all contribute to maintaining it - professional associations, companies and every citizen.
Confidence is important. For example, we could confidently explain to a geographically distant acquaintance living abroad that not only does NATO protect Estonia, but Estonia also protects NATO. All members of our defense forces are part of a large allied army, and Estonia's contribution, given its size, is significant. At the same time, the security of the region will be enhanced by the accession of Finland and Sweden to NATO, which will basically turn the Baltic Sea into a NATO inland waterway.
In addition to the positive economic impact, the presence and integration of multinational companies into the global economy will increase our security more broadly.
Editor: Michael Cole