Three companies interested in taking over the Tallinn plant of Elcoteq

In addition to French electronics manufacturer Eolane, also two other companies are considering a bid for Elcoteq Tallin, a subsidiary of the bankrupt Finnish electronics assembly group Elcoteq SE.

Jan Kotka, CEO of Elcoteq Tallinn, said that sales negotiations were ongoing with all three companies, but declined to name the other two because they were listed companies.

Kotka said that the Luxembourg-based bankruptcy administrator of Elcoteq SE had told him that the sale of Elcoteq Tallinn could be closed already in January.

Annual revenues of Elcoteq Tallinn were 4.6 million euros in 2010 and the company made a profit of 136,000 euros.

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Estonian football team reached all-time high in FIFA rankings

The Estonian National Football Team hit 52nd place in this month’s FIFA rankings, a new record for the country. The results, announced 18 January, put Estonia five notches up from its December position, which was also a record at the time.

Despite not making it through the Euro 2012 qualifiers in autumn, the team has seen its ranking rise slowly and steadily over the past three months, inching up from 59th to 58th place in November before reaching the 57th spot last month.

In January’s list, the top spot continues to be occupied by world football superpower Spain, followed by Holland and Germany.

Prior to last year, the highest Estonia ever climbed on the list was 60th place, which it achieved in December 2002. Its worst showing came in October 2008, when it languished at 137th.

Source: Estonian Review

5 pct more cargo handling at Estonian ports last year

Statistics Estonia said that a total of 48.3 million tons of goods were loaded and unloaded at Estonian Ports in 2011, 5.3% more than in 2010. Last year 35.1 million tons of goods were loaded and 13.15 million tons of goods unloaded at Estonian ports, respectively 1.5 and 16.3% more than the year before.

Last December 2.9 million tons of goods were loaded at Estonian ports and 1.2 million tons of goods were unloaded, respectively 7.5% less and 5.3% more than in the same month last year.

Source: Estonian Review

116.7 MEUR of EU funds distributed in environmental sector 2011

Last year 116.7 million euros of European Union structural support was paid out in Estonia’s environmental sector, which is almost three times as much as a year earlier.

Financing decisions made in the framework of environmental sector structural support of the 2007-2013 budget period total 563 million euros. By the end of last year 156.5 million euros of this sum had been paid out, the Ministry of the Environment said. In December 29.5 million euros of EU funds was disbursed, which the ministry said is the largest monthly amount ever.

According to the ministry, the distribution of European support in the environmental sector is influenced by the fact that it largely involves extensive infrastructure projects that take at least a couple of years to prepare, and only after that can the money be paid out. In 2011 numerous water supply projects, which make up a substantial part of the living environment development action plan, reached the payment phase.

In addition to EU structural support, more than one million euros of the Norwegian and EEA Financial Mechanism funds was disbursed in 2011.

Source: Estonian Review

Inflation was the year’s lowest in December

According to the Statistics Estonia, prices rose by 0.1 per cent in December. The annual rise in prices slowed from the 4.2 per cent in November to 3.7 per cent in December. The annual rise in prices also slowed in the Euro zone, decreasing to 2.8 per cent.
There were no significant price changes in December. In comparison to November, there was a slight rise in food and fuel prices which were compensated by discount offers on alcoholic beverages. Food prices were affected by a rise in meat product prices, which is in accordance with price developments in foreign markets.
In 2011, prices rose 5 per cent, which is close to the last forecast by the Ministry of Finance (4.9 per cent) issued in the summer. Last year, the rise in prices was mostly led by foreign factors. Of commodities, the prices of food and oil products were spurred on in the first half of the year by a rapid global economic growth, along with a growing demand in developing countries. In the autumn, the impact of commodity prices began to decrease, wherefore inflation began to gradually slow down. At the same time, higher salaries and employment levels have enabled internal demand to recover, increasing the impact of domestic factors on inflation.
As expected, adopting the Euro had a small impact on prices . The single impact on inflation is estimated at 0.2-0.3 per cent, which is similar to the experience of other countries that have adopted the Euro.
A temporary acceleration in annual inflation may be expected in January due to rising housing expenses. Annulment of the sales tax in Tallinn should somewhat lessen its effects. Inflation will return to its deceleration trend thereafter and the rise in prices in 2012 will reach around 3 per cent. This is facilitated by a weak foreign environment and instability, which will decrease the effects of foreign factors even further.
Source: Estonian Ministry of Finance

Estonia to open embassy in India

The government has decided to establish an Estonian embassy in the capital of India, New Delhi.

Foreign Minister Urmas Paet stated that as of the spring the Foreign Ministry will send a chargé d’affaires to New Delhi, whose task it will be to make preparations for opening an embassy there in the fall of this year. “We plan to send an ambassador to New Delhi by the end of the year,” said Paet.

Paet stated that the opening of the embassy in New Delhi will help to intensify political co-operation with India and develop business and cultural contacts, as well as provide an opportunity to better address consular matters and to issue visas.

“On account of India’s important and growing role in the world and Estonians’ increasing interest in travelling to India, the plan to open an Estonian representation in India has been on the agenda for quite some time. From September 2005 to July 2008 an Estonian consular diplomat was working in the Finnish Embassy in New Delhi,” said Paet.

Currently Estonia’s non-resident ambassador to India residing in Tallinn is Peep Jahilo. The ambassador presented his credentials to Indian President Pratibha Devisingh Patil on 8 December 2010. Estonia also has two honorary consuls in India: Anil Vig in New Delhi and Sunil Khana in Mumbai.

India re-recognised the independence of the Republic of Estonia on 9 September 1991. Diplomatic relations were established on 2 December 1991. At the time a British colony, India recognised Estonia for the first time on 22 September 1921 when Estonia became a member of the League of Nations.

 Source: Estonian Ministry of Foreign Affairs

Estonian state budget taxes in 2011

According to the Tax and Customs Board, 4.34 billion Euros, i.e. 102.2 per cent of the estimate for 2011, accrued to the state budget in taxes by the end of December. The total amount of tax revenues increased 7.3 per cent compared to 2010 and 6.5 per cent compared to 2009. Tax revenues in December amounted to 378 million Euros.
One of the main reasons for the better than expected tax revenues is the positive effect of the adoption of the Euro on the Estonian economy. The Euro provided security for investors – direct foreign investments increased employment levels and raised export capacity.
The results for 2011 support the stability of Estonia in the uncertain economic environment and are in accordance with the estimates used for compiling this year’s state budget.
153.7 million Euros of social tax accrued in December; 102.9 per cent of the budget was filled during the year. Social tax revenues increased by 103.8 million Euros or 6.1 per cent compared to the previous year. The positive development of the labour market was reflected also on the tax declarations – the annual average increase  in wages was 7.7 per cent and 2.9 per cent in the number of employees.
26.9 million Euros of personal income tax accrued in December, 105.5 per cent of budget was filled during the year. In comparison to 2010, tax revenues increased by 35.6 million Euros or 18.6 per cent. Income tax returns decreased by 13.8 million Euros in 2011, while additional designations increased by 3.5 million Euros. In December, 52.4 million Euros of personal income tax accrued to local governments; annual increase was 33.8 million Euros or 5.8 per cent. 
12.6 million Euros of corporate income tax accrued in December and 87.9 per cent of  the budget was filled during the year. The revenues remained lower than the estimate due to postponing the dividends of Port of Tallinn to 2012 among other things. Compared to the previous year, revenues increased by 7.3 million Euros or 3.8 per cent. Tax revenues on dividends comprised 81.7 per cent of all corporate income tax.
In December, 120.1 million Euros of VAT accrued and 103.3 per cent of the budget was filled. Compared to the previous year, VAT revenues increased by 95 million Euros or 7.6 per cent. The declared monthly turnover reports indicated a rising trend and the motor vehicle sales sector as well as exporting companies showed the biggest increase in turnover. Regardless of cautious consumers, the turnover of retail business companies also increased; this was supported among other things by real wage increases starting from the  third quarter of the year. As of the summer months, revenues were also positively affected by tighter control over the fuel industry through changes in the legal framework . 
During the year, 717 million Euros of excise revenues accrued, which comprises 101.8 per cent of the budget. In December, 60.8 million Euros of excise tax was paid; the annual growth was 50.7 million Euros or 7.6 per cent.
16 million Euros of alcohol excise accrued in December and 105 per cent of the budget was filled during the year. Compared to the previous year, revenues increased by 13.4 million Euros or 8.1 per cent. During the year, revenues increased on nearly every type of alcohol, while declaration of strong alcohol, which formed the largest proportion, increased by approximately 7.7 per cent.
In December, 12.3 million Euros of tobacco excise accrued and 104.7 per cent of the budget was filled during the year. The end of the year summary concludes that revenues increased by 29.9 million Euros or 26 per cent as compared to 2010. The increase in revenues was caused by increased excise rates and a noticeable increase in the amount of cigarettes declared. Accrual was remarkably high in the summer months, exceeding 14 million Euros monthly.
29.6 million Euros of fuel excise accrued in December and 99 per cent of the budget was filled. The annual growth was 4.4 million Euros or 1.2 per cent. While a relatively strong growth trend could be observed throughout the year with regard to diesel fuel and diesel fuel for special purposes, an overall growth in fuel excise accrual was hindered by a decrease in excise paid on petrol. Consumption by private persons was strongly influenced by increased fuel prices; revenues  also decreased because of  warm weather conditions in the year’s final few months as compared to the previous year.
The prepayment account changes increased tax revenues by 8.8 million Euros in December, to a total of 386.8 million Euros. By the end of the year, prepayments had been made in the amount of 17.5 million Euros, which increases the annual  tax revenues to 4.36 billion Euros. The positive change in the prepayment account indicates that in December, the number of new prepayments made exceeded the utilisation amount of already made prepayments.
Source: Estonian Ministry of Finance

MP: state should not support exporting to Russia

Kalev Lillo, MP for Reform Party caused an uproar among businessmen last week when he said that the Estonian state should not support exporters who trade with Russia, writes Äripäev.

Lillo who is also member of the supervisory board of state-owned Port of Tallinn wrote in an opinion column published in Delfi last week that Estonia should be wary despite of Russia becoming a WTO member and being now Estonia’s second-largest export partner.

„We should not use taxpayer money for increasing economic security risks,” wrote Lillo.

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Developer seeks 700 MEUR to complete luxury resort

Margus Reinsalu who is developing a luxury resort estate on the Ilha de Cajaiba island off the Brazilian coast is now the sole owner of the development company Property Logic Brazil.

Reinsalu himself does not wish to comment why his former business partners, a Dutch businessman Joob Huisman and an Irishman Sean Cusack, decided to quit the project and only says that they exited as previously agreed.

Reinsalu remains optimistic about the chances to complete the billion-dollar-project and says that while the whole of Europe talks about the debt crisis, life in Brazil is a peach.

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Lending review of the Bank of Estonia

In the second half of 2011, the deepening of the debt crisis in the euro area started to have an impact on bank lending to the European private sector too.Growth in loans slowed down in the euro area in the second half-year, driven by both demand and supply. 

While the non-financial sector was not ready to make new loan commitments in the context of an unstable economic climate and heavy debt burdens, the banks have at the same time reduced their offers of loans due to their strained financing.

Finland and Sweden – our closest neighbours – have so far succeeded in differentiating themselves in a positive manner from the general trends in the euro area, but even their loan markets showed signs of a slowdown.

The financial results of the Estonian companies have significantly improved in 2011 following the swift recovery in economic activity and primarily due to strong external demand.The turnover of non-finan­cial sector companies has increased and companies have stepped up their take-up of short-term loans, especially overdrafts, in order to finance their evolving stock.

Parent banks from Nordic countries have so far remained outside the epicentre of the euro area debt crisis and there have been no major problems with funding.However, due to their continuously high share of wholesale funding, parent banks are still vulnerable to adverse developments in the financial markets.

Growth in credit stock is usually coupled with economic growth.10 The recession in the Estonian economy turned into growth in 2010.In contrast to traditional patterns, however, the growth was not accompanied by a recovery in credit volumes.The credit stock has been decreasing since the end of 2009 in all major customer groups, for both companies and households.This is not a very common situation in international terms, but neither is it unheard of.It is normal in developed countries that every fifth or sixth recovery from economic recession is creditless.This occurs even more frequently in developing countries, where every fifth recovery is credit­less. 

Read more from the LENDING REVIEW of the Bank of Estonia