Finland country brief

Introduction

The Republic of Finland is the most sparsely populated country in the European Union with a population of 5.2 million in 2011 spread over 338,145 square kilometres. The Åland Islands, off the south-western coast, are an autonomous, demilitarised administrative province of Finland. Under the Finnish Constitution, Finland is a bilingual country with Finnish and Swedish as official languages. The capital of Finland is Helsinki. Finland celebrates its National Day (Independence Day) on 6 December.

Political overview

The Republic of Finland is a parliamentary democracy with a republican constitution. The unicameral parliament (Eduskunta) has 200 members directly elected from 15 multi-member constituencies every four years. In the past, the President was entrusted with supreme executive power and was elected for six years by direct popular vote. Changes to the Finnish Constitution in March 2000 curbed the President's powers, requiring closer cooperation with the government on foreign policy matters and removing domestic powers relating to coalition building and the appointment of the Prime Minister.

The current Finnish Coalition Government was formed on 22 June 2011 following elections on 17 April. The coalition comprises a majority of National Coalition Party and Social Democrats. The remainder of the coalition is composed of The Greens, Left Alliance, Swedish People's Party of Finland and the Christian Democrats. The True Finns and the Centre Party have formed the opposition. A member of the National Coalition Party, Mr Jyrki Katainen, is the current Prime Minister.

The current President is Mr Sauli Niinistö. Mr Niinistö was elected by popular vote on 5 February 2012 and took office on 1 March 2012. The next presidential elections will be held in approximately February 2018.

Since the collapse of the Soviet Union, Finland has sought out new political and security structures and in 1995, along with Sweden and Austria, joined the EU. Finland supports development of the EU's European Security and Defence Policy and is a non-NATO contributor to the International Security Assistance Force in Afghanistan.

Economic overview

Finland has experienced a downturn in its economy, as the effects of the global financial and economic crisis hurt its export markets and industrial output. GDP diminished by 8.2 per cent in 2009, however bounced back to increase by 3.1 per cent in 2010 and is predicted to expand by 3.1 per cent in 2011. Unemployment was at 9.8 per cent in May 2011, slightly down from 2010. Inflation at 3.3 per cent in 2011. Finland has few natural energy resources. The Finnish Parliament has approved the construction of three new nuclear reactors (Finland currently has four reactors) in order to meet increasing energy demand and reduce carbon emissions. Work on the fifth reactor started in 2005 and it is expected to go online in 2013. Parliament approved plans to build the sixth and seventh reactors in July 2010. Finland's other energy options include increased use of natural gas and electricity imported from Russia. Renewable fuels account for around 25 per cent of Finland's energy mix.

Bilateral relationship

Australia and Finland signed a bilateral social security agreement on 10 September 2008, which came into force on 1 July 2009. The social security agreement provides improved social security protection to people who have lived or worked in both Australia and Finland. Further information is available on the Australian Taxation Office website.

Australia also has a bilateral Working Holiday Maker Arrangement with Finland, which came into operation on 1 May 2002. Australia signed a bilateral Double Taxation Agreement with Finland in 2006, which came into force on 10 November 2007.

Recent visits

High-level visits are important for promoting cooperation and understanding between Finland and Australia. Australia's then-Minister for Foreign Affairs, the Hon Kevin Rudd, visited Helsinki on 16 and 17 May 2011 for the UN High-level Panel on Global Sustainability (GSP), which brought together world figures to formulate a new blueprint for a sustainable future for a planet under increasing stress resulting from human activities. During his visit to Helsinki, Mr Rudd met with Finland’s then-Minister of Foreign Affairs, Dr Alexander Stubb, and then-President Tarja Halonen.

There have been numerous additional high level visits to Finland by Australians including: then-MP, Ms Ann Corcoran (May 2007); Senator Eric Abetz, then Minister for Fisheries, Forestry and Conservation (January 2007); then Minister for Foreign Affairs, the Hon Alexander Downer (September 2006); then Minister for Communications, Information Technology and the Arts, Senator, the Hon Richard Alston (October 2002); then Minister for Immigration and Multicultural and Indigenous Affairs and Minister Assisting the Prime Minister for Reconciliation, the Hon Philip Ruddock MP, who signed the bilateral Working Holiday Maker Arrangement (April 2002); and an Australian Parliamentary delegation led by the then President of the Senate, the Hon Margaret Reid (April 2002).

Then-President Tarja Halonen visited Australia in January 2007. Other high level visits included: then Minister for Finance, Mr Eero Heinäluoma (November 2006); a Parliamentary delegation led by then-Parliament Speaker, Mr Paavo Lipponen (March 2005); and the Minister for Trade and Industry, Mr Mauri Pekkarinen who was accompanied by a business delegation (April 2004).

The Australian Embassy in Stockholm has responsibility for Finland (the Ambassador, based in Stockholm, has non-resident accreditation). Australia has an Honorary Consul in Helsinki. Finland has an Embassy in Canberra and a Consulate in Sydney.

Bilateral and trade relationship

Total two-way merchandise trade between Australia and Finland in 2011 was A$1.3 billion (our 36th largest merchandise trade partner). Australia's exports to Finland in 2011 totalled A$320 million including coal, specialised machinery and parts, and alcoholic beverages. Finland's exports to Australia in 2011 totalled A$965 million, and included civil engineering equipment and parts, paper and paperboard, and paper and pulp mill machinery and parts.

Export opportunities

Export opportunities exist in all sectors. Austrade has targeted information and communications technology and wine exports as being the most promising sectors in Finland for Australian exporters.

Wine to Finland

Australian wines have gained a good reputation in the Finnish market, originally in the budget wine category, and in recent times in the mid-price range. Australian wines are well recognised and known for providing good value for money. Australian wine sales to Finland grew in 2009, and long-term prospects are good. Finland is a member of the European Union, so the EU import regime applies.

Mining

As Finland seeks to open its natural resources sector to increased international investment, there are opportunities for Australian services and exporting companies (including in IT, transport, logistics, infrastructure and human resources) given the size and sophistication of Australia's mining industry. An Australian minerals company with successful operations in Finland is Dragon Mining, with two mining operations in southern Finland. The Vammala Production Centre (located in the Sastamala region, 165 kilometres northwest of Helsinki) produced over 30 000 ounces of gold in 2010 and is anticipated to extract another 30 000 in 2011. Australian company Altona Mining has also recently opened a copper mine and mill in the Polvijarvi municipality, some 400 km north of Helsinki.

Finnish government support

Finnish and foreign-owned companies are equally eligible for government and EU-sponsored incentives in Finland. The incentives are mostly intended to promote investments in economically less developed regions in northern and eastern Finland. Most of the support is provided for small and medium sized enterprises only and includes cash, grants, loans, tax benefits, equity participation, guarantees and employee training.

Updated August 2012