One-man-committee Jorma Eloranta: More investment in Finland urgently needed
The Finnish economy is currently undergoing a structural decline downturn. This has escaped the public eye, due to the current focus on general economic difficulties and the severe economic challenges overshadowing Europe. In particular, fixed investments by industry have contracted faster than in other EU countries. In addition, a steep fall in R&D investment as a share of GDP is forecast over the next few years.
However, corporate investment is vital to Finland's economic performance. Rapid, concerted measures are need in response, in order to make Finland more attractive to companies looking to invest.
In a report published on 15th February 2012, Mr Jorma Eloranta* presented his proposal for Finland’s investment strategy and an action plan. These are intended to improve the basis for attracting investment to Finland, in order to bolster the country's competitiveness and develop its business sector. The report includes five main theses and 40 related proposals for measures to rapidly improve the situation.
− If we so choose, the proposal could be implemented in its current form. Having the will to decide is now the decisive issue, emphasises Mr Eloranta.
According to Eloranta's first thesis attracting investment is a matter of willingness. Sustainable economic growth, promoting the investment prerequisites of Finnish and international companies and the creation of 200,000 net jobs in Finland’s privately financed sector in 2013-2020, should be the key government targets.
In its strategy review and public economy framework discussion in February-March, the government should decide its position on the report's key proposals. If the government takes a positive stance, it must prepare a Government Resolution, for acceptance by June 2012 at the latest, on measures to enhance Finland's attractiveness as a corporate investment target. In support of this, a national framework programme should be drawn up for the period leading up to 2020.
Fundamentals influencing investment decisions must be in place. Among other issues, this means balancing the public economy, implementing business and investment friendly tax reforms, securing the availability and competitive terms of financing, creating better-functioning labour markets and solving competitiveness issues in energy, infrastructure and logistics. It also involves the implementation of energy tax solutions and transport infrastructure projects. National and municipal processes touching on business activities must also become more efficient. Various permit and registration processes should be combined. A “fast track” should be created for promising investment projects, enabling their faster execution.
We should further develop our strengths. Finland's natural resources, strong ICT, forest, energy, mineral and water expertise, open society, collaborative culture, solution-oriented mind-set and neutral international stance continue to be strengths on which the country can build. However, competencies must be continuously developed. Strong competence clusters must be created, cooperation between the business world and educational system increased, the internationalisation of universities and research groups enhanced and language skills diversified. More efficient use could also be made of our forest and mineral resources, although still in a sustainable manner.
We can turn some weaknesses into strengths. Finland's weaknesses, such as a small domestic market, a geographically peripheral location, and the impact of its language and cost levels, must be improved or converted into strengths. A small market could prove attractive as a dynamic front runner, public procurements could promote environmental and new technology, while the proximity of Russia and St. Petersburg could be better leveraged in economic cooperation. The economic development of the Arctic regions also presents possibilities.
Foreign investment requires active sales. In order to attract foreign investment, Finland needs a sales organisation with sufficient authority. For this purpose, a foreign investment strategy will already be needed in early 2012, in order to attract foreign investments and capital to Finland. It is proposed that an aggressive sales organisation, the Investment Promotion Agency, be established as part of Invest in Finland and Finpro, which are to be merged in the summer. The entire national administration, from the President of the Republic to ministers and foreign missions, would be marshalled in support of the Agency's work.
*In October 2011, Minister of Economic Affairs, Jyri Häkämies, and Minister of Labour, Lauri Ihalainen, appointed Senior Adviser Jorma Eloranta as Head of a Government Commission to draw up a proposal on an investment strategy to promote inward investment into Finland.
Senior Adviser Jorma Eloranta, tel. +358 (0)40 539 5542, email@example.com
Permanent Secretary Erkki Virtanen, TEM, tel. +358 (0)10 606 3502
Jari Romanainen, Executive Director, Tekes, tel. +358 (0)50 557 7703