Finland to Grow by Charm

According to the recently published Transparency International corruption statistics, Finland is once again one of the world’s most corruption-free countries, right below the number one countries Denmark and New Zealand. Corruption is a disease in economics, and it is rare in democratic welfare countries such as the Nordic Countries. The corrupted countries usually have a low income level, high income difference and an authoritarian leadership. From Finland’s neighboring countries, Russia has a very high corruption rate: its ranking is 136, the same as Nigeria. However, Finland has not done very well in acquiring foreign investments. In comparison to Sweden, the investments obtained by Finland amount only one fourth of the investments Sweden has acquired. The countries that attract most of the investors are USA, Great Britain, Hong Kong, China and Germany. On the list, Sweden is ranked as number 17, Finland 35. One bright spot can be found in the same statistics: Helsinki is among the most attractive investment destinations when European cities are compared, right after London. Dublin in on the third place. Reflecting to these facts, I am wondering how Finland could increase its status as an attractive investment destination in the future.

The fact that we have relatively small market, and we are located far in the north, is not a good enough explanation. Our neighbor, Sweden, is a good example of how to get investments. What are those differences between Sweden and Finland, and what are the reasons there are so few investments in Finland? There are at least five reasons. Firstly, the public sector in Finland is too large. The Finnish Chamber of Commerce is working to reduce the public expenditure so, that the expenses are maximum 50 % of the GPD.  Finland lose to Sweden also in tax competition. The European Commission has recently published a forecast, which shows that Finland's total tax rate increases to the top place among 27 EU countries in 2014. In proportion to the GDP, the tax rate is 58 %. For comparison we can mention Sweden with 52 % and Estonia with 36,5 %. These figures do not speak for Finland, and are hurting the investment attractiveness. What is needed now is a good tax reform, as was made in the early 1990s. Back then, the reform helped the Finnish economy to recover and rise – although, of course, the miracle of Nokia and the newly opened Russian markets also contributed to the economic growth. Thirdly, I would like to mention the inflexible labor markets and the lack of local decision-making. It is absurd, if being unemployed is more profitable than working, when there is work available. The fourth point is unnecessary regulation and complex permit processes. As the business is starting to move, the regulation must be flexible and permits to be granted fast. The last, but not the least point, is the slowness and slowing of the decision-making. Collecting political points cannot guide the decision-making. Sometimes even a bad decision is better than no decisions.

In my opinion Mr. Bruce Oreck, the U.S. Ambassador to Finland, gave some fresh and free advices to Finland in the Helsingin Sanomat- newspaper last weekend. There were five advises, I will point out three of them:

  1. Aim high, decide to be the number one of storytelling and marketing.
  2. Act: practice marketing, stories, confidence like hell.
  3. Learn to enjoy what you are doing. Conquer the world; charm them with your words.

I believe that with these guidelines we can grow stronger in the international marketing and reach Sweden in acquiring investments. Our knowledge, passion and products already are the best in the world.

Pirjo Karhu,
Yrittäjäneuvos, CEO,
Centre d'Expertise Oy

Blog in Finnish: ”Yrittäjän Ytimessä” (In the core of an entrepreneur)