Ladies and Gentlemen,

As you are no doubt going to devote much of your time at this seminar to detailed discussion of financial services, I will offer you some sort of a counterweight and speak about Estonia in general.

I am happy to be able to say that Estonia has entered the Central European mainstream. I remember all too well the time, when Estonia was not regarded as serious contender for a place in the European Union. Few believed that we would be able to shake off the Soviet mindset. Nevertheless we did it and I am mighty immensely proud of it.

In ten years Estonia has built a fairly modern economy, an economy in which many Western businesses want to have a stake. Nordic banks have bought control in leading Estonian banks. Scandinavians come over to Estonia in their millions to buy our services. As any ''e-commercially aware'' Estonian knows, Esther Dyson has recently bought a stake in an Estonian job-search site. Russians ship their oil on Estonian railroads through the port of Tallinn, because we are reliable as well as familiar to them.

Estonian economy is of necessity an open economy. Our rather tiny domestic market provides excellent living only for ''natural monopoly'' utilities. Everyone has to rely on exports for their profits - or languish. Estonia has established itself as one of the most liberal trade regimes in the world. Taking all of Estonia's Free Trade Agreements into account, then the free market for goods produced in Estonia exceeds 600 million consumers.

In 1998, according to the Bank of Estonia, export equalled 60 per cent of our GDP, combined with imports, our foreign trade amounted to 125 per cent of GDP. Other examples of economies where trade exceeds 100 per cent of GDP are Singapur and Hong Kong. The Economist's ''Pocket Europe in Figures'' put our visible trade in 1997 at 78,37 per cent. Either way we are clearly the biggest trader in Europe in relation to our GDP.

At the same time, we have been expanding our view of what is our domestic market. It is not too big an exaggeration to say that out real domestic market is the economically very promising area - the rim of the Baltic Sea. Established business connections to Nordic countries and north-western Russia mean 80 million consumers for a business based in Estonia. These are not just any old 80 millions. These consumers live in the fastest-developing, most modern area of Europe. Most promising European high-tech centres in Finland and Sweden can boast the natural resources of Russia as their backyard. And Estonia is right in the middle of all this.

Understandably, the competition for the hearts and wallets of 80 million is intense. Businesses, which choose Estonia for their operational base, will have several advantages.

1. Our tax system is beautiful in its simplicity. Estonia has a universal value
added tax, and a flat rate corporate and personal income tax of 26%. Reinvested profits are free from corporate income tax.

2. There are no restrictions placed on foreign ownership of business,
repatriation of profits or ownership of land.

3. Our monetary system is based on a currency board arrangement using a
fixed 8:1 exchange rate with German Mark and thereby with the Euro. As a result, the exchange rate has remained stable since 1992 and inflation has been decreasing consistently. This year it will probably be less than 5 %.

If we take a look at the structure of foreign investments into Estonia, we see that industry accounts for 30 per cent of foreign investments, finance for 22 per cent and distribution services for another 23 per cent. Logistics and telecommunications account for further 10 per cent. The same proportions are apparent in the structure of Estonian GDP. Agriculture accounts for 5 per cent of GDP, industry for 26 per cent, services for over 20 per cent, financial services for another six per cent, logistics and telecommunications for nearly 12 per cent. This is a picture of a modern economy, where, as the readers of Wall Street Journal will know, over 10 per cent of bank customers use Internet banking. However, apart from telecommunication, which will remain lucrative until its deregulation in ten months, we are looking at low-margin industries.

Finns have their Nokia and Swedes their Ericsson - though large proportion of them are assembled in Tallinn. I see facilitating development of similar bestsellers of Estonian origin as one of my most important responsibilities.

Estonia is, and will remain, very friendly towards foreign investors. Estonians own about 26,7 per cent of equity in firms listed on Tallinn stock exchange, giving local investors the second place behind the Swedes, who own about 38,4 per cent. United Kingdom comes in at about 4,5 per cent.

As well as money, Estonia welcomes people with know-how, world-class managerial skills, an international outlook and world-wide business connections. To keep the ones we have and to attract more from abroad, Estonia aims to build an outstanding infrastructure to replace a good one we have already now. Estonia aims to do more to uphold laws and rules which make living in Estonia pleasant for everyone.

To sum it up: Estonia is a stable and growing economy, situated in the centre of a fast-developing region of 80 million consumers. And Estonia has become a trustworthy trading partner and the upholder of dynamic development in this region. Investors with good business sense and strategic vision are establishing their businesses in Estonia now.

Ladies and gentlemen, when you are considering investing in Estonia, I will ask you to consider the points I made here today. Investing in Estonia's future will certainly be more rewarding than investing in Estonia's past.

Thank you.

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