Encouraging business investments - Overall assessment

Public administration could start the process by changing its own practices and setting a good example in customer service, innovativeness and regeneration. The authorities should invite companies to a dialogue and recognise the role of marketing. The purpose of this audit is to find answers to the question: How can central government encourage business investments?

Conclusions

The purpose of this audit is to find answers to the question: How can central government encourage business investments?

An overall picture of the Finnish investment environment is produced by comparing the situation with Sweden, Denmark and the Netherlands. A total of 53 interviews were conducted for the audit in these four countries. The interviewees included government officials, business executives, representatives of business organisations and other experts. The results of two workshops attended by about 50 experts from companies and public administration were also used in the audit. In addition to the interviews, international competitiveness indices and other literature were also used as sources.

Central government can do a great deal to encourage business investments

Companies always make their investments on the basis of their own situation and needs. However, in a country like Finland, which has a large public sector covering a broad range of different fields, many of the decisions taken by central government can also encourage business investments.

In many respects, building a good society means building a good investment environment. Good basic services provided by the public sector, equality and pleasant living environment help to attract high-productivity investments to Finland. In fact, all administrative branches are responsible for building a good investment environment.

Public administration could start the process by changing its own practices and setting a good example in customer service, innovativeness and regeneration

New thinking and approaches in public administration would be a cost-effective way of improving the investment environment.

Even though companies appreciate the professionalism, impartiality and reliability of the Finnish public administration, they often view the working practices of the authorities as too slow, complex and inefficient.

Public administration actors can also contribute to a better operating culture with their own action: innovation capability, agility, experimental culture, networking, service-orientation, open mind and marketing skills can also encourage Finnish companies to adopt these positive qualities. When central government issues statements urging companies to embrace these qualities, it would be natural for central government actors to develop their practices in accordance with these qualities.

If public administration actors adhere to old operating models, this may result in regulation and official controls that prevent reforms in the operating environment and business practices. In addition to ensuring that the operating practices are in accordance with existing norms, public administration should also pay attention to what can be done.

The authorities should invite companies to a dialogue and use their expertise

International competition provides a benchmark for Finland’s investment environment and the performance of its public administration. The way in which the companies making investments rate Finland in this respect and their own experiences of Finland are crucial factors in this area.

Companies value cooperation and are willing to share their knowledge with the authorities. The authorities should invite companies to a dialogue, use their expertise and learn from them.

In business policy, it would be important to hear both economics and business economics experts on how companies make decisions and how they succeed.

Central government can enhance the status of marketing and help to improve marketing skills in Finnish companies

Finland lags behind its competitors in marketing skills and in the way in which companies view marketing. Finnish companies have not done particularly well in the consumer market and they have fewer valuable consumer brands than companies in other countries. Furthermore, unlike companies in other countries, Finnish firms have not managed to become important players in online commerce.

Finnish Government and authorities should recognise the role of marketing as a factor contributing to profitability of business operations and the national economy as a whole.

Proposals for enhancing the status of marketing and for improving marketing skills in Finnish companies are presented in this audit. The most important of these are as follows: giving commercialisation of innovations a higher priority in product development funding, improving basic education so that students finishing comprehensive school would possess better presentation skills, and the establishment of a marketing development centre. The marketing development centre would bring together top marketing experts, serve as an information hub, and organise cooperation projects for companies. The centre would act as an engine for strengthening marketing skills in Finnish companies.

Business executives expressed the hope that Finland’s government leadership would commit itself to promoting Finland as an investment location

When companies are making decisions on where to invest, marketing a country as an attractive location may be of crucial importance. Finnish government ministers and the country’s top leaders are less actively involved in the efforts to attract investments than their colleagues in the other reference countries.

It is important to listen to foreign investors so that we can understand their problems and what they want. It is also important to listen to companies after they have invested in Finland so that we can ensure that they stay here and expand their operations in the new location. This interaction is an area where improvements are needed in Finland.

These are the main strengths and weaknesses of Finland as an investment environment:

Strengths

Weaknesses

Business operations

Good basic education providing equal opportunities

Highly educated workforce

Innovativeness and high-quality research

Ample natural resources

Availability and price of energy

Good availability of workforce in many sectors

Competitive business taxation

Good flight connections

Low status of marketing and poor marketing skills

Slow land use planning and building permit processes

It is difficult to end permanent employment relationships

Finland does not always defend its interests in the EU single market

Prerequisites for business in remote areas

Society and living environment

Good living environment: good basic services, unpolluted nature and safety

Equality

Trust between citizens

Public administration is competent and reliable

Small market

Unfavourable location

Finland is little-known in the world

Cities do not have international appeal

Growing gaps in living standards between citizens

Economy

ICT cluster and programming skills

Successful forest industry

Weak growth prospects

Narrow industrial base, few well-known brands, weak success in consumer market

Few international investments that would attract new investments

The National Audit Office recommends that:

  1. The Ministry of Economic Affairs and Employment should allocate more product development funding to commercialisation of innovations and marketing.

  2. The Ministry of Finance should monitor how satisfied companies are with the services provided by the authorities and develop central government activities so that companies will have more positive experiences of how the authorities deal with them.

  3. Finpro should make more use of diplomats and business executives when attracting investments to Finland and have more extensive longterm contacts with companies that have established themselves in Finland.

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