Estonia lies at the heart of Northern Europe - Europe's fastest growing market with over 70 million people. It is in an excellent position to provide access to this market and beyond at a significantly lower cost than many neighbouring countries. In addition, since 1993 Estonia has maintained a track record as one of the fastest growing and most stable economies in Europe. This enterprising and technologically adept country has been a leader in free trade and economic reform, paving the way for impending membership in the European Union (EU).

Rapla and Järva counties, as the 'Powerful heartland of Estonia', provide among the best opportunities to maximise returns on investment in the Baltic region. These counties offer all the advantages of doing business in Estonia and more.

Advantages

Both counties are a short distance from Estonia's capital,Tallinn, as well as the other primary trade centres of Tartu and Pärnu. Järva and Rapla counties offer easy access to major international transportation routes via road, rail, air or ship.

Whether interested in establishing a new enterprise or investing in an existing one, start-up, labour and the cost of doing business are significantly less than those in Tallinn and far lower than in neighbouring Scandinavian countries. Average salaries in both counties are over 30 per cent less than in Tallinn.¹ Naturally, this difference will vary according to industry, but it is clear that it is possible to save money on labour and other costs when investing in Rapla or Järva counties.

• A diligent, well-educated, motivated workforce with good computer and language skills.
• Inexpensive land and buildings requiring little to modest investment.
• Modern telecommunication services, including complete mobile phone coverage, fibre-optic data lines in all major urban centres and Internet access.
• All necessary power and water sources.
• Easy accessibility to transportation routes.
• Potential financial support from the Estonian Government for job creation in this region.
• A good social infrastructure of banks, schools, shops, restaurants and cultural activities.
• Eager co-operation from local authorities to facilitate business foundation and expansion.

Rapla and Järva counties have demonstrated their excellent investment qualities through the success of firms large, medium and small already operating within their borders. Major international concerns from Sweden, Finland, Denmark, The Netherlands, the United Kingdom (UK), the United States (US) and more have either invested in existing companies here or started new facilities from the ground up. They have recognised the opportunities available in the area and are benefiting from them while becoming valuable members of their local communities. More detailed accounts of just a few of these enterprises are found in 'Success stories'.

Järva county

Järva county lies south-east of the nation's capital, Tallinn. It's largest town and county seat is Paide, with 11,000 people. No more than an hour's drive from Tallinn, the university town of Tartu or the summer resort of Pärnu, Paide is ideally situated. It is also well-known for its castle ruins and tower, which date from 1265, and for its cultural festivals. Türi is the second largest urban centre with nearly 7,000 inhabitants. From here Estonia's railway provides access to major cities in Estonia and Europe. In addition, Türi is popular for its picturesque gardens and flower fairs, and is home to Tartu University's environmental college.

The primary economic fields in Järva county are agriculture, dairy, timber and construction. Among the largest enterprises are a trading co-operative (700 employees), bread factory (450) and dairy plant (300). The county's natural resources include peat, limestone, oil shale and timber, with 120,000 ha of forest and 18,000,000m³ of timber. Järva county has a solid infrastructure with the railway in Türi and its proximity to the Via Baltica highway. The county has also recently begun to develop tourism, emphasising its rich history, traditions and culture. There are numerous Gothic churches from the 13th-14th centuries and manor houses dating from the 18th-19th centuries.

The following are just a few of the successful enterprises in Järva county with foreign investment capital:

* Converted from 1997 Eesti kroons to US dollars and euros at current rate, 13.42:US$1 and 15.65:1 EUR (8/1/99)

Rapla county

Rapla county is situated directly south of Tallinn, with its economic centre, Rapla, only 54 kilometres away. Rapla houses the county's Government and is its largest town, with over 6,200 inhabitants. Kohila (3,436) and Märjamaa (3,422) are other hubs of activity. Rapla and Kohila lie on the primary rail route from Tallinn to Parnu, and Märjamaa is near the Via Baltica, the highway transport route that runs from St Petersburg to Poland.

Primary economic fields in Rapla county include agriculture (dairy, meat processing), chemicals, paper, glass manufacturing, construction and timber and wood processing. Over half of the county's land remains forested. Rapla county is noted for its superb educational system, particularly grade schools. Many students go on to universities in Tallinn or Tartu, or study at the local Kehtna Higher Agricultural School. The county also contains the remnants of over 60 manor houses from the 15th-19th centuries, beginning when Tallinn was a member of the Hanseatic League and this was a prosperous trading region. Many are still well-preserved and used as culture houses and schools. Estonia and Rapla county are re-establishing their historic trading prosperity today. Rapla's Mary Magdalena Church, home to Estonia's largest annual church music festival, remains among the more beautiful and acoustically superb structures in the country.

The following are just a few of the successful enterprises in Rapla county with foreign investment capital:

* Converted from 1997 Eesti kroons to US dollars and euros at current rate, 13.42:US$1 and 15.65:1 EUR (8/1/99).
# Underwent major expansion, 1999 projected turnover.

Success stories

Founded in Rapla in 1984, ES Sadolin is now a division of Dutch concern Akzo Nobel, a global coatings, fibres, chemicals and healthcare products manufacturer dating from the late 18th century, with over 87,500 employees worldwide. The Nobel name is from the same Alfred Nobel of Peace Prize fame and some of his companies remain part of the business today. Sadolin exports 70 per cent of its production of decorative and industrial paint products to such diverse markets as Germany, Finland, the Ukraine, Russia, Latvia, Lithuania, Cyprus and Oman. The firm employs 120 people in Rapla and recorded a turnover of 34.1 million EUR/$39.8 million 1997.

From Akzo Nobel's Decorative Coverings Business Unit headquarters in Stockholm, Sweden, BU Manager Jan Andersson commented on their investment in ES Sadolin and in Rapla county:

'We are very pleased with the performance of Sadolin. We have developed a speciality there in solvent-based paints and Sadolin is one of the most efficient and cost-effective operations in our enterprise. Their volume and profitability are very good and the Estonian management is excellent. This plant is our focal point for exports in the Baltics, Russia and the Ukraine, and we are investing in a new warehouse this year to expand our operations there. We are in Rapla to stay.'

This traditional wood furniture maker located 11km from Rapla is 60 per cent owned by AS Tarmel of Tallinn and 40 per cent by Swedish and Estonian investment firm Estinvest. Tarmel recently completed a major expansion at Lemrat and now produces 400 cubic metres of wood per month. Expected turnover for 1999 is $2.2 million/1.9 million EUR. The company exports 75 per cent of their production primarily to Sweden, England and Denmark.

AS Tarmel Marketing Director Aare Paloots was asked why they made their latest investment in Lemrat:

'We saw many advantages. One, the company has good experience in what they do. They also had five hectares of available land. Plus Rapla county is centrally located, transport routes are easily accessible and the raw materials and labour resources are right there. We also took advantage of an Estonian investment support programme available to both Estonian and foreign firms. Lemrat is important to the future of our business.'

Founded in 1997, AS Rationel Eesti is a manufacturer of high quality wood doors and windows. It is 65 per cent owned by Danish firm Rationel Windows and has rapidly become one of the largest producers in its category in the Baltics. They export 70 per cent of their production back to Denmark, Sweden and Norway, while the remainder sells in the Estonian market. The stability of the company, the conditions in Järva county and the dependability of their Estonian partners have enabled the company to develop and grow significantly. Sales in 1997 reached $1.2 million/1.0 million EUR and are expected to surge to $1.9 million/1.6 EUR million in 1999.

Toomas Agasild, Director of AS Rationel Eesti, was asked why the company chose Järva county and what were the advantages. He explained that:

'the central location and logistics of the county, in addition to the trustworthy Estonian partners, were among the many reasons why investing in Järva county has been good for our business.'

Rationel Windows is very satisfied with their investment in Järva county and plans for expansion there are underway.

AS Imavere Saeveski is a Finnish and Estonian joint venture in wood processing, launched in 1994. The company bought out a smaller firm and has rapidly expanded the facilities and production, growing to its current status as the biggest sawmill in the Baltics. AS Imavere Saeveski posted a turnover in 1997 of $20.1 million/17.2 million in 1997 and expects sales to jump to $31.3 million/26.9 million EUR. The firm exports 75 per cent or their output to The Netherlands, France, Spain, North Africa, Denmark, Italy and Belgium, with the balance sold in Estonia. Company technology and equipment have advanced to the level of their Northern European competitors, while less expensive raw materials come from Järva county's rich forests.

Company Director Margus Kohava stated that his firm chose Järva county for its business due to the excellent logistics, its location as a transportation crossroads, and the experience of the smaller operation here before they were established. Kohava was asked, 'Has investing in Järva county been good for the company? Would you do it again?' His answer: 'Yes, for sure.'

Statistics

+ Through Q3 1998. Eesti kroon exchange rates used - 13.42:US$1, 15.65:1 EUR (8/1/99)

References

1 1OT-3QT 1998, Statistical Office of Estonia

For more information about Jarva county, contact:
Toomas Tippi, Director, Economic Department. Tel: +372 38 59 609 E-mail:toomas@pmv.paide.ee
Aino Kreitsman, Assistant Director, Economic Department. Tel: +372 38 59 608 E-mail: aino@pmv.paide.ee

For more information about Rapla county, contact:
Janek Kadarik, Rapla county Enterprise Centre. Tel: +372 48 94 122 E-mail: retk@estpak.ee
Mikk Sarv, County Advisor. Tel: +372 8 250 93 669 E-mail: Mikk.Sarv@mail.ee