Sulling sees Enterprise Estonia overhaul as greatest feat

Photo: Martin Ilustrumm

Minister Anne Sulling does not think it bad for competition to arise regarding labour force: economy must adjust to resources, not vice versa.

Foreign trade and enterprise minister Anne Sulling (37), in office over three months, says that Foundation Enterprise Estonia (EAS) – thus far mainly handing out grants – needs to be reformed, becoming an advisory competence centre for businessmen and providing paid services.

What assessment would you pass on Estonian exports, right now?

The numbers of its rise and fall are assessments in their own right; but, one does have to look at background thereof as well. In first quarter these were falling and we need to see what is going on around us. Seeing that export means demand in the world around us for our goods. Our main markets, like Finland, have been in decline for two years, Russia has problems. With things not well around us, our exports cannot be very big.

Secondly, we need to take a look at the exporting enterprises in Estonia – are they doing well, what could go better. Over these initial three months now, I have been visiting and getting acquainted with many exporting companies, and there is potential. As well as room for development.

Lately I had a talk with Professor Stéphane Garelli, of Lausanne University; according to him, Estonia ought to line more after Switzerland and not focus on EU market alone – rather, to look further. What do you say?

Estonia is such a small country so that the EU is a very very big market which we can exploit more and more. If we talk about going outside, it is often said that China is a very big market. But, over there, totally different volumes are expected which, often, we aren’t able to offer.

In my opinion, Estonia’s chance is offering something in the high quality niche areas and for that the EU has a well funded population. But, then, one needs to find products and services that these might need. True: the EU market has a very intense competition, but we share a similar cultural background, similar values, and as a rule promises are kept.

When compared to the large tempting markets like China or Russia, there are both very high risk markets. On EU market we don’t have the risk of having backs turned to us one day, for some political reason.

But in Europe there’s no growth.

Forecasts show the situation will improve. But the thing with market growth is also that as you enter it with a better product, you can gain market share.

Many agricultural producers in Estonia long with anticipation to have their foot in the China door, to export into its market. Recently, you paid a visit to China – how are things, at the moment?

I had the opportunity to meet the Chinese trade minister; we talked about the desire of our entrepreneurs to export milk, poultry and pork products. The trade minister was very friendly towards us. He said they were well aware we have high quality agricultural products.

I think time will tell if actions will follow the benevolent talk. Fish producers, for instance, do have the authorisations.

I developed a very good contact with the trade minister. Turns out we have both studied in Paris. He spoke pure French with me.

Entrepreneurs say the delay in China is because Estonian politicians met with dalai-lama. That true?

That surely has an impact. As for many other countries.

Why must exporting companies receive special treatment, by the state?

If we want the economy, tax revenue and salaries to grow, it is very important for us to export more. Estonia is such an open economy – export is 70–80 percent of GDP. With such a small economy, we can’t hope in domestic market alone.

Mainly, the state supports enterprises thru EAS. While speaking about EU support, these are much smaller during this period than the previous one; and, in time, they’ll keep getting smaller yet. Therefore, it is important for EAS to focus more on counselling of companies, rather than money distribution alone. During this period already, a part of the support is issued as financial instruments, to train enterprises to use guarantees and loans instead of grants.

Also, we want to create closer ties to honorary consuls. Foreign ministry had a study made, asking honorary consuls how much they are used for business contacts. And the answer was: not much. But they would be pleased to have an input into creating contacts with local retail chains and fixing meetings between entrepreneurs. We have honorary consuls all over the world – 186 of them, in 82 countries.

In addition to that, EAS intends to broaden its network of representatives. For instance: it seems to me that a Silicon Valley representative is not enough for the US market; we would need somebody on the East Coast as well. In the fall, we are planning to open EAS representations in France and Holland.

Rather, EAS ought to morph into a competence centre – in addition to these networks, it is important for them to start providing advice to entrepreneurs. And these ought to have paid services: market research, finding contacts, organising match-making events.

How much interest do you detect towards Estonia, at the moment, among foreign investors towards Estonia?

The interest is there. Also, the investors already active here provide for an excellent source – on the one hand, they are expanding their operations; on the other hand, they are involving their partners who offer some complementary products or services. It is very important to hold the hands of those who are already here.

I always ask foreign investors why they want to come to the very Estonia. They like it that, in Estonia, the business and tax environment is very simple. No need for a tax manager. No exceptions. It is very easy to deal with the state – many foreign entrepreneurs are waiting for e-residency so as to be able to use digital signature.

Labour force may be qualified, but it is insufficient. It is said that for an investor who needs to quickly find over a hundred of staff, it makes no sense coming to Estonia.   

That is the problem. Meanwhile, it is not bad when new players enter with new jobs, which allow for higher added value and pay better salaries. Neither is it bad if some investments replace others.

I realise that some major players have, by campaigning and offering better wages, pulled employees from other entrepreneurs. But the economy needs to adjust to resources, not the resources with the economy. While talking about labour shortage, people always talk about bringing in resource from abroad. But that can only be a process motivated and directed by the entrepreneurs.

There’s been much talk about the income tax exemption, created to attract foreign investors, having become obsolete. What do you think of that?

I think it works very well. When talking to investors, this is a bonus they esteem with the Estonian tax system – that re-invested profits aren’t taxed and are only taxed when dividends are withdrawn.

Some have raised the issue of the high labour force taxes. Glancing at employers we would seem to have high taxation, as if; even so, when it comes to employees, we have very low taxes. This is an issue of calculation.

In many countries, they just have social tax included in taxes paid by employees, but we have it paid by employers. In reality, we are below average when it comes to tax load.

How do you assess you initial 100 days as minister?

For me, the toughest nut to crack was fixing EAS. A couple of weeks ago, I met a foreign investor very vital for Estonia who said he likes the way things are moving at EAS. He senses a positive atmosphere there now. While up to now he has been standing on the sidelines, now he would like to be involved. For me, that was quite a statement.

But, at the same time, they say you aren’t getting along too well with the officials at the ministry.

I think that is not true. Talking about the people under me, my cooperation with them is ideal.

Meaning: the economy ministry’s economic development department under guidance of vice chancellor Ahti Kuningas, and the foreign ministry’s foreign trade and development cooperation department under vice chancellor Väino Reinart. I couldn’t imagine better partners to work with. With them, and their teams, my relations are excellent.

Behind this image of problems, I see the small political games. I did hope I would not have to do with these, but, turns out, it’s not that easy.