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Foreign Direct Investment

Due to the outbreak of the Covid-19 pandemic, foreign direct investment (FDI) flows to Finland came to an abrupt halt in 2020. According to the World Investment Report 2021 published by UNCTAD, Finland's FDI inflows amounted to USD 13.6 billion in 2019 and decreased to USD 2.6 billion in 2020. In the same year, the total FDI stock amounted to USD 97 billion. According to recent data by OECD, the majority of the investment stock comes from Sweden, Luxembourg, the Netherlands, Norway and China. The combined share of the investment stock from the EU area is at 90%. Examined by industry, inward FDI to Finland are mainly directed towards enterprises engaged in manufacturing, financial and insurance activities, information and communication, real estate, wholesale and retail trade. Figures from Statistics Finland shows that during 2020, Finnish investors’ returns from foreign direct investments totalled EUR 11.3 billion; whereas returns generated by foreign owners on direct investments to Finland totalled EUR 5.5 billion. According to the latest data by OECD, in the first half of 2021 FDI inflows to the country totalled USD 0.6 billion, compared to a negative flow of USD 2.4 billion one year earlier.


The country’s strengths include a highly educated workforce, a knowledge-based and innovative economy, a reputation for stability and lack of corruption, competitiveness, a strategic position at the centre of a dynamic zone formed by Russia, Scandinavia and the Baltic countries and its orientation towards high technology, research and development. Finland’s weak points are the small size of its market, a high vulnerability to the international situation, substantial labour costs and a high degree of dependence of the country’s banking sector on the Swedish and Danish financial sectors. Significant amendments to the Monitoring of Foreign Corporate Acquisitions Law (172/2012) entered into force in 2020, widening the scope of acquisitions that are subject to mandatory pre-approval. Overall, Finland has a very friendly business environment, as shown by the fact that the country ranked 20th out of 190 countries in the latest edition of the World Bank's
Doing Business report (although it lost three positions compared to the previous publication).

 
 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) -2,17113,6122,575
FDI Stock (million USD) 72,07285,82196,903
Number of Greenfield Investments* 148191131
Value of Greenfield Investments (million USD) 1,8591,8771,959

Source: UNCTAD - Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Country Comparison For the Protection of Investors Finland OECD United States Germany
Index of Transaction Transparency* 6.0 6.5 7.0 5.0
Index of Manager’s Responsibility** 4.0 5.3 9.0 5.0
Index of Shareholders’ Power*** 8.0 7.3 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in Finland

Strong Points

The country's strong points:

  • Political stability
  • A strategic geographic location between Scandinavia, Russia and the Northern European expanding markets
  • A multilingual population
  • One of the least corrupt countries in the world
  • Expertise in green technology, manufacturing, health and the ICT industry
  • An extremely industrialised economy, based mainly on the free market and with a high work productivity 
  • High spending in R&D
  • High-end industries
Weak Points

Finland's main weak points:

  • Geographic vulnerability
  • A decrease in industrial competitiveness
  • Fragility of the banking sector (regional exposure, especially to Russia)
  • A small internal market
  • Ageing population 
  • Deterioration of the current account
  • Large household debt
Government Measures to Motivate or Restrict FDI
Finland does not discriminate between foreign and national companies. As such, support in the form grants, loans, tax benefits, equity participation, guarantees, and employee training can be available to all firms. Subsidies for start-up companies are available for establishing and expanding business operations during the first two years of activity. Investment aid can be granted to companies in the regional development areas, especially SMEs (but also bigger companies in case of significant job creation).
In order to promote foreign investment, the government has created a Team Finland network that serves as a one-stop shop for businesses.

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Investment Opportunities

The Key Sectors of the National Economy
Telecommunications, IT devices, information and communication technologies, renewable energies, software, environmental technologies, medical equipment, biotechnology, safety and security, travel and tourism services, development of Arctic natural resources, franchises.
High Potential Sectors
Best franchising opportunities lie in underdeveloped areas of B2B services (such as personnel, building repair/maintenance, training and IT) and consumer services (cleaning services, interior design, nursing, etc.).

Telecommunications is a highly competitive sector which is growing quickly; as well as e-commerce. Finland also serves as an excellent gateway to the emerging computer software markets of Russia and the Baltic countries. The overall high level of public and private investment in biotechnology, infrastructure and technical know-how offer opportunities for foreign firms.

Privatization Programmes
Finland has opened up electricity, gas, telecommunications postal and rail markets in recent years to meet EU requirements. Sales of direct holdings of the State totaled USD 1.72 billion from 2010 to 2019.
For constant updates on privatization programs, please regere to the official Government ownership steering portal.
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Finland
Ted - Tenders Electronic Daily, Business opportunities in EU 27
DgMarket, Tenders Worldwide
 

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
The state-owned betting company Veikkaus has exclusive rights in the market for legal gambling services.
The state also has a monopoly on the retail sale of alcoholic beverages. 
The State can approve FDI in areas of vital national (defense and security) or strategic interest (energy, food supply or communications).
Sectors in Decline
Agriculture
 

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