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Foreign direct investments in Estonia hit an all-time high mark in 2022

Last year, Invest Estonia helped bring 351 million euros worth of foreign direct investments to Estonia, an all-time record. With almost 1,600 new high-paying jobs being created, the year turned out to be a success for Estonia on the international scene.

Invest Estonia (Estonian Investment Agency) has secured €351M in direct foreign investments during 2022, the biggest number up to date. From world-class factories to R&D initiatives, Estonia has attracted plenty of innovative solutions for a changing world.

“The war launched by Russia shook the world economy, but Estonia has managed to play to its strengths. Those include an educated workforce capable of creating high-added value, a simple and clear tax system, and flexibility both in the regulatory environment and in testing new technologies. If we are the best in the world in these three things, we don’t need to convince foreign investors for too long,” said Kristjan Järvan, Minister of Entrepreneurship and Information Technology of Estonia.

“In the first half of the year, we had to do a lot of explaining to maintain investor confidence in Estonia. The second half of the year was again more commercially active, and a number of important investment deals for Estonia were confirmed. All in all, the interest in investing in Estonia remains high, as demonstrated by the all-time record foreign investments made with the help of our team,” said Joonas Vänto, Head of Invest Estonia.

Riding the wave of innovation

Major foreign investment projects do not happen overnight, though. One of the best examples is the Neo Performance Materials magnet factory project, a €100M facility to be built in the city of Narva by the rare earth producer Silmet. Invest Estonia handled the project for years, with the final announcement being made in November 2022.

“The decision by Neo Performance Materials to build a magnet factory in Ida-Viru County was undoubtedly the largest project of the past year in terms of both, investment volume and the number of jobs created. It was also a strategically significant deal,” said Vänto.

The magnets produced by the factory will be used in various applications, including electric equipment, generators, speakers, and scientific equipment, as well as in wind turbines and hybrid and electric vehicles. The factory will also house an R&D centre to develop new materials and applications for magnets.

Breaking the ice in research and manufacturing

Another success worth mentioning is Bifrost Tug, a Norwegian manufacturer of ice-breakers, which is setting up a Research and Development centre in Estonia. The facility has received funding of nearly €800,000 from the EAS Applied Research Programme, and it will also involve Taltech’s Small Craft Competence Centre. It aims to develop a new design of removable ice-breaking bow for smaller towing vessels to improve their access to wind generators in offshore wind farms during winter. As Estonia races to be the world leader in per capita green energy production, those efforts will move this goal closer.

Other success stories include the follow-on investment by the German company Kühne+Nagel IT Centre, the biggest job creator after Neo Performance Materials, and the Finnish electronic manufacturer Incap Electronics, which was selected as Foreign Investor of the Year at last year’s Estonian Entrepreneurship Awards. The company operates a factory on the island of Saaremaa.

Besides all kinds of electronics, Incap is also producing circuit boards for stereo cameras that will be used on the Moon in connection with NASA’s Artemis lunar program. The cameras will be part of Maxar Technologies’ robotic arm and are expected to land on the Moon by 2024. Incap also invested in the Estonian education sector, facilitating a program in electronics engineering.

Unlocking the future potential

“Every crisis creates new opportunities for innovation. History has shown that the companies that adapt the fastest to new circumstances will shape the focus of economic growth in the coming years, “ said Minister Järvan.

Vänto believes that cooperation with Estonian companies will be on the increase, as there are enormous benefits in bringing an outside investor on board and setting up strategic partnerships. “Strong companies are the ones that make bold investments in difficult times,” he commented and added: “A special mention should, in addition, be made of the good cooperation that we have with the Ministry of Foreign Affairs and embassies. We will likely work together even more in the coming year, helping foreign companies find opportunities in Estonia.”

In 2021, the Estonian FDI department helped to secure €194 million of foreign investment, up from €160 million in 2020. In 2019, the year before the COVID-19 pandemic, investments facilitated by Invest Estonia amounted to €234 million.

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