Successfully investing in Finland

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published on May 16, 2018

 

How do you assess the current economic situation in Finland?

Finland's economy is currently developing more favourably than many expected yet at the beginning of 2017. This is not only due to the favourable external trade situation but also the measures initiated in 2016 under the Competitiveness Pact concluded between employers and employees. The Pact aims to enable Finish export companies to become more competitive against the global competitors.
 
Russian markets have become more active, the contract volumes for the industrial sector are increasing and the economic situation of export companies is good again. Service sectors, especially tourism and IT, are prospering. Also the consequences of the massive layoffs at Nokia could be handled well and have led to the emergence of a new entrepreneurial landscape. The start-up scene in Finland has been more dynamic and vital than ever before.
 
Private-sector project developers implement numerous construction projects in major cities because urbanisation is rapidly increasing. Projects often refer to the development of completely new urban areas for up to 30,000 residents where new infrastructure must be built from scratch. 

 

How would you describe the investment climate in Finland? Which sectors offer the largest potential?

The history of Finland's economy is an example of successful globalisation, a culture of increasing openness and a flourishing market economy. The foundation here is the exemplary education system with an already high level of education. Finland's investment climate and investment environment have generally stabilised again after the financial crisis.
 
Sectors which attract the largest foreign investments are those related to technological innovations such as Cleantech and biotechnology as well as software development and research centres. In addition, Finland has a solid and extensive transport network and the related infrastructure, which makes the country a perfect business gateway both for the Russian market in the east and for northern European markets in the west.
 

What challenges do German companies face during their business ventures into Finland?

The Finish licensing and certification requirements differ from those applicable in other European countries. Therefore, for meeting domestic legal and regulatory requirements, it is advisable to use consulting services from a local service provider. This enables enterprises to smoothly break into the Finish market. For many, also the Finish language can be a real challenge. But Finland is a very international country where you can communicate in English, Swedish or even German and Russian.
 

Since 2017, 2,000 [randomly picked] unemployed citizens have been paid basic monthly income for a 2-year trial period. Can this help reduce unemployment, e.g. by boosting the number of newly established companies?

This project is a unique social experiment launched by the Finish government where basic monthly income is paid to the unemployed. It was launched because the previously developed social security measures were not adjusted to the currently changed situation. This trial aims to help develop a social security system which will better meet the requirements of today's employment policies. The trial enables a jobless person to take short-term jobs more flexibly without losing part or even the entirety of the social benefits. For the same reason, it is easier to establish a company in Finland. The declining unemployment rate has thus had a positive effect – both at the community and at the individual level.

 

As for the remaining 190,000 unemployed, who do not participate in the experiment, the requirements for receiving unemployment benefits will be, by contrast, significantly tightened from the beginning of 2018.

 

The new regulations require all unemployed persons to evidence that they worked at least 18 hours, earned at least 241 euro in income from independent work, or participated in a one-week further training programme – the requirements must be met during every three-month period. If they fail to do it, the amount of their financial benefits will be each time cut by 4.65 per cent for every next quarter of the year. As for the justification of the basic-income experiment, the government expressly said that the idea was to draw attention to what they consider to be a “disincentive problem” of the Finnish social security system.
  

In your opinion, how will Finland develop?

The outlook for Finland is very positive. The structural reforms are said to increase the country's competitiveness. The changes have strongly influenced the growth in exports. Alongside the reduction in corporation tax, low interest and the availability of financial resources, this growth is fuelled also by domestic and international investments. Private consumption is quickly increasing, benefiting from increased consumer confidence. Exports have been on an upward trend. Thus, an increase in the GDP could be observed in recent years.
 

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