Starting in May of this year, when Estonia formally joins the European Union, an increase in foreign investment is expected. Currently, the country is second only to the Czech Republic in per capita foreign investment among the new EU members. However, despite a global decline in foreign investment, as revealed in a recent UN report, the Central and Eastern European Countries (CEECs) have maintained a steady pace. In Estonia's case, there is a strong Scandinavian presence: Sweden and Finland use the country as a service base in the Baltic Sea region due to its inexpensive labor force.
Although a decrease in foreign investment was observed in 2002, 2003 closed with encouraging results and major projects planned for 2004. The largest of these will be the spring construction of a pulp mill using local aspen, undertaken by the Norwegian company Larvik Cell in the industrial city of Kunda. The mill, whose production will be exclusively for export, will have an annual turnover of €64 million and will employ 400 people. Another sector where a significant increase is expected is real estate, primarily represented by small and medium-sized enterprises. Between 2004 and 2006, a total of €320 million in foreign direct investment is anticipated.
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