1 What advantages does your region offer to investors?

Harju is a favourable location both locally and internationally, especially for Estonia’s main foreign partners, Sweden and Finland, which have brought valuable investments into the region. The Harju city of Tallinn (Estonia’s capital city) is twinned with Finland’s capital, Helsinki making the county economically more dynamic and strengthening the Baltic Sea economy. The close proximity of the two capital cities makes travel between them convenient; more than six million people a year travel between them. The twin region has euro-region status. Harju region also links Russia with northern and eastern Europe.

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The investment climate compares advantageously with the rest of Estonia: as a capital city region, the county has the biggest economic potential. Access to transport and communications has been an important factor for both the local and foreign markets. The relatively high level of enterprise, the accessibility of materials and services, and well-qualified labour, as a result of access to good education services, are big advantages.

Tallinn and its surroundings have become Estonia’s engines of development, with most of the country’s government and financial institutions and manufacturing potential located here. The city plays an important part in the county’s development because it brings business interests, capital, tourists and higher living standards to the whole region.

2 How do you visualise investment in your region by 2006?

As a future EU member state, Estonia – and therefore Harju County – has better prospects for co-operation with other EU member countries and for foreign investment. A growing openness to the foreign economy, familiarisation with foreign markets and increasing know-how is raising the number of foreign shareholders in Estonian companies and the number of foreign company branch offices in the region. Improvement of the international rating is opening the way for participation in the competition for capital and increasing economic activity in the area.

On the transport front, the Via Baltica international expressway will link Harju region with all European transport lines. A high-speed railway, Rail Baltica, is planned that will connect Berlin with Tallinn via Warsaw, Kaunas [Lithuania] and Riga [Latvia]. Good transport connections, both within Estonia and internationally, allow us to establish logistical points and warehousing complexes along the highway and near railway terminals.

Well-developed transport infrastructure (ports, international airport, railways and highways) and successfully combined transport services, transit operations, supply centres network and value-added logistics are, and will continue to be, attractive business assets for foreign investors. Investments in real estate development and tourism are predicted to grow in forthcoming years.

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The business areas that are considered to have the greatest prospects in the Tallinn region are transit, trade and brokerage activities connected to harbours, tourism and modern industrial activities, like electronics.

3 What steps will you take to overcome any challenges you currently face?

Since Estonia regained its independence, the economic development of Harju County has been faster than that of the rest of the country, largely due to the location of the capital city, with its economic and cultural ties. The region offers good access to diverse educational opportunities and a skilled labour force, plus the willingness of organisations and regions to co-operate on projects. This makes Harju open and attractive to new innovations and investments. Small and medium-size enterprises are important creators of innovations and employment, as well as the seedbed of new business ideas. Enterprises in less developed areas in the region have a crucial role to play in spreading the development process; the potential for economic activities to spread outside Tallinn has brought more equal investment across the region.

4 Tell us about one or two forthcoming major FDI projects in your area.

The steel galvanisation facility of Galvex Estonia OU in Harju County is one of the biggest FDI projects in Estonia, bringing in Ekr3.8bn (E242.8m). The plant is nearing completion in Tallinn’s Muuga free trade zone and will start output in mid-August 2003. It will employ about 130 people and produce up to 500,000 tons of galvanised steel a year. Staff training is now in progress.

The terminal’s construction is being financed by an international group of banks, including HypoVereinsbank, Banca Commerciale Italiana and UniCredito Italiano. The principal contractor is Italian construction company Danieli, whose Estonian subcontractors are Eesti Ehitus (Estonian Construction), Scanweld and Baltros GEM Group. Almost one-fifth of the Ekr3.8bn investment will go to the Estonian subcontractors and banks. The largest local subcontractor, Eesti Ehitus, will earn Ekr100m: the plant building will be produced in Italy and Eesti Ehitus has made a bid for its on-site assembly.

The complex will be a multi-story building and the only metals warehouse in the Baltic States to offer climate-controlled storage. The steel will be imported from Russia and Ukraine as well as from Japan and Korea. Once galvanised, it will be marketed to Europe and Asia.

Another project is KEK Group’s Industrial Park in Keila. Ideally situated, near Tallinn and one of the known Baltic harbours Paldiski, the park offers high potential for growth and synergistic benefits for Baltic and international operations. The park provides sophisticated telecommunication networks, operating infrastructure, management and services, creating favourable conditions for development, and enabling companies to focus on business objectives and growth.

With nearly 66 hectares designated for industrial use, the park has developed 48 hectares where more than 20 companies operate with total sales of more than E100m. About 1500 specialists and workers are employed there.

The park was founded in 1968, but it was only in 1988 that the first contacts with overseas companies brought international co-operation. Today Harju KEK is a privately-owned Estonian holding company and the group’s subsidiaries and affiliates are involved in a range of diverse industrial activities, including trade and industry of building materials, electrical equipment, metal processing, specialised construction and international transportation. Many leading international companies, such as ABB, AGA, Nokia, Glamox, Ensto, NK Cables, PKC Group, Inexa and Aspo, have an established presence in the park.

A new 18-hectare industrial site in Keila has been acquired for the future extension of the park. It already has infrastructure and utilities, including electricity, water supply, drainage and sewerage systems, railway access and 20,000msq of asphalt-covered roads and stockyards.

In another development, one of the world’s biggest oil companies, Jukos, is planning to open an oil store in Estonia this year. Palidiski North Harbour has been under discussion as a possible location for this. The main activity of the project will be retail and wholesale oil business.

5 What incentives have you developed to secure investment over the coming years?

We emphasise location – on the shore of the Baltic Sea – as a dimension; and as a metropolitan region, Harju can be a constructive partner to other regions. It has been connected to several large-scale international projects. Much depends on the activity of local municipalities and direct contacts with partnership regions and municipalities. Project participation, conferences and seminars are used to promote co-operation, and to introduce and promote the region.

Other incentives for investment include the availability of vacant industrial land and buildings, constructed and developed technical infrastructure, business development in the Via Baltica development zone and relevant county plan, as well as comprehensive plans of the local municipalities. Industrial park developments in region are good examples of ongoing successful projects.

Being a capital city region is a positive advantage for the business environment of Harju County. Tallinn and counties surrounding the capital continue to be the most favoured area for FDI in Estonia. From 1992, about 80% of foreign investments in Estonia have been made in Harju, including Tallinn. We visualise that this figure will remain more or less at that level in forthcoming years.

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