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finland

Finland’s business interest in the Arctic

Unlike Norway, Russia, Iceland, Greenland, Canada and the USA, Finland’s territory does not border the Arctic Ocean. However, the northern parts of Finland (Lapland) are considered to be part of the Arctic Region, a polar area covered in ice and snow for most of the year.

Why is this region getting more attention from business people in Finland? In this article, we’ll take a look at the Finnish Arctic strategy.

Finland’s vision is to be an active and responsible Arctic actor in the midst of change 

According to a publication from the Prime Minister’s Office of Finland, Finland declared its own Arctic vision in 2012:

Finland is an active Arctic actor with the ability to reconcile the limitations imposed and business opportunities provided by the Arctic environment in a sustainable manner while drawing upon international cooperation”.

What does this mean? Essentially, the significance of the Arctic region has increased and Finland possesses relevant expertise. Finland wants to contribute to the sustainable development of the Arctic region. At the same time, Finland is engaged in the international efforts to exploit the economic opportunities emerging in the northern region.

An Arctic railway?

One of the ways that Finland could be part of the Arctic business ecosystem is by building a railway that would connect Finland to the Arctic Sea through Norway. In 2018, the Finnish and Norwegian governments announced their plans for this kind of connected railway.

Both the Finnish and Norwegian governments see the potential for an avenue that could provide a more direct route for exporting Arctic resources, and also help a booming tourist industry in northern Europe.

Yle reported this May that tourism in Finnish Lapland increased by 3% in 1Q2019 compared to the previous year. American tourists are visiting Lapland at a particularly increasing rate and the amount of American tourists increased by staggering 66% in that period compared to 1Q2018.

Focus on Food, Maritime and Mining

Besides tourism, Finland sees much potential in the Arctic food industry as food from this region has a pure and healthy reputation globally. Especially Arctic berries are being used and sold as a superfood in powder form all over the world. Just earlier this month, a Tampere University study released promising data on the health benefits of lingonberries. We love lingonberries! The demand for these types of food products has increased in Asia, according to Natural Resources Institute Finland.

Mining is also a large industry in Finland’s Arctic region. According to House of Lapland – a publicly owned destination marketing company, Lapland counts for half of the total quarrying and mining industry volume of Finland and has more than €4 billion of investment potential. Several thousand new jobs are likely to be created in Lapland by potentially two new mines in the next few years, according to Lapin Kansa.

Another area of expertise and focus for Finland is Arctic maritime technologies. Finland has been a world leader in building icebreakers and ships for the extreme Arctic weather conditions. In May it was reported that Finland was bidding to be an icebreaker subcontractor for the USA, which is planning to update its icebreakers in the Arctic region.

The Arctic sea ice is vanishing –  New shipping routes are emerging

There’s another side to the Arctic story. And it’s not exactly all Euros and lingonberries.

You probably know the story: global warming has impacted the Arctic region more than any other place in the world. During the past decades, the Arctic region has changed radically, with higher temperatures having a great impact on the environment. As the climate has warmed steadily for decades, the Arctic sea ice has melted simultaneously, as the graph shows. 

In the future, when the Arctic summers will most likely be free of sea ice (in a matter of decades, according to experts), there will be lots more interest in this Arctic region, especially from the economic point of view.

Take the Northeast passage, for example. It has traditionally been open for sea traffic for only two months in a year. But with the help of icebreakers, it is open from July to November in 2019. The Northeast passage shortens the distances of shipping between Asia and Europe by thousands of kilometers. 

You can make money when you save money. Finland will have plenty of company up in the, previously, desolate north.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

Categories
finland Investing

Nordic equity markets: positioning for a tough economic outlook

The Nordic economic outlook isn’t exactly rosy. Cue layoffs and downbeat growth expectations. Where to invest if you want a little more defense in your financial strategy?

Our bottom-line suggestion is to investigate discount retailers. Maybe Finland’s Tokmanni? If you’re really adventurous start your own company offering budget prices to deal-hungry consumers. Or are you more of a shark? Hold your cash, wait for equity prices to drop, then spend, spend, spend. 

How long will the party go on? 

Since the great recession in 2008-2009, we have witnessed a 10-year “bull run” in stock markets, especially in the United States. Other countries have witnessed similar results. Never before in the history of stock investing have we seen such a long period without a recession. Only one other bull market has lasted longer than seven straight years, and it was the bull run after WW2

(In this article, we are taking a look into the current economic situation and thinking about future decisions when it comes to retail investing.) 

So how long will the party continue? 

This is the million dollar question that no one really knows. Looking at the current equity prices (such as OMX Nordic 40 or the S&P 500), it can be tempting for individual investors to sell at least some of their shares, taking profits while they’re still there. However, by not holding  investments, or selling too early, investors can also lose some big gains that might just come to their portfolios. There is always risks and rewards, and everyone acts according to their own investing strategy.

In the past 10 years, US stocks have performed better than Nordic European stocks.

Economic growth is likely going to slow down

We have witnessed steady economic growth globally in the 2010s. Finland struggled quite badly after the great recession and the following European debt crisis. However, since 2015 the Finnish economy has recovered. According to Statistics Finland, Finnish Gross Domestic Product (GDP) has grown for four consecutive years, although the growth is expected to slow.

The Bank of Finland Forecast for Finnish GDP Growth:

  • 2019: 1.6%
  • 2020: 1.5%
  • 2021: 1.3%

It is always hard to predict the future, especially when there are so many uncertainties and factors that determine the global economy trend. As a small fish in the sea, the Finnish economy is prone to various global economic threats and risks. Finns have always relied on their export sectors which is also the reason why the Finnish economy goes hand in hand, up or down, with the global economy.

So want to know how the Finnish economy is going to do? Look at global economic outlook.

Whats should intelligent investors do?

Many of us are thinking ‘what should we do in this new situation’: equity prices are at all-time highs, everyone is talking about the next recession, but still there are not too many attractive investment options for stocks and real estate.

How can intelligent investors invest their money and equities in this kind of a situation?

It all comes down to personal preferences, investing strategy, risk-tolerance, life situation etc. Some things that every investor should consider…

Are you investing long-term or do you need the money in a few years ?

  • The sooner you need your money, the more risk you have if you invest in stocks. Stock market in general have always been a good option for long-term holders, but only those with enough time.

What kind of stocks do you have in your portfolio?

  • During tough economic times, investors should look for companies that thrive or at least survive recessions better than other companies. For example, discount retailers such as Wal-Mart or Tokmanni in Finland might be good options if a recession hits.

Should you allocate your investments into other asset classes?

  • To reduce risk in an investment portfolio, one should invest in different asset classes. Investing in precious metals, such as gold, or just having cash, might be a good option if stock prices drop. Gold price and stock prices have no or very weak correlation which is good for asset allocation. Building up a cash buffer might be a good idea during these times, because when the recession hits, equities are on sale!

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

Categories
finland

Want to Live in Finland? Tips From a New Arrival

I moved to Finland in January from Vushtrri, Kosovo. As an international student, I also work in Helsinki and have an internship.

Why do I want to live in Finland? Everyone’s goal is to live the highest quality and most stable life possible. Finland surely offer that to you.

[mapsmarker map=”2″]

What would I tell someone considering a move to Finland?

Finland needs international workers. The Director General of the country’s migration department has said: “The basic premise is that, in addition to the domestic workforce, Finland needs employees also from abroad. There is intense competition in the world for international talents.”

Open Spaces

You’ll probably need to be prepared for some cultural and lifestyle changes. For example, looking at Finland for the first time from an airplane, I noticed the lack of colors. At that moment, Finland seemed only black and white – darkness and light. Of course it was wintertime. Other seasons in Finland are very colorful, though that monotone first impression has stuck with me.

Also, outside of a few urban areas, Finland is very low-density in terms of population. You really see that as you descend. There’s huge expanses of open land. While Finland’s population is only about 5.5 million, it’s land mass is 303,815 km2 – that’s a lot of empty space. There’s a huge distances between buildings in some areas, and the land is filled with forests.

View of Finland from the air during winter.
Wintertime view of Finland from an airplane.

Simple architecture

Get on the ground, exit the airport, and notice the architecture. There’s a fantastic simplicity to the architecture in Finland. Finns are all about efficiency: “If it works perfectly, you don’t have to complicate it. Keep its destiny clear and simple!” That seems to be the unspoken motto.

No small talk 

Did I mention unspoken? The distances between houses seems to help people keep at a distance, in order not to disturb others and to work in silence by themselves. At the least, Finns really do appreciate personal space.

One point is unambiguous. Most Finns are not accustomed to small talk. That doesn’t mean that there’s a fear of small talk. It’s just not a common experience for most people. If you come from a more collectivist society, this aspect of Finland may really shock you. If you want company without priorities or purpose, Finland may not be the right place for you.

Helsinki Sunset Pink
Sunset over Helsinki.

Independent culture 

The stoic independence of Finns created a culture of self-service. Many services – such as buying public transport tickets or paying taxes – are done by individuals themselves, rather than a service provider. Having up to date tech tools is important in order to access the apps and other systems you’ll need. You’ll be helping yourself, and also the overall economy, run more smoothly and transparently.

So, how long will it take to get over the culture shock after moving to Finland? I’d say just two or three months and you’ll appreciate every detail of this wonderful country, which has the most beautiful scenery in the world. You’ll find your peaceful moment here, of a type you won’t ever find anywhere else.

Krenare Bunjaku is a marketing intern at sulonorth. Connect with her on LinkedIn or Facebook.

NOTE: The above post was amended on 31 OCT to clarify that Krenare arrived in Helsinki as an international student.

Categories
finland Investing

Europe is the pioneer in global P2P-lending & Finland is dominating the Nordic markets

Peer-to-peer (P2P) lending or crowdlending/-funding is a new way of borrowing and lending money without any middleman. P2P-platforms operating online connect those who need the money with those who are ready to lend money. No bank is needed in this process. 

Borrowers can be either individuals or companies, and there can be tens or even hundreds of individual lenders contributing to one single loan. Crowdfunding is easier to get than traditional bank loans, which makes it an easy option for startups. P2P-lending is also more flexible, less time-consuming and often a cheaper alternative compared to traditional business loans that banks are offering. 

P2P-lending has become very popular in recent years

The first online P2P-lending platform, the UK’s Zopa, was launched in 2004. However, P2P-lending did not become mainstream investment option until few years ago. As we can see from the graph below, crowdlending has grown steadily during the last 5 years in Finland. At a global scale, P2P-lending did not achieve (early) mainstream adoption until in the 2010s. 

P2P-lending in Europe 

Europe is one of the pioneers in the P2P-sector. The first P2P-platform was launched in UK, which has been the market leader in Europe ever since. In 2017, the UK represented 68% of the overall market volume. In Continental Europe, France and Germany were the two biggest players in P2P lending space. As a small country with a population of only 5.5 million, Finland was doing relatively well compared to the bigger European countries.  

Baltic countries, especially Latvia are growing fast in the European P2P-lending scene: their favourable regulation  and entrepreneurial mindset has produced some decent results.  However, most of the investments in Baltic P2P-platforms come from international investors and loans

In general, there are many platforms in European P2P-markets to choose from. Mintos, a Latvian P2P-platform is the largest and most popular P2P-lending platform in Europe and it’s growing fast. 

P2P-lending in Finland growing

In 2019, there are 4 different P2P-platforms that are operating from Finland: Bondora, Fixura, Fellow Finance and Fundedbyme. Fellow finance provides consumer loans also in Germany, Sweden, Denmark and Poland being the leading P2P-platform in Nordic countries

According to P2PMarketData, Finland was the leading Nordic country in P2P-crowdfunding in 2017. Sweden was pretty close, but Denmark and Norway were far away. When it comes to geographical regions, the Nordics beat Benelux countries, Italy, Baltic countries and other big regions in volume. Rankings have probably changed after 2017, but this gives an idea about the P2P-lending scene in Europe. 

In Finland, P2P-lending has become a popular way to borrow and lend money. According to Finlands Bank, in total of 150,1 million Euros was borrowed in P2P consumer loans in 2018. The number was 40 % higher than year before that (2017), so the growth of P2P consumer loans has been quite strong. 

However, borrowing money via P2P consumer loans is not that popular among Finnish families; P2P consumer loans cover only 1% of the total household consumer credit.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

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Denmark estonia finland Norway Sustainability Sweden

Why Sweden is the waste king of Nordic Europe

Want to live in Finland or another Nordic country? Get ready to spend a lot of time sorting waste and recycling.

In Finland, most apartments and houses contain multiple bins for waste sorting by type. You carry it outside regardless of the weather and dispose of it in one of several different receptacles: biological, mixed, cardboard, plastic, paper, cans, glasses, and hazardous (batteries, small electronics).

Compare this to Britain, where residents usually put out three bins: food waste, mixed recycling, and garden waste. In countries such as the UAE and Turkey, people generally do not recycle at all.

I chose these countries as examples because I can speak from first-hand experience after living for multiple years in each. The point is that Northern Europe is a leader when it comes to waste treatment and recycling.

How do they do it in Sweden and Finland?

In Sweden, nearly half of general waste is sent for energy recovery. The country is so good at burning waste, which produces steam for electricity producing turbines, that it imports waste from other nations, including Norway and Finland. The energy is used to heat Swedes’ homes and even to power buses.

Some numbers from Swedish Waste Management and Recycling Association Avfall Sverige:

  • In 2018, each Swedish citizen produced 466kg of household waste.
  • In 2017, each Swede produced 473kg (so waste per person in Sweden is being reduced – at least between 2017 and 2018!).
  • In 2018, 15.5% of household waste was treated biologically.
  • Nearly 50% of household waste went to energy recovery in 2018.  
  • Only 0.68% of the waste went to landfills.

Finns, on the other hand, produced 510kg of waste per person in 2017. In Finland, most of the municipal solid waste is treated for energy recovery. The rest gets recycled and only a tiny amount is sent to landfills, as per data from Statistics Finland.

The most dramatic change with Finnish municipal waste management happened in 2016 when the dumping of municipal waste in landfills decreased substantially compared to previous years, coming in at 3%. This change was due to a regulation that banned dumping organic waste into landfills. 

Helsinki neighborhood waste center door
Fall in line and recycle as you are told!

Why are Danes the largest waste producers in EEA?

NOTE: How countries define municipal waste varies. Sometimes the term covers a wide amount of commercial waste. This is the situation in Denmark, which partly explains the large amount of generated municipal waste per capita. Therefore, the figures below are not completely comparable between countries.

Danes produced the most municipal waste in the European Economic Area at a staggering 781kg per capita in 2017. In Norway, the figure was close at 748kg. In Iceland, the third biggest waste producer, it was 656kg. 

This puts Scandinavian nations on the top of the list for municipal waste generators. This can partly be explained by the wealth of these nations. Usually, rich nations produce more municipal waste than less wealthy nations within the EEC.

However, Sweden and Finland are producing much less waste and are also wealthy countries.

Urbanisation is considered another important contributor to Denmark’s high level of waste. However, perhaps the main reason for the high figure is the way that municipal waste is determined, according to Denmark’s Environmental Implementation Review 2019. The review also states that Denmark is among the countries with the lowest amount of landfill waste in the EU at 1%.

Why does Sweden import waste?

Currently, Sweden imports more than 1.3 million tonnes of waste from other European countries. Nearly half of this waste comes from Norway, but also Finland exports waste to its western neighbour. Why is that?

Overcapacity

Finland has a problem when it comes to energy recovery at home. The country’s waste burning facilities are overcapacity. That is why a lot of Finland’s waste is sent to Sweden and Estonia. All in all, Finland exported 100,000 tons of mixed waste in 2018, according to Yle.

A ban on dumping organic waste in landfills also increased the amount of municipal waste being burned. If Finland’s waste incinerators only took in household waste they would have enough capacity. However, they also accept industrial waste.

Finland Waste by Sector 2017
Finland Waste by Sector 2017

Finland is building a new waste incinerator facility in Salo, but it won’t be ready until 2021. Finland’s largest waste management facility (in Vantaa) is also being expanded. However, for the time being, it seems Finland will keep exporting waste to its neighbours to the south and west.

Trash means cash

In Norway, the problem is not related to capacity but the free-market economy. Norway has enough facilities to burn its waste at home. The capacity was built up after landfill dumping was banned in 2009. However, Swedish waste burners compete in the Norwegian market. They offer a cheaper price due to lower costs in Sweden. 

It seems that Sweden is destined to sit on the Nordic waste throne for the foreseeable future.