Off the wire

  • 2001-06-14
BIG MAC INDEX TO SKEW: McDonald's Estonia raised prices at its fast food restaurants by an average of more than 8 percent, or three kroons ($0.16) since June. The hike was due to an overall rise in the cost of living, said Dmitri Shalov, a consultant with the fast food chain's Estonian operation. Almost all communication costs have gone up, but a Big Mac still cost the same as years ago, Shalov added. McDonald's Estonia opened its first fast-food restaurant in Tallinn in April 1995. It now has four restaurants in Tallinn and one in Tartu and Narva each. Local-currency prices of a Big Mac are used by The Economist to calculate its Big Mac index reflecting under/over valuation of a currency against the U.S. dollar.

DANES OUT OF A JOB: The board of Gronbjerg Mobelindustri, the Danish parent of the glued-wood-panel maker OU GM Panels based at Somerpalu in southern Estonia's Vorumaa region, has decided to move its entire production from Denmark into Vorumaa. "The sale price of glued wood panel on the world market has dropped so low that one can't stay in competition any longer using Danish labor," GM Panels manager Urmas Lillepalu told the business daily Aripaev. According to Lillepalu's information, the price of pine panels has shrunk by at least one-fifth in recent years. GM Panels is preparing to building a new, 7 million kroon ($380,000) production facility with a floor area of 2,500 square meters. "We want to be able to get the equipment to be brought in from Denmark and put into operation at around Christmas," Lillepalu said. GM Panels employs 45 people producing about 500 cubic meters of panels a month. The Danish parent company has invested more than 20 million kroons in the Somerpalu-based production facility.

PRICE HIKE BEFORE MIDSUMMER: The Saku and Tartu breweries, which together control more than 80 percent of the Estonian market, said on June 8 they would raise the price of beer by an average of 0.10 kroons to 0.20 kroons ($0.01)) per bottle, citing higher prices of raw materials. The price hikes are effective before the June 23-24 celebration of midsummer, traditionally a beer fete in Estonia. AS A.Le Coq Tartu brewery's sales chief said the price increase on output was effective starting June 18 and distributors had already been informed. "As far as I know, the price rise is caused by higher prices of malt," the sales chief said. Sources at Saku brewery's sales department said the price of Saku beer would rise from June 11.

HILTON APPROACHES: The Hilton Group, one of the world's largest hotel chains, confirmed June 11 that its offer for shares in the Estonian hotel chain Scandic Hotels AB is nearly approved. As a result, Hilton will become the owner of the Scandic chain. Toomas Sildmae, managing director of Scandic Hotels Eesti AS, said the deal involved 154 hotels worldwide, including four in Estonia - the Palace and St. Barbara in Tallinn, the Rannahotell in the seaside resort of Parnu, and the Karupesa in Otepaa in southern Estonia. In the next couple of years, the Hilton will bring about 50 Scandic hotels under its trademark while the remaining ones continue operations as Scandic hotels. Sildmae said the integration of Scandic hotels into the Hilton chain would have several positive consequences for Nordic countries as well as Estonia and might bring more tourists into the country.

JAPANESE GIFT: A deal was signed between Japan and Latvia on June 7 for a gift of $495,000 toward preparing Latvia's World Bank housing development project. World Bank's Baltic states and Poland's Regional Director Michael Carter said after the deal was signed that, as preparation would take some time, the whole project could begin in a couple of years. The total cost of the project is expected to run between $5.3 million to $6.3 million, of which the World Bank will lend $2 million and Denmark some $2 million to $3 million. Latvia will chip in with $800,000. The project will help to house people with low incomes and should help around 20 percent to 25 percent of Latvia's population in getting housing or their homes repaired, according to Latvian officials.

TOP OF THE NET: The Web site of the Lithuanian Development Agency was ranked top among investment promotion agencies in the annual review of the top 100 sites by Corporate Location magazine. The United Kingdom magazine published by the Euromoney Plc Group gave the Lithuanian agency the "Best IPA Web Site Award for 2001." The evaluation is based on such criteria as functionality, ease of navigation, search function availability, downloading time, links, quality and timeliness of information, topical news and structure and design of the site. In 1998 the LDA Web site was ranked 34th; in 1999 it was fourth, and in 2000 it rose to second place, topped only by South Korea's, which was named Europe's best.

ARAB BUSINESS: An agreement on investment promotion and protection between Kuwait and Lithuania was signed at the Lithuanian Foreign Ministry on June 5. Kuwait becomes the first Arab nation to sign an investment treaty with Lithuania. In 1996, exports worth some $13,000 went to Kuwait. In 1997 trade between Kuwait and Lithuania didn't take place. In 1998 goods worth $12,700 according to the exporting country and $ 250 according to country of origin were imported from Kuwait. In 1999 Kuwait and Lithuania again had no bilateral trade, according to official statistics. In 2000, imports worth $15,275 by country of origin were received in Lithuania from Kuwait. Data on 2001 are not available. As of January 31, 2001, only one joint Lithuanian-Kuwaiti company is registered in Lithuania, with an authorized capital of $250.