Extra money for vacations

The Baltic Times, TALLINN
Aug 31, 2000
By Kairi Kurm

For the first time in Estonian history the average wage has exceeded 5,000 kroons ($ 287).  According to some specialists, the wage increase may indicate a boost in the Estonian economy in the near future.

In the second quarter of 2000, the average gross wages and salaries of full- and part-time employees of enterprises, institutions and organizations were 5,031 kroons per month and 28.69 kroons per hour. The average wage in April was 4,628, in May 4,974, and in June 5,548 kroons.

Compared with the second quarter of 1999, the average monthly gross wages and salaries have increased by 10.5 percent and the average hourly gross wages and salaries have risen by 10 percent. Even when inflation is figured in, the increase is still 7.4 percent.

In the past, inflation affected the results greatly. In 1994, for example, the average wage in the second quarter was only 1,741 kroons, but by 1996 it had reached 3,004 kroons.

Mare Kusma, head of wage statistics section at the Statistical Office of Estonia, said that she had predicted the same trend.

“The second quarter was influenced by the vacation pays,” she said. “The third quarter is usually a little bit lower.”

Maris Lauri, an analyst with Hansapank, said that there are several reasons behind the rise of the average gross wages. One is the recovering economy.

“The number of people working in the lower-paid sectors decreased during the period of the economic slowdown and the productivity increased due to the decrease of these less efficient employees,” said Lauri.

She said that the rise in income should boost the economy because people have more money to spend.

According to the statistical office, employees in the financial sector are paid the most. Salaries in this section are 2.2 times higher than the average gross wages in Estonia.

Kusma said that although the financial sector is the best-paid sector, some workers in this business still receive less than the Estonian average.

“The salaries depend mostly on the activities and possibilities of a company. In some companies an office cleaner may receive the Estonian average,” said Kusma.

The lowest wages and salaries are in the agriculture and hunting industries. They are about 55 percent lower than average but have increased more than 16 percent compared to the same period last year.

The biggest rise in incomes was in the hotel and restaurant business, where wages increased by almost 33 percent and reached 5,063 kroons per month.

Villu Zirnask, columnist of the daily Eesti Paevaleht, said that the rise in salaries in this sector might indicate a decrease in wages paid “under the table,” because sales in the hotel industry increased by only 22 percent and in the restaurant industry by 16 percent in the same period.

According to news agency BNS, untaxed wages are most common in trade and construction businesses.

The biggest drop in wages and salaries was in the fishing industry, where they decreased by about 15 percent and reached only 3,400 kroons per month.

Although the average Estonian wage is only 40 percent to 60 percent of the European Union average, public officials are still doing better than the average Estonian.

In general, the increase in average salaries must have delighted MPs and other public officials most, because their salaries are tied to the national average.

The gross average salary of an MP amounts to four average Estonian salaries combined. With the increase in average incomes, they should get an additional 2000 kroons per month. Together with the 20 percent expense account, an average MP should now receive about 19,000 kroons a month.

The monthly salary of the Estonian president is six times the national average, the business daily Aripaev reported.

Besides the good income, Parliament officials, top military officials and judges receive a good pension after retirement. A pension of a Parliament member is about 75 percent of their previous gross income. As the pension is sometimes higher than the income itself, the government is planning to impose income tax on pensions that exceed 4,000 kroons.

Some people are of the opinion that the salaries of state officials should be tied to the minimum Estonian wage, because this will increase the governors’ responsibility for the Estonian living standards.

Although most people think that civil servants are badly paid, the statistics released by Aripaev prove the opposite. According to Aripaev, an average civil servant earned 6,758 kroons a month in ministries and 5,489 kroons a month in county governments in 1999. Extras and bonuses made up about a quarter of their salaries.

The highest earnings are in the Ministry of Roads and Communications, where the average salary is 8,700 kroons, and the lowest are in the Ministry of Foreign Affairs, where it is 5,414 kroons.

Compared to the average Estonian gross wages and salaries, Lithuanians make a little bit more money, and Latvians less, said Kusma.

Source: http://www.baltictimes.com/news/articles/2482/

Callers frustrated with new phone system

The Baltic Times, TALLINN
Aug 24, 2000
By Kairi Kurm

New dialing system leads to unwanted calls abroad, including 1,800 to Chile

 The new dialing system for international calling put into effect on Aug. 1 has caused considerable confusion and will probably bring high phone bills for local callers.

The new digits are leading callers who are trying to phone locally all the way to Russian and even South America.

According to the new dialing system, all numbers starting with the prefix 800 should have a prefix 00 when making long-distance calls, and prefixes “8” and “2” – “8” is for service numbers and “2” for mobile numbers – should be replaced with 0 when making local calls.

But thousands of callers are mistakenly dialing two zeros, when calling on a mobile phone or making a local call to another county.

As a result they unwittingly make an international call and may be surprised when they receive their bill at the end of the month.

According to Ain Parmas, spokesman from Eesti Telefon, the number of international calls to countries where prefixes are similar to those of the Estonian mobile phone operators (“50”, “51”, “55”, “56”), has increased dramatically.

These prefixes lead to South and Latin American countries, when dialed wrongly.

Parmas said that more than 1,800 calls were made to Chile during the first two weeks of August. The prefix to Chile, for example, starts with “56”, the same as the number for the Radiolinja operator.

Many people have made calls to Russia instead of Tartu, because the prefix for international calls to Russia is similar to that for Tartu.

Aili Armvaart, head accountant at the road construction company Tasfil, hopes that employees of her company have not made too many false calls but she would find that out at the beginning of September when she receives the telephone statement.

“I read through the article concerning the new dialing system many times and have thus not had any problems with dialing,” said Armvaart. “I also changed the phone numbers in my mobile phone at once.”

As a result of the new dialing system, mobile phone owners had to make changes in their mobile phone books and many forwardings. Short number dialings and hotline services to the numbers beginning with “8” had to be reactivated, said Parmas. Short numbers starting with “1” do not require prefix “8” any- more.

The new changes also caused problems in the POS terminals in some countryside shops, which were not aware of the new configuration system, the business daily Aripaev reported.

Krister Bjorkqvist, financial director at Eesti Telekom, said that the new dialing system is not confusing him.

“I have heard that some people are complaining and Eesti Telefon receives lots of questions from its clients,” he said. “I think the best we can do is explain it in the newspapers.”

Source: http://www.baltictimes.com/news/articles/2105/

Linstow buys into Reval group hotels

The Baltic Times, TALLINN
Aug 17, 2000
By Kairi Kurm

Linstow International, one of the largest Norwegian real estate companies, has acquired a majority share in the Estonian hotel operator Reval Hotelligrupp. Reval HG controls about one third of the hotel market in Tallinn. Linstow owns hotels in all three Baltic countries.

According to the contract, which was signed on Aug. 7, Linstow International acquired 2,322,752 shares or a 44 percent stake from Baltic Republics Fund in Reval HG. The BRF has been an investor in Reval HG for five years. BRF has also invested in such successful Estonian companies as MicroLink, Viisnurk, Baltika and Helmes.

James Syme, fund manager of BRF, said Reval HG had one of the best track records of any company in Estonia, and it had reached the stage in its development where it would benefit from an international strategic investor.

The price of the transaction was 74 kroons ($4.3) per share. Linstow International will make the same offering to all small shareholders of Reval HG and take the company off the Tallinn Stock Exchange list. Reval HG has about 1,000 small shareholders.

The last closing price of Reval HG shares on TSE before trading was suspended on July 26 was 50 kroons ($3).

Veikko Maripuu, head of the sales and research department in the investment bank Suprema, said previous shareholders were offered a good deal.

“The price of the deal was set according to the long-run value of the company,” said Maripuu. “The purchase of Reval HG shares is the first good example where a small shareholder can get a better price than the one settled on the stock exchange.”

As Linstow International formerly held about 8 percent of Reval HG shares, its stake in Reval HG has risen up to 52 percent.

According to Tarmo Sumberg, supervisory board chairman at Reval HG, Linstow’s decision can be viewed as a good development opportunity for the hotel group.

“It permits Linstow’s real estate development know-how to unite with the hotel management and the operation experiences of Reval HG in the best possible way,” said Sumberg. “Both companies have set an objective to build up a hotel chain with a strong regional trademark in the Baltics.”

Sumberg is also one of the biggest shareholders in Reval HG with his company called Inn Group, which owns about 11 percent of the company’s shares. He said that he was planning to keep part of his shares because the new investor wanted him to continue managing the company.

Besides 25 buildings in Norway, the Linstow group owns the biggest hotel in Latvia called Latvija and in Lithuania called Lietuva, a World Trade Center hotel project in Tallinn and half of the Park Ridzene Hotel shares in Riga.


Reval HG to run Hotel Latvija

After buying a majority holding in the Estonian hotel group, Linstow intends to start cooperation with Reval HG on developing a hotel chain in the Baltic states. Reval HG will operate all the hotels fully owned by Linstow, said Bauer-Nilsen.

As the first step, Reval HG will start a joint development of Hotel Latvija in Riga, owned by Linstow International. The 26-story hotel, one of the tallest buildings in Riga, will be reopened for guests in May 2001 after renovation as Reval Hotel Latvija.

According to preliminary plans, Linstow International intends to invest $25 million in the renovation of Hotel Latvija.

“We are currently examining the market, and it seems the World Trade Center project has to wait for better times,” said Sumberg.

Bauer-Nilsen said that after the hotels Latvija and Lietuva have been renovated, they will hold about 15 percent to 20 percent of the guestrooms in Riga and Vilnius.

The five-star Park Ridzene Hotel will not become part of Reval HG, said Bauer-Nilsen, because it does not fully belong to Linstow, and it is different from the general middle-class Reval hotel.

Reval HG owns four hotels in Tallinn: two upper mid-scale, full-service hotels, Reval Hotel Olumpia and Park Hotel&Casino, a mid-scale, full-service hotel Reval Hotel Central and economy, basic-service Reval Express Hotel.


Competition is very tight

According to the hotel experts, the competition on the Tallinn hotel market is tight and this has improved the quality of hotel services and kept the prices low.

Bauer-Nilsen said Radisson SAS group is the biggest competitor to Reval HG across the Baltic states.

“But their product is different from ours. They are very good. We are for the mid-market segment,” said Bauer-Nilsen.

He said the competition in the Tallinn hotel market is becoming very strong because of many newcomers, and he expects the same development in Latvia and Lithuania.

“Our strong presence in all three countries will be our advantage,” he said.

Yrjo Vanhanen, director at Viru Hotel, said in a short-run perspective the new owner of Reval HG will probably not make any big changes on the hotel market, because Linstow is dealing in a different business section. Viru Hotel, a company owned by Finnish investors, controls about 20 percent of the hotel market in Tallinn.

“I hope the new owner is reasonable enough not to expand its activities in Tallinn in the near future. They should wait at least three years before they start increasing their capacities in Tallinn. It is the wish of all hotels on the Tallinn market,” said Vanhanen.

In Vilnius and Latvia the market is expected to get lively after the privatization of large state-owned and municipal hotels.

“In Lithuania and Latvia, the market is different. Many renovations are taking place, and these investors have to look far into the future because they cannot earn money fast,” said Vanhanen.

Compared to the first half-year results of 1999, the demand for hotel rooms on the Tallinn hotel market increased by 19 percent in the same period in 2000.

Vanhanen said the occupancy rates as well as the hotel prices will decrease this year and will continue decreasing next year as well.

Source:  http://www.baltictimes.com/news/articles/1951/

Privatization not good for forestry

The Baltic Times, TALLINN
Aug 03, 2000
By Kairi Kurm

According to the Estonian Nature Fund, the continuation of the Estonian forests is in big danger. If the government does not get control over the cutting quantities, more than one third of the Estonian forests could be cut down in the period of 10 years.

“The Ministry of Environment claims that everything is under control and at the same time says that they haven’t got any reliable statistics,” said Rainer Kuuba, representative of the Estonian Nature Fund.

“The cutting quantity is increasing fast in a short time, mostly at the expense of private forests, and there are no signs of slowdown. The more land is privatized, the bigger the problem. People want to make money fast,” said Kuuba.

Andres Talijarv from the ministry, who is also the chairman of the council of the state Forest Management Center, is of the opinion that the Estonian Nature Fund, like all other outward organizations, is trying to pressure the ministry in order to protect their interests.

“They forget that administrating forests is an acceptable method,” said Talijarv. “The state institution should place itself in a neutral position towards the environment protectors and the businessmen.”

The ministry determined that 7.8 million cubic meters is the annual acceptable cutting limit. From spring 1998 to spring 1999, harvesters cut 7.5 million cubic meters, twice as much as in 1995.

But the problem is that the forest has been cut intensively on a very small area, and the most cut trees are pine, spruce and birch, said Kuuba. Kuuba said the sale of aspen and alder does not bring in much money and are thus not popular.

Talijarv predicted that the number of evergreen trees would decrease on the account of deciduous by 5 percent to 6 percent in the near future.

“It is not bad that people raise birches, if there is a big demand for that and the investment pays itself back fast,” said Talijarv. “But besides replanting, forest owners should do more maintenance work,” said Talijarv.

“The forest as well as the rest of the harvest should be cut down when it is mellow,” said Talijarv.

“The state authorities think people are poor and forests should be given to them. But the cuttings have taken such big measures like during the first independence in 1920, when forests were heavily cut and the wood came very irregularly afterwards. It is difficult to develop forestry in this manner,” said Kuuba.

Kuuba said Estonia might also lose a lot of its intact nature and the rare animals and plants that grow there. As an example, the nest of a rare bird black stork was cut down on private land in Poltsamaa.

“All the other European nations have gone through these stupidities. Why should we follow them?” said Kuuba.

Kuuba said many people are of the opinion that mature forests will start making loss, but actually they do still produce profit, but imore slowly. He said only the forests that are not replanted do not not bring in profit.

According to Kuuba, less than 10 percent of the privatized forests are replanted. Forest replanting to match the cutting quantities has only taken place in state forests. About 60 percent of the state-owned forests are replanted, and natural seeding does the rest.

“The replanting of state forests does not compensate for the losses in private forests. Therefore we should be grateful that the land reform lasted that long,” said Kuuba.

Talijarv said that according to a specialist from a world environment protection organization, only 10 percent of the forest has to be replanted and the rest will recover by itself.

“My opinion is that at least 50 percent has to be replanted,” said Talijarv. He added that the land had not been scarred so deeply that it would fail to recover.

Kuuba also disclosed that only about 30 percent of the taxes from forest business are paid. He said it is very common to avoid paying value added tax and social tax. The state has thus lost 1 billion kroons of revenue.

Talijarv said that currently it is more difficult to fool the government, and tax evasion schemes have become more complex.

“When wood is sold to a sawmill, the VAT is paid directly to the state budget by the sawmill,” said Talijarv.

Today, forested land makes up nearly half of the surface of the Estonia. By the end of 1999, almost 1 million hectares of land were registered as state property, about 40 percent of the total number of forests. Of this area, forest makes up almost 78 percent and marshlands equal 15 percent.

The new law on forests adopted at the end of 1998 does provide for a more stringent replanting requirement, but people do not obey these regulations, said Kuuba.

“Even the constitution says it is important to protect nature. People think that there are no obligations toward the forest, but only a revenue to be made. The economic development law also says renewable resources used should be reproduced in the same amount,” said Kuuba.

Talijarv said some amendments will be made in the forest law, but this will not affect forest owners. Although the quantity cut has tripled during the last seven years, Talijarv believes the law, as well as the economic environment, will hinder the enormous increase in forest cuttings. He said the capacity of the Estonian woodcutters is about 8 million cubic meters, and there is no demand for more wood.

The average price of the standing crop at the state forest auctions in 1999 was 200 kroons per cubic meter, which is 29 kroons less than in 1998.

The export of wood and wood products gives about 15 percent of the total exports in Estonia. “As the share of wood imports is trivial, exports related to wood and wood products give almost 6.5 billion kroons positive cash flow in the trade balance,” said Talijarv.

Source: http://www.baltictimes.com/news/articles/1277/