Finland Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Finland exports approx. 57% of its production to the EU. In 2021, there was an increase in exports (by approx. 24%) and imports (approx. 19%) of goods to/from the EU. Within the EU, exports to all member states increased. The same was the case with imports, with the exception of France. Behind the long-term negative balance with the EU, which reached almost EUR billion in 2021, is the negative balance with Finland’s main trading partners within the EU, i.e. Sweden and Germany, but also with less important ones such as Poland, Denmark or Estonia. On the other hand, Finland had a positive balance with, for example, the Netherlands, Belgium, Norway, and recently also with Italy.

  • Allcountrylist: Overview of major industries in Finland, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Export to the EU (million EUR) 35,854.2 37,883.5 35,918.2 31,379.6 38,956.9
Imports from the EU (million EUR) 37,900.8 39,718.6 38 191.6 35,565.0 42 150.3
Balance with the EU (million EUR) -2,046.6 -1,835.1 -2,273.4 -4 185.4 -3 193.4

Source: Finnish Customs

Trade relations with the Czech Republic

In 2021, after the decline caused by the pandemic, the turnover of mutual trade started to grow again. Turnover growth to the end of 2021 (by approx. 10% year-on-year) was driven exclusively by strengthening imports from Finland, which grew by up to 40% year-on-year. Although the CZ maintained a significantly positive trade balance at the turn of 2021 and 2022, its amount fell by 32% year-on-year. Overall, however, the balance increased by 6.5% between 2020 and 2021 and surpassed the value of 2019. In addition to motor vehicles, mechanical machinery and equipment, electronic equipment and iron and steel products are the most exported to Finland. From the point of view of the Czech Republic, the main imported items are paper, cardboard and cardboard, electronic devices, mechanical machines and devices, plastics and their products, and iron and steel.

2017 2018 2019 2020 2021
Export to the Czech Republic (billion CZK) 10.5 11.7 11.9 11.6 13.8
Import from the Czech Republic (billion CZK) 23.5 25.0 24.1 22.9 25.9
Balance with the Czech Republic (billion CZK) -13 -13.2 -12.3 -11.3 -12.1

Source: CZSO

Trade relations with countries outside the EU

Similar to the year before, in 2021 non-EU countries were the destination of 43% of Finnish exports, which is a significant increase compared to 2019, to which the United Kingdom’s departure from the EU also contributed. However, the most important long-term trading partners outside the EU are China and the United States in particular for Finland (there was a fundamental change with Russia after the invasion of Ukraine). The balance of Finland’s trade balance with third countries was quite significantly positive in 2019 and 2020, then returned to negative values ​​in 2021. In the case of Russia and China, the balance is negative for a long time. This is particularly evident in the example of Russia, which, despite a significant decline a year earlier, remained the main source of imports from outside the EU for Finland in 2021, primarily due to the influence of fuel, which made up over 50% of imports from Russia. China is of growing importance for Finland in terms of imports and exports, which was also reflected in last year’s Action Plan for China. In relation to the USA, on the other hand, Finland maintains a significantly positive balance in the long term, which also applies to the trade balance with the United Kingdom on a similar scale, only in lower absolute values.

2017 2018 2019 2020 2021
Export to countries outside the EU (million EUR) 23,857.1 25,798.5 29 135.7 26,060.4 29,804.4
Import from non-EU countries (million EUR) 24,568.3 26,866.7 27,659.6 24 203.1 30,556.4
Balance with non-EU countries (million EUR) -711.2 -1,068.2 1,476.1 1,857.3 -752

Source: Finnish Customs

Foreign direct investment

In 2020, the final levels of FDI from Finland abroad and from abroad into Finland decreased compared to the previous year. At the end of 2020, the value of inward FDI was EUR 7billion, compared to EUR 7 billion a year earlier. There was also a decrease in the area of ​​outgoing FDI, which was at the level of EUR 117.1 billion at the end of 2021. However, this decrease from EUR 130.4 billion in the previous year is largely due to changes in the classification system, so it was not necessarily a major reduction in Finnish foreign investment. On the other hand, net income from direct investments in 2021 reached a record value of EUR billion. At the end of 2020, the majority of incoming FDI came from the EU (81%), especially from the eurozone countries (47%). The largest direct foreign investor in Finland is traditionally Sweden, followed by the Netherlands and Luxembourg, whose investments have long been at a stable level of around EUR 20 billion in the case of Sweden and over EUR 10 billion in the case of the Netherlands and Luxembourg. Although these countries are a source of direct investment, the final investors more often come from the USA, Germany or China. Especially in the case of China, there has been an increase in both immediate and final FDI since 2018. However, the volume of FDI originating in Norway has also increased noticeably since 2019. From the point of view of the type of industry, the most incoming FDI goes to the field of finance and insurance, but investments in the technological, information and communication or chemical industries are also significant. Finnish outbound FDI goes mostly to Sweden, the Netherlands, Ireland, Norway and Denmark.

Currently, total FDI originating in the Czech Republic amounts to EUR 29 million. In the long term, the absolute volume of these investments tends to grow, the current state corresponds to almost three times the volume in 2014 or 2015, when FDI reached 11, respectively EUR 10 million, and almost thirty times the FDI of the Czech Republic in 2009, when it only slightly exceeded EUR 1 million. A leading European manufacturer of rolling stock, low-floor trams and double-decker wagons, as well as demanding engineering products, the Finnish company Škoda Transtech has been a member of the Škoda Transportation group since 2015. Currently, Škoda Transtech supplies trams for the Finnish metropolis, the city of Tampere, and cars for Finnish railways. Czech private equity investor Green Horizon Renewables (part of the BHM group founded and majority-owned by Tomáš Krsko) investing in renewable energy sources in Europe entered the 2017 into the Finnish market through the acquisition of a majority stake in Winda Energy Oy, which develops, builds and operates wind farms of all sizes mainly in western and central Finland. In 2020, the Czech company VAFO completed the successful acquisition of Prima Pet Premium Oy, the Finnish leader, manufacturer and distributor of premium pet food and products, becoming its 100% owner (the value of the acquisition was EUR 30 million). VAFO is currently investing EUR 20 million in the city of Nokia in the new largest Finnish plant for the production of dry fodder, which will be completed in March 2023. Opportunities for further Czech FDI could be in particular sectors related to the green transition, infrastructure or innovation (energy, electromobility, etc.), ICT especially in the context of Finland’s long-term orientation towards digitization (fintech,

FTAs and treaties

Treaties with the EU

With regard to the membership of both states in the EU, relations are governed by the EU acquis, therefore the relevant documents are the accession treaties of the two states: Treaty on the Conditions of Accession of the Kingdom of Norway, the Republic of Austria, the Republic of Finland and the Kingdom of Sweden to the EU dated 29 August 1994, valid from 1 1/1/1995 and the Treaty on the Accession of the Czech Republic to the European Union, signed on 16/04/2003 in Athens and valid from 1/5/2004.

Contracts with the Czech Republic

Currently, the Agreement between the Czech Republic and the Republic of Finland on the avoidance of double taxation and the prevention of tax evasion in the field of income taxes, signed on 2 December 1994 and valid since 12 December 1995 (Act No. 43/96). The agreement between the government of the Czech and Slovak Federal Republic and the government of the Republic of Finland on the promotion and protection of investments, signed on 6/11/1990 and valid from 23/10/1991 (Act No. 478/91) ceased to be applied in September 2020 by mutual agreement and subsequently an agreement on its termination was approved.

Developmental cooperation

Finnish development aid is mainly focused on multilateral cooperation (EU, WB, BAD, UNFPA, UN Women, UNICEF, OECD) focusing on security, human rights, trade, agriculture and forestry, education, employment, health and social policy, environment and immigration. Through the EU (approx. 20% of development aid), Finland can contribute to improving the situation in regions that would normally be beyond its capacity. Partners in this collaboration include approximately 160 countries, regions and international agencies. Since the entry of the current left-wing government in 2019, development aid has been gradually increasing again after previous significant declines and should reach a value of EUR 1.275 billion (0.49% of GDP) in 2022.

Most bilateral development aid in Africa goes to Ethiopia, Kenya, Mozambique, Somalia and Tanzania, and in Asia to Nepal. Within the Middle East, Finland supports the Palestinian Authority, Syria and Iraq. Finnish development cooperation focuses on humanitarian aid, mediation, support for security and good governance, development of civil society and educational projects, or support for agriculture and water management. Finland places special emphasis on the rights of women and girls, young people and people in vulnerable situations.

The possibilities of cooperation between Czech and Finnish companies in the framework of development cooperation are limited, because Finland focuses mainly on multilateral cooperation and support of non-profit organizations (e.g. Finn Church Aid). A certain possibility of partial synergies between private entities of both countries is offered in some sectors and countries (e.g. water management development projects in Ethiopia). Public contracts related to development cooperation are published together with other contracts on the Hilma portal.

Prospective fields of study (MOP)

Energy industry

Finland plans to achieve carbon neutrality by 2035 and a completely carbon-free economy by 2050. Already in 2020, a total of 40% of the energy produced came from renewable sources (in the case of electricity it was even more than 50%, in the case of heat it was more than 60% ), by 2030 the total share should then increase to 50%. Particular emphasis is placed on increasing the share of wind energy, with the share of wind energy in the energy mix expected to more than double between 2020 and 2023 alone. In addition to hundreds of wind farms on land, a giant project is being prepared by the autonomous Finnish province of Åland, in which up to 500 wind farms are expected to be built in the Baltic Sea. In addition to wind parks, there are opportunities for Czech companies and investors in the construction and modernization of nuclear power plants, the hydrogen ecosystem,

ICT

Finland is very strongly oriented towards comprehensive digitization across sectors (software has the potential to make up a third of exports). Innovative software/digital solutions are in demand, especially in the fields of healthtech, fintech, edtech, social services, public administration, process management, logistics or optimization of supply chains. Opportunities can also be found in the gaming industry, processing of “big data” or the application of artificial intelligence, e.g. in the field of traffic planning, medical diagnostics, the Internet of Things or cyber security, including personal data protection. The area of ​​complex ecological solutions with strong ICT elements (cleantech) will offer a number of new opportunities, especially in the next fifteen years, where an annual market turnover of approx. 65 billion is expected by 2050. CZK, e.g. in the field of electromobility (automotive and aviation),

Defense industry

Finland is responding to changes in the security environment in Europe by strengthening its armed forces and substantially increasing defense spending. At the same time, he has a strong interest in deepening defense cooperation with EU and NATO countries. During this decade, in addition to other acquisitions, the Finnish army should implement a project worth approximately CZK 50 billion to comprehensively improve its mobility. Opportunities for Czech companies are, for example, in the field of military transport technology, armored vehicles, radar technology, anti-aircraft defense, small arms or optical systems.

Construction industry

Following stronger-than-expected economic growth, residential construction reached record volumes in 2021 (construction of 44,000 apartments started), while the trend of unprecedented growth in the construction sector should continue into the future, with a slight weakening of housing and infrastructure construction should more than offset the expected boom in commercial building construction. The question is what impact Russia’s war against Ukraine will have on this sector. However, the city of Helsinki alone intends to invest almost CZK 30 billion in urban construction in 2022. Opportunities for Czech companies are mainly in subcontracting for the largest Finnish construction companies in the field of construction and energy modifications of residential and commercial buildings.

Healthcare and pharmaceutical industry

The healthcare and pharmaceutical industry in Finland focuses on the use of state-of-the-art technologies in diagnosis, treatment and patient care. Innovative software solutions in the field of online medicine, the use of artificial intelligence in diagnostics, as well as nanotechnology, biotechnology and 3D printing have export potential. With regard to the planned construction of several so-called 5G hospitals (one of the largest projects is the construction of Helsinki’s Laakso Hospital for approx. 20 billion CZK), in addition to these high-tech segments, a number of opportunities can also be expected in more traditional areas such as medical equipment, furniture, infrastructure etc. In relation to the ongoing reform of the health and social care system, an extraordinary opportunity is offered in the field of supplying new information systems for some hospital districts.

Rail and rail transport

As part of the green transformation, the Finnish government has intensified the modernization and construction of railway and tram lines, which represent significant opportunities for Czech companies as well and are co-financed by private, state and EU money. A number of opportunities for Czech companies will also be in the construction of related infrastructure (e.g. tram depot) and in the digitization, strengthening of security and automation of existing lines and operations on them. In the field of tram transport, opportunities will be concentrated especially in the metropolitan area of ​​Helsinki and in Tampere, new high-speed train lines will be built between Helsinki and Tampere (estimated cost: CZK 145 billion) and Helsinki and Turku (estimated cost: CZK 96 billion).

Finland Trade