Viru hotel celebrates its 28th with new look

The Baltic Times, TALLINN
May 25, 2000
By Kairi Kurm

 Once the tallest and most modern building in Estonia, Viru Hotel, a favorite of Finnish tourists, can now be rated one of the best three-star hotels in Tallinn. On May 18 Viru Hotel celebrated its 28th anniversary and the end of reconstruction work.

The hotel spent 40 million kroons on rebuilding the foyer, the area around the hotel, the second-floor bar and the rooms on the 13th floor. Since its privatization six years ago, the hotel has made investments totaling 270 million kroons, said Yrjo Vanhanen, its director. The hotel was privatized in 1994 for 145 million kroons.

Vanhanen said the hotel was renovated from its own funds. About 90 percent of the hotel belongs to different Finnish companies.

Vanhanen said that the hotel has made an offer to the Tallinn City to buy the neighboring property, but the City has not responded. At present, the favourable land in the center of Tallinn is used as a parking lot. 

Viru Hotel has 22 floors, 11 of which have been renovated. The average price of a hotel room is about 1,000 kroons, while modern rooms cost about 1,700 kroons, said Anu Soosar, housing manager. She said that the hotel has 203 employees and 750 beds.

“We want to be the best three star hotel in Tallinn,” said Vanhanen. “The satisfaction of our clients is more important for us than the number of stars an appointed council may give us,” said Vanhanen. “We want to be like an  nternational Holiday Inn.”

Vanhanen said the market share of Viru hotel is about 20 percent with about 80 percent of its clients from Finland.

By the end of the year, the hotel expects to make a 34 million kroon profit and 180 million kroon sales. That is almost as much as the hotel made last year, said Vanhanen.


Meri turns down Opmann for central bank

The Baltic Times, TALLINN
May 25, 2000
By Kairi Kurm

Estonian President Lennart Meri rejected Mart Opmann’s candidacy for president of Bank of Estonia, saying the deputy chairman of the Coalition Party should improve his proficiency in foreign language, according to news reports. The business daily Aripaev also reported that Meri advised the bank council to find a politically independent candidate for the post.

The President referred to the need to find a candidate who could efficiently represent the interests of the Bank of Estonia in the European Central Bank Council, a spokesman of the office of the President reported. With the accession of Estonia to the European Economic and Monetary Union, the head of the central bank will automatically become a member of the European Central Bank Council.

The council of the Bank of Estonia elected Opmann, 44, as governor of the central bank on May 18. Opmann was finance minister for four years from 1995 to 1999 and a member of the Coalition Party. Opmann said that he would cut ties with the party as soon as he was appointed governor of the Bank of Estonia and promised to improve his knowledge of languages.

The board of the Bank of Estonia met with Meri on May 22 to discuss the situation. The parties left the meeting without coming to an agreement over the right candidate. The president asked the council of the central bank to find a new candidate by June 19. The central bank’s supervisory council is considering an inquiry to the justice chancellor, since the decision of the president had resulted in a dispute related to political law.

A member of the supervisory body of the Bank of Estonia, Kalle Jurgenson, who preferred another candidate to Opmann, suggested the council to resign since it had not been able to find a good candidate for the post of the governor of the central bank. The president said he did not wish the council to resign.

It is the second time the central bank’s council chose a wrong candidate for the post of a new governor. The term of the former central bank president expired on April 28. The first candidate for the governor’s post, statistics professor Vello Ven-sel, resigned citing health problems some days after he was nominated for a five-year term as the governor of the Bank of Estonia by Meri.

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Integration will shrink food industry

The Baltic Times, TALLINN
May 18, 2000
By Kairi Kurm

Only one fourth of the Estonian food enterprises will survive European integration, PricewaterhouseCoopers reported to the Ministry of Economic Affairs.

“The number of Estonian food industries has swelled,” said Tanel Tang, specialist from the ministry.

“During the Soviet period, Estonian enterprises were capable enough to produce and sell their products to the large northwestern part of Russia and the Leningrad region. When the Soviet Union collapsed, these markets disappeared. The decrease of production was steep and has lasted until today,” said Tang.

There are 41 dairies, 120 fish processing and 281 meat- packing enterprises in Estonia. According to PwC, about 100 to 150 are likely to survive European integration. According to the pessimistic scenario, the number of enterprises could be even smaller – 60 to 80 companies.

“The reduction of enterprises does not necessarily mean that the volume of Estonian food industries will decrease,” said Tang. He said the existing technologies enable processors to produce more to market, so surviving enterprises will work more efficiently when they start using all of the production capacities.

“Besides the problem of over-capacity, companies have very limited resources,” said Tang. Estonian companies need investments before they are ready to go on the European market.

“Food industries do not make enough profit to cover the necessary investments before European integration. Some have borrowed so much they are not able to pay it back,” said Kaili Roonet, finance director at Tallegg meat packing industry.

She said Tallegg had done most of the necessary investments in technology and is almost ready for European integration. At present only 20 percent of the company’s production is exported.

Tang said that Estonian meat packing enterprises have difficulties with exporting their products in a cheap eastern market and a limited European market.

Andrus Sonts, sales director at the Estonia’s biggest meat-packing company, Rakvere Lihakombinaat, said European markets are closed at present and in the Russian and the Ukrainian markets it is difficult to compete with cheap European meat, subsidized to a large extent. He said that Rakvere Lihakombinaat sells most of its products on the local market, while subsidiaries in Latvia and Lithuania sell in the neighboring countries.

“We make a lot of investments in the company in order to raise the quality to an appropriate level before European integration,” said Konts. Rakvere Lihakombinaat laid off a large number of employees after the Russian crises but is now hiring back employees because of increased sales.

He said there are less than 281 serious meat-packing enterprises in Estonia and only 20 will survive the integration.

“The reduction will take place at the cost of unfair competition, illegal production channels and places of sale not in accordance with necessary requirements.”

About 80 percent of the sales of the Estonian fisheries come from exports. Russia and Ukraine are the biggest markets. Tang said fisheries are the biggest employers in food industry enterprises and may thus have to dismiss the most employees. In 1994 the Estonian food industry employed 28,000 people; but in 1999, only 23,000, and the number may even decrease to 14,000 by 2003.

He said the biggest concern of the Ministry of Economic Affairs and the Estonian government is to find new jobs and create new companies. The other tasks of the government include explaining the importance of mergers and consolidations in the food industry and the mediation of European Union funds.

According to the study, the fish industries require 600 million to one billion kroons in investments to meet EU requirements, about 12 percent to 14 percent of total sales. The dairy industries require 600 million to 1 billion kroons, only about 3-4 percent of total sales. Meat packing enterprises need about one billion to 1.6 billion kroons, about 10 percent -12 percent of sales

The share of exports has always been around one-third of the sales in the food industry, although the volume of production has decreased since the collapse of the Soviet Union. Fisheries and dairies are the biggest exporters in Estonia, while bakeries sell to local markets mostly.

Ants Promann, managing director of the biggest Estonian bakery, Leibur, said that the Estonian bakeries’ market decreased only by 6 percent during the Russian crisis last year, while dairies and meat packing enterprises lost almost 40 percent to 60 percent of their market.

Estonian dairies as well as bakeries, alcohol and soft drink enterprises have already accomplished most of the investments. Promann said that Leibur had made restructuring investments some years ago and had already reduced personnel to an optimum number.

Most of the enterprises from the Soviet period need to invest in their buildings, technologies and training. “Those, who have not done any strategic plans for the future and have a short term vision, may disappear,” said Promann.


Doctors against new hospital plan

The Baltic Times, TALLINN
May 11, 2000
By Kairi Kurm

 There are too many hospitals in Estonia and too few rehabilitation and long treatment hospitals, reported Swedish consultants to the Estonian Ministry of Social Affairs at the end of April.

Two Swedish companies, Scandinavian Care Consultants and SWECO International, have since December 1999 examined relevant facts about health care in Estonia and visited 60 hospitals all over the country. There are at present 78 hospitals in Estonia, most of which are more than 20 years old.

The number of Estonian hospitals should be reduced to 13 in 15 years, while many can be transformed into rehabilitation and long treatment hospitals.

Roomelt Malviste, assistant to the chief doctor in Magdaleena hospital does not believe these reforms would better the condition of hospitals.

“The medical treatment in Estonia is not bad,” said Malviste. “I believe that reducing the number of hospitals to 13 does not improve the level of treatment.”

Peeter Mardna, member of the board of the Estonian Hospitals’ Association said that according to the new plan there will be 2.5 times less hospitals in Estonia than there are in Sweden or Norway. In Sweden there are 95 hospitals per 8.4 million people, in Norway there are 72 hospitals per 4.2 million people and in Estonia there should be 13 hospitals per 1.4 million people, Mardna said.

He also said that it is amazing that the most modern hospital in Estonia, built in Keila in 1989 has to be removed, and a hospital in the small town of Haapsalu will be turned into a regional hospital of Laanemaa province.

“This decision has been made by people, who are at the same time related to Laanemaa in their past or present,” said Mardna. Hannes Danilov, Secretary General at the Ministry of Social Affairs, who is leading the development plan, was a governor of Laanemaa province from 1994 to 1999, said Mardna.

Another member in the development team, chairman at the Social Affairs Committe in the Estonian Parliament Toomas Vilosius, has also tight links with Haapsalu, said Mardna. Vilosius has been working in a central hospital in Haapsalu for 16 years.

Most of the Estonian hospitals have been rebuilt during the last few years, but not according to a long- range plan, the consultants reported. In nearly all the hospitals there is an urgent need to make profound reconstructions and update the infrastructure with respect to area standards, hygiene facilities, ventilation, fire protection and lifts.

“The sanitary conditions in our hospital are the best in Tallinn and so is the medical equipment. Each ward has a separate toilet and a shower bath,” said Malviste. The Swedish consultants noted in their report that medical technology in Estonia is advancing at an increasing speed.

Although the secondary hospitals are very big and the rate of occupancy is often low, wardrooms are usually overcrowded, the consultants found. Compared to Swedish and Danish gross areas per bed, Estonian area standards are many times smaller. At the same time the average length of stay at the Estonian hospitals is much longer than in Scandinavia and should be reduced. The plan foresees sending patients to health care centers or to treat them at home.

“Patients do not stay long in our hospital. The average length of stay last year had dropped to 8.3 days. The treatment conditions in Estonia are not the same as in Sweden. Our patients do not have the same possibilities to cure at home and the number of nurses is many times smaller than in Western countries,” said Malviste.

Malviste said that the rate of occupancy in Magdaleena hospital is low because the hospital gets too few financial resources from the sick-fund. “Out of the 188 beds only 69.5 percent were filled last year. This year we predict a smaller occupancy, because the budget in the contract with the sick-fund was 8-10 percent smaller,” said Malviste.

Mardna said that Estonians have 30 times less money to spend on treatment. “The Estonian 2.4 billion kroon treatment budget allows us to spend 24,000 kroons on each patient, while Swedes can spend 30,000 Swedish kroons on a patient,” said Mardna.”It is superb to achieve such results with that amount of money.”

The development plan also foresees reducing the number of acute care beds from the present 8,200 to 3,100. This makes it possible to save one third of the operating costs on accute treatment and allows for better care of the growing number of aged people.

Patients, who need qualified treatment, should be concentrated in fewer hospitals in order to improve the quality of treatment. This will make it possible to concentrate a more professional staff and better medical equipment to fewer hospitals. Also the barriers between the different departments will fade away and the staff should start developing teamwork.

According to the new development plan, Estonia should be divided into four service regions so that each Estonian would live within 70 kilometers from an acute care hospital. This restructuring would enable patients to get medical treatment in 60 minutes.

The consultants also found that there are too many obstetrics departments in Estonia compared to the small number of deliveries last year.

Swedish specialists also noted that diseases and causes of death related to the socio-economic structure and to habits such as drinking, smoking and consumption of fat are significantly more common in Estonia than in Norway and Sweden. Malviste agreed with that statement saying that: “The average lifetime of Estonian men is short due to many different aspects such as socio-economic and nutrition traditions.”

The rebuilding and renovating of Estonian hospitals according to the above mentioned Hospital Master Plan for Estonia 2015 would cost about 5.5 billion kroons.