Ladies and Gentlemen,

I am glad to be present at this breakfast that is intended to introduce to you trade and investment opportunities in Estonia and to promote business between our countries.

The goal of this seminar is to show you that Estonia, a country which itself has only 1.4 million inhabitants, is situated right at the heart of the Baltic Sea economic space, within the reach of tens of millions of consumers. Eighty kilometres to the north you find Finland, the home country of Nokia, to the east, one of the most well-developed regions of Russia with St. Petersburg, and in the south there is the Baltic market united by a free trade agreement. It is a region characterised by the most rapid economic growth in Europe and by the development of trade connections and high innovativity in the information technology and telecommunications market. Estonia is there, right in its centre, both geographically, but more importantly through its way of thinking.

Throughout the last decade Estonia has been the fastest growing economy in Central Europe. As soon as we were able to re-establish our independence in 1991 we realized that the only way we were going to bridge the economic gap that had opened up between us and our neighbours, Finland and Sweden, during the fifty years of Soviet occupation was through radical market reforms.

This meant that already in 1992 - against the advice of the IMF - we carried out a radical economic reform, much like the one carried out in Germany at the end of the 1940s, which laid the basis for the German economic miracle. Our new old currency, the Kroon, or crown, became instantly convertible and has remained stable to this day, at a rate of 1 to 8 to the German Mark. And, paradoxically, soon after our reform had proven to be a success the IMF began presenting it as an example to other countries.

We passed a law requiring the Parliament to pass a balanced budget. This may be painful at times, but it has certainly imposed fiscal discipline. We also imposed a universal value added tax, and a flat rate corporate and personal income tax of 26%. From this year, not the profit itself, but only the withdrawal of profit is taxable in Estonia.

This means that in Estonia reinvested profits are free from corporate income tax. There are no restrictions set on foreign ownership of business, repatriation of profits or ownership of land.

We also worked hard to open up markets for our domestic producers. Today I can proudly say to you that Estonia has one of the most liberal trade regimes in the world. We don't have any subsidies and practically no tariffs. We have free trade agreements with the European Union, EFTA, and most of the former Soviet bloc. Estonia is a member of the World Trade Organisation. The free market of Estonian goods has 600 million consumers.

All these steps have paid off. Estonia is today the largest recipient of foreign direct investment in Central Europe. We have freed our entrepreneurs from unnecessary bureaucratic shackles with the result that we are today no longer only vying about a place in the front row of Central European countries, but that in areas such as internet penetration per capita we are ahead of many European Union members. Our schools are wired up. In fact, most of Estonian banking transactions today take place across the Internet.

The Wall Street Journal recently named the Estonian Hansabank among the three most technically advanced banks in the world.

Ladies and Gentlemen,

Within a few years' time Estonia will be a member of the European Union. We are today among the frontrunners for early EU membership. We will be a vital junction on the commercial highway connecting Europe with Russia and we are already today a central player in the most dynamic economic region in Europe, the region around the Baltic Sea.

All of these facts should make it eminently clear that not only is Estonia a good place to put your money, in terms of investments, but also as a market for your goods. And there is nothing to stop you. Ever since 1995, the business and trade agreement between our two countries has been in force. In the same year, also the agreement for avoidance of double taxation of profits and capital and prevention of tax evasions was signed.

Unfortunately, Canada's share in our foreign trade has so far been only 0.1 per cent. The volume of Canada's direct foreign investments is in the 26th position, Canada having invested less than 3 million Canadian dollars to Estonia.

I hope that this morning will convince you that it is worthwhile to investigate the Estonian economy more closely and to invest there. We are open for business.

Thank you, ladies and gentlemen.

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