Financial Integration – Making a Case for an Integrated Baltic Sea Finance Market A fundamental necessity for any region aiming at growth, prosperity and competitiveness is a well-functioning and integrated financial market. Ian Tokley, partner at Bech-Bruun, said that a steady and strong financial market with available expertise and resources to drive the economics is a key foundation. The ability to promote business activities, to develop and encourage private market and the free flow of liquid funds rests on this foundation, he said. Carl-Johan Granvik, Executive Vice President of Nordea, considered an integrated financial market in the Baltic Sea Region as a supplement to European integration. Furthermore, it has a potential to enhance economic growth and competitiveness of other regions. However, there are a number of impediments that hinder financial integration. Erik Berglöf, Chief Economist at EBRD, mentioned different rules and regulations. According to Mr. Berglöf, one solution could be a stronger focus on the home country, rather than the host country, regulation and supervision. But such a system is difficult to govern so that it is highly efficient and at the same time legitimate for all participating countries and market institutions. Peter Egardt, Chairman of the CBSS Business Advisory Council and the Stockholm Chamber of Commerce, added that different regulations and types of supervision create trade barriers, in general, and restrain financial institutions from operating efficiently across national borders, in particular. He called for better co-ordination of the regulatory process, implementation and supervision. Hans-Ole Jochumsen, President of Information Services & New Markets at OMX, also called for more integration in order to attract more investments. A larger home market would mean more trading in the listed companies, he said, which in turn will attract more investors and better position the Region’s equity markets in relation to consolidating exchange services. ------------------------------------------------------------------------------------------------------------------------------------- The New Northern Dimension – Fully Integrated Partnership with Russia The renewed Northern Dimension (ND) and its policy programmes are seen as some of the most useful tools in enhancing co-operation and prosperity in the Region. Particularly, the co-operation with Russia has gained special focus in the new policy framework. Pertti Torstila, Secretary of State in the Finnish Ministry of Foreign Affairs, said that the ND should be seen as the regional expression of the implementation of the four common spaces in the EU-Russia co-operation (1. economic co-operation, 2. freedom, security and justice, 3. external security, and 4. research, education and culture). Areas, where the co-operation with Russia is imperative, are within marine environment, transport safety, cross-border crime, and transport and logistics. In addition, two practical partnerships on environment, and public health and social well-being have been successfully established. Risto E. J. Penttilä, Director of the Finnish Business and Policy Forum, EVA, pointed out that the energy sector wasn’t prominently emphasized in the programme. Mr. Torstila replied that the energy policy would first be dealt with at the EU level, then the regional perspective would follow. A prerequisite for a successful ND, according to Christopher Beazley, MEP and Chairman of Baltic Europe Intergroup, is the development of a fully fledged EU-Russia policy. From a business perspective, Antti Piippo, Founder and Member of Board of Directors of Elcoteq, suggested that the ND programme will contribute to eliminating duties in Russia on components and products, developing technology parks and facilitating public funding to research and development for the technological industry. These improvements would lead to a more advanced, successful technological industry in the northern part of Europe. Dimitri Bukin, Counselor at the Russian Ministry for Foreign Affairs, emphasized that proposals on private and financial development are prerogatives that Russia welcomes. At the same time, he stressed that Russia endorses the establishment of new partnerships on transport and logistics. See full session report here. Stimulating Growth – How to Increase Labour Force Circulation in the Baltic Sea Region The free movement of labour continues to be both an imperative and sensitive topic in Europe. There was a general agreement that the flow of labour leads to economic and social advantages, and helps face rapidly changing demands of the globalised world. However, despite the positive impact on growth and an enormous need for increasing labour supply in Europe, some of the member countries still uphold a heavily regulated labour market due to political and regulatory barriers. Mr. Graugaard said that another obstacle, besides the political and regulatory barriers, was an old-fashioned way of thinking. Companies need to change their attitude towards cross-border recruitment, if they want to keep up with growing demands. Surveys show that the prevalent myth, that there is a flood of workers from new member countries, who emigrate with plans of a long-term permanent residence elsewhere, is wrong. Research shows that the primary reason for working abroad is to earn money in order to make a better living at home. Mr. Graugaard urged abolishing the transitional agreements imposed during the EU accession process. He suggested making work opportunities more visible by making people more aware of local employment conditions and rules. See full session report here. ------------------------------------------------------------------------------------------------------------------------------------- The State of the Region 2006 – Taking the Pulse of the Baltic Sea Region’s Performance and Competitiveness Ole Frijs-Madsen, Director of Baltic Development Forum, stated that the State of the Region Report has become a useful tool to profile the Region both internally and externally. Per Unckel, Secretary General of Nordic Council of Ministers, added that the Report defines what we are not good at in the Region, which gives policy makers an opportunity to improve the right areas. Nils E. Emilsson, Executive Vice President of Nordic Investment Bank, said the Report describes one of the most important factors of financial character, which is the significant need for risk capital in the entire Region. Mr. Emilsson said it was essential to work on broadening markets for seed and venture capital. Christian Ketels, Principal Associate at Harvard Business School and author of the Report, presented factors the Region needs to deal with when competing in the global economy:
The Report’s key conclusions and recommendations are:
See full session report here. ------------------------------------------------------------------------------------------------------------------------------------- Prosperity, Sustainability, Energy Safety – are they Compatible? Affordable and reliable access to energy resources has dominated the economic and political agenda over the past year. Christoffer Taxell, President of the Confederation of Finnish Industries, said that without energy there is no growth, prosperity or welfare. One of the EU’s challenges is its dependency on imported energy and growing uncertainty of energy supply. Matti Vanhanen, Prime Minister of Finland, said that it was urgent that the current energy systems are modified to limit this dependency. He proposed 1) to improve consumer-producer relations and energy partnerships, 2) to co-ordinate actions in the Region, and 3) to strengthen leadership in combining climate change, as well as improving energy efficiency. Maud Olofsson, Swedish Deputy Prime Minister, agreed with Mr. Vanhanen and recommended promoting enhanced energy efficiency within all links of the energy chain as well as developing renewable energy sources in order to replace fossil fuels. Karlis Mikkelsons, Chairman of JSC Latvenergo, backed Ms. Olofsson and stressed that regional co-operation and accelerated use of renewable energy sources are fundamental for securing the energy supply to the Region in the future. Christopher Beazley, MEP and Chairman of Baltic Europe Intergroup, said that a related proposal has recently been presented to the EU as part of a bigger Baltic Sea Strategy. One recommendation was to gather the ministers from the EU’s Baltic Sea Region member countries to discuss the energy issue with Russia. Igor Yurgens, Chairman of Renaissance Capital, replied that Russia wants to be a key player as an energy supplier. However, certain conflicts between the EU and Russia have made it difficult to reach a mutually beneficial agreement on energy supply, he said. Ann Eggington, Head of Division of the International Energy Agency, said that one of the most significant problems at present is that unexpected events greatly affect energy prices. The oil market will remain subject to the instability of the Middle East and gas supplies will come from Norway and Russia. There are growing pressures on energy resources and emerging economies require more energy, especially new Asian markets. Therefore, vast investments world-wide are needed to meet Europe’s energy demand in the future and to develop ways of reducing energy usage, she said. See full session report here. Growth and Innovation beyond Metropolises – Strategies for Creating Prosperous Peripheral Regions New possibilities for peripheral regions have been created by the transition to knowledge-based economies, said Danuta Hübner, Commissioner for Regional Policy in the European Union. She added that peripheral regions could thereby turn a disadvantage into an opportunity. At the same time, Ms. Hübner stated that locally fostered development strategies and initiatives play a key role in turning sluggish development trends into positive spirals. Three factors on which peripheral regions should construct their development strategies were mentioned: 1) local assets, 2) networking and co-ordination, and 3) innovation. In fact, if the peripheral regions want to catch up, they must invest even more in innovation than the central areas, she said. Along the same lines, Wolfgang Blank, Managing Director of BioCon Valley GmbH, stressed that investments in R&D and education in life science, biotechnology and healthcare create great opportunities for peripheral regions. He called for closer co-operation in the life science industry, where the metropolitan areas could become competence hubs and the peripheral regions competence satellites. Representing the business perspective, Baiba Rubess, Managing Director of SIA Latvija Statoil, said that peripheral and remote regions experience lack of power and entrepreneurship. Following that point and referring to Finland’s remote location, Hannes Manninen, Finnish Minister for Regional and Municipal Affairs, agreed that a peripheral location poses many challenges. However, the key to success, according to Mr. Manninen, is an open society, a high standard education system and a pragmatic approach in behaviour and business. He said that Finland’s success was due in part to investment in knowledge and innovation (i.e. education and R&D) as well as closer co-operation between business and research institutions at the regional level. See full session report here. ------------------------------------------------------------------------------------------------------------------------------------- Transnational Co-operation in the Baltic Sea Region – a Programme Tool behind Success Stories in Boosting Regional Competitiveness As part of the development of the new Interreg IVB programme, a session focused on how to further improve EU supported transnational co-operation within the Baltic Sea Region. Wilfried Görmar, German Federal Office of Building and Planning, Steering Committee of the BSR Interreg IIIB Neighbourhood Programme, said that the main idea of the Interreg programme was to focus on questions that require transnational strategies, such as environment and transport related issues. Though the Interreg projects have attracted 2800 partners, among these 150 from the private sector, there is a strong need to increase the involvement of the private sector and national authorities, he said. According to Mr. Görmar, the programme should focus on innovation, accessibility, environment and urban-rural co-operation. A number of concrete successful projects were presented:
See full session report here. Innovative Cluster Development for a Competitive Baltic Sea Region Europe is lacking world-class clusters, even though many regions have the ambition to become number one in this field. Reinhardt Büscher, Head of Unit in EU’s DG Enterprise and Industry, Innovation Policy Department, called for closer transnational co-operation in the BSR. He emphasized that cluster identity building should be part of cluster policies, especially in sectors that are not always in the centre of attention. Per Unckel, Secretary General of Nordic Council of Ministers, emphasized the importance of improved education systems in the Region. “Only the best is good enough”, he said. Mr. Unckel said that behind a cluster based on high-tech, there has to be a world-class university. Thus he urged policy makers to combine education, research and innovation to a higher degree. Lena Gustafsson, Deputy Director General for Vinnova, supported Mr. Unckel’s conclusions and emphasized that freedom and creativity are vital factors for innovation. Ms. Gustafsson explicitly called for the creation of methods for evaluating the impact of regional innovation policies. See full session report here. ------------------------------------------------------------------------------------------------------------------------------------- No Knowledge, No Future – Investing in Research and Education The knowledge-based economy requires flexibility and an element of adaptation to the rapidly changing and competitive global environment. In this regard, Europe is losing its competitive edge within higher education to other regions, such as the US and Asia. To counteract this tendency, Europe needs to attract more people with talent and knowledge. That was the overall message of Børge Diderichsen, Vice President at Novo Nordisk. Andrzej Kaczmarek, Polish Undersecretary of the Ministry of Science and Higher Education, said that in entering the knowledge-based era, new economic strategies will be based on the development of science, high technology, and technological services of the information society. The panel discussed strategies on how to respond to the growing competition from other regions. Anders Flodström, President of the Royal Institute of Technology, KTH, drew attention to the recently created EU-budget to create a European Institute of Technology from 2008, a “European MIT”. The idea is to create three to six knowledge communities throughout Europe, most likely located in the areas with biotechnology, ICT and material science clusters. The Baltic Sea Region needs to attract some of these knowledge communities, as these will also be very favourable research environments for companies. Furthermore, it will be essential to attract the best students to our Region, he said. Mr. Diderichsen added that attracting students particularly from the Eastern part of the Baltic Sea Region to the Western parts would be highly beneficial, as many companies would be interested in training and employing Baltic and Polish students, especially because companies in these areas experience labour shortage. Mailis Reps, Estonian Minister of Education and Research, said the next step for the Region will be to divide strategic points and agree on concentrations in education. Each country has its strength, but realistically, the countries must agree on which areas should be given more focus and what institutions should be developed, she said. One important step should be attracting private sector involvement and persuade the companies to invest in brainpower. See full session report here. ------------------------------------------------------------------------------------------------------------------------------------- How Can Metropolises Contribute to an Integrated Baltic Sea Region through Investments in Infrastructure? One of the main challenges for the Baltic Sea Region is to improve its internal and external infrastructure system. Thus, the project BaltMet Infra is a top priority for the Baltic Metropoles’ cooperation, BaltMet. The metropolises have the possibility of becoming one of the driving forces in positioning the Region externally and strengthening it internally. However, to fulfil this mission, the metropolises need to create good logistic connections, said Jussi Pajunen, Lord Mayor of Helsinki. Regrettably, the metropolises are facing a number of impediments: 1) poor access to the main corridors, 2) inadequate capacities, and 3) ineffective logistic chains. Particularly, missing links to Russia and bottlenecks at the Russian border have become a large problem in terms of customs and logistical services. On that note, Mr. Pajunen called for upgrading and development of corridors between the cities, better co-ordination between financial institutions and the national governments, and involving St. Petersburg - the main Western logistical centre in northwest Russia - in even more transport projects. Andrey Karpov, Chairman of the Committee for Transport and Transit Policy in the Government of St. Petersburg, agreed with Mr. Pajunen and pointed out that some of the impediments need to be tackled between Russia and Europe. Firstly, sea border custom procedures must be simplified along with land border procedures and secondly, a common set of standards must be created, which will ensure the safety of transport activities in the Region. According to Juhani Tervala, Director General in the Finnish Ministry of Transport and Communication, a Northern Dimension partnership on transport and logistics could be an important start for common work on infrastructure in the Region. One of the future tendencies, a.o. logistical challenges, is the increasing extra-regional trade, where the emerging economy of China will play one of the main roles. In this context, Igor Kabashkin, Vice-Rector of the Transport and Telecommunication Institute of Riga, stressed that the Region needs to create logistic centres and regions, and not local logistic points. See full session report here. ------------------------------------------------------------------------------------------------------------------------------------- Environmental Standards and Advanced Technology – a World-Class Growth Industry Environmental issues have topped both the European and global agenda for several years, and one key discussion at the summit focused on how to improve the environment of the Baltic Sea Region. The debate concentrated on creating a healthy environment, but also integrating growth and technological progress in that process. A healthy environment, including a healthy Baltic Sea, is important not only for its citizens, but it is also prerequisite for a sustainable long-term economic development, Anne Christine Brusendorff, Secretary General of HELCOM, said. Lars-Erik Liljelund, Chairman of European Environmental Agency, pointed out that the future state of the Baltic Sea itself does not look promising. He was concerned about pressures from agriculture, excess fishing and pollution. Poul Erik Sørensen, Director of Business Development at Krüger A/S, gave a good example from the waste water industry on how environmental standards and rules create new business opportunities and markets. Arne Øren, Chairman of Baltic Sea States Sub-regional Co-operation, expressed deep concerns about the coming generation and stressed that we have to invest ten times more per economic unit if we are to have environmental and resource effectiveness by 2050. Uwe Döring, Minister of Justice, Employment and European Affairs of Land Schleswig-Holstein in Germany, pointed out that the new Lisbon agenda and HELCOM’s action agenda should be two important starting points for local and regional action in the field of environment. See full session report here. ------------------------------------------------------------------------------------------------------------------------------------- The New Europe and the Baltic Sea Region The world is entering the third wave of globalization, which forces countries and regions to develop new strategies to stay competitive in the global economy. Carl Bildt, Minister for Foreign Affairs of Sweden, emphasized seven critical factors for the future success of the BSR. It should: 1) support the Single Market of the EU, 2) work towards a fully-integrated Russia, 3) ease rules and regulations in our economies, 4) improve the venture capital environment, 5) do more for R&D and make certain it is effective, 6) allow free mobility of people, and 7) solve the environmental challenges of the Baltic Sea. Lars G Nordström, President and Group CEO of Nordea Group, urged the national competition authorities to allow big companies in smaller countries to grow and thereby become more competitive on a European and a global scale. In this regard, Mr. Nordström stressed that we shouldn’t over-emphasize our differences, but look for commonalities instead. Alexander Stubb, MEP from Finland, pointed out that it is of utmost importance for the BSR to brand itself as a forward-driving, competitive region now, as the EU is very focused on the northern part of Europe. Per Unckel, Secretary General of Nordic Council of Ministers, recommended five important strategies for the BSR, namely 1) to create Ivy-league universities, 2) to have a knowledge policy that is able to attract more European research investments, 3) to work on cluster development, 4) to establish a playing field for competitive activities, especially within financial markets, and 5) to support those that are in a less favorable situation. See full session report here. Creating a Global Competitive Identity for the Baltic Sea Region Baltic Development Forum has initiated a regional branding process with the goal of establishing a world leading brand encompassing the 11 countries of the Baltic Sea Region. Simon Anholt, Government Advisor on Nation Branding and Public Diplomacy, said that the Baltic Sea Region has no intention of using a promotional, advertising, or marketing campaign. There are already numerous bodies and organizations with money and skills promoting the Region as a tourist destination. The idea is to align and co-ordinate these national efforts and expanding and developing a strong common and competitive regional brand. Mr. Anholt agreed with Dorte Kiilerich, CEO of VisitDenmark, that the tourism sector is essential for the branding initiative and emphasized that a branding strategy is not a replacement for a tourism strategy. According to Mr. Anholt, by joining forces we can leverage commercial spending of many millions of Euro, if we can tell one good, coherent story for the Region, a common message and belief. Mr. Anholt suggested forming a committee consisting of representatives from the Region’s member countries with the purpose of identifying the best stories of the Region. Børge Diderichsen, Vice President of Novo Nordisk, agreed that the Baltic Sea Region needs to establish itself as a region with a particular positive reputation and image. In his view, a combination of the Nordic values, the Baltic drive, and the talent mass in the Eastern part of the Region would create a powerful concept. See full session report here. ------------------------------------------------------------------------------------------------------------------------------------- Transport and Infrastructure – Bridging the Gaps in a Global Playing Field A crucial element for economic growth and quality of life in the Baltic Sea Region is the existence and dynamic development of a coherent and intelligent transportation system combined with a well-developed infra¬structure. Currently, many businesses are suffering because of numerous bottlenecks in the Region’s transportation system. Regional co-operation must continue and investments in logistics and transportation must be increased to help solve these problems and decrease transportation costs. The Baltic Sea Region has a huge potential of becoming a significant gateway between Europe and Asia. The Finnish EU presidency has proposed an elaborate transportation and logistics partnership between Northwest Russia and Europe. The proposal was offered in relation to the renewed Northern Dimension policy programme. Also, border-crossing within and from the Region, is another issue that needs attention both regionally and at the EU-level. The session concluded that national solutions are not enough and there is clearly a need for a broader transnational and regional approach to solve many issues. Pertti Puro, State Secretary at the Finnish Ministry of Transport and Communications, said that it is important to acknowledge that the logistics sector, as an industry, is a major source of employment in Europe. On the other hand, Alminas Maciulis, State Secretary at the Lithuanian Ministry of Transport and Communications, focussed on the bottlenecks in co-operation and utilization of the transcontinental transport system. He pointed out that shortcomings involve different customs procedures, different freight documents and tariffs, and a significant amount of bureaucracy and unbalanced traffic. Thomas Dyrbye, CEO of Maersk Nordic & Baltic, pointed out that although the main cargo routes cannot be changed combined regional efforts could eliminate numerous bottlenecks and remove logistical obstacles. Therefore, he urged for more investments in logistics and transport. See full session report here. ------------------------------------------------------------------------------------------------------------------------------------- Tourism Co-operation in the Baltic Sea Region – How to Proceed? The concept of tourism is changing. Trips abroad are increasingly shorter and often combined with other purposes such as business or medical treatment. In that regard, Krzysztof Gromadowski, Director of Port Development and Integration with EU at Port of Gdynia Authoritiy S.A., says the Region needs to create more dynamic and innovative new products. One initiative is to move tourism cooperation in the cruise industry from city and port level to the country level, which was suggested by Henrik Kahn, Director UK & Ireland, VisitDenmark. Knowledge sharing and developing the Region’s marketing concept are other important steps in creating synergies and enhancing tourism development, said Tomasz Studzieniecki, Expert in the International Association of Scientific Experts in Tourism. He also said it was important to bridge different places attractive for tourism. Bengt Philström, Former Director of the Finnish Tourist Board, suggested that in regards to developing foreign markets, the countries of the Baltic Sea Region should work together and promote the Region under one brand. Uldis Vitolins, Director of Latvian Tourism Development Agency, talked about the co-operation among the Baltic countries in the tourism sector. He said that when it comes to attracting tourism into the Region, the Baltic States are partners, increasing their co-operation process each year. This sets a good example for other member countries of the Baltic Sea Region. See full session report here. ------------------------------------------------------------------------------------------------------------------------------------- North West Russia and Kaliningrad – A Gateway to Growth and Global Markets Northwest Russia is often referred to as the “gateway” to Europe or the “pilot region” for co-operation between Europe and Russia, because of its geographical location. In fact, many regional challenges have been addressed under the wings of the New Northern Dimension EU policy programme through partnerships in economic as well as social areas between Europe and North West Russia. But faster development of the Region’s enormous potential is hampered by many obstacles. Among some of those obstacles, Paula Lehtomäki, Finnish Minister for Foreign Trade and Development, highlighted burdensome custom procedures and other lengthy bureaucratic problems related to border crossing with Russia. She also emphasized that establishing and conducting foreign business in Russia is still highly bureaucratic and costly. This does not only decline the profit margins of foreign companies, but also reduces local employment opportunities. “If we want to reap the full benefits of North West Russia’s economic and commercial potential, we must improve the praticalities of doing business in the Russian business environment by improving local leadership”, she said. Arne Grove, Head of the Nordic Council of Ministers in Kaliningrad, added the special location and the small size of Kaliningrad, which makes it difficult to attract investments. Igor Yurgens, Group Vice President of Renaissance Capital, said furthermore that the whole business community in the Region is fighting against corruption, bureaucratic abuse and administrative barriers. He termed it, a “curse of Soviet Russia”. He stressed the importance of the struggle for de-bureaucratization within the growing entrepreneurial class. The struggle, which is conducted with foreign colleagues, brings with it a certain sense of optimism to the region. The new generation shows a lot of flexibility, openness and transparency, he said. The panelists believed that Russia’s accession to the WTO and the successful New Northern Dimension partnership are important steps to improve the Russian business environment. Ms. Lehtomäki mentioned particularly that the partnerships related to public health, social well-being and environment will have far-reaching impact on the well-functioning of the society and the stability of the business environment. See full session report here. |
