The National Audit Office of Finland (NAOF) has examined how business executives view Finland as an investment environment. The purpose was to find out why Finnish economic growth remains slow even though the country ranks high in international competitiveness comparisons. The business executives, experts and government officials interviewed by NAOF listed a number of proposals for improving the investment environment. They included streamlining of permit processes and public contracts, better education and training paths, and a higher status for marketing.
In two audits, NAOF examined how Finland could attract more business investments. Finland was also compared as an investment environment with Sweden, Denmark and the Netherlands. The following four sectors were assessed in the audit: mining, pharmaceutical industry, software industry and retail trade. The audits produced an overview of the investment environment, Finland’s strengths and areas where central government could help to improve the situation.
Concentration of investments puts Finland at a disadvantage
− The Finnish GDP is still smaller than in 2007 and business investments have not recovered from the latest financial crisis. For companies, wisely made investments are crucial to improving productivity and achieving profitable growth and a good investment environment is also a good environment for economic growth, explains Vesa Koivunen, Principal Performance Auditor at NAOF.
− Countries are competing for business investments. The country’s image and how well-known it is play a role when companies select investment locations. Even if different countries would otherwise provide similar business operating prerequisites, concentration of investments puts Finland at a disadvantage. For example, Sweden has more than seven times as many Nordic head offices of large companies as Finland, says Auri Pakarinen, Principal Performance Auditor at NAOF.
According to the business executives interviewed for the audit, marketing skills are not appreciated in Finland. Only six of the 50 most valuable Nordic brands are Finnish. In online sales, Finnish companies are also below EU average. This means that, as online commerce is growing, spending by Finnish consumers is increasingly moving to foreign companies.
Central government can help to improve the business environment
The business executives interviewed for the audit valued the competence and reliability of the Finnish public administration. In their view, however, the way in which the authorities operate should be speeded up, streamlined and made more efficient. Lengthy permit and appeals processes and public contract provisions that are stricter than what is required by the EU are some of the issues listed by the interviewees.
The fact that employees’ skills become outdated is considered a problem in many sectors, such as the software industry. According to the pharmaceutical sector, Finland would attract high added value investments if it were easier to use patient registers and biobanks in pharmaceutical research.
The views of the companies and their experiences in Finland compared with its competitors are crucial when investment decisions are made. In an ideal situation, efficient public administration can encourage investments and provide Finland with a competitive edge by setting a good example.
Public administration can contribute to a competitive investment environment by being innovative, service-oriented and agile, by favouring experimental culture, by establishing networks and by having an open mind. A dialogue with companies – both potential investors and companies that are already operating in Finland – is key to building a good investment environment.
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