TALLINN - When it comes to Estonian business projects, bigger is better. Because municipalities are after larger investment portions, sizeable projects have a better chance of finding fruitful soil in Estonia.
Joakim Gronvik, president of Primus AB, the famous Swedish manufacturer of stoves and lanterns for outdoor and leisure use, claims the business has improved since the company relocated its industrial operations to Tartu in 1995.
"It is cheaper and the quality is very good," he says.
The facility in Tartu, which today employs about 30 people, is involved only with assembling and except for the Swedish factory manager, all employees are local. Before the relocation, Primus had some 150 people in Sweden manufacturing parts and assembling end products. The company headquarters is still in Solna, a city near Stockholm.
Gronvik, who held a different position with the company during the relocation period, said Primus management had to learn one fundamental thing.
"What I have learned is that one had to understand the Eastern bloc mentality. After that, everything went smoothly," he says.
"We probably had a different way of thinking. If we say we need to do something now, it means now, not tomorrow or next week," Gronvik explained, referring to how disorganized Estonian workers were in the early 90s.
Most likely the result of 50 years under the Soviet regime, he says that problems with inefficiency have been fading.
"There is no problem with qualified local personnel, but it is essential to have a Swedish manager on site in Estonia."
Gronvik says there were no conflicts with state officials and inspectors, except for a protection service offer that took place in accordance with trends of the mid-90s.
"In the very beginning, in 1995, we were offered protection by a so-called security service company that we suspected was the mafia. The offer was rejected, and we haven't had any problems since," says Gronvik.
Edith Kiilmaa, head of communications for the state-run business promotion agency Enterprise Estonia, asserts that no major problems occur during a company's establishment in Estonia.
"We [Estonia] are known [for having] a liberal economic environment and well-working bureaucratic machine. At the same time, there are certain things one should know. For example, if a company's articles of association are in English, it must be translated into Estonian and attested notarially," Kiilmaa explains.
"We mostly recommend contacting a lawyer's office that deals with establishing businesses. They have booked notary appointments so one would not have to wait for a month to get to the notary. They usually also have their own certified translators so there is no need to attest a translation notarially," she ads.
Enterprise Estonia helps people interested in investing in the country "with word and might" as Kiilmaa puts it. In addition to searching for the necessary production site, possible local partners and other contacts, the company looks into whether a project can be supported by a program that channels EU money. Naturally, all of this comes free of charge.
Estonian commercial law requires that 50 percent of company board members have permanent Estonian residence permits. Citizenship, however, is not required and foreign owners are allowed.
In Kiilmaa's opinion, the demands of various Estonian inspectorates are clear and easily interpreted.
"In general, we recommend to hire a consultancy company to keep things simple, but that depends upon the concrete person – whether he wants to arrange all those things himself or allows some experienced company that offers business start-up services to do that," she says.
However, the provincial thinking of local municipalities may sometimes hamper what comes easy on the national scale. According to the Estonian Association of Small and Medium Enterprises, municipal officials' indifference and negative attitude toward businesses and entrepreneurs, along with their poor administrative skills, bothers local businesses.
In a 2003 interview with 400 businesses, the association found that most are disappointed with the municipal officials' habit of interpreting legal acts in a way that blocks business initiatives.
According to the survey, the main problem with small municipality administrations is their tendency to wait for a major investor on a big white ship. Thus, they neglect the initiative of smaller companies and individual entrepreneurs.