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We’ve come a long way

  • 2011-01-27
  • Interview by Olya Schaefer

Andrus Alber has been the CEO of NASDAQ OMX Tallinn since February 2007. He is a graduate of Tallinn Technical University in the field of economics and the Fletcher School of Law and Diplomacy of Tufts University in the U.S., in the field of international relations. He has worked as an advisor for President Lennart Meri, the International Monetary Fund and for the Bank of Estonia, as well as the European Commission in Luxembourg, and currently serves as chairman of the Supervisory Council for the Estonian Central Securities Depository, is a member of the Supervisory Council of NASDAQ OMX Armenia and is president of the American Chamber of Commerce in Estonia. Andrus met with TBT to discuss the markets.

How many Estonian companies are listed on the NASDAQ OMX Tallinn exchange?

Currently 15 companies are listed. Last year 2 companies were delisted because Swedish majority owners bought out the minority owners, and there was 1 IPO – Premia Foods. Delistings are something that happen all over the world. They are not necessarily a negative indicator. I think, actually, that a few delistings could be interpreted as a positive sign for the Estonian economy, otherwise why would large Swedish companies decide to invest more into Estonia? Because in order to delist, a majority owner would need to buy out the minority shareholders, and that means bringing more money to Estonia. Of course, in this instance the Swedish majority shareholders recognized an opportunity as the valuations of the companies were not that high. And long term they saw that this is a good place to invest.

Do you think that’s true overall, that Estonia remains a good place to invest?

Definitely. Last year our stock exchange index went up by more than 70 percent, so we were the best performing stock exchange in all of Europe, and fourth best worldwide. In the first few weeks of this year the index went up by another 10 percent. Why is this? I think the increase is due to the fact that there is now definitely more attention paid to Estonia. We joined the euro area, at the end of last year we also joined the OECD, and those events draw a lot of attention from the international media. Recently, Estonia has gotten positive news coverage in the Financial Times, The New York Times, the Economist. Investors pay attention to these events.

Do you actively collaborate with the Riga and Vilnius offices?

We are in daily contact with the Riga and Vilnius offices. We have tried to build the Baltic stock market as a single market. So today, if you have a securities account in any one of the Baltic States, you can purchase securities in any of the three countries without the need to open a new account in each country. A foreign financial firm, such as a bank, can become a member of the Baltic exchanges by approaching any one exchange. There is no need to fill out separate paperwork to have access to the other two. We have also harmonized the listing principles as much as possible, and when necessary our employees cover their counterparts’ responsibilities across the network. And, of course, we use the same trading technology, one that is also used by NASDAQ in the U.S., Stockholm, Copenhagen and other European markets.

Do you think Estonia will make an impact on the eurozone? Or, do you think that given its size, it will be Estonia who is more affected?

The eurozone will of course affect Estonia; it already has. Take, for example, currency risk. In Estonia we have always trusted that our currency is very firm and that we will not devalue the kroon. But to a lot of foreign investors this was always a hard sell, this idea that we will not devalue our currency. Especially in the years of crisis, 1992, 1997, 2008, it was very difficult to convince people that a very small country can manage this. The adoption of the euro puts an end to the discussions of the possibility of devaluation. If we look at the size of the Estonian economy, we see, of course, that we are very, very small compared to the whole euro area, but by the end of last year, Estonia had the smallest government debt in all of Europe, as a percentage of GDP. It probably will increase now somewhat, but it will still be the smallest. Our entire debt is smaller than some countries’ one year budgetary deficit, as a percentage of GDP. And so I think we can serve as an example to other eurozone countries. This has been noticed in the European Union, with multiple achievement awards bestowed upon our Minister of Finance - that it is possible to go through a deep economic recession and maintain fiscal prudence. This is something that’s very much needed in the eurozone.

What would you say is different about working in Estonia, from working in the United States or Luxemborg?

There are always differences between the private and the public sector, between working for an international organization and private corporation. But it all boils down to the people. In Estonia, in business, you will find that a lot of people know each other personally. So it’s rare that you make a business contact with whom you have no connection whatsoever. This is the nature of being in a small country. There are of course advantages and disadvantages to this kind of a small community. On the one hand, it’s easier to arrange business meetings if you have people in common, rather than sending an anonymous email. At the same time, if things don’t go that well, it may be more difficult the next time. But that can be a very good tool in motivating people to behave well, to act properly because they know that there will be consequences. Of course, in today’s Internet and social media world, it’s increasingly difficult to get away with bad behavior anywhere. Facebook and LinkedIn will have comments that will follow you.

You are the president of the American Chamber of Commerce in Estonia. What are your responsibilities there?

NASDAQ OMX belongs to the Chamber, where I have been a member of the board, and as of this year I am the president of the Chamber of Commerce. The American Chamber of Commerce in Estonia works to bring together companies of U.S. origin, like NASDAQ OMX, Coca Cola, Microsoft, UPS and others, with companies who have business interests in the United States or who are looking for investors in the United States for networking opportunities. I sometimes arrange for speakers, or meetings with ministers, because as discussed earlier, this is something that I can do because I know the people. But my main function as the president is to serve as the board director and to be the public face of the Chamber and assist other American companies in Estonia. AmCham has assisted the U.S. Embassy with the 4th of July celebrations, and has arranged Thanksgiving dinners so that people who are away from home could still maintain their traditions and so that Estonians could understand and experience American customs. I have only been president for three weeks, but look forward to being involved in my new role.

What was your educational experience like?

You have to remember that I attended Tallinn Technical University from 1989 to 1993; I studied economics there. That was a time of huge changes in Estonia. We had the ruble hyperinflation of more than 1,000 percent a year; we, still in my first year of university, were taught political economy by Marx and Lenin. When I graduated in 1993 there was the wild market economy here. I earned some of my grades for giving lectures to others, because I was working at the Central Bank during my third year and I had better access to books and knowledge through the Central Bank than what I had access to through my professors. So it’s difficult to compare studies then and studies now, because the environment was totally different. I don’t know if it’s possible to consider doing things differently then, because the practical possibilities and realities were not as they are today.

What are you most proud of in your career?

I think I have enjoyed many different professional roles. I have had the great privilege to work for more than a year as the economic advisor to President Meri during the end of his term. He is a very special person in Estonian history. That was definitely very, very interesting. Also, I think our euro area accession went very smoothly. That’s because we had made a lot of preparations in 2005 and 2006, before it became clear that we would not be joining the eurozone in 2007. A lot of practical plans and logistics were worked out at that time, and that was when I was responsible for the euro area preparations at the Central Bank, so a lot of the work plans that were taken to use in 2010 were worked out in a small team 4 or 5 years ago, and I was a part of that team. I was very happy to see that a lot of those plans were still usable last year. I think that was of great benefit, that we had this preparation and that we didn’t have to start from scratch only in spring 2010, when euro accession became clear. And of course today I am very proud of our team in this organization, it is really excellent. As of this year, we have not only switched over to the euro, but also changed over the whole infrastructure of the Estonian securities market.

What do you consider to be your biggest business mistake?

This is a very difficult question. Looking back, there are always things that I could have done differently, but luckily none of them have been huge mistakes. A lesson that I learned from being a manager is that if you have a decision to make that is difficult for you emotionally, such as having to fire someone, it’s important to remember that your decision will not impact only that one person, [but] that many people on the team will be affected by your action or inaction. This is something that I think comes with experience, this isn’t something that can be learned from a textbook.

How do you relax?

I used to play quite a lot of squash, but in the last year I haven’t had much time. I also like to dive, and I go diving here in Estonia. Of course the visibility here is not as great as in Egypt or elsewhere in the Red Sea, but I think that’s also what makes it thrilling. There isn’t much marine life, but there are very many ship wrecks here. You only see things that are 3 or 4 meters in front of you, so there is more of a surprise when you come upon something. Near Hiiumaa there are some quite interesting ship wrecks, and you can see cabins and even the dishes in the kitchen of the ship.

How does your work and high position influence your personal life?

I really haven’t felt a lot of the effects in my personal life. A business leader is different from a rock star in that sense, so even though I am on TV or quoted in newspapers regularly, it hasn’t brought me the personal problems or advantages of celebrity. My wife was at one point the head of the labor market department in the Ministry of Social Affairs. This was during a very challenging time when unemployment was especially high, and she was the focus of much attention. Currently she works in the Ministry of Finance as an auditor of European Union finance issues, a somewhat less visible post. I think that whether [or not] it is difficult having two people in high powered jobs really depends on personalities and relationships. I’m very happy and proud of my wife, and we are able to balance quite well, I think, our private and work lives. We both take care of chores and the kids, and try arranging work travel to accommodate each other’s work schedule. So, I don’t think that two careers is a special challenge, it just requires more planning.

What would you recommend to young people who plan to start their career in business and management?

I think it is very sad to consider how little people like to study mathematics. I’m talking about basic mathematics, basic understandings of proportion, percentages, money. Understanding mathematics is extremely important. This is not only advice to business students, but to everyone. Not understanding basic mathematics is why people get into trouble with mortgage loans, SMS loans. Students prefer to be more involved in soft issues like negotiation and presentation skills. But in business, you should be able to understand and calculate basic things, otherwise you cannot effectively present, negotiate or draw up simple business plans. We have too many students who just study business management and upon graduation think that they are already managers. A general idea of business issues and not much mathematical base creates a very big contrast between the student’s expectations and the market offerings. So, before going to study economics or business, I would advise students to consider studying finance, logistics or construction or some other precise area and study business or economics as a secondary discipline. There is not very large demand for general business managers in Estonia.

Any last thoughts?

I think it would be good to end this interview on a positive note. I will say that Estonians typically like to complain that we are not as good as Sweden; our pensions are not as high as in Germany; our unemployment benefits are not as good as in Finland, and so on. But if we look back at where we have come from, and take a look at what our living standard was even 5 or 10 years ago, it is clear that we are doing very well. We cannot expect to jump overnight from a totally messed up economic and political society into an extremely well-developed, perfect economy and society. I think overall we have done very well, and that there are so many opportunities and possibilities today for young people here, if they bother to study, think, make an effort. It is always easier to think that the sky is more blue abroad, but I think many people who do go abroad lower their expectations and standards more than they would have done in Estonia. Again, if we look at Skype or Internet banking in Estonia, we will see that Estonian entrepreneurship and engineering does lead to success. The market here is not too small and you don’t have to limit your business to Estonia, and it’s very possible to try harder and to be innovative. As the NASDAQ OMX slogan states, Dream it, Do it!