Asset sales get under way

  • 2009-09-23
  • From wire reports

PULP NON-FICTION: State land sales should turn trees to cash and boost government coffers.

TALLINN - In order to increase revenue to the state budget, the Estonian Land Board has put up for sale, in an expedited process, state-owned forest land that is probably of interest only to local residents, and therefore hundreds of millions of kroons of foreign investment will not be attracted, reports news agency LETA. Analysts say that foreign investment funds do not consider buying land in small plot sizes to be profitable.

The Minister of Environment Jaanus Tamkivi said at a government press conference that the state knowingly chose the option of selling land to local investors interested in the forestry land auctions.
Forest management company AS Fest-Forest's manager Toomas Kams said that the state chose a risky path by selling small pieces of land, one by one, to individuals because more time is needed to sell the land in this manner. He says that it is doubtful whether the new owners can manage such forests properly. "The state is selling now around 20,000 hectares of land in small sections but [investment] funds would buy land starting at 5,000 hectares at a time and at the true market price. During the boom years, a hectare was sold at an average of 20,000 kroons (1,280 euros) - 25,000 kroons, now the state asks for a higher initial price. This is unreal," said Kams.

Ants Erik, managing director of forest management company Metsatervenduse OU, says he is satisfied with the desire by the state to sell small lots, piece by piece. "This really suits us. From the point of view of the state it is right that a chance is given at the auctions to buy land by local people and companies. I tend to think that if the state sold all at once, for example 5,000 or 10,000 hectares of land as one unit, it would remain unsold or the price would have to be so attractive for the buyer that the seller wouldn't benefit much," he said.

News daily Aripaev, in an editorial, says that the state selling land, preferably to Estonian residents, is a great idea. Although with this step, the state can lose money, it still cheers us up.
In May it emerged that the state, due to its shortage of money, started preparing for the sale of state-owned forests, this at the insistence of investment bank SEB Enskilda, which figured the forest land to have a market value of around 5 billion kroons.

The SEB report indicates that the state owns nearly 36 percent of Estonian forests, which is much more than, for example in Scandinavian countries. In Sweden the state owns about 18 percent, and in Finland 25 percent of forest land. The state also owns un-improved forest land totaling 17 percent of all forest land in Estonia. It is not vitally important for the state to own the forest land; the important thing is for the state to guarantee sustainable management of forests, the bankers said.