Thanks to streamlined rules, Estonia teems with business

  • 2004-05-20
  • By Wayne Jackson
TALLINN - Starting a new business in Estonia can be simple and quick, taking as little as one day, though it can also be very time-consuming, depending on what type of company you are starting.

In terms of law, there are five types of legal entities, the simplest being a sole proprietorship (known as FIE in Estonian) and the most complex being a public limited company (AS).
"It is possible to start an FIE in one day," says Anne Jurgenson, executive officer of enterprise division for the economic development department at the Economy Ministry. An individual may become an FIE and be entered in the commercial register. The tax fee is 500 kroons (32 euros).
"In Estonia there are approximately 70,000 sole proprietors," said Jurgenson. "If turnover is more than 250,000 kroons per year, then they go to a new tax port, and to start some other form of company can be time consuming."
Valeri Petraitis, who founded OU Flaminger in 1989, is a pioneer in Estonia's small business world. His company designs Web sites and also sells, repairs and builds custom computers.
"I currently have three shops and hope to open a fourth before the end of 2004," says Petraitis.
"At first it was very hard to start a business, but now it is less complicated," he adds.
Due to the ease with which proprietorships are created, new ideas are continually coming to market. Toom Pungas, a patent attorney, came up with one such idea.
"The product name and company name is Viru Ramm, and I have the patent on it," says Pungas. "It's a process by which toxic waste from oil-shale production and oil-shale burning is processed to make a soil conditioner for rapid plant growth."
As he explains, a three-year pilot program, named Hasco, funded by the EU, was started in [the northeastern town of] Kivioli in 1991. "It will be finished this year and has already produced 70,000 tons of semi-coke," says Pungas. "This is used to condition the soil on 200 hectares, and the plant growth is incredible."
His partner Petr Mihodui stresses the project's benefits. "This process does not pollute the air, restores plant growth and creates jobs. So far Estonia has not seen the importance of this [project], and all the output is being exported," says Mihodui. "But we have received help from the EU and are currently seeking investors."
Right now in Estonia there are county development centers that provide free consultation services for both potential startups and active enterprises, as well as for local governments, NPOs and foundations. What's more, they will also provide financial help in those cases where the business concept is deemed sustainable.
The maximum amount of startup aid is 160,000 kroons, though the government offers a number of other support instruments and some of them are considerably larger than 160,000 kroons.
"Computer skills and a willingness to work hard are the key to success in today's business world," says Aleksei Klochkov, a subcontractor for Inflot AS in Maardu, a container shipping company. Since 2000 he has been responsible for marketing and research and compiling information pertaining to all aspects of the container shipping business.
"Most of the problems we are encountering are due to a lack of proper documents under EU rules because they haven't been prepared yet," says Klochkov.