Jan. 24 (Bloomberg) -- Estonia’s accession to the euro region and the Organization for Economic Cooperation and Development has attracted a wave of foreign-investor interest, a government official said.
The national business promotion agency EAS is working with potential investors on 112 projects, compared with about 50 projects a year earlier, Krister Kalda, the head of EAS’s investment and trade development unit, said in an e-mailed response to questions today.
“It is a safe bet that euro has had a positive effect as Statoil mentioned it when making a big investment here,” Kalda said. “We also know of other companies who’ve said that. Certainly there’s also been a boost from general increase in publicity due to Estonia’s capital Tallinn becoming the European capital of culture this year, and joining the OECD.”
Euro adoption removes currency risks and exchange costs for exporters and investors. The former Soviet Baltic republic is relying on foreign investment and shipping goods abroad as it catches up with western European living standards amid weak domestic demand because of high private debt and unemployment, at 15.5 percent in the third quarter.
Estonia on Dec. 9 became the 34th member of the Paris-based OECD, a grouping of the world’s most advanced economies and the 17th euro nation on Jan. 1.
Statoil Fuel & Retail ASA, the biggest fuel retailer in the Nordics, set up its financial center in Estonia on Oct. 1, citing euro entry as a crucial factor in picking the location. It spent 270 million euros ($366 million), the biggest foreign investment in the Baltic country last year.
Kalda said he hopes to reach investment decisions this year on about the same number of projects as last year. In 2010, EAS helped to seal 24 investment agreements totaling an expected 1.89 billion krooni ($164 million), he said.
Key industries for investors are metals and machinery, chemicals, materials technology, business services and information technology, with major investors helping their suppliers to move operations to Estonia, he said.
Aside from Sweden and Finland, where the majority of investment into Estonia stems from, potential investors also represent the U.K., France, the U.S., Russia and Norway.
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