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