Finnish – Latvian Business Forum, Latvia, Riga

Minister Kampars,

Distinguished guests,

Ladies and Gentlemen,

It is great honour for me to address the audience of this Finnish-Latvian Business Forum. I am especially delighted to see such wide participation both from Finnish and Latvian companies in this Forum.

Ladies and gentlemen,

It is often said that Finland and Latvia are in many ways similar. We share many things like our geographical position in Northern Europe on the shore of the Baltic Sea, climate conditions, similar nature and mentality of Finnish and Latvian people. Unfortunately, one thing that we have also shared in recent years is the global financial crisis, which has hit hard both of our countries.

Finland entered the global crisis from a relatively strong position. But as a country highly dependent on exports we were hit hard by the global crisis. All of our major export industry branches: metal engineering, electronics and forestry experienced sharp decline in global demand. As a result our GDP declined in 2009 by almost 8%, which even exceeds the decline observed in 1991, which was the worst year of GDP decline in the economic crisis of the early 1990s.

Our experience from the crisis and budgetary consolidation in the beginning of the 90s was very painful, even if it was less severe than what Latvia has faced in recent years. The main lesson for us from this period was that by committing to both budget cuts and tax increases and implementing them early on we were able to increase confidence in the economy in general and in the public sector’s capacity to service debt. We have maintained strict policy of public finances also during the good years and therefore we entered the present crisis with substantial surpluses in the government finances. This has helped us during the rapid decline of GDP.

Our economy is well placed to return to growth path in the nearest future. The recovery of exports will depend on the recovery of the global markets and the domestic demand is forecasted to initially drive the recovery. Latvia has carried out admirable budgetary consolidation during the present crisis and the government has acted responsibly in dealing with this crisis. Therefore I am confident that when the EU returns to the growth path both Finland and Latvia are well placed to follow the rest of the European recovery.

Ladies and gentlemen,

According to our statistics the foreign trade between Finland and Latvia in 2009 was 336 million euros, which is 47% less than year before. Finnish exports to Latvia decreased even more by that is 53% last year. Imports from Latvia to Finland in 2009 also decreased by 36% compared to the previous year. Since I am an optimist, I would like to emphasise the positive aspect as well. The decrease in our trade has been drastic, but on the other hand it means that when our countries return to the growth path there is a huge potential to develop and expand further our business relations. Today’s Forum offers an excellent possibility for encouraging our companies and businesses to develop their existing contacts and networks and to form new ones.

Ladies and gentlemen,

Finland has lot to offer for foreign investors. Our economy is one of the most competitive and open economies in the world. The government is business-friendly and we have developed infrastructure and skilled workforce. Red tape is minimal. Government offers foreign-owned companies investment incentives and access to the latest research from extensive cooperation between Finnish universities and the private sector.

Finland has been able to reach a high international standard in certain areas of social and economic development. This has also helped us to create an attractive business environment. Realising the importance of open economy and free, liberal trade we have had to strive to use our natural resources and other productive assets to our best knowledge to be competitive in the world. This is where the strong Finnish know-how comes from, that is central to the success of our forest industry and technology, energy technology, environmental technology and ICT.

We are often asked how it was possible for Finland to become a technology-intensive, knowledge-based economy in such a short time in the 1990s. Our education system and systematic investments in research and development have played important role in this process. Recent PISA-evaluations measuring the quality of education systems have proven the Finnish education system to be of high quality. Our investments in Research and Development are currently 3,7% of our GDP, which is one of the highest figures in the world.

Sensitive Northern nature, traditionally high public awareness of environmental values, advanced legislation and its effective implementation as well as close cooperation between public and private sector have made Finland also a globally leading country in environmental expertise and technology.

Ladies and Gentlemen,

As a minister of housing I am responsible for issues related to energy efficiency of buildings and green building. These are also themes that are central for our marketing brand ‘Cleantech Finland’. They are also themes were Finland and Finnish companies have a lot to offer.

With the pressure to combat climate change, the world is increasingly looking to buildings to make a difference. Building stock is the main consumer of energy globally, accounting for approximately 40% of total global energy consumption. The greatest potential for energy savings and emission reduction lies in this sector.

According to the new EU directive on energy performance of buildings, the European Union member states shall ensure that by the end of 2020, all new buildings are nearly zero energy buildings’ and energy must be derived ’to a very significant extent’ from renewable sources. It is important to increase dramatically the energy efficiency in new construction. On the other hand, it is even more important to decrease the energy consumption of the existing building stock.

To a great extent, the debate on energy efficiency has focused on new buildings partly because progress there is reasonably easy and cost-efficient. However, the real challenge facing many countries lies in renovating their existing building stock. The new EU directive requires Member States to issue binding regulations requiring the improvement of energy efficiency during major renovation work. Since renovation is more labor intensive than new building, this issue also has a major economic and social dimension.

In fact, the construction sector is already one of the world’s largest sectors and major employer. The need to renovate the existing building stock will further strengthen this trend. If you also include the growing need to build more climate-friendly buildings, green construction is becoming one of the most important and fastest growing business opportunities in the world.

As I mentioned energy efficiency and green construction are part of the marketing brand Cleantech Finland, which brings together Finnish clean energy and environment companies and experts in the effort to build clean technologies as part of Finland’s competitive advantage. Many Finnish companies representing different clean technologies are also present in this Forum today.

Ladies and gentlemen,

Countries like Finland, which are depended on export, have been greatly affected by the economical crisis. We cannot just wait for the better times to come but we have to be active in promoting trade and investments. Even inside the EU internal market we can’t wait for the internal market to do the promotion for us. Wide participation from both Finnish and Latvian side shows that there is need for this kind of business seminars.

At the same time, it should be remembered that Finland and Latvia are becoming all the time closer and closer. Doing business between our countries has become easy with our memberships in the European Union. Nowadays travelling between our countries is fast and easy. There are several flights daily from Riga to nine different cities in Finland. This forms a good basis to further develop the business relations between our countries. I wish this seminar all the success.