16th Baltic Development Forum Summit and 5th Annual Forum of the EUSBSR, Turku

Mr(s). Chairman, Mr(s). President, Commissioner, Ladies and Gentlemen,

As a start I would like to welcome you all to Turku on behalf of the Finnish Government. Actually Turku is a great city to host the 16th Baltic Development Forum and the 5th Annual Forum of the European Union’s Strategy for the Baltic Sea Region. Turku is a great example how to create successful business in various sectors in Baltic Sea Region and how to respect clean nature in a Baltic Sea Nation. This meeting will certainly improve the awareness of Baltic issues.

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My theme today – Baltic economic co-operation – is not a new one. To the contrary, for almost a millennium, Baltic Sea has been a platform for economic co-operation. The Hanseatic League, or Hansa, which was established in 1356, was an early form of commercial and political co-operation in the Baltic Sea Region.

What is common for co-operation then and now, is its informal and institution-free character. When the business interests are strong, commonly understood and widely shared, there seems to be less need for formal structures. We could say that Baltic Sea region is an example of the benefits of trade, not only in an economic sense, but also as a stabilizing factor in the region.

The Nordic countries have traditionally played a very important role in Baltic Sea Region’s co-operation. The Nordic countries have a long common history which is still present in the many forms of co-operation; on the parliamentary level with Nordic Council and between governments in the Nordic Council of Ministers. The Nordic countries may have different approaches towards the membership of the European Union or European monetary policy, but the forms of regional, needs-based co-operation, are neutral in relation to such policy choices.

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The Baltic Sea Region is the home of over 60 million people. The Baltic Sea Region comprises a highly competitive part of the European and even of the global economy providing a vital economic environment to its people and enterprises. The countries around the Baltic Sea have deep historical boundaries and economic ties integrating the people and the businesses together.

The region’s economic size is impressive. According to the most recent “State of Region Report” the annual GDP is more than 1 300 billion euros. Northern Germany and Northwestern Russia account both for roughly 15 per cent, the Baltic countries 7 per cent and Northern Poland 5 per cent. The Nordic countries account for the most, that is, 60 per cent of the total.

The Baltic Sea Region went along with the European slowdown, even if it remained at a higher level of economic dynamism than its European peers.  However, there are some risks in the expected recovery and growth in the Baltic Sea states, currently not the least due to the situation in Ukraine. This may hamper the economic activity across Baltic Sea Region.

Most exports from the Baltic Sea Region continue to be destined for markets nearby emphasizing the benefits of mutual connections between the countries involved. Challenged by increased global competition and affected by the economic slowdown in Europe, the Baltic Sea Region has in recent years lost some of its market share.

The Baltic Sea Region is also a home to a significant manufacturing sector. This drives exports in many products from metal manufacturing industries, the automotive industry and production technology. The Region also has a significant position in biopharmaceuticals and communication technologies, often associated with high levels of R&D, as well as in forest products and some food processing sectors. Not surprisingly, given the geographic nature of the Region, transport and logistics play a significant role in the area.

It is worth emphasizing – and this may be surprising – that the Baltic Sea Region continues to do better on services, where export values have been slightly growing. The Baltic Sea Region is more oriented towards service exports than both the EU-28 and the world economy in all. But even for the Baltic Sea Region goods trade continues to be about three times as large in terms of overall value.

Although we are living and operating in a globalised world, regional dimension is a dominant player in our lives and for the businesses as well. There are still multiple advantages for businesses to be connected within the regional value chains – we could call it Baltic value chains in this context.

With the current phase of globalization not only the costs but also the risks of global value chains are increasing. Globalization has been driven by the internet and decreasing logistical costs. In regional operations the logistics will take less resources – as well as less emissions – than when carried out globally.

Furthermore, with the help of digitalization and the internet, the methods of production are changing in ways that reduce the relative importance of cheap manual labor and emphasizes the regional dimension of the economy. By deeper regional integration the economic, cultural, legal and political strengths of the Baltic Region have become more appreciated.

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Since the accession of the three Baltic States – Estonia, Latvia and Lithuania – and Poland, to the European Union in 2004, the Baltic Sea Region has become an important strategic part of the EU.

This is reflected in the European Union’s Strategy for the Baltic Sea Region. The three main objectives of the Strategy are “Save the Sea”, “Connect the Region”, and “Increase Prosperity”.

Baltic Sea strategy action plan includes several important aspects: environmental protection, maritime safety, economy, transport, energy and internal security among others. All these sectors involve much cooperation within the European Union and they are regulated by actions and programs at EU level.

However, in implementing the Baltic region strategies we need to identify such joint actions and projects that bring added value particularly to our region. This is especially important now when the new programme period of the structure and investment funds of the EU is about to start. The resources provided by these funds are not small. Together we must find the best ideas, how to use these resources for the common good of the Baltic Sea Region.

One of the main sectors in the Baltic Sea region is energy. According to the Baltic Sea Strategy’s action plan, the development and integration of energy markets are the key goal. This aims to several objectives like: security of energy supply, diversification of energy sources, contribution to economic growth by improving the competitiveness of the region and encourage investments in renewable energy and overall reduction of greenhouse gas emissions through more efficient energy distribution.

Also, attention must be paid to the resilience of infrastructure to natural and man-made disasters. After all, the Baltic Sea is a very shallow sea and highly vulnerable to discharges of pollution.

In addition to energy sector I would like to highlight the importance of the maritime sector for Finland – and for the Baltic Region as a whole.

Due to global competition marine technology and shipping industries have faced some serious setbacks in the Baltic Sea region. The products and services of the Baltic Sea region companies vary, but the challenges are similar in many cases.

It is inevitable that in order to develop the competitiveness of the industry, input to long-term research and development is needed, as well as smart choices made and specialisation to support the high level products and services. Strong alliances between the actors in all levels are to be sought and new business areas and markets need to be found.

Even in the Baltic Sea area, we must not underestimate the potential of the Arctic region. Finland has actually more than 60 per cent of all ice-breakers in the world. The newest ice-breaker of Finland will be delivered by 2016 and it will be the first of its kind in the world to be equipped with LNG (liquefied natural gas) dual fuel engine and oil-spill response equipment. Finland will not forget environmental friendliness even during harsh winters.

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In the Baltic Sea Region it is vital to find more and more environmental-friendly solutions. Of course the challenge of climate change is global but in the Baltic Sea area we can lead the way in finding sustainable solutions for this challenge.

The Finnish Government gave this May a resolution on cleantech and bioeconomy strategy. The new resolution is a clear indication of our conviction that environmental values on the one hand, and economy or new business opportunities on the other, are not opposites.

In fact, there is no standard definition of “clean technology”. In general, cleantech means technologies that support increased productivity or profitability while also reducing resource consumption or pollution. This technology is vital for solving important challenges like that of the climate change.

The other part of the said government resolution concerns bioeconomy which refers to economic activities which use renewable natural resources in a sustainable manner for the production of bio-based products, nutrition, energy and services.  It is expected to be the next economic wave, after the fossil economy.

We would even like to see Finland as a cleantech and bioeconomy forerunner – a task so vast and all-encompassing, that we certainly need broad co-operation with our Baltic Sea neighbors.

Dear audience,

The Baltic Sea region will remain a vibrant area also from an economic perspective. The co-operation has always been based on sound economic interests and a common will to prosper. In this sprit, we must continue to look for positive challenges that create unity, not division, in the Baltic Sea region. Environmentally adaptive economy is a common challenge for the Baltic Sea countries.