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Estonia attracts Finnish companies

Interest is growing among Finnish companies to shift operations across the Gulf of Finland to Estonia. In contrast, few Estonian companies have considered making a move to Finland.

Tallinnan vanhakaupunki.
The Old Town in Estonia's capital Tallinn. Image: Touko Yrttimaa / Yle

There are around 4000 Finnish or Finnish-backed companies actively operating in Estonia. Finnish entrepreneurs are attracted by lower labour costs than at home as well as a general business-friendly atmosphere.

"One great advantage is that if you want to grow and invest, the state doesn't step in to take taxes, unless you take profits out of the company," explains Timo Parmasuo, the chairman of the board of Meconet Oy, a Finnish metal components manufacturer.

In past years, most of the Finnish companies setting up in Estonia have been in the metals and machine shop sector. Now however, interest has spread to new fields and design companies, architect offices and IT companies have increasingly started to move operations across the Gulf of Finland.

No rush to Finland

In contrast, there is very little interest among Estonian companies in establishing operations in Finland. This country is generally viewed as being expensive and bureaucratic for businesses. It is estimated that only about 50 Estonia companies have set up in Finland. The most common reason given is tougher taxation, but there are others as well.

"Labour unions are quite powerful in Finland and employees might go on strike. That's pretty bad for a company, and then there are an awful lot of days off in Finland," points out Sten Sarap, CEO of the Labelprint printing house in Estonia.

Estonia is likely to retain its corporate appeal at least until the end of the decade.

"I'd guess that 600 to 800 more Finnish companies will move to Estonia," says Kimmo Hyrsky, a senior adviser at the Confederation of Finnish Industries EK.

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