ESTONIA AT A

GLANCE.

Estonian Investment Agency

» investinestonia.com

(Map & location) • Area 45 227 km2

• Population 1,3 million

• Member of EU, Eurozone,

OECD, NATO and Schengen

• Credit ratings: Fitch A+;

S&P AA-; Moody’s A1

At the Heart of the Baltic Sea

A Message from our President

“Were the internet to have a postal address, it would most likely be here

in Estonia. We have reason to be proud of our highly developed

telecommunications network. Estonia is a place you can take your laptop

into the deepest forest and still hook up to the internet. It is no accident

that Skype was born here.”

“Skype represents an ideal of what we think Estonia should be - a small

group of people come together and come up with a really brilliant idea

that becomes known all over.”

Toomas Hendrik Ilves,

President of Estonia

Welcome to e-Estonia!

Why Estonia?

A unique location and culture combining Nordic roots

and Eastern influences. The Estonian approach is functional and

one that creates timeless value.

A highly progressive environment that offers an

efficient way of doing business. Our e-services, mobile

communications and internet applications are among the most

progressive in the world.

Among the most successful countries in the world in

attracting foreign investments. Foreign direct investments

account for 85% of Estonia’s GDP.

High Position in Business Environment

Rankings

Source: World Bank – Doing Business 2014

1 24 5

9 1012

1417

21 2224

2729

45

54

75

Ease of Doing Business Ranking 201411th in Index of Economic

Freedom 2014 Wall Street Journal /

The Heritage Foundation

7th in Trading Across

Borders 2014 World Bank

2nd in the Internet Freedom Freedom House

32nd in Global

Competitiveness Report

2014 World Economic Forum

28th in Corruption

Perceptions Index 2013 Transparency International

Low risk – Politically and Economically Stable

Political stability. Estonia is seen

as the most stable country in CEE.

Lowest government debt in

Europe. Government debt was 10.0%

in Q3 2013 compared to 54,8% in Finland

or 38% in Latvia for example.

A balanced and future

oriented state budget with a

growing interest in entrepreneurs and

foreign investors.

9.05 8.77 8.5

6.496.19 6 5.92 5.64

5.29 5.24

0

1

2

3

4

5

6

7

8

9

10

Risk of political instability, global rank

Source: IMD World Competitiveness Yearbook 2013

The higher the rank, the lower the risk

Estonian GDP by Economic Activity 2013

Source: Statistics Estonia

GDP Growth and Inflation, 2004-2016

7.5

9.2

10.2

7.1

-3.6

-14.1

3.1

7.6

3.2

0.8

3.6 3.5 3.6

-15

-10

-5

0

5

10

15

-15

-10

-5

0

5

10

15

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015* 2016*

gdp growth, %

inflation, %

* forecast

Source: Statistics Estonia

Main Economic Indicators, 2012-2017

2012 2013 2014* 2015* 2016* 2017*

GDP real growth (%) 3.2 0.8 3.6 3.5 3.6 3.8

GDP (current prices, billion

EUR) 17.0 18.4 19.2 20.4 21.8 23.3

Consumer price index (%) 3.9 2.8 2.7 2.8 2.9 2.8

Employment (15–74 years

old, thousands) 624.4 621.3 635.0 635.0 635.0 635.0

Growth of labour productivity 0.7 0.2 3.2 3.5 3.6 3.8

Unemployment rate (ILO) 10.2 8.6 8.3 7.9 7.5 7.1

Average wage (EUR) 887 948 998 1,061 1,130 1,204

Wage real growth (%) 1.7 2.7 3.4 3.4 3.5 3.6

* forecast

Source: Ministry of Finance Summer 2013 forecast

Structure of FDI Inflow (EUR m)

Source: Bank of Estonia

Total stock: EUR 15,6 bln

Structure of FDI Outflow (EUR m)

Source: Bank of Estonia

Total stock: EUR 4.8 bln

FDI Inflow by Country and Activity Stock as of 31.12.2013

Sweden 26,7%

Finland 21,3%

Netherlands 10,2%

Norway 5,8%

Russia 5,3%

Lithuania 3,0%

Cypros 3,0%

UK 2,5%

Denmark 2,3%

USA 2,1%

Luxembourg 2,1%

Other 15,7%

Financial and insurance activities 25,0%

Real estate activities 16,0%

Wholesale and retail trade 15,3%

Manufacturing 14,3%

Professional, scientific, technical activities 8,4%

Transportation and storage 5,5%

Administrative and support service activities 3,2%

Agriculture, foresty and fishery 2,7%

Information and communication 2,1%

Other 7,5%

Source: Bank of Estonia

FDI Outflow by Country and Activity Stock as of 31.12.2013

Cyprus 28,4%

Lithuania 21,2%

Latvia 16,8%

Ukraine 5,4%

Russia 4,6%

Finland 4,1%

Netherlands 3,1%

Belarus 2,0%

Others 14,4%

Transportation and storage 27,4%

Professional, scientific, technical activities 20,3%

Financial and insurance activities 16,8%

Real estate activities 12,7%

Wholesale and retail trade 8,9%

Manufacturing 4,6%

Other 9,3%

Source: Bank of Estonia

Estonian Foreign Trade - Commodities (EUR bln)

0

2

4

6

8

10

12

14

16

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

4,7

6.2

7.7 88.5

6.5

8.8

12.112.5 12.3

6.7

8.2

10.711.4

10.9

7.6

9.2

12.613.8 13.7

Exports Imports

Source: Statistics Estonia

Commodities exports represent 67% of Estonia’s GDP

Sweden 16,8%

Finland 16,1%

Russia 11,4%

Latvia 10,4%

Lithuania 5,9%

Germany 4,5%

Norway 3,7%

USA 2,9%

UK 2,4%

Others 25,9%

Commodities Exports by Country

and Commodity 2013

Source: Statistics Estonia

Machinery and appliances 28,1%

Mineral products 10,5%

Wood and articles of wood 8,6%

Base metals and articles of metals 7,2%

Miscellaneous manufactured

products 7,1%

Transport equipment 6,6%

Chemical products 5,7%

Food products 4,2%

Live animals, animal products 3,8%

Textile products 3,4%

Other 14,8%

Finland 15,1%

Germany 10,5%

Sweden 10,1%

Latvia 9,6%

Lithuania 8,9%

Poland 8,0%

Russia 5,8%

UK 4,2%

China 3,4%

Netherlands 3,3%

Others 21,1%

Commodities Imports by Country

and Commodity 2013

Source: Statistics Estonia

Machinery and appliances 27,7%

Mineral products 12,7%

Transport equipment 10,5%

Chemical products 7,8%

Base metals and articles of metals 7,5%

Food products 6,1%

Plastics and rubber 5,0%

Textiles and textile articles 4,3%

Wood and articles of wood 2,7%

Live animals, animal products 2,5%

Other 13,2%

Estonian Foreign Trade - Services (EUR bln)

0

1

2

3

4

5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

4.7

2.6

2.9

3.33.5

3.23.4

3.9

4.34.5

1.4

1.82

2.22.3

1.82.1

2.7

33.2

Exports Imports

Source: Bank of Estonia

Services exports represent 24% of Estonia’s GDP

Exports

Finland 24,8%

Russia 11,8%

Sweden 7,8%

Lithuania 7,1%

Latvia 6,9%

Germany 4,8%

UK 4,4%

USA 4,2%

Norway 3,3%

Switzerland 3,3%

Denmark 2,7%

Others 18,9%

Services Exports and Imports by

Country 2013

Imports

Finland 14,8%

Sweden 8,9%

Latvia 8%

Germany 7,1%

UK 6,2%

Russia 4,6%

Lithuania 4,5%

France 4,2%

Poland 4,2%

Cyprus 4%

Norway 3,8%

Others 29,7%

Source: Bank of Estonia

Simple and Favourable Tax System

* 0% Corporate income tax on reinvested profits

All distributions are subject to income tax at the rate of 21%

of the amount of taxable payment

Personal income tax: flat rate 21%. The same rate applies

for expats

VAT: 20%

Social tax: 33% (20% for social security and 13% for health

insurance)

Unemployment insurance: 3% of the gross salary. (The

employer pays 1% of the salary and the employee 2%.)

No property tax

The land tax is from 0,1% to 2,5% on the assessed value of

the land, rate established by local government (i.e in Tallinn

2,5%).

Easy administration - All the taxes can be declared via E-

tax/e-customs (an electronic service desk of the Estonian

Tax and Customs Board)

Source: KPMG

29.6%

24.5%

23.0%

22.0%

19.0%

19.0%

19.0%

15.0%

15.0%

0.0% *

0.0% 10.0% 20.0% 30.0% 40.0%

Germany

Finland

UK

Sweden

Poland

Czech Rep

Hungary

Latvia

Lithuania

ESTONIA

Tax rate on corporate income, 2013

Information Society Indicators

100% of schools and government organizations are ICT equipped

Entire country is covered with a broadband connection

97% of businesses use computers

80% of homes have broadband connection

99,8% of bank transfers are performed electronically

95% of income tax declarations are made via the e-Tax Board

25% of votes were cast over the internet on 2013

66% of the population participated in the census via internet in 2012

More than 93% of the population has an ID-Card

Estonia is Part of the Nordic

Electricity Market

Estonia is part of Nordic electricity market and Estonian electricity

system is connected also with Russia and Latvia.

Estonian energy system is the only predominantly oil-shale-based

energy production system in the world.

The biggest energy producer in Estonia is Eesti Energia, a 100%

state-owned company.

The price of electricity consists of four components: electricity,

network service, renewable energy support and excise duty.

Electricity market is 100% open starting January 2013.

Natural Gas Market

Natural gas is imported into Estonia

from Russia and Latvia.

Estonian natural gas company is

Eesti Gaas.

Network services to all participants

of the natural gas market on the

territory of Estonia are provided by

EG Võrguteenus.

The price of gas consists of three

elements: gas, network service and

excise duty.

The price for industrial users is a

matter of negotiations.

99.3

9.9 9.9 10.110.6

10.9

12.2 12.212.8

0

2

4

6

8

10

12

14Gas price for industries, 2013 (EUR per GJ)

Source: Eurostat

Property Market Indicative range for rents (excluding VAT and operating expenses) in major towns

of Estonia for class A and B1 office premises and industrial space (EUR/m2 per

month).

Type of space Tallinn Tartu Pärnu Narva

Office 8.0 – 16.0 4.8 – 11.5 4.0 – 8.0 3.1 – 5.5

Industrial 2.8 - 5.0 2.0 - 4.0 1.6 - 4.4 1.9 - 3.8

Source: Colliers International

Labour Market and Education

System Total labour force: 680,000

The unemployment rate: 8,6% in 2013

General working time: 8 hours a day, 5

days per week. The duration of one shift

may not exceed 12 hours

Overtime is allowed by mutual agreement

The duration of the annual vacation: 28

days

10 Public holidays a year

The average wages in Estonia in 2013 was

EUR 948. The monthly minimum wage for

full-time work is EUR 355.

7 universities (6 public, 1 private) - ca

49,400 students

University of Tartu – 15,800 students

Tallinn University of Technology – 12,900 students

Tallinn University – 10,300 students

Estonian University of Life Sciences –

4,300 students

Estonian Academy of Arts – 1,130 students

22 other professional higher

education institutions – ca 15,400 students

48 vocational schools - ca 26,200 students

214 gymnasiums (high schools) - ca

24,000 students

7 universities (6 public, 1 private) - ca

46,600 students o University of Tartu – 15,800 students

o Tallinn University of Technology – 12,900

students

o Tallinn University – 10,300 students

o Estonian University of Life Sciences – 4,300

students

o Estonian Academy of Arts – 1,130 students

o Estonian Academy of Music and Threatre – 700 students

o Estonian Business School – 1,500 students

17 other professional higher education

institutions – ca 12,500 students

47 vocational schools - ca 25,700 students

204 gymnasiums (high schools) - ca

22,500 students

Room for Growth:

Number of Students and Graduates

Name of

faculty

Name of the

study

programme

2011/2012 2012/2013

Social

sciences,

business &

law

Social and

behavioural

sciences

3,746 3,487

Journalism 1,161 1,067

Business

Administration 16,427 15,637

Law 3,448 3,124

Natural- and

applied

sciences

Bio science 1,497 1,460

Physcis 1,283 1,250

Math and

statistics 383 353

Computer

sciences 7,104 7,284

Name of

faculty

Name of the

study

programme 2010/2011 2011/2012

Social

sciences,

business &

law

Social and

behavioural

sciences

679 626

Journalism 234 210

Business

Administration 3,870 2,284

Law 708 688

Natural- and

applied

sciences

Bio science 292 277

Physcis 220 249

Math and

statistics 71 79

Computer

sciences 957 1,029

Number of students Number of graduates

Source: Ministry of Education and Research

World class talent: according to the World Economic Forum’s 2013-2014 Global

Competitiveness Index, Estonia was ranked 24th in the world and the highest in CEE and

Russia for the quality of its higher education.

Universities & vocational colleges: student base = 91,000

Key Sectors

ICT

Transport and logistics services

Shared services

Industrial machinery and metalworking

Electronics

ICT Estonia is the host country for NATO's Cooperative Cyber Defence Center of

Excellence and the EU IT Agency’s headquarter.

The computer security company McAfee ranks Estonia as having a reliable

cyber security structure.

Estonia is second in the internet freedom in the world, according to Freedom

House.

Estonia is the global pioneer in adopting electronic government and numerous

ID-card based e-services.

The development center of Skype is located in Estonia. Besides that also

companies like Symantec, CGI, Fujitsu and many others have their base in

Estonia.

2,560 companies are active in the ICT sector, contributing 5% of total sales in

business activities in Estonia. Over 19,500 employees – 3,1% of total

employment in Estonia.

Transport and Logistics Services

An impressive infrastructure – 5 key international ports, 4 free zones,

10 border posts to Russia, block trains to Moscow and Beijing,

shortest EU flight time to China.

Estonia is the geographical midpoint of Northern Europe and therefore

the best place to set up distribution centres and to generate added

value.

Europe's most effective rail operator, Europe's most modern and up to

date airport and the largest port at the Baltic Sea are all located in

Estonia.

Estonia is ranked 7th out of 189 economies for the ease of Trading

Across Borders.

Shared Services

Sustainable, high-quality, competitive costs and low risk solutions for

BPO, IT and financial services shared service centres, customer and

technical support centres.

Estonia is the regional market leader in IT shared services.

55% of the workforce are fluent in one or more foreign languages.

Top language skills: Russian, English, Finnish, German, Swedish.

Solid track record in shared services: Kuehne+Nagel, Statoil,

TeliaSonera, AGA (Linde Group), Stora Enso, Transcom, Arvato

(Bertelsmann).

Industrial Machinery and Metalworking

Estonia offers a dynamic, internationally focused mechanical

engineering ecosystem, excellent accessibility, a sustainable, high-

quality skills base and competitive, low-inflation costs.

1,370 companies are active in the machinery and metalworking sector,

ca 20,400 direct employees.

EUR 1.8 billion revenues, of which 50% is generated from exports.

3 main branches:

o Metals and metal products – 57% of total revenues;

o Transport equipment – 21% of total revenues. 88% of transport equipment

production is exported;

o Machinery, tools & equipment – 18% of total revenues.

Examples of companies in Estonia: ABB, Hanza Tarkon, Metalliset

Group, Ruukki.

Electronics

Estonia offers distinctive opportunities as a near-shore electronics

hub for both in-house and outsourced production and distribution.

200 companies are active in electronics sector, ca 10,800 direct

employees.

EUR 2.3 billion revenues, of which 91% is generated from exports.

2 main branches:

o Computer, Electronic & Optical Products – 76% of total revenues;

o Electrical Equipment – 24% of total revenues.

Examples of companies in Estonia: Ericsson, Stoneridge

Electronics, ABB, PKC Group.

Estonian Investment Agency

Our mission

• to ensure a competitive business environment for

foreign investments in Estonia

• to establish and develop business relationships with

international companies

We provide

• Information services and investment preparation

• Investment proposals and tours

• Consulting and project management

• Facilitating contacts, negotiation with authorities

• Organizing recruitment and identifying suitable

properties

• Post-investment / aftercare services

Our representations:

• Tallinn, Estonia

• Hamburg, Germany

• Helsinki, Finland

• Stockholm, Sweden

• Silicon Valley, USA

• Tokyo, Japan

• Shanghai, China

• Saint-Petersburg, Russia

EIA is a division within

Enterprise Estonia

THANK YOU!