Stubb Praises Business Climate
Published: June 6, 2012 (Issue # 1711)
ALEXANDER BELENKY / SPT
Finland’s Nokian Tyres is the number one producer of tires in Russia. It is one of over 500,000 Finnish companies in Russia.
Finland’s Minister of European and Foreign Trade, Alexander Stubb, called for more Finns to do business in Russia at the Finnish Business Forum that took place in St. Petersburg last week.
“I want to tell Finnish businessmen that it is profitable to do business in Russia and that it’s worth coming here,” Stubb said.
“Russian-Finnish business relations have a bright future,” he said, adding that the Russia-Finland trade volume totals 16 billion euros ($20 billion).
“In fact, Russia is our biggest trade partner in the world,” Stubb said.
More than 500,000 Finnish companies work in Russia in sectors including retail (such as Stockmann and Prisma), food (Valio and Fazer), construction, energy (Fortum) and others, he said.
Stubb said Russia’s upcoming entry into the WTO, as well as the potential introduction of a free trade zone and visa-free regime between Russia and the EU would contribute to the strengthening of business relations between Russia and Finland.
“Russia’s membership in the WTO is the best news. It will become a big stimulus for trade relations between Russia and the EU. It will also contribute to the modernization of the Russian economy,” Stubb said.
Russia’s joining the WTO will be good for Finland too as “it will help to limit the number of trade barriers,” he said in an interview with The St. Petersburg Times.
Stubb said that for Finland it would result in lower customs duties in spheres such as forestry.
“It is obvious that the lower customs duties are, the better it is for business,” Stubb said at the forum.
The minister said a visa-free regime between Russia and the EU would be a very positive achievement as well.
“My philosophy is that the fewer borders we have, the better it is for Russia, Finland and the EU,” he said.
“My personal aim is to enjoy the visa-free regime between Russia and the EU by the 2018 FIFA World Cup to be held in Russia,” he added.
Stubb said the major problems Finnish business currently faces in Russian include bureaucratic and administrative barriers connected with customs, work permits, taxes and corruption.
ALEXANDER BELENKY / SPT
Stockmann, a Finnish department store, stands on the corner of Nevsky Prospekt.
“Finland is in second place in the world in terms of being corruption-free. Therefore we can’t get tangled up in such matters, even though lately there has been less of it in Russia,” Stubb told The St. Petersburg Times.
The trade minister said that when Finnish businessmen face the inevitable corruption found in Russia, they often choose to “drop the business.”
Meanwhile, Alexander Prokhorenko, chairman of the Committee of Foreign Affairs in St. Petersburg, said that while Finnish businessmen often complain about “administrative barriers” in Russia, they do not propose any solutions about how to solve the problem.
“It’s not enough to just say that it is a problem, it also requires suggestions about what exactly should be improved and how,” Prokhorenko said at last week’s forum.
Prokhorenko also recognized that Finland was the major European promoter of reducing visa requirements between Russia and the EU, but said that in practice limiting these requirements is not as ideal as it sounds.
Prokhorenko said that when the St. Petersburg authorities introduced a three-day visa-free entrance for foreign tourists arriving in the city on ferries that travel between St. Petersburg, Tallinn, Stockholm and Helsinki, their European partners introduced a rule requiring Russian passengers on these ferries to have their visas checked in every foreign city along the route, making travel more inconvenient.
Despite the travel complications, representatives of both Russian and Finnish companies said that business collaboration between the two countries was quite successful.
Mirja Tiri, chief executive of the Finnish-Russian Chamber of Commerce, said Finland was the biggest foreign investor in Russia, with investment totaling 10 billion euros ($12.4 billion). Finnish companies also employ 50,000 people in Russia.
Kari Kautinen, vice president of Finland’s Fortum Power and Heat, said Russia was “as important a region for the company as Scandinavia.” Currently the Russian division of Fortum includes eight electric power stations that are powered mainly by gas.
Felix Karmazinov, general director of St. Petersburg’s state water supply company Vodokanal said that Vodokanal and Finland have been working together for 25 years.
In the late 1980s, when the water supply infrastructure in what was then Leningrad was poor and 3.5 million cubic meters of the city’s wastewater was dumped into the Gulf of Finland every year, Finland offered to help with training and solve the problem. Today Vodokanal’s sewage treatment facilities treat 94 percent of all the city’s wastewater. The figure is estimated to reach 96 percent next year, Karmazinov said.
“All of this is a result of our collaboration with Finland, and now the city meets all the requirements of the Helsinki Commission,” Karmazinov said.
Representatives of Finland’s Nokian Tyres said the company had become the biggest producer of tires in Russia, with investment reaching up to 800 million euros ($993 million). The company is currently preparing to open a second plant in Russia.
Martti Huttunen, president of Industry Park East Management, said that the Industrial Park Morozova that the company plans to build in the St. Petersburg suburb of Vsevolozhsk during the next couple of years will help bring more Finnish companies to Russia, saying it would provide “a convenient, profitable and safe basis for entry into the Russian market.”