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### Viewing cable 10HELSINKI19, INVESTMENT CLIMATE STATEMENT 2010 - FINLAND

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
10HELSINKI19 | 2010-01-15 15:03 | 2011-04-24 00:12 | UNCLASSIFIED | Embassy Helsinki

`

    VZCZCXYZ0000
    RR RUEHWEB

    DE RUEHHE #0019/01 0151533
    ZNR UUUUU ZZH
    R 151533Z JAN 10
    FM AMEMBASSY HELSINKI
    TO RUEHC/SECSTATE WASHDC 5372
    RUCPDOC/USDOC WASHDC
    RUCPCIM/CIMS NTDB WASHDC
    RUEATRS/DEPT OF TREASURY WASHDC

` `

    UNCLAS HELSINKI 000019

    DEPT FOR EB/IFD/OIA, PASS TO USTR
    SIPDIS

    E.O. 12958:  N/A
    TAGS: EINV EFIN ETRD USTR OPIC ELAB KTDB PGOV FI
    SUBJECT: INVESTMENT CLIMATE STATEMENT 2010 - FINLAND

    REF: SECSTATE 124006

    ¶1. The following is Embassy Helsinki's response to
    reftel regarding features of the investment climate in
    Finland.

    A.1. Openness to Foreign Investment

    The Finnish Government is open to direct foreign
    investment.  There are no general regulatory
    limitations relating to acquisitions.  Legislative
    control of mergers and acquisitions is mainly governed
    by domestic and EU competition rules.  Certain
    acquisitions of large Finnish companies may require
    follow-up clearance from the Ministry of Employment and
    the Economy in accordance with the Act on the Control
    of Foreign Acquisitions of Finnish Companies.  The
    purpose of the clearance is to protect essential
    national interests.

    Unlike many other countries, however, Finland does not
    "positively" discriminate in favor of foreign-owned
    firms by giving them tax holidays or other subsidies
    not available to other firms in the economy.  Instead,
    Finland relies on "condition-providing policies" which
    means pursuing policies that offer all firms in the
    economy appropriate conditions and sufficient pools of
    advanced factors of production, including an educated
    labor force and well-functioning infrastructure.

    There are some legal requirements for non-European
    Economic Area (EEA) residents (persons or companies) to
    conduct business in Finland.  In certain areas
    involving specific safety or health hazards or
    financial risks, specific conditions must be met to
    conduct trade.  A non-EEA (person or company) operating
    in Finland must obtain a license or a notification when
    starting a business in the "regulated" forms of trade.
    Licensed trades are governed by acts and decrees. A
    list of licensed trades can be found at:

    http://www.yrityssuomi.fi/default.aspx?NodeID =15806

    The Aland Islands are an exception to common Finnish
    practice.  Based on international agreements dating
    from 1921, property ownership and the right to conduct
    business are limited to only those individuals with
    right of domicile in the Aland Islands.  However, the
    Aland Government can, occasionally, grant exemptions
    from the requirement of right of domicile for those
    wishing to acquire real property or conduct a business
    in Aland.

    In 2006, the United States and Finland signed a
    protocol amending the existing bilateral income tax
    treaty significantly reducing tax-related barriers to
    trade and investment flows between the countries.  For
    more information, see section A. 14 - Bilateral
    Investment Agreements

    The salary and fringe benefits paid to qualifying
    foreign key employees, such as employees with special
    knowledge or competence, are taxed at the rate of 35
    percent during a maximum of 48 months of the assignment
    in Finland provided that the employee has a special tax
    card (which must be applied for separately).

    For detailed tax guidance see Finnish Tax
    Administration's Tax Guide:

    http://www.vero.fi/default.asp?domain=VERO_EN GLISH&lang
    uage=ENG

    and the Finnish Foundation for Share Promotion's Tax
    Guide for Investors:

    http://www.porssisaatio.fi/en/articles/tax-gu ide

    A number of different organizations collect economic
    indicators for Finland.  Indicators for the year 2009
    include:

    Millennium Challenge Corporation:
    Government Effectiveness Index         1.95
    Rule of Law Index   1.87
    Control of Corruption Index  2.34
    Fiscal Policy Index        64.3
    Trade Policy Index     85.8
    Regulatory Quality Index  1.58
    Business Start Up Rank   #30, 2010 (#20, 2009)
    Natural Resource Management Index 9.4
    Natural Resource Management Rank #4

    Transparency International Corruption Index:
    Index: 8.9
    World Ranking: #6

    Heritage Economic Freedom Report:
    Index: 74.5
    World Ranking: #7
    European Ranking: 9#

    World Bank Doing Business Report:
    2010 Ranking: #16
    2009 Ranking: #14

    A.2. Conversion and Transfer Policies

    Except for those relating to money laundering, there
    are practically no legal obstacles to direct foreign
    investment in Finnish securities and exchange control
    regarding payments into and out of Finland.  There is
    no limit on dividend distributions, as long as they
    correspond to a company's official earnings records.
    Payments to or from Finland must, however, be made
    through authorized banks in Finland.

    Finland implemented the EU regulation on controls of
    cash being transported over the Eu Community Border in
    June 2007.  According to the regulation persons
    carrying USD 14,500 (EUR 10,000) or more will be
    required to declare cash upon entering or leaving EU
    territory.  The regulation only imposes an obligation
    to declare, it is not a restriction or prohibitation
    regarding imports and export of cash.

    Finland adopted the single currency (the Euro) on 1
    January, 1999.  The Euro replaced the Finnish Markka
    (FIM) at the end of a three-year transition period on
    January 1, 2002. One Euro equals FIM 5.94573.

    A.3. Expropriation and Compensation

    Private property rights are well protected in Finland.
    Private property is only expropriated for public
    purposes (eminent domain), in a non-discriminatory
    manner, with reasonable compensation, and in accordance
    with established principles of international law.

    A.4. Dispute Settlement

    There is no record of any significant investment
    dispute in Finland in recent years. Finland has a civil
    law system. Swedish law and Nordic tradition have
    influenced statutory law and jurisprudence.  EC law is
    directly applicable in Finland and takes precedence
    over national legislation.  Finland has written and
    consistently applied commercial and bankruptcy laws,
    and secured interest in property are recognized and
    enforced.

    Finland has signed the Convention on the Settlement of
    Investment Disputes between States and National of
    other States (also known as the ICSID Convention or the
    Washington Convention) on July 14, 1967 and deposited
    its instrument of ratification on January 9, 1969.
    Finland has attained status as Contracting State to the
    ICSID Convention on February 8, 1969.  Finland signed
    the New York Convention of 1958 on the Recognition and
    Enforcement of Foreign Arbitral Awards in December
    ¶1958.  The convention entered into force in Finland in
    April 1962.

    The Arbitration Institute of the Central Chamber of
    Commerce of Finland, established in 1911, promotes as
    an impartial body the settlement of business disputes
    by arbitration.  The Institute appoints arbitrators
    both to domestic and international arbitration
    proceedings. For more information see:

    http://www.arbitration.fi/en/indexen.html

    The Market Court was established in 2002 as a special
    court for rulings in market law, competition and public
    procurement cases.

    Major revisions to the Finnish competition legislation
    took effect in May 2004.  The Act on Competition
    Restrictions was harmonized with EU competition rules.

    A.5. Performance Requirements/Incentives

    There are no performance requirements or commitments
    imposed on foreign investment in Finland.  However, to
    conduct business in Finland, some residency
    requirements must be met; the intent being to ensure
    that persons liable for the company's acts can be
    brought to court if necessary.

    In 2003 the Finnish Parliament has adopted legislation
    which relaxed the domicile requirements in Finnish
    company law.  According to the amendment, the managing
    director and at least one member of the board of
    directors (and the supervisory board, if any) of a
    Finnish limited liability company must be domiciled
    within the EEA.  The nationality of the founder is thus
    irrelevant.

    Foreign-owned companies are eligible for government
    incentives on an equal footing with Finnish-owned
    companies.  Support is given in the forms of cash
    grants, loans, tax benefits, equity participation,
    guarantees and employee training.

    Business aid: In Finland, government-administered aid
    to business (investment aid, aid to business
    development, start-up subsidies, transport aid, energy
    subsidies, employee training, tax relief) is mainly
    aimed at improving the long term competitiveness of
    small and medium-sized enterprises (SMEs).  Business
    aid to companies is coordinated by 15 Centre for
    Economic Development, Transport and the Environment
    providing consulting and training as well as financial
    aid.   For more information see:

    http://www.ely-keskus.fi/en/Pages/default.asp x

    Loans and guarantees by Finnvera: The state-owned
    financing company Finnvera plc improves and diversifies
    the financing possibilities of companies by granting
    loans, guarantees, venture capital investments and
    export credit guarantees.  Finnvera serves its clients
    through 15 regional offices and through the
    Representative Office (Finnish-Russian Innovation
    Center) in St. Petersburg. For more information see:

    http://www.finnvera.fi/eng

    R&D incentives by Finnish Funding Agency for Technology
    and Innovation (Tekes): Funding by Tekes is intended
    for challenging and innovative projects potentially
    leading to global success stories.  Tekes funding is
    aimed at companies and other organizations operating in
    Finland and actively developing their technology,
    services and business operations.  The funding also
    supports the establishment and expansion of start-up
    companies. For more information see:

    http://www.tekes.fi/en/community/Funding%20an d%20servic
    es/346/Funding%20and%20services/1238

    EU-funded support: The EU-funded programs aim to
    diversify the economic and business structure and to
    improve employment.  This is done by supporting the
    establishment and development of small and medium-sized
    enterprises and the expansion of their activities.
    Financing is directed to projects developing the
    competitiveness, know-how and operating environment of
    the SME sector, with a special emphasis on start-up
    businesses and service sector companies.

    Invest in Finland Bureau, a government agency promoting
    foreign investments into Finland, assist international
    companies in finding business opportunities in Finland
    and provide all the relevant information and guidance
    required to establish a business in Finland. For more
    information see:

    http://www.investinfinland.fi/

    A.6. Right to Private Ownership and Establishment
    Private ownership and entrepreneurship is normal in
    Finland.  In most fields of business activity,
    participation by foreign companies or individuals is
    unrestricted.  As the government pursues privatization
    of state-owned companies, both private and foreign
    participation is welcome except in some enterprises
    operating in sectors related to national security.

    Competitive equality is the official standard applied
    to private enterprises in competition with public
    enterprises.  Private companies do not face
    discrimination.  With the end of the Restriction Act in
    January 1993, Finland removed most restrictions on
    foreign ownership of property in Finland.
    Restrictions, such as requirements to obtain permission
    of the local government in order to purchase a vacation
    home in Finland were abolished January 1, 2000,
    bringing Finland fully in line with EU norms.

    A.7. Protection of Property Rights

    Secured interest in property, both movable and real,
    are recognized and enforced.  The Finnish legal system
    protects property rights, including intellectual
    property, and Finland adheres to numerous international
    agreements concerning intellectual property.  Finland
    has joined the most important copyright agreements.
    Patent rights are consistent with international
    standards.  In Finland a granted patent applies for 20
    years.  The time of validity of patents can under
    certain conditions be prolonged through a Supplementary
    Protection Certificate.  In 1996, Finland joined the
    European Patent Convention (EPC) and the European
    Patent Organization (EPO).  Finland is a member of
    WIPO, and participates primarily through its membership
    in the EU.  The idea of protection of intellectual
    property is well developed.

    Finland Joined WIPO's Patent Law Treaty (PLT) in March
    ¶2006.

    Pharmaceutical Patents:  In 2008, the Finnish
    government approved a pharmaceutical reference pricing
    system, a provision of which undermines the patent
    protection of medicines created and manufactured by
    non-Finnish pharmaceutical companies. The reference
    price system legislation took effect on April 1, 2009.
    Previously, under Subsection 2 of Section 57(c) of
    Finland's Medicines Act, pharmaceuticals were excluded
    from the Government's generic substitution system if
    they were protected by an analogous process patent in
    Finland and they enjoyed product patent protection in
    at least five other countries in the European Economic
    Area.  Section 57 recognized in a balanced and fair
    manner, the intellectual property of process patent
    holders in Finland.

    The reference pricing scheme passed by the Finnish

    parliament in November 2008 ended the 57(c)
    arrangement. By subjecting products protected by
    process patents to the reference pricing restrictions
    applicable to generic products, the new law deprives
    pharmaceutical process patent holders in Finland of
    appropriate compensation for the value of the
    intellectual property they created in the original
    products.

    Information on copying and copyright infringement is
    provided by the following copyright holder interest
    organizations:  the Copyright Information and Anti-
    Piracy Center (CIAPC), The Finnish Copyright Society,
    The Finnish Copyright Institute, the Copyright
    Information Centre, and The IPR University Centre.  The
    Business Software Alliance (BSA), a worldwide software
    anti-piracy organization, began operations in Finland
    in January 1994.

    Finland has been a member of the Paris Convention for
    the Protection of Industrial Property since 1921, the
    Berne Convention for the Protection of Literary and
    Artistic works since 1928 and the Rome International
    Convention for the Protection of Performers, Producers
    of Phonograms and Broadcasting Organizations since
    ¶1983.

    Finnish copyright legislation was amended in 2005 to
    meet the demands of the digital environment and the
    internet. The amendments to the Copyright Act and the
    amended section 49 of the Criminal Code came into force
    from the beginning of 2006.  This reform implemented
    the Copyright Directive adopted by the EU in 2001.  The
    amendments also addressed a number of national issues,
    such as the prohibition of importation of pirate
    recordings for personal use.

    Finland signed the WIPO Copyright Treaty (WCT) and the
    WIPO Performances and Phonograms Treaty (WPPT) in May
    1997, and the Finnish Parliament adopted the treaties
    in autumn 2005.

    The Finnish Copyright Act, which also grants protection
    to authors, performing artists, record producers,
    broadcasting organizations and catalog producers, has
    been adjusted to comply with EU directives.  As part of
    this harmonization, the period of copyright protection
    was extended from 50 years to 70 years.  Protection for
    database producers (currently a part of catalog
    producer rights) has been defined consistent with EU
    practice.  The Finnish Copyright Act provides for
    sanctions ranging from fines to imprisonment for up to
    two years.  Search and seizure are authorized in the
    case of criminal piracy, as is the forfeiture of
    financial gains.  The Copyright Act has covered
    computer software since 1991.

    Finland has acceded to the Agreement on Trade-Related
    Aspects of Intellectual Property Rights (TRIPS, 1994)
    which constitutes an Annex to the WTO Agreement. The
    TRIPS treaty, which took force in 1995, contains
    regulations governing the enforcement of intellectual
    property rights, i.e. industrial property rights and
    copyright.

    Recent amendments to the Finnish Penal Code have
    enhanced the position of employers in regard to the
    protection of their business secrets, with employees
    now required to keep a former employer's business
    secrets confidential for two years after termination of
    employment.

    The Trade Mark Act, which came into force in March
    2000, brought Finnish Trade Mark Law into line with the
    Trade Mark Treaty (TLT).  Finland signed the Singapore
    Treaty on the Law of Trademarks in October 2006.

    The significance of mortgage banks has remained minor
    as deposit banks have traditionally handled housing
    loans in Finland.  The Mortgage Society of Finland is
    operating in accordance with designated special
    legislation.

    A.8. Transparency of the Regulatory System

    The legal and enforcement framework for competition
    conforms to European Community praxis.  Finland brought
    its law into full conformity with the prohibition-based
    system of EC competition law in May 2004.

    The Securities Market Act (SMA) contains regulations on
    corporate disclosure procedures and requirements,
    responsibility for flagging share ownership, insider
    regulations and offenses, the issuing and marketing of
    securities, and trading.  The law defines and takes
    into account new instruments, which have become common
    in financial markets, such as securities lending and
    repurchase agreements.  Finnish legislation recognizes
    the same internationally common financial market
    contractual arrangements as legislation elsewhere in
    the EU.  Regulations concerning clearing of securities
    trades have been incorporated in the law since 1998.
    Clearing has become subject to licensing, and is
    supervised by the Financial Supervision Authority,
    which oversees the financial markets.

    Finnish tax, labor, health and safety, and related laws
    and policies are largely neutral towards the efficient
    mobilization and allocation of investment.  Finnish
    legislation does not normally influence regional
    distribution of investment except when specifically
    designed to do so, such as through regional incentive
    programs.

    In Finland, the Act on the Openness of Public Documents
    of 1951 established the openness of all records and
    documents in the possession of officials of the state,
    municipalities, and registered religious communities.
    Exceptions to the basic principle could only be made by
    law, or by an executive order for specific enumerated
    reasons such as national security. The openness of
    unsigned draft documents was not mandated, but up to
    the consideration of the public official. This weakness
    of the law was removed when the law was revised in the
    1990s. The revised law, the Act on the Openness of
    Government Activities of 1999, also extended the
    principle of openness to corporations that perform
    legally mandated public duties, such as pension funds
    and public utilities, and to computer documents. For
    more information see:

    http://www.om.fi/23963.htm

    A.9. Efficient Capital Markets and Portfolio Investment

    Credit is allocated on market terms and is made
    available to foreign investors in a non-discriminatory
    manner.  The private sector has access to a variety of
    credit instruments.  Legal, regulatory, and accounting
    systems are transparent and consistent with
    international norms.

    The Helsinki Stock Exchange has since September 2003
    been part of OMX, referred to as OMX Helsinki (OMXH).
    Since NASDAQ's acquisition of OMX in February 2008 the
    official name of the Helsinki exchange has been NASDAQ
    OMX Helsinki. OMX Helsinki is part of the NASDAQ OMX
    Nordic division, together with the stock exchanges in
    Stockholm, Copenhagen, and Iceland.

    Compared to the international average, the number of
    banks in Finland is high. The reason for this is the
    high number of savings banks, Local Cooperative Banks
    and banks in OP-Pohjola Group. At the end of 2008,
    there were 336 banks operating in Finland, 322 of them
    domestic. The total assets of the domestic banking
    groups and branches of foreign banks (Nordea Bank
    Finland, OP-Pohjola Group, Sampo bank, Aktia Group,
    Savings Banks (excl Aktia), Local co-operative Banks,
    Bank of Aland, Tapiola Bank Group, Hypo Group,), and
    largest Nordic banking groups (Danske Bank Group,
    Nordea Group, SEB Group, Handelsbanken Group, DnB NOR
    bank Group, Swebank) amounted to 2.1 billion euro in
    ¶2008.  For more info see Federation of Finnish
    Financial Services "Finnish Banking in 2008" report
    http://www.fkl.fi/www/page/fk_www_3919
    Increased mergers and alliances have been shaping the
    Finnish banking sector in recent years.  The banking
    and finance market has become increasingly
    international, with Scandinavian banks particularly
    active in cross-border mergers and acquisitions.
    Finnish banks' profitability, efficiency and capital
    adequacy are all at a healthy level.

    Hostile takeovers have not in the past been part of the
    Finnish business culture and Finnish law does not
    distinguish between friendly and hostile takeovers.
    Finnish legislation does not expressly address takeover
    defenses.  In Finnish law, the legality of takeover
    defenses is evaluated primarily in light of the leading
    principles of the Security Markets Act (SMA), the
    principle of equal treatment of all shareholders, and
    general principles of company law.  If challenged, the
    legality of the defensive measures is subject to review
    by the courts.

    Finland changed over to the Single Euro Payments Area
    (SEPA) in January 2008. The system began with credit
    transfers and cards, and direct debit will be taken
    into use on 1st of May 2010, when the New Payment Law
    enters into effect.   SEPA replaces 32 national payment
    systems in Europe with one single European system
    working with uniform standards and regulations.

    A.10 Competition from state owned enterprises

    Duties relating to state ownership steering are handled
    in the Ownership Steering Department in the Prime
    Minister's Office. The department is responsible for
    state ownership policy, the ownership steering of
    state-owned companies under the Prime Minister's
    Office, expansion of ownership base, branch re-
    organizations, share investments, coordination of
    ministries' ownership steering procedures and inter-
    ministerial cooperation. The Minister responsible for
    Ownership Steering in the Prime Minister's Office is
    Minister Jyri Hakamies.

    The Finnish State is the majority owner in seventeen
    and a significant minority owner in twenty-two
    companies which operate on market terms. In addition,
    the State is an owner in fifteen special assignment
    companies which have been assigned a certain task by
    the State or which do not operate in a competitive
    environment due to a granted exemption.

    A list of state owned companies can be found here:

    http://www.valtionomistus.fi/yhtiot/en.jsp

    The State's objective as a shareholder is to provide
    consistent and predictable solutions and act as openly
    as possible. The most important ownership policy tools
    include Government resolutions, statements of the
    Cabinet Committee on Economic Policy and
    recommendations and statements by the responsible
    Ministries. All of the aforementioned documents are
    public and thereby available to all market actors.

    The Guidelines "Handling of Corporate Governance Issues
    in State-owned Companies and Associated Companies",
    dated 13th November 2000, is an important instrument in
    the State's corporate governance policy. The Guidelines
    stress, among others, the independence of the Board of
    Directors and its goal to aim at increasing the
    shareholder value. The State has since Spring 2006
    published (in Finnish) on the internet pages salaries
    and remunerations of the company management and board
    in individual state-owned companies and associated
    companies.

    The number of state-owned companies with a supervisory
    board is 11. They are Alko Inc., Finnish Fund for
    Industrial Cooperation Ltd, Finnvera plc, Fortum
    Corporation, Itella Corporation, Kemijoki Oy, Neste Oil
    Corporation, Vapo Oy, Oy Veikkaus Ab, VR-Group Ltd and
    Yleisradio Oy. In addition, there is a supervisory
    board in two associated companies, namely in Gasum
    Corporation and Rautaruukki Corporation.

    The State has direct holdings in 3 listed companies,
    namely Finnair Oyj, Fortum Corporation and Neste Oil
    Oyj. In addition, the State has indirect shareholdings
    via Solidium, a wholly state-owned holding company, in
    9 associated companies: Elisa Oyj, Kemira Oyj, Metso
    Corporation, Outokumpu Oyj, Rautaruukki Corporation,
    Sampo Group, Sponda Plc, Stora Enso Oyj and TeliaSonera
    AB.

    A.11 Corporate Social Responsibility

    Finland is committed to compliance with and the
    promotion of corporate social responsibility by
    supporting the implementation of international codes of
    conduct guiding the operations of multinational
    enterprises. Such international codes of conduct
    include the OECD Guidelines for Multinational
    Enterprises, the ILO Declaration on Fundamental
    Principles and Rights at Work, and the Tripartite
    declaration of principles concerning multinational
    enterprises and social policy by the ILO. These include
    instructions and rules of conduct concerning the
    financial, ecological and social responsibility of
    enterprises, such as human rights, rights at work, the
    abolition of child labor, the environment, anti-
    corruption measures, consumer protection and science
    and technology.

    Having committed to these guidelines, Finland strives
    to influence Finnish companies so that they operate
    sustainably and responsibly in all countries.
    Compliance with the guidelines is voluntary for
    enterprises. Furthermore, business and non-governmental
    organizations have compiled corresponding
    recommendations for enterprises.

    The Committee on Corporate Social Responsibility,
    operating in connection with the Ministry of Employment
    and the Economy, is the National Contact Point that
    monitors the application of the OECD Guidelines for
    Multinational Enterprises in Finnish multinationals.

    In Finland, the Securities Market Association
    established by the Central Chamber of Commerce, the
    Confederation of Finnish Industries EK and NASDAQ OMX
    Helsinki Ltd has developed and updated the Finnish
    Corporate Governance Code for companies listed on the
    Helsinki Stock Exchange. The Code harmonizes the
    practices of listed companies as well as the
    information given to shareholders and other investors.
    It also improves the transparency of administrative
    bodies, management remuneration and remuneration
    policies. The aim of the Code is that Finnish listed
    companies apply corporate governance practices that are
    of a high international standard.

    A.12. Political Violence

    There have been no instances of political violence
    since the struggle for independence in 1918.

    A.13. Corruption

    Corruption in Finland is covered by the Criminal Code
    and provides for sanctions ranging from fines to
    imprisonment for up to four years, depending on the
    seriousness of the crime.  Both giving and accepting a
    bribe is considered a criminal act under the Criminal
    Code.  Finland has statutory tax rules concerning non-
    deductibility of bribes.

    Finland does not have an authority specifically charged
    with the prevention of corruption. Co-ordination of
    horizontal and international co-operation anti-
    corruption matters is the responsibility of the
    Ministry of Justice. However, Finland's anti-corruption
    contact point for EU purposes is in the Ministry of the
    Interior and the National Bureau of Investigation has
    an officer whose full-time duty is to follow matters
    related to corruption in Finland.

    Over the past decade, Finland repeatedly has placed
    first or second on Transparency International's
    Corruption Perceptions Index (CPI), indicating
    extraordinarily low perceived levels of corruption, as
    determined by expert assessments and opinion surveys.
    However, Finland's CPI score decreased from 9.4 in 2007
    to 8.9 in 2009, ranking Finland sixth on the list of
    least corrupt countries, mainly due to concern about a
    lack of transparency in election campaign finance. In
    May 2008, the Ministry of Justice appointed a Committee
    on Election and Party Funding to prepare a proposal for
    the reform of the laws regulating the funding of
    political parties and election candidates. In September
    2008 a provision on the itemization of campaign costs
    was added by way of a partial amendment (Act 604/2008)
    to the 2004 Act on the Disclosure of Election
    Financing.  The reporting threshold for individual
    campaign contributions in municipal elections was cut
    from USD 2,266 (EUR 1,700) to USD 1,333 (EUR 1,000). A
    new law on candidates' election funding (The Act on a
    Candidate's Election Funding 273/2009) was enacted in
    May 2009, containing far stricter provisions than the
    previous piece of legislation. For one thing, the
    threshold of donations above which the identity of the
    donor is to be disclosed was lowered and oversight was
    tightened by introducing substantial supervision in
    addition to the earlier formal control.  Preparations
    for legal reform to the party funding and
    incriminations laws are still underway.  Another
    committee was appointed in autumn 2008 to prepare the
    implementation of stricter provisions concerning
    bribery of members of the Finnish Parliament (the Act
    on Political Parties).  If this law is approved by
    Parliament it will dramatically increase the
    transparency of party funding in Finland.

    Transparency International's (TI) national chapter
    Transparency Finland (TF) was founded in late 2003.
    TF's prime objectives are informing and educating about
    international treaties, corruption and the consequences
    of corruption. In addition TF strives to spread
    awareness of the problems and threats facing good
    governance.  More information can be found at:

    http://www.transparency.fi/english.htm

    Finland is a signatory to the OECD Convention of Anti-
    Bribery.  The instruments of ratification of the
    convention were deposited in December 1998.  The
    amended Penal Code entered into force in January 1999.
    The convention entered into force in February 1999.
    Finland ratified the UN Convention against Corruption
    in July, 2006.

    Finland ratified the Council of Europe Civil Law
    Convention on Corruption in October 2001 (which entered
    into force in November 2003) and then signed the UN
    Convention against Corruption in December 2003.  The
    Convention on Laundering, Search, Seizure and
    Confiscation of the Proceeds from Crime entered into
    force in Finland in July 1994.  The UN Convention
    against Transnational Organized Crime was ratified in
    February 2003.

    Finland ratified the Criminal Law Convention on
    Corruption (EST 173) in October 2002, and the
    Convention entered into force in February 2003.
    Finland made reservations in respect of Article 12
    (trading in influence) and Article 17 (jurisdiction).

    Finland is a party to the 1957 European Convention on
    Extradition.  Finland has ratified the 1959 European
    Convention on Mutual Legal Assistance in Criminal
    Matters and its 1978 Additional Protocol.  Finland is a
    party to the 1996 Convention on Extradition between EU
    member States as well the 1995 Convention on Simplified
    Extradition Procedure between EU.

    The U.S and Finland have an extradition treaty, signed
    in June 1976; it entered into force in May 1980.  The
    U.S. and Finland signed a bilateral extradition and
    mutual legal assistance treaty (MLAT) in December 2004.
    The U.S. and the EU signed bilateral extraditions and
    mutual legal assistance (MLAT) treaties in December
    ¶2003.  The Finnish Parliament ratified the agreements
    (HE 85/2005) and approved the necessary implementing
    bilateral instruments in December 2007.

    A.14. Bilateral Investment Agreements

    Finland has concluded bilateral investment agreements
    with the following 62 countries: Azerbaijan, Albania,
    Algeria, Argentina, Armenia, Belarus, Bosnia-
    Herzegovina, Bulgaria, Chile, China, Croatia , the
    Czech Republic, the Dominican Republic, Egypt, El
    Salvador, Estonia, Ecuador, Ethiopia, Georgia,
    Guatemala, Hungary, India, Indonesia, Iran, Jordan,
    Kazakhstan, Kirghizia, , Kuwait, Latvia, Lithuania,
    Macedonia, Malaysia, Mauritius, Mongolia, Morocco,
    Mozambique, Mexico, Namibia, Nigeria, Oman, Oriental
    Republic of Uruguay, Peru, Philippines, Poland, Qatar,
    Republic of Korea, Republic of Lebanon, Republic of
    Moldova, Republic of Slovenia, Romania, Russia,
    Slovakia, South Africa, Sri Lanka, Tanzania, Thailand,
    Tunisia, Turkey, Ukraine, United Arab Emirates,
    Uzbekistan, and Vietnam.

    In September 1989, Finland and the U.S. signed a
    convention (TIAS 12101) for the avoidance of double
    taxation and the prevention of fiscal evasion with
    respect to taxes on income and on capital.  The
    convention entered into force December 30, 1990.  The
    tax convention was amended on 31 May 2006 under a
    protocol signed in Helsinki.  The protocol changes the
    rules that apply to people falling within the area to
    which the convention applies, domicile, taxation of
    dividends, interest and royalties, restrictions on
    benefits, a method for eliminating double taxation and
    an exchange of tax information.

    Among other things, the protocol eliminates the source-
    country withholding tax on many intercompany dividends
    and on dividends paid to pension funds, updates the
    dividend article to incorporate policies reflected in
    the U.S. Model provision, such as those regarding real
    estate investment trusts (REITs), eliminates source-
    country withholding royalties payment regardless of
    type of intellectual property, bringing the convention
    in line with the U.S. Model treaty.  For more see:

    http://www.treas.gov/press/releases/reports/j s4298_atta
    chment_finnishprotocol06.pdf .

    The protocol has been passed by the Finnish Parliament,
    and U.S. signed the instruments of ratification in
    December 2007.

    A.15. OPIC and Other Investment Insurance Programs
    In January 1996, OPIC and Finnvera (the former Finnish
    Guarantee Board FGB) signed an agreement to encourage
    joint U.S. - Finnish private investments in Russia and
    the Baltic States.  The 1996 agreement was preceded, in
    1992, by a Principles of Cooperation Agreement between
    OPIC and the Finnish Fund for Industrial Cooperation
    (Finnfund).

    Finland has been a member of the Multilateral
    Investment Guarantee Agency (MIGA) since 1988.

    A.16. Labor

    The Finnish labor force is highly skilled and well
    educated.  Of the 2.41 million persons employed, 4.8
    percent are employed in the primary sector, 24 percent
    in industry and construction and 71.2 percent in
    services.

    Finland has a high unionization rate of around 76
    percent, and a long tradition of social dialogue.  Wage
    formation and labor market institutions are based on
    legislation and agreements.  The working life
    legislation has been prepared on a tripartite basis by
    government and social partners. Collective bargaining
    and collective labor agreements are generally binding
    in nature.  Finland adheres to most ILO conventions;
    enforcement of worker rights is effective.

    Regulation of the labor market - minimum wages, working
    hours, working conditions etc - to a large extent takes
    place through collective agreements instead of
    parliamentary legislation. In recent years, labor
    market partners at the local level have been given more
    flexibility in enforcing the stipulations of the
    collective agreements e.g. concerning working time
    arrangements.  The Act on Employment Contracts is the
    main regulating act applied to employment
    relationships.  It includes the minimum conditions
    regarding working hours, annual leave, safety
    conditions etc.

    The unemployment rate in November 2009 was 8.5 percent,
    against 6.0 percent a year earlier.  The unemployed are
    granted compensation (labor market subsidy) which, if
    linked to earnings, as has been the case for about 60
    percent of the unemployed, guarantees moderate income
    for a period up to 500 working days.  Since January
    2006, the labor market subsidy has had restrictions
    placed upon it. People without jobs after 500 days need
    to demonstrate that they are actively pursuing
    employment in order to continue receiving the benefit.

    Finland is participating in an experiment taking place
    in the European Community, the purpose being to find
    out what impact a targeted reduction in value added tax
    has on employment and the grey economy.  The value
    added tax rate on hairdressing services and certain
    small repair services (bicycle, shoe, leather product,
    clothes and linen repairs) has been reduced from 22
    percent to 8 percent for 2007-2010.

    The temporary limits on the free movement of workers
    from eight EU member states were not renewed, and the
    restrictions applied to work permits ended in Finland
    in May 2006.  Parliament adopted the amendments to the
    Aliens Act fully incorporating the directive on free
    movement of EU citizens into national law.  The Act
    came into force in April 2007.

    Due to the aging population in Finland all sectors of
    the economy are estimated to face labor shortages in
    the future. The labor shortage issue is likely to be
    amplified by historic low levels of immigration; a
    trend which does not appear likely to change in the
    near to medium future.

    A.17. Foreign Free Zones/Free Warehouse Areas

    Finland has four Free Zones and four Free Warehouse
    areas.  The four designated Free Zones are located in
    Hanko (Southern Customs District); Hamina and
    Lappeenranta (Eastern Customs District); and Turku
    (Western Customs District).  The four Free Warehouses
    are located in Helsinki (Southern Customs District);
    Naantali, (Western Customs District); and Kemi and Oulu
    (Northern Customs District).
    In Finland, the duty-free free zone and warehouse
    licenses have in most cases been granted to
    municipalities or cities, but one or several commercial
    operators, approved by the customs districts, are
    usually in charge of warehousing operations within the
    area.  The duty-free storage areas are available to
    both domestic and foreign-owned companies.  The free
    zone area regulations have been harmonized in the EU by
    the Community Customs Code.

    See Finnish Board of Customs for more information at:

    http://www.tulli.fi/en/index.jsp )

    A.18. Foreign Direct Investment Statistics

    In 2008 Finnish direct investment recorded a capital
    outflow of EUR 2.3 billion. As foreign investors
    repatriated EUR 4.9 billion of direct investment in
    Finland, the result was a EUR 7.2 billion net outflow
    of direct investment. At the end of 2008, the value of
    the stock of outward direct investment was 82 billion
    euros and the value of the stock of inward direct
    investment was 56 billion euros.  Finnish companies'
    income on foreign direct investment abroad totaled 7.4
    billion euros and foreign investors' income on direct
    investment in Finland totaled 5.1 billion euros.

    No policies exist that govern the export of capital and
    outward direct investment.  Holders of capital, Finnish
    and foreign, can move funds at will.

    For more FDI statistical info See Bank of Finland's
    "Finland's balance of payments, annual review 2008",
    10/26/2009 - report

    http://www.bof.fi/NR/rdonlyres/5E78C3CA-AC12- 4D86-A28D-
    E5C293FE9FBB/0/Mtvuosi0910_en.pdf

    Major U.S. investors, in terms of turnover, in Finland
    in 2008, include: OMG Finland (*779 million euros),
    Valtra/AGCO Corp (610 million euros), Hewlett-Packard
    (566 million euros), IBM (*480 million euros), General
    Medical Finland (*452 million euros), Paroc Group (*446
    million euros), John Deere Forestry (*404 million
    euros), Foster Wheeler Energia/Foster wheeler Corp
    (*352 million euros), Ford (326 million euros), Tellabs
    (*311 million euros), and GE Healthcare Finland (*310
    million euros) * = consolidated turnover.

    For 2008 the Major foreign investors in terms of
    turnover included: Nordea (*7043 million euros), Tamro
    (*5534 million euros), Elcoteq (*3443 million euros),
    RTF Auto (3407 million euros), Luvata (*2487 million
    euros), ABB (*2446 million euros), Teboil (*1964
    million euros), Sampo Bank (*1803 million euros),
    TeliaSonera (*1544 million euros), GNT Holding (*1356
    million) and Yara (*1350 million euros).

    BUTLER

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