Interview with H.E. Mr. Sven Sakkov, Ambassador of Estonia to Finland
Trade between Finland and Estonia has developed positively during the last years. How do you see the development of our trade relations in the coming years?
Finland has been the most important economic and trade partner to Estonia for a long time and will remain at the forefront of our main trading partners for decades to come.
In 2019, Estonia’s exports to Finland amounted to €2.34B, making it number 1 export partner. Compared to the previous year, exports from Estonia to Finland experienced growth at an annualized rate of 2.21%. Estonia’s imports from Finland were worth €2.04B, again making Finland Estonia’s nr 1 trading partner. Compared to the previous year, imports from Finland to Estonia experienced decline at an annualized rate of 2.28%. Most recently, exports were led by electrical transformers, followed by iron or steel structures, and imports were led by electricity, followed by refined petroleum products.
Finland has been one of the two biggest investors in the Estonian economy during the last 30 years (in second place only after Sweden). FDI from Finland has been wide all across Estonian economy.
Which Finnish goods and services would have demand in Estonia and which Estonian ones in Finland according to your opinion? (if you want you can speak only about Estonian goods).
Machinery and equipment are the main goods exported to Finland and their export volumes remain around 0.5-0.6 billion euros. The main products in the group of goods are remote controls, panels, parts of handling equipment, transformers and static converters, parts of electric engines and generators, isolated wire and cables, and telephones. The second biggest export articles are metals and metal products, the main products are iron or steel constructions, iron or steel reservoirs, tanks and pipe fittings, aluminium products, and the third biggest group is other industrial products (furniture and accessories, light fixtures, timber houses). The share of timber and timber products in export remains around 7-8%.
Machinery and equipment are the main imported goods, the second biggest import articles are vehicles and transport equipment. Mineral products (gas oils, petrol and power) are also imported; the share of metals and metal products in import is similar.
Which kinds of start-ups communities you have in Estonia – if a Finnish start-up company would like to start doing business in Estonia, is there any support for foreign start-ups? If not – you can concentrate on describing the start-ups in Estonia.
Estonia and Finland are both very hospitable for start-ups. Both are digitally developed countries with a world-class education system. According to the Estonian Startup Database, we have more or less 1110 startups operating in Estonia and 66 new startups have been created in 2020. The number of startups that have been active for at least five years is 257 (23% of the startups in the Estonian Startup Database).
Even though it has been difficult to match pre-crisis growth rates, Estonian startups have generally done very well in adjusting and putting up these extraordinary times. As expected, some have also had to shift focus from hiring and expansion and taken on other objectives to accommodate the situation.
The turnover of Estonian startups totaled 562 million euros in the first nine months of 2020, growing by 41% year-on-year. The startups with the largest revenue were Bolt and Pipedrive . Pipedrive became recently Estonia’s 5th unicorn after Skype, PlayTech, TransferWise and Bolt.
The global crisis has had a noticeable effect on the Estonian startup sector, but despite the difficult times, the number of employees working in startups has stayed consistent.
The statistics from the Estonian Tax and Customs Board show that at the end of the third quarter of 2020, Estonian startups employed 6329 people locally. A year ago, the employee count was at 6124, meaning the growth in one year has been 3%. The biggest employers among Estonian startups are Transferwise, Bolt and Pipedrive.
There are no special grants for startups, grants are meant to all startup enterpreneurs. Several county development centres in Estonia that counsel all start-up entrepreneurs on the application for start-up grants. The business consultants give you feedback on your business idea as well as business plan. In the course of the counselling you will also learn whether your business idea meets all the necessary requirements in order to apply for a start-up grant.
In order to apply for a start-up grant, it is obligatory to receive a preliminary assessment from a county development centre.
Life during and after Covid-19 – which kind of support Estonian and foreign companies can receive in Estonia? How the companies see the future?
The impact of crisis mitigation measures in the supplementary budget adopted by the Parliament for 2020 on the budgetary position of the government sector is EUR 1.15 billion this year. As a result of the crisis, lower tax revenues, financing transactions and the use of reserves will increase the negative cash flow of the Treasury to EUR 3.8 billion this year. To cover the negative cash flow, the Treasury will borrow and issue bonds of EUR 3.5 billion. As a result, the government debt burden is estimated to rise to around 22% of Estonia’s gross domestic product (GDP) by the end of the year. Even though there has been a rapid growth of sovereign debt Estonian debt-burden is still the lowest among the EU member states.
The overview of current economic indicators may be followed via fin.ee/koroonakriis
Please, tell your personal aims during your time as an Ambassador in Finland.
In broad strokes a foreign policy of a small and geopolitically exposed country should in my understanding have 3 large aims – security of your country, well-being of your country, and supporting your people abroad. Starting from the last and in reverse order – there are up to 70 000 Estonians living and or working in Finland. This is pretty much 5% of Estonia’s population. They need to be supported and we have a large consular section at the Embassy. We have talked already about trade and investment during this interview. I hope to be able to be of help in bringing additional strategic investments into Estonian economy. Now, coming to what could be called classical foreign policy issues, I hope to assist in expanding the horizon of bilateral consultations between Finland and Estonia. Relations between countries are built brick by brick. And they can never be complete – there is always room for improvement and development. As for a short-term goal for 2021 I hope to learn Finnish. I have now studied it for 4 months and the road ahead is long.
H.E. Sven Sakkov
Ambassador of Estonia to Finland
Contact person for questions:
Ms Anne Hatanpää
The Finnish-Estonian Business Association
anne.hatanpaa ( a ) chamber.fi