Food Industry in Lääne – Viru CountyLääne-Viru Development Centre2013

Sustainable competitiveness in business services

Estonia offers distinctive opportunities for business service centres for both in-house and outsourced solutions. Estonia is the emerging Nordic location and an excellent gateway between Northern, Western and Eastern Europe and Russia.

Estonia offers sustainable, high-quality, competitive costs and low risk solutions for BPO, IT and financial services shared service centres, customer and technical support centres.

Enterprise Estonia is here to help you achieve and maintain these competitive advantages.

Why Estonia?

Quality technical skills Foreign language skills Competitive costs and taxes Cutting-edge ICT infrastructure Strategic location and global vision Easy to do business Low risk: economic & political stability Room for growth: a sustainable solution Supporting your investment

Why should you set up business in Lääne-Viru County ? •Closeness to important markets: the largest Estonian market in Tallinn and Harju County, the largest Finnish market in Helsinki region, one of the largest Russian markets in St. Petersburg region; • Closeness to important business areas: the largest Estonian business areas in Tallinn, Harju County and Ida-Viru County; Helsinki region ; • Closeness to the largest sources of Estonian labour force: Tallinn, Harju County and Ida-Viru County ; • A good transport network ; • Existing business areas that offer various services (including electricity and gas supply); • Various existing companies: building materials, wood processing, food industry, metal and engineering industry, electronic industry; • A good living environment with a normal social infrastructure and recreation opportunities

Business enviroment in Estonia

• Estonia's economy offers key opportunities for companies in a number of sectors including ICT, electronics, machinery and metalworking, wood processing, logistics/transport and food. The R&D elements of these activities are supported by the country's 10 universities and 25 higher education colleges, which collectively provide a source of graduates, often fluent in English, Swedish, Russian, Finnish and German.

• Estonia has been ranked 16th in the Index of Economic Freedom (2012, Wall Street Journal/The Heritage Foundation), 24th in the Ease of Doing Business Report (2012, World Bank), and 33th in the Global Competitiveness Report (2012, World Economic Forum).

• Estonia has some of the highest credit ratings in the region (Fitch IBCA, Standard & Poor's, Moody's).

Business enviroment in Estonia

• Estonia is a member of euro area as of January 1, 2011.

• 0% corporate income tax is imposed on all reinvested earnings in Estonia.

• The Estonian cost level is still significantly lower than that of neighboring Scandinavian countries.

In Estonia, all capital is treated equally, foreign or domestic. Estonia is a member of the International Center for the Settlement of

Investment Disputes, the Multilateral Investment Guarantee Agency, and the New York Convention.

Estonia is the leading country in Central and Eastern Europe in terms of attracting foreign direct investments.

Estonia is one of the leading countries in the world in creating and implementing e-government solutions and cyber security

Location

• Situated in northern Estonia. Bounded by Ida-Viru County on the east, south and west of Jõgeva, Järva and Harju counties.

• Bounded on the north by Gulf of Finland

• Fifth most populated county in Estonia, with the population of 66 701 people

• Territory is 3609 sq km and we are the third largest county in Estonia.

• Divided into 15 municipalities (13 rural municipalities and 2 towns). Rural population is 55%

• The largest municipality is town Rakvere with 16 570 inhabitants, being the county center as well

Connections

Transport and logistics • Lääne-Viru County has a very favourable logistic location by the sea,

between Tallinn on one side and Ida-Viru County on the other side.

• Rail link with St.Petersburg and Pskov (Russia)

and Riga (the Baltic States, Belarus, the Ukraine)

• Port of Kunda – located 26 kilometres from Rakvere

• Close to Tallinn-Narva highway (Rakvere – Tallinn 98 km, Rakvere – Narva 120 km)

• Rakvere-Väike-Maarja- Vägeva highway (Rakvere – Tartu 135 km)

• Sõmeru- Rakvere –Pärnu highway (Rakvere – Pärnu 178 km)

• International road transport companies: transport operations all over Europe as well in Russia and in the Ukraine

• Storage terminals for chemical and oil products

• Airport in Tallinn – 98 km

Power network • Electric power reaches Estonian households and companies with the help

of Eesti Energia Jaotusvõrk OÜ which provides services for 87,7 % of Estonian electricity consumers.

• Lääne-Viru County is supplied by a network of power lines with a total length of 5235 kilometres, 4520 kilometres of it is made up by overhead transmission lines. In the financial year 2010, over 2.58 million € was invested by the distribution network in the renovation of the power network of Lääne-Viru County. Nearly half of that sum was spent on the installation of underground cable lines.

• In 2011 the focus was on replacing overhead transmission lines with underground cable lines, the company replaced 80 km of lines with underground cable lines. The distribution company invested about 2.88 million € in 2011 in Lääne-Viru County for the construction and renovation of networks. In addition, maintenance and repair work necessary for sustaining the operating reliability is carried out. www.energia.ee

Regional workforce skills and costs• Estonia has relatively low taxes and a simple tax system. Currently there

is no corporation tax ( tax is not imposed on reinvested profit) • Income tax on dividends forms 21/79 of the dividends received. • Value added tax is 20 per cent with just a few exceptions.

• The average labor cost per hour worked in food industry was 6.73 eur (www.stat.ee, year 2008)

• Educational level in Lääne-Viru County

Statistics 2011 (people, thousands)• Primary education or lower 5.2• Secondary, post secondary and pre tertiary education 17.3• Tertiary education 9.2• Education after secondary education 2.7• Higher education, mater`s doctoral degree 5.5

Unemployed food industry skilled workers at Lääne-Viru County 31.11.2012 (www.tootukassa.ee)

• Production manager 1• Meat processor 4• Confectioner 2• Baker 2• Baker-confectioner 5• Dairy products manufacturer 3• Production line operator 16• Grain processor 2

TOTAL 35 persons

Taxes and duties

Rate of tax on income 21%.Additional tax-exemption income when accidents at work or

occupational disease benefit is 64 euros monthly Social security tax is 33%. The minimum obligation base monthly rate

for social security tax is 290,00 euros, which means that the minimum obligation social security tax is 95,70 euros monthly.

Unemployment tax for the worker is 2%, for the employer it is 1%.

Taxes and dutiesThe company must be registered as a VAT payer when from the

beginning of the calendar year, turnover is in excess of 16,000 euros, on a voluntary basis can be registered also earlier.

When the company is registered VAT payer in Estonia and starts to use the imported (equipment, goods) for goods under VAT too, it can deduct VAT paid at customs on these good from its taxable supplies VAT.

Each month for the 20th is needed to present a tax return when registered VAT payer, VAT return form KMD. VAT payer can read from the registration requirement of § 19 VAT law (law is also available in English).

When the company will make special payments or other distributions paid in Estonia, and the company already is registered in Estonia, then you may re-turn to the specific tax questions also directly at jurisik@emta.ee.

Labor costs• The average wages in Estonia in

2011 was EUR 839. The monthly minimum wage for full-time work is EUR 290.

• Approximately three to four times lower labour costs, compared to Scandinavian countries, in miscellaneous business activities sectors.

• More than three times lower labour costs in the computer related services sector compared to the EU27 average.

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1,559,3551,811,572

1,965,661

2,312,688

3,495,198

4,277,570

4,872,490

5,690,992

0

1,000,000

2,000,000

3,000,000

4,000,000

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Latvia Lithuania Poland Hungary Estonia CzechRepublic

UK Finland Sweden Germany

Total labour costs, EUR/yearShared service centre/BPO, 80 persons

Benchmark locations

Source: fDiBenchmark.com, spring 2012

Food Industry in Lääne-Viru County• Leading sector in the county – strong traditions, existing raw materials,

good agricultural land and big grain production

• Sector has developed at highly level and has the second place in Estonia (after Harju County)

• Opportunities for new food productions

• Existing labour force

• Biggest suppliers in the region: AS Rakvere Lihakombinaat, OG Elektra AS, AS Viru Õlu

• The most suitable areas: closest surroundings of Rakvere and southern part of county

• 15 companies 1400 employees

• Sales 127230670 EUR

• Export 2405609 EUR

• Profit 7939697 EUR

Industrial Areas in the RegionRakvere Industrial Area

• Reconstructed infrastructure• Good logistical position of the highway (Tallinn-Narva), railroad and port of

Kunda• Good labor force potential in urban and in near rural municipalities• Perspective of bring one of railway line to industrial park• Perspective of developing airport for serving enterprises• Existing neighborhood of the Estonian energy and natural gas distribution

network• Possibility of developing the industrial park area existing residential areas

and residential land to allow the relocation of labor • The business environment in addition to a quality living environment• Opportunity to provide affordable and cheaper production costs, while

logistically well-located plots (eg Harju county companies)

• Surface 73 ha

• Architectural drawings

• In offer 30 plots from 0,2

to 1ha

• Electricity

• Water supply, sewerage

• Teleservice

• Railway connection

• Highway (500 m)

• Location on the edge of town (2300 citizens)

• Location:

• Tallinn airport 90 min

• Tartu 90 min

• Narva 120 min

• Kunda port 45 min

• Rakvere 25 min

• Tallinn-Tartu- Moscow railway

• Traditional branches of economy:

• Metallurgical industry

• Production constructionmaterials

• Food production industry

• Wood production industry

• Agriculture

• Logistics (railway and motor transport

Industrial Areas in the RegionTamsalu Industrial Area

Industrial Areas in the RegionHaljala Industrial Area

• Location:• Tallinn 55 min , 90 km• Tallinn airport 60 min• Tartu 130 km• Narva 124 km• Pärnu 150 km• Kunda port 20 km• Rakvere 11 km• Tallinn – Narva – Saint-Petersburg

railway• Well-developed and modernizing industry.

Some important enterprises of the county: ViruÕlu AS, Bellus Furniture OÜ and Baltic Fibres OÜ which have owners from Denmark, Finland and United Kingdom.

• Attractive to foreign investors and investments

• Intensive agriculture

• High speed internet connection

• Surface area ca 34 ha

• Electricity

• Water supply, sewerage

• ICT services

• Railway connection ( in Rakvere)

• Highway

• The number of registered unemployed 3%

Biggest Suppliers in the RegionAS Rakvere Lihakombinaat (Rakvere Meat Processing Plant)• Rakvere Lihakombinaat and subsidiaries employ approximately 1,200

people, about 900 of them in Rakvere. • Largest manufacturer of meat products in the Baltic States. • Market leaders in both the meat and meat products.• One of the largest employers in Lääne-Viru County.• Exports account for about 30% of the turnover.• Rakvere is implemented integrated quality and environmental management

system and have obtained the international ISO 9001 and ISO 14001 certifications

• Turnover: 140 704 000 EUR(2011); 1 428 765 000 EEK(2010) (91 314 726,5 EUR) (2009);

• Profit: 6 750 000 EUR (2011); 72 052 000 EEK(2010); 4 604 962,1 EUR (2009)

Biggest Suppliers in the RegionPihlaka AS

• Founded in year 1993.

• 122 employees.

• Products include confectionery, bakery and cookery.

• Lots of prices from different nation-wide competitions.

• Turnover: 3 007 881 EUR (2011);2 636 649 EUR (2010)

• Profit: 193 669 EUR (2011); 178 278 EUR (2010)

• Export turnover: 19 826 EUR (2011); 6 447 EUR (2010)

Biggest Suppliers in the RegionAS OG Elektra group

• A privately held group of companies founded in the domestic business enterprises whose main activity is the manufacture and sale of food products, covering the whole chain from producer to consumer - mostly due to our own manufacturing units, logistics centers and retail outlets in the chain.

• In the meantime, the company has its central warehouse and 35 food and convinience goods stores around Estonia. The stores are located in East and West-Viru, Tallinn and Harju County

• Members of group: OG Production Ltd, Ltd. butcher, Lepna Manufacture Ltd, Oleg Gross Farm LLC, Annikvere Farm LLC, PM carotene, Avec Publisher.

• OG Elektra, Ltd. employs about 700 people.

• Turnover: 7 832 827 EUR (2011); 8 151 902 EUR (2010)

• Profit: 1 362 252 EUR (2011); 984 307 EUR (2010)

Biggest Suppliers in the RegionAS Viru Õlu

• Estonian beer and soft drinks producer since 1975.a, located at Haljala. The company is a cheaf shareholder of Danish brewery Harboe Bryggeri AS.

• 2000th market share was 7%, 2003 was 10.2% in 2005 13% and 2007 was 9.0%. The production in 2005 was 164 100 hl, in 2007 was 115,400 hl.

• Products include soft drinks, waters, juices, syrups, beers, ciders, energy drinks and coffee.

• Turnover: 8 363 264 EUR(2011); 8 776 238 EUR (2010)

• Profit: 177 376 EUR(2011); 13 099 EUR (2010)

• Export turnover: 1 377 129 EUR (2011); 2 220 106 EUR (2010)

Foundation Lääne -Viru Development Centre

Investor consultant

ar@arenduskeskus.ee

Phone nr: + 372 32 58 028

www.arenduskeskus.ee