OFF THE WIRE

TAX THREAT

Estonia will turn into a tax haven when it joins the European Union, posing problems for Finland, a Finnish trade union official has claimed. Matti Viialainen said Estonia will maintain an exceptionally low tax level even after joining, besting even the low taxes of Ireland, the current low-tax darling in the bloc. Estonian companies' tax burden is kept low as investments are tax exempt, income tax is a flat 26 percent and value added tax is 18 percent - below Finland's 29 percent and 22 percent rates. Personal income taxes eat up almost 60 percent of the income of Finns in the highest income brackets.

"How can playing by so widely differing rules be tolerated on a common internal market?" Viialainen demanded to know. "Were Finnish officials monitoring Estonia's accession talks at all awake when talks over the Estonian taxation system were in progress? Or is it that the aim is to make the neighboring country into a sort of model that Finland too should strive to emulate?" (Baltic News Service)

UPGRADES

The international credit rating agency Moody's has upgraded the ratings of several Nordic owned Baltic banks. In Estonia, SEB-owned Hansapank had its financial strength rating bumped up from C- to C and its Baa1/Prime 2 deposit rating confirmed, reflecting Hansapank's dominant position on the Estonian market, said Moody's. Swedbank-owned Uhispank meanwhile received a financial strength rating of from D+ to C-, while its Latvian cousin Unibanka also had its rating raised from D+ to C-. Estonia's Sampo Bank went from D- to D. Both Uhispank and Sampo now have deposit ratings of Baa1/Prime 1 while Unibanka's deposit rating is now Baa3/Prime 3. (BNS)

LITHUANIAN INPUT

Any decision on the imposition of visa requirements for residents of Russia's Kaliningrad exclave will have to be approved by candidate countries, including Lithuania, the European Union's top external affairs commissioner said. In a letter to Lithuanian Foreign Minister Antanas Valionis, Chris Patten promised that the European Commission, the EU's executive arm, would consult candidates Lithuania and Poland before submitting final proposals to the EU member states. The EU has said Kaliningraders, who will be cut off from the Russian mainland when Lithuania and Poland join the EU, will have to get visas to travel across these countries. Lithuania is planning to scrap its current visa-free regime with Kaliningrad in January 2003. (Baltic Business News)

MOBILE SAVVY

Tallinn municipality says that 6,100 public transport tickets were sold by mobile phone transactions within two weeks of the launch of trials. Officials said sales averaged about 400 tickets per day on weekdays and 200 per day at weekends. The concept of buying bus and tram tickets by phone and receiving confirmation in an SMS message was first tried in Helsinki where city authorities say an average of 3,000 tickets are sold per day by mobile phone. The Estonian service is available to subscribers of all the country's mobile operators and is being managed by Regio and Mobi Solutions. (BNS)

LATTELEKOM IN THE BLACK

Latvian fixed-line monopoly Lattelekom posted net profits of 12.1 million lats ($20.3 million) in the first half of 2002, a 9 percent increase year on year, company officials said. This compares with a profit in the same period last year of 11.1 million lats, which was down 2 percent from the first half of 2000. Lattelekom's total 2001 profit was eclipsed by mobile operator Latvijas Mobilais Telekom, which posted profits of nearly 30 million lats, beating Lattelekom's 23.3 million lat profit for the year. The state owns a 51 percent stake in Lattelekom and is immersed in a legal dispute with the owner of the other 49 percent, Tilts Communications, which is owned by Finland's Sonera. Tilts is aggrieved at Latvia's decision to liberalize the telecommunication market in 2003 - a decision which breaks an earlier commitment to wait until 2013. (BNS)

KLAIPEDOS NAFTA DOING WELL

Klaipedos Nafta announced a preliminary pretax profit of 40.9 million litas ($11.8 million) for the first half of this year. In the second quarter of this year, the fuel transit company's pretax profits reached 30.5 million litas, it reported to the National Stock Exchange. Last year Klaipedos Nafta earned a profit of 5 million litas for the period January-June but made a loss of 9.6 million litas for the full year. This year the company handled 4 million tons of oil products in the six months, up by 37 percent on the same period last year. (BNS)

BEER ON THE GO

Sales of beer in plastic containers, known as PET containers, are on the rise throughout Lithuania and are expected to account for one-third of total sales this year, according to the country's brewers' association. PET container sales have grown threefold over the past two years and such products account for nearly 30 percent of beer advertising. In the first half of this year, the country's 12 brewers sold a total of 121.46 million liters of beer. PET container manufacturing does not require large investment and beer in plastic containers is popular among lower-income consumers. It is believed, however, that the introduction of a pollution tax in early 2003 will hit sales in PET containers. (BNS)

Estonia mulls simpler visas for Russians

By Kairi Kurm, TALLINN

The number of Russians visiting Estonia has been increasing lately thanks to promotional work done by the government and the private sector in Russia. But some say the inflow of Russian tourists could be even higher if the visa issuing procedure were simpler.

Leisure and business travelers from Russia could mean billions of kroons for Estonia, says Oliver Staas, regional director of Radisson SAS Hotels and Resorts.

"Estonia has always been a popular destination for Russian travelers," Staas said. "Now with increased awareness of Estonia as an attractive conference destination with modern infrastructure, this could only grow."

Last year 281,000 Russians visited Estonia, according to the Estonian Tourism Board, forming one-quarter of the total number of foreigners visiting the country, just behind Finns and Latvians.

Almost half of the Russians visit their relatives and friends in Estonia. Some 22 percent come for business and 12 percent for vacation, according to the tourism board.

By the end of this year, the number of Estonian visas issued at the consular office in Moscow will increase by 30,000, a result of the aggressive promotional campaign by Estonian tourism authorities, said Tarmo Punnik, second secretary at the Estonian Embassy in Russia.

Recent research at a travel fair in St. Petersburg shows that the visa procedure was the main obstacle, mainly among the older generation that used to travel to Estonia without visas during Soviet times. Russians also complain about the long lines at the three Estonian consular departments.

"I think extra resources should be allocated to deal with the queues and lower cost visas should be available with a Pan Baltic agreement allowing Pan-Baltic access for Russians on one visa," said Paul Taylor, regional director of sales for Radisson's Baltic and Russia operations.

Only citizens of Canada and South Africa may travel to Estonia on Latvian or Lithuanian visas.

It takes Russians up to five days to get a regular visa to Estonia and one day to get an urgent visa. The regular single-entry visa costs 210 kroons (13 euros), while the urgent one is twice as expensive. In addition, Russians traveling to Estonia need an invitation either from relatives or friends, a tourism agency or the company they are visiting.

Oliver Olin, sales manager at a Moscow travel agency, says the agency route is the easiest. But others said improved transportation and infrastructure, not easier visa requirements, would bring more Russians to Estonia.

"I don't think the problem is in visas," said Punnik. "It is rather a bad transportation connection, lack of hotel rooms and lack of information. You can't get a Schengen visa in Russia in a day or a week, even an urgent one."

Russian tourists have complained about transportation links to Estonia, Punnik said. There is an airplane route to Moscow, which is often booked solid. The trip from Tallinn to Moscow takes 16 hours by train and bus.

A direct flight from Tallinn to St. Petersburg could also help increase the number of Russian tourists, said Staas.

Another way is to work on shaping Estonia's image within Russia, which can be affected by negative news and lack of information, Ollin said.

Punnik added that the Estonian government should do more to advertise the country in Russia.

"A Russian tourist spends all his money on a vacation," Punnik said. "Unlike Finnish tourists, he wouldn't go to the Kadaka market, but to the most expensive restaurant to drink the most expensive vodka.."

According to the international weekly Tourism & Vacations magazine, about 20 million Russians travel abroad each year and spend nearly 50 billion euros.

Estonian travel agencies and hotels lobby for Russian tourist dollars in Russia at their own expense. Some major Estonian hotels promote themselves in Russian travel magazines. Radisson SAS even offers special tours to the country with discounts on traveling expenses.