Finland Country Brief
Introduction
The Republic of Finland, a Nordic country situated in Northern Europe, is bordered by Sweden to the west, Russia to the east and Norway to the north. Finland is bounded by the Baltic Sea, with the Gulf of Finland to the south and the Gulf of Bothnia to the west. The Åland Islands, off the south-western coast, are an autonomous, demilitarized administrative province of Finland. Finland has a population of 5.3 million people, spread over 338,145 square kilometres, making it the most sparsely populated country in the European Union. According to 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. The President is entrusted with supreme executive power and is 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 Government came to power following the March 2007 election. The final results were close with the Centre Party, led by the incumbent Prime Minister Matti Vanhanen, winning 23.1% of votes and 51 seats in parliament. The National Coalition came a close second with 22.3% and 50 parliamentary seats. These two parties, and the much smaller Swedish People’s Party and the Greens, then formed a centre-right government coalition, led by Prime Minister Vanhanen. The former government partner, the Social Democrats, lost 3.1% compared to the 2003 election. The coalition holds 125 of 200 seats in the Parliament.
The current President is Tarja Halonen. Halonen was re-elected for a second term in the Presidential election held in February 2006. Despite her popularity in opinion polls only weeks before the election, Halonen only won a by a small margin. The opposition Conservative Party's candidate (Sauli Niinistö) came second and Prime Minister Vanhanen, the ruling Centre Party's candidate for President, came third.
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 attaches importance to the trans-Atlantic relationship between Europe and the United States and supports development of a European Security and Defence Policy (ESDP). Finland plays a strong and positive role in the EU's relationship with Russia.
Economic Overview
Combating unemployment has been a Government priority for some time and was a major issue in the election campaign. The last three years have seen a reduction in the jobless rate, from 8.8 per cent in 2004 to 6.9 per cent in 2007, although unemployment remains persistently higher in the north of the country. GDP growth for 2008 is forecast for 2.7 per cent, down from 4.4 per cent in 2007.
Finland has few natural energy resources and in order to meet increasing energy demand the Finnish Parliament voted (107-92) in May 2002 in support of the construction a fifth nuclear reactor in Finland. Work on the new reactor started in 2005 and it is expected to be operational in 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
There are estimated to be around 17,000 people in Australia of Finnish descent, of whom 8,600 were born in Finland, reflecting a wave of migration following the Second World War. There are over 500 Australians registered as living in Finland.
Australia has a bilateral Working Holiday Maker Arrangement with Finland which came into operation on 1 May 2002. Australia signed a Double Taxation Agreement with Finland in 2006.
There have been numerous high level visits to Finland by Australians including: Former MP, Ms Ann Corcoran (May 2007); Senator Eric Abetz Minister for Fisheries, Forestry and Conservation (January 2007); the then Minister for Foreign Affairs, the Hon. Alexander Downer (September 2006); Delegation from the Uranium Mining, Processing and Nuclear Energy Review Taskforce (September 2006); the then Minister for Communications, Information Technology and the Arts, Senator, the Hon. Richard Alston (October 2002); the then Minister for Immigration and Multicultural and Indigenous Affairs and Minister Assisting the Prime Minister for Reconciliation, the Hon. Philip Ruddock MP signed a bilateral Working Holiday Maker arrangement (April 2002); an Australian Parliamentary delegation led by the then President of the Senate, the Hon. Margaret Reid (April 2002).
President Tarja Halonen visited Australia in January 2007. Other high level visits included: the previous Minister for Finance, Mr Eero Heinäluoma (November 2006); a Parliamentary delegation led by former Parliament Speaker, Mr Paavo Lipponen (March 2005); the Minister for Trade and Industry, Mr Mauri Pekkarinen accompanied by a business delegation (April 2004).
The Australian Embassy in Stockholm has responsibility for Finland (the Ambassador, based in Stockholm, is accredited to Finland). Australia has an Honorary Consul in Helsinki.
Bilateral and trade relationship
Two-way trade between Australia and Finland in 2007 totalled A$2 billion. Australia's exports to Finland in 2007 totalled A$1.1 billion including nickel ores (A$598 million), metallic salts (A$138 million), coal (A$52 million), and alcoholic beverages (A$17 million). Finland's exports to Australia in 2007 totalled A$895 million including paper and paperboard (A$239 million), civil engineering equipment (A$132 million) and mechanical handling equipment (A$60 million).
Export Opportunities
Export opportunities exist in all sectors. Austrade has targeted biotechnology, information and communications technology and wine exports as being three particularly promising sectors in Finland.
Biotechnology
Australia has a strong international reputation for its quality of science and as a source of intellectual capital. Many European pharmaceutical companies, and in particular Nordic companies, look favourably on Australia for contract R&D because of the quality of research and the lower cost base. Because of the size and scope of the biotech industry throughout Europe and the Nordic region, there are many opportunities in many different biotech sectors.
Information and Communications Technology
Finland offers one of the world's most sophisticated Information and Communications Technology (ICT) infrastructure and application environments. This environment provides cutting-edge, high efficiency settings for all kinds of business. Nokia, Finland's largest company, is the world's leading mobile phone supplier and a leading supplier of mobile, fixed and IP networks, as well as multimedia terminals. Finland is also home to many niche leaders in related fields such as mobile commerce, wireless equipment and data security.
Finland is an ideal 'test bed' for foreign companies who can be assured of a robust scientific research environment. Finland also serves as a useful platform market for other European Union members. The sector has a strong international flavour and welcomes international investment.
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 known for providing good value for money and being easy to understand. Future prospects are good if the Australian prices are competitive and exporters are prepared to meet the demands of what is a relatively small, yet interesting market. Finland is a member of the European Union, so the import regime of the EU applies.
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.
Business aid available includes transportation aid for deliveries to sparsely populated areas and energy subsidies for investments promoting energy conservation and domestic use of energy. Small and medium sized companies are also entitled to tax relief on fixed assets in northern and eastern Finland. The National Technology Agency of Finland also provides grants and risk loans to research and development projects leading to internationally competitive products, production processes or services.
Trade Successes
Perth-based mining company, Vulcan Resources, will begin construction in 2008 of a new copper-cobalt mine and concentrator in eastern Finland. In addition to the new mine, Vulcan is also involved in a successful joint-venture nickel exploration project and several vanadium, nickel-copper and platinum exploration projects in Finland. Another Australian minerals company with successful operations in Finland is Dragon Mining, whose mining and production facilities near Tampere produce 25,000 ounces of gold per year.
Last updated: 12/08/2008