Overseas Business Risk – Estonia

Information on key security and political risks which UK businesses may face when operating in Estonia.

Political and Economic

Estonia is a small but dynamic country, which in recent years has made a name for itself for innovation in e-commerce and e-government. The population of 1.34 million is divided ethnically with 68% Estonian, 25% Russian, 7% other. At 45,227 sq km, it is the smallest and the most northerly of the Baltic States. Estonia borders Russia to the east and is only 80km south across the Gulf of Finland from Helsinki. The official language is Estonian, though in specific areas a significant number of the population speak Russian.

Since regaining independence in 1991, Estonia has progressed rapidly both in terms of internal modernisation and its external integration. Parliamentary elections determine the composition of the 101-member Riigikogu (Parliament), with the current coalition government of the liberal Reform Party, and centre-right Union of Pro Patria and Res Publica forming the current government in March 2011. The other major parties are the Centre Party and Social Democratic Party. Andrus Ansip (Reform Party) has served as Prime Minister since April 2005, and Toomas Hendrik Ilves has served as President since 2006.

The Estonian economy managed the eurozone crisis well, having already implemented austerity measures much earlier than most of Europe. Estonia is proud of its low government debt, with a budget deficit of just 1.2% of GDP in 2012. However, its unemployment rate has only recently fallen below 10%, wages remain below pre-recession levels, and inflation continues to be high (3.7% in 2012). Scandinavian countries are by far the biggest trading partners, although Estonia’s border with Russia means Russia is a significant (and growing) source of trade and tourists. UK exports to Estonia have grown from €200M in 2010 to more than €500M in 2012.  

Estonia is renowned for its tight fiscal policy. During the crisis, the government introduced several painful austerity programmes that were backed by tough decisions in the private sector. The majority of spending cuts were made in 2009, when the economy fell by 14%.  The government debt level is the lowest in the EU (10.1% in 2012 and equal to reserves held). Estonia has managed to hold the state budget deficit under 3% which is exceptional in the EU. Estonia joined the Eurozone in 2011, and became the OECD’s 34th member country in 2010.

The Bank of Estonia’s 2013 growth projection is currently 2%, down from 3% forecast at the start of the year. It notes, however, that the slowdown is due to temporary factors, and that growth is expected to pick up to 4% in 2014 and 2015 thanks to higher domestic and foreign demand.

The largest employer in the country is Eesti Energia, with 8000 employees, though most companies are micro-, small-, and medium-sized. There are approximately 500 UK companies registered in Estonia. The market is currently dominated by Nordic companies, but there is more scope for UK export and investment to Estonia. 

Estonia’s economic strengths are its well-educated and qualified work force, below EU-average cost of labour, openness for new technology, sound government fiscal position, and strategic location between the Nordics, Russia and other CEE countries. English is widely spoken and frequently used in business, allowing easier access for UK companies. Estonia is an easy place to conduct business, ranking 22 in the World Bank’s Ease of Doing Business Index, and Estonia has the best Transparency Index rating in Eastern and Central Europe.  It also has the second highest number of start-ups per capita in the world, behind the US, in particular in the ICT sector. 

Information on political risk, including political demonstrations, is available in FCO Travel Advice.

Human Rights

There are no significant human rights problems in Estonia. Estonia is an electoral democracy, with free and fair elections. Freedom House ranked Estonia as “Category 1 Free” in Political Rights and Civil Liberties. Corruption is a relatively minor problem, ranked 32 out of 178 countries surveyed in Transparency International’s 2012 Corruption Perceptions Index. Public access to government information is respected, with government decisions published almost instantly online. Religious and academic freedom are respected. The Reporters Without Borders Press Freedom Index in 2012 placed Estonia third in the world in the degree of freedom enjoyed by journalists, news media and internet users. Estonia is actively engaged with human rights issues within the framework of the EU, UN, OSCE, and the Council of Europe. Estonia has presented its candidature for membership of the UN Human Rights Council 2012-2015, and successfully concluded the first Universal Periodic Review of human rights at the United Nations in 2011.

Bribery and Corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

According to the NGO Transparency International Corruption Perception Index (CPI), Estonia was ranked in 32nd place in 2012.

A new anti-corruption strategy in Estonia for 2013 – 2020 was adopted in parliament in November 2013. While the number of corruption crimes has decreased since the previous strategy was adopted in 2008, the new strategy still identifies certain areas where transparency may be improved. Areas of improvement include transparency of legislative drafting and political decision-making process, decision and financial transaction of the state and local government (public procurements, financial benefits, work of law enforcement and national defence authority) and courts.

Estonia is represented in Transparency International by the organisation Transparency International Estonia (in Estonian Korruptsioonivaba Eesti). The main aims of this organisation are analysing and highlighting the risks of corruption, awareness raising and strengthening cooperation between public institutions and private persons in the fight against corruption.

For more information please contact:

Transparency International Estonia Chairman of the Board Mr. Jaanus Tehver:

Lootsi 11 (2nd floor),

10151 Tallinn, Estonia

T: +372 6116 020

E-mail: info@transparency.ee

Web: http://www.transparency.ee  

Visit the Business Anti-Corruption portal page providing advice and guidance about corruption in Estonia and some basic effective procedures you can establish to protect your company from them.

Read the information provided on our Bribery and corruption page.

Terrorism Threat

There is a low threat from terrorism. But you should be aware of the global risk of indiscriminate terrorist attacks which could be in public areas, including those frequented by expatriates and foreign travellers.

Information about fundamentals of counter terrorism in Estonia is available at the web site of the Ministry of the Interior and the Security Police Board.

Read the information provided on our Terrorism threat page.

Protective Security Advice

The Centre for the Protection of National Infrastructure also provides protective security advice to businesses

There is a risk from tourist-targeted crime, particularly petty theft. Be aware of the risk of pick pocketing and mugging, especially in bars, pubs, nightclubs and hotels in Tallinn’s Old Town. Be vigilant, take sensible precautions and avoid unlit side streets and parks at night. If possible, leave your valuables in a hotel safe. It is safer to phone for a taxi rather than hail one from the street.

Theft of property should be reported in person to

Tallinn Central Police Station:

Kolde pst 65, Tallinn, Estonia

T: +372 6 12 5400

You will need to obtain a police report if you have lost your passport.

Read the information provided on our Protective security advice page.

Intellectual Property

According to the Estonian Patent Office, the results of human creativity require legal protection, i.e. intellectual property requires legal protection.

Different types of intellectual property (works of art and literature, trademarks, inventions etc.) require specific legal protection.

Works which are not industrially manufactured are protected by copyright.

Intellectual property rights are different from copyright and related rights, because these rights are not granted automatically. Particular procedures should be followed in the Patent Office to obtain these rights.

The main types of intellectual property are:

  • Trademarks

  • Patents and utility models

  • Industrial design

  • Industrial property includes also:

  • Geographical Indications

  • Integrated Circuits

For more information please contact:

Estonian Patent Office

Toompuiestee 7,

15041 Tallinn, Estonia

T: +372 627 7900

F: +372 645 1342

Email: helpdesk@epa.ee

Web: http://www.epa.ee/

Estonian Author’s Society:

Eesti Autorite Ühing

Lille 13

10614 Tallinn, Estonia

T: +372 6 684 360

F: +372 6 684 361

E-mail eau@eau.org

Web http://www.eau.org

Also refer to the web site of the World Intellectual Property Organisation (WIPO), and the Madrid Protocol for the international registration of marks.

Read the information provided on our Intellectual Property page.

Organised Crime

According to the EUROPOL Organised Crime Threat Assessment the organised crime dynamics in Estonia as well as in the other Baltic countries are determined by their location between countries supplying cigarettes and synthetic drugs and the destination countries for those products.

The institution which fights against various forms of organised crime in Estonia is the Central Criminal Police. The Central Criminal Police concentrates on organised crime, corruption and serious economic crime, money-laundering, narcotics and information technology crimes.

Tööstuse 52, 10416 TALLINN

T: +372 612 3800

F: +372 612 3726

E-mail: ppa@politsei.ee

Web: http://www.politsei.ee/

Read the information provided on our Organised crime page.

Countries: Estonia
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