Construction sector expands by fifth in 2012

The Estonian construction sector remained at a low ebb in 2012 compared with the years before the crisis but signs of improvement could be observed in all indicators, especially in building construction and engineering construction volumes, but also wages and productivity, the Ministry of Economy and Communications said on Friday.

Estonian construction companies performed works for 3.03 billion euros during the year, which is 20% more than in 2011. Construction works in Estonia made up 2.77 billion euros of that and construction abroad 0.26 billion euros.

The total profit of construction companies amounted to 257 million euros, 1.6 times the figure for 2011.

Net value-added based total productivity grew 11% and productivity of labour went up 21%. The sector’s value added increased 36% year on year.

The number of people employed in the construction sector last year was 58 700, on a par with 2011.

Source: Estonian Review / BNS

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Playtech’s boosts earnings by a third in 2012

Revenue of the Tartu-based software developing and computer imaging company Playtech Estonia in 2012 increased 10% year-on-year to 18.8 million euros while its profit expanded 32.2% to 904 106 euros.

The company finished the year with a profit thanks to ongoing Co-operation with existing business partners and new agreements concluded by the parent company, Playtech Estonia said in its annual report. The company exports its entire output.

The average number of employees last year was 454 and labour costs totalled 14.4 million euros. In 2011 the average number of employees was 426 and labour costs 13.1 million euros. Remuneration for executives and top leadership amounted to 48 260 euros.

The size of the company’s undistributed profit at year-end was 4.6 million euros.

Playtech Estonia is 100% owned by Playtech Cyprus Ltd.

Source: Estonian Review / BNS

Estonian tax authority zooms in on applicants for VAT registration

Estonian tax and customs board says that it is taking a new look at the companies which apply for registration in the VAT registry because there have been more cases where criminals planning VAT fraud have taken over otherwise honest companies after they have registered for VAT, writes Postimees daily.

Usually the new owners are people who have been blacklisted because of involvement in earlier VAT fraud and would otherwise not be accepted for VAT registration.

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Tartu – Estonia’s best investment environment

In its fresh issue, Forbes magazine for the first time publishes a list of the best Baltic regional business cities, which puts the Lithuanian cities Klaipeda and Kaunas in places one and two and Estonia’s Tartu in third place.

Forbes names Tartu’s successful combination of education and business as making it the best city in Estonia for business.

Klaipeda takes first place primarily because of its successful free trade zone, which has attracted big business. In addition to the success of the Lithuanian port city, its ranking is also based on the absence of excessive red tape and its good political atmosphere.

Kaunas was helped by a consumer market three times the size of Tartu’s.

Of other Estonian cities, Pärnu and Kohtla-Järve made the top ten, taking fourth place and ninth place respectively. In the case of Kohtla-Järve and Narva, ranked 13th, their closeness to the Russian market is seen as an asset.

Excluded from the list were national capitals and towns with fewer than 30 000 residents. The rankings are based on more than a dozen indicators from six fields such as society, residents’ purchasing power, business climate, stability during the crisis, infrastructure, and environment.

Source: Estonian Review

Court: lawyers should have traveled in economy class

The Ontario High Court in Canada ruled this week that two Canadian lawyers who were defending Estonian Air in its dispute with the Canadian aircraft manufacturer Bombardier should have flown in economy class and not in business class.

As a result, Bombardier is not required to compensate the business class fare of Estonian Air from Canada to London, according to Law Times, a Canadian law publication.

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People take more housing loans

Activity in the housing loan market has increased noticeably this spring. In May, 65 million euros of housing loans were taken by households, which is the largest amount given out during one month since the end of 2008. This represented a 23% larger turnover in housing loans than a year ago. Although demand for loans has increased together with the rise in activity in the real estate market, the role played by the loan market in housing purchases or in financing construction has been smaller than in the previous growth cycle and lending is now happening on a more conservative basis. The growth in the housing loan stock has been very modest, as new loans exceed repayments by only a small margin. The annual growth rate for the housing loan portfolio at the end of May was 0.1%.

Corporate borrowing remains at the same level as last year. The volume of long-term loans taken in May to finance investment was somewhat larger than in April, but slightly less was taken in short-term loans than a year ago. The largest share of long-term loans went to real estate and construction companies and to financing infrastructure projects.

The total loan and lease portfolio of the banks fell in May to 14.7 billion euros due to the decrease in the loan stock to companies. The annual growth rate slowed to 1.5%.

The average interest rate on housing loans fell to 2.4%. The very low base rates have meant that interest rates are very favourable for borrowers. In recent years, loan interest rates have, to a large extent, been set by the margins added by banks to the base rates, and these margins have now stabilised after rising for around a year. The average interest rate for long-term loans taken by companies in May remained where it was in April at 3.2%.

The share of loans overdue by more than 60 days fell in May to 2.9% of the loan portfolio. Loan quality has continued to improve due to favourable interest rates and a sound economy. Long-term overdue loans declined over the month by more than 30 million euros.

The annual growth in deposits remained at 5%. Deposit growth has been somewhat slower this year. Over the first five months of the year, corporate deposits have declined while household deposits have increased by less than they did last year. The total deposits of Estonian companies and households at the end of May stood at 8.7 billion euros.

Source: Bank of Estonia

Author: Jana Kask, Deputy Head of the Financial Stability Department of Eesti Pank

Head of Skype Estonia to leave company in September

General manager of Skype Estonia Tiit Paananen will leave the company at the beginning of September. The goals set a couple of years ago that were related to the integration of Skype into Microsoft have been achieved, Paananen said. “I feel that now is the right time to say thank you and take a breathing spell in order to face new challenges.”

Paananen will continue volunteer work as member of the board of the Estonian Association of Information Technology and Telecommunications in the fall. The coming months will show who will take over as head of Skype Estonia.

Paananen replaced Sten Tamkivi as general manager in April 2012.

He joined Skype in 2005 as test director in software development and has been in charge of engineering learning and development globally for the last two years.

Source: Estonian Review