ESTONIA AT A GLANCE Märt Helmja Deputy Director of FDI unit.

ESTONIA AT A GLANCE

Märt HelmjaDeputy Director of FDI unit

(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.

High Position in Business Environment Rankings

Source: World Bank – Doing Business 2015

13

5 6 7 8 911

1417

2023 24

2932

44

54

Ease of Doing Business Ranking 2015

1st in International Tax Competitiveness Index 2014 Tax Foundation

8th in Index of Economic Freedom 2015 /2nd in Europe Wall Street Journal / The Heritage Foundation 2015

6th in Trading Across Borders 2015 World Bank

2nd in the Internet Freedom Freedom House 2014

29th in Global Competitiveness Report 2015 World Economic Forum

26th in Corruption Perceptions Index 2014 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 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.

9.078.39 8.13

7.48

6.54 6.496.07

5.49 5.31 5.24

0

1

2

3

4

5

6

7

8

9

10

Risk of political instability, global rank

Source: IMD World Competitiveness Yearbook 2014

The higher the rank, the lower the risk

Estonian GDP by Economic Activity 2014

Source: Statistics Estonia

Manufacturing18%

Wholesale and retail trade14%

Real estate activities12%

Transportation and storage9%

Construction8%

Public administration and defence

8%

Professional, scientific and technical activities

6%

Information and com-munication

5%

Education5%

Administrative and support service activi-

ties4%

Health and social work4%

Agriculture, forestry and fishing4% Financial and insurance activities

4%

GDP Growth and Inflation, 2004-2016

9,210,2

7,1

-3,6

-14,1

3,1

7,6

3,2

0,8 0,5

2,23,1 3,6

-15

-10

-5

0

5

10

15

-15

-10

-5

0

5

10

15

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015* 2016* 2017*

gdp growth, %

* forecastSource: Bank of Estonia (10.06.2015)

Main Economic Indicators, 2012-2014

2012 2013 2014

GDP real growth (%) 3.2 0.8 0.5

GDP (current prices, billion EUR) 17.0 18.4 19.5

Consumer price index (%) 3.9 2.8 -0.1

Labor force (thousands) 624.4 621.4 624.8

Growth of labour productivity 0.7 -0.2 0.3

Unemployment rate (ILO) 10.2 8.6 6.3

Average wage (EUR) 887 948 1,039

Wage real growth (%) 1.7 4.9 6.3

Source: Statistics Estonia

FDI Inflow by Country and Activity Stock as of 31.12.2014

Source: Bank of Estonia (27.03.2015)

Sweden 26%Finland 22%Netherlands 10%Norway 6%Russian Federation 6%

Cyprus 3%Denmark 3%Lithuania 3%Latvia 3%USA 2%United Kingdom 2%Germany 2%Austria 2%Other 10%

Financial and insurance activities 27%Real estate activities 17%Wholesale and retail trade; repair of motor vehicles and motorcycles 15%

Manufacturing 13%Professional, scientific and technical activities 8%Transport and storage 6%Administrative and support service activities 3%Information and communication 2%Agriculture, forestry and fishery 2%Electricity, gas, steam and air conditioning supply 2%Other 5%

Total Exports Across All Commodities (EUR)

Source: Statistics Estonia (18.03.2015)

2010 2011 2012 2013 20140 €

2,000,000,000 €

4,000,000,000 €

6,000,000,000 €

8,000,000,000 €

10,000,000,000 €

12,000,000,000 €

14,000,000,000 €

8,7

43

,00

7,2

48

€

12

,00

3,3

60

,29

8 €

12

,52

1,1

45

,70

5 €

12

,29

7,2

64

,12

0 €

12

,08

3,4

23

,52

8 €

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 2014

4,7

6,2

7,7 88,5

6,5

8,8

12,1 12,5 12,3 12,1

6,7

8,2

10,711,4

10,9

7,6

9,2

12,613,8 13,7 13,7

Exports Imports

Source: Statistics Estonia

Commodities Exports by Country and Commodity 2014

Source: Statistics Estonia

Sweden 18,0%

Finland 15,3%

Latvia 10,7%

Russian Federation 9,8%

Lithuania 5,3%

Germany 4,9%

Norway 3,9%

United States of America 3,7%

Netherlands 2,7%

Denmark 2,6%

United Kingdom 2,4%

Others 20,7%

Machinery and transport equipment 34%Miscellaneous manufactured articles 15%Manufactured goods classified chiefly by material 15%Mineral fuels, lubricants and related materials 11%Crude materials, inedible, except fuels 8%Food and live animals 8%Chemicals and related products 6%Other 3%

Commodities Imports by Country and Commodity 2014

Source: Statistics Estonia (11.03.2015)

Machinery and transport equipment

37%

Manufactured goods classified chiefly by material

15%

Mineral fuels, lubricants and related materials

13%

Chemicals and related products

11%

Miscellaneous manufactured articles

10%

Food and live animals 8%Crude materials, inedible, except fuels

4%

Beverages and tobacco 3%Other 1%

Finland 15%

Germany 12%Sweden 11%

Latvia 9%Lithuania 8%

Poland 8%Russian Federation 6%

Netherlands 4%China 4%

United Kingdom 3%

Italy 3%

Other 19%

Estonian Foreign Trade - Services (EUR bln)

0

1

2

3

4

5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

4.72,6

2,9

3,33,5 3,2

3,4

3,9

4,34,5

1,4

1,82

2,2 2,3

1,82,1

2,73

3,2

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 20% of the amount of taxable payment

Personal income tax: flat rate 20%. The same rate applies for expats

VAT: 20%

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

Unemployment insurance: 2,6% of the gross salary. (The employer pays 0,8% of the salary and the employee 1,6%.)

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, 2014

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

Labour Market and Education System Total labour force: 674,400

The unemployment rate: 6,3% in Dec 2014

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 wage in Estonia in 2014 is EUR 1 039. The monthly minimum wage for full-time work is EUR 390 / 2.34 €/h.

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 43,647 students

o University of Tartu – 14,179 studentso Tallinn University of Technology – 12,926

studentso Tallinn University – 9,391 studentso Estonian University of Life Sciences – 3,905

studentso Estonian Academy of Arts – 1,102 studentso Estonian Academy of Music and Threatre –

702 studentso Estonian Business School – 1,442 students

17 other professional higher education institutions – ca 11,500 students

47 vocational schools - ca 25,200 students

204 gymnasiums (high schools) - ca 23,400 students

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.

Rail BalticTotal Capital Costs – € 3,5 Billion

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!