News

BNS - Jordan's Minister of Energy and Mineral Resources Khalid Irani and the head of the country's department for resources, Maher Hijazin, will visit Estonia later this week to look at shale oil refining and oil shale powered electricity production in this country.  

During the visit from Thursday to Friday the minister and his delegation will look at the existing shale oil production facilities of Eesti Energia and the Enefit-280 refinery currently being built. They will also visit other companies of the Eesti Energia group, such as mines, power plants and facilities of technology industry, spokespeople for Eesti Energia said.

On the second day of the visit the Jordanian minister will meet with Estonian Prime Minister Andrus Ansip and Minister of Economy and Communications Juhan Parts.

The state-owned Eesti Energia group in May this year signed a concession agreement with the Jordanian government for utilizing the resources of the Attarat Um Ghudran oil shale deposit in Jordan during 50 years. Eesti Energia's 38 square kilometer concession area contains an estimated over two billion tons of oil shale and under certain conditions it can be extended to cover an area containing an estimated four billion tons.

Basing on the concession agreement, Eesti Energia is developing two projects in Jordan: a shale oil factory with a daily capacity of 38,000 barrels and an oil shale-fired power plant with a capacity of 900 megawatts.

If all goes to plan, the power plant will start generating electricity in 2016 and the oil factory will start production in 2017, the power company said in May.

BNS - By Saturday afternoon more than 100 companies in Estonia had joined the fair pricing agreement, committing themselves to follow good practice and refrain from ungrounded price increases in the switchover to the euro.

Among the companies that have acceded to the agreement are all the 11 commercial banks that are members of the Estonian Banking Association. An updated list of the companies is available from the website ahk.eesti.ee from Saturday.

As of 5 p.m. on Saturday the list had the names of 104 businesses on it.

The purpose of the fair pricing agreement is to prevent economically ungrounded price increases of goods and services during the switch to euro. The experience of many countries shows that similar agreements have helped to prevent unreasonable price increases and joining the agreement has given businesses the opportunity to assure the public that adoption of the euro in itself does not entail a price increase.

Enterprises joining the agreement give their consent that they will follow good practice and will not increase prices in the conversion to euro unless there is an economic justification to it. The businesses that join the agreement have the right to use a sticker with a corresponding logo and other visual materials.

The fair pricing agreement is supervised by the Estonian Chamber of Commerce and Industry and abidance by its terms is monitored by the Consumer Protection Board.

BNS - The rapeseed oil maker Werol Tehased based in Estonia's Jogevamaa region and controlled by the entrepreneur Rein Kilk will on Sunday lay the cornerstone of a new pressing unit that costs 130 million kroons (EUR 8.3 mln), the business daily Aripaev reports.

The new unit will have twice the capacity of the old one, crushing 145,000 tons of rapeseed annually.

Enterprise Estonia will put up around a tenth of the investment, the rest of the financing comes from equity and borrowed funds. "I guess that's one of the largest investments in South Estonian industry and agriculture this year," Kilk said. The new plant is to go into operation in January.

In Kilk's words, the project was prompted by partly outdated equipment. The old presses were patched together from Chinese and Argentine equipment, he said. Modern equipment however requires fewer hands and so the number of jobs at Werol will not increase significantly.

In addition the company is going to install a power turbine of its own. "If power is cut off even for half a second, the presses will grind to a halt," Kilk explained.

It is planned to start producing also biofuel at the new plant. "We'll buy back used oil and turn it into biodiesel," Kilk said.

(EUR 1 = EEK 15.65)

BNS - Trafotek Oy, a manufacturer of current transformers and voltage stabilizers based in Turku, Finland, wishes to set up a plant in the Rae technology park outside Tallinn that would give work to 50 people, the daily Eesti Paevaleht said.

"We're going to build the new plant from scratch," the manager of Trafotek, Pertti Arvonen, told the newspaper. The company expects to start the construction of the plant building having a floor area of about 4,000 square meters in October.

Arvonen would not disclose the size of the investment or the plant's planned capacity.

Trafotek Oy posted a turnover of 55 million euros for 2009. The company employs 280 people in Finland.

BNS - Innokas Medical Oy, a Finnish contract design and manufacturing company specializing in healthcare technology, is planning to increase investments in equipment and personnel in Estonia alike as it is expanding its business here.

Right now activities have been started with the goal of laying the foundation for a new company named Innokas Medical Estonia OU, Innokas Medical announced.

The managing director of Innokas Medical Oy, Jouni Ihme, said the company would continue operating out of its premises in the eastern town of Rakvere that were expanded during the summer. The new space will be ready for use at the beginning of August.

"With the establishment of the new company our manufacturing operation in Estonia will expand from electronic component assembly to management of broader entities. We are also developing our overall logistics and purchasing in Estonia and the neighboring areas. The strategic goal of these measures is be able to offer our customers ever more advanced medical equipment also from our Estonian plant," Ihme said.

Innokas Medical currently employs a little under 30 people in Rakvere and the number will grow as a result of the new investments. It set up plant in Rakvere in 2006 for the assembly of electronic equipment.

Innokas Medical's headquarters are located in Kempele, near the Finnish technology city Oulu.

BNS - Seven Networks, an IT company of Finnish roots that has expanded to Silicon Valley, is planning to open a development center in the Estonian capital Tallinn and hire 50 IT specialists here, the daily Eesti Paevaleht reported.

At the end of July Seven Networks entered into the Estonian business register a company by the name Seven Networks Estonia.

The CFO of the company, Robin Pulkkinen, said it was the attractiveness of the Estonian labor market that made Seven Networks look this way.

"We do have a development center in Helsinki, but it's very difficult to find fresh work force in Finland. Since a trip from Helsinki to Tallinn by ferry takes only a hour and a half, setting up the Estonian unit was a logical step," said Pulkkinen.

Seven Networks is a provider of mobile e-mail and messaging solutions for mass market devices. Among its partners are almost all major manufacturers of mobile telephones.

BBN - Estonia that in July formally received confirmation from the EU that it will be admitted to the eurozone at the beginning of next year is stubbornly failing to comply with the predictions of currency crises, is already seeing a resumption of growth and a fall in its real cost of capital, John Dizard writes in today's FT.com.

The internal devaluation policy, which means cuts in nominal costs such as wages and rents, was very hard on the population, but appears to have worked ahead of even the Estonian government's schedule, writes Dizard.

Unemployment, while still high, peaked in the first quarter of this year. Optimistic locals point to the decline of "registered unemployed" from nearly 14 per cent of the workforce to just over 11.5 per cent in the past three months. Those are not, however, seasonally adjusted numbers, and it seems likely that sustainable declines in unemployment will be hard won. Private sector wages have stabilised after last year's cuts of around one-fifth of pay packets. Manufacturing and service export growth is beginning to partially offset the collapse of the building sector.

The other Baltic states are not recovering as quickly as Estonia, though Lithuania seems to be doing better than Latvia. The differences among these small states have useful lessons for the southern Europeans.

The full article is available for viewing at http://www.ft.com/cms/s/0/c4350686-9c01-11df-a7a4-00144feab49a.html

BBN: http://www.balticbusinessnews.com/article/2010/08/02/FT_Estonia_s_recovery_defies_economists_and_academics

BNS - Estonia's gross domestic product grew by 3.5 percent in the second quarter of this year compared to the same period of 2009, flash estimates of the national statistics office show.

The GDP grew last in the fourth quarter of 2007.

In the first quarter of this year a decrease of 2.3 percent was recorded.

The second-quarter GDP was above all influenced by the 10 percent growth of value added in the industrial sector, Statistics Estonia said. The growth was supported by the strong exports of manufacturing production and electricity.

The value added generated by the mining of oil shale used for producing electricity grew fast as well. Doe to small domestic demand, sales of manufacturing production on the domestic market decreased, the statistics office noted. The value added generated in construction whose output mainly targets the domestic market showed a continued downtrend.

In the wholesale and retail trade the value added increased under the impact of the growth of value added in wholesale. The value added generated in retail trade kept decreasing due to insufficient demand. In financial intermediation the growth of value added was primarily influenced by the growth of banks' income from service charges and by the growth of net premiums of insurance companies.

The seasonally and working day-adjusted GDP increased by 2 percent in the second quarter compared to the previous quarter, preliminary figures show.

Statistics Estonia will publish the second-quarter GDP calculated by the complex approach on Sept. 8.

BNS - In his remarks made after the final confirmation by EU finance ministers in Brussels that Estonia can switch to the euro currency from the start of next year, Estonian Prime Minister Andrus Ansip said the arrival of the euro is good for foreign investments, will simplify trade, offer a feeling of confidence to people who have taken a loan and reduce costs for currency exchange.

"I, too, regret having to give up Estonian banknotes, but unfortunately foreign investors do not have a lot of trust in small national currencies," Ansip told BNS.

The prime minister was confident that Estonia will manage well as a member of the eurozone, especially given that it has managed well outside the common currency area.

When asked whether Estonia is ready to take part in the aid packages that eurozone members are planning to put together, Ansip said that this was going to happen proportionately with national wealth and could not be considered an obligation. "It must come from the heart and be connected with the hope that when you need help yourself, others will help you more eagerly too," he said, bringing the assistance offered by Estonia to Latvia as an example.

EU finance ministers on Tuesday unanimously adopted the decision and endorsed related papers that confirm Estonia's accession to the eurozone from January 1 next year, also setting the changeover rate at the present exchange rate of 15.6466 kroons to the euro.

The European Commission's Monetary Affairs Commissioner Olli Rehn told Estonian reporters that Estonia must remain competitive and continue its present fiscal policy. The last 18 years have shown that the decisions Estonia has made are right, he said.

Hailing the decision of the EU finance ministers as a recognition of our joint efforts and monetary policy, Finance Minister Jurgen Ligi said the Estonian state and local governments were faced with six months of serious work completing the practical preparations so that the changeover was as smooth as possible.

The governor of the Bank of Estonia, Andres Lipstok, said Estonia was ready for life in the monetary union as just like eurozone members it had gotten used to implementing change by means other than changing the exchange rate.

Lipstok said that Estonia adaptation to change had taken place via a conservative fiscal policy, an open economy and a flexible labor and product market. "We didn't have the need to adapt the economy using the exchange rate. In that respect eurozone does not bring any change for us," Lipstok said.

Estonian President Toomas Hendrik Ilves in his remarks issued on the occasion welcomed the EU finance ministers' final confirmation to Estonia's accession to the eurozone and added that the euro would add stability to the Estonian government and would show Estonia as a reliable partner.

"The European Union's finance ministers' today's [Tuesday's] confirmation to Estonia's accession to the eurozone from January 1, 2011 gives an insurance policy to the Estonian people and the Estonian economy," the president's office reported Ilves as saying.

"This along with the fixation of the changeover rate at the level of the present exchange rate is the last decision in Estonia's accession to the euro zone and thus recognition to all those who, despite complicated times, understood the necessity of the numerous difficult fiscal and economic policy decisions."

"For Estonia accession to the eurozone means joining one on of biggest currencies in the world. I underline that this is not a magic wand, which solves all our problems at one go and saves us from economic depression. But the euro will add stability to the Estonian economy, will simplify our trade relations, and a very important fact, Estonia will show that it is a reliable partner, part of a very influencial economic region."

Ilves said that the eurozone would certainly cope with its present problems, would responsibly find the necessary solutions and would step into the future stronger than before.

Ilves also praised the agreement  that Estonian businessmen's associations are going to sign at the end of August and whose signatories will underline that they will not use the transition to the euro for artificial distortion of prices.