Foreign direct investment (FDI) in Finland

FDI in Figures

Due to the outbreak of the Covid-19 pandemic, foreign direct investment (FDI) flows to Finland came to an abrupt halt in 2020. According to the 2022 World Investment Report published by UNCTAD, however, FDI inflows resumed in 2021, totalling almost USD 9.4 billion. Data from Statistics Finland shows that in the same year corporate acquisitions covered more than two-thirds of the total flow. Examined by country, net inward FDI flow was highest from Luxembourg (EUR 2.9 billion), Sweden (EUR 2.4 billion) and Switzerland (EUR 1.5 billion). Two-thirds of the country’s investment in 2021 went to the Uusimaa region in southern Finland, which includes the capital Helsinki and other major cities like Hyvinkää  and Espoo. In the same year, the total FDI stock amounted to USD 98.5 billion (+8.8% on the previous year). According to recent data by OECD, the majority of the investment stock comes from Sweden (23.1%), the U.S. (18.4%), Germany (10.1%), Norway and Luxembourg (6.6% each). Examined by industry, inward FDIs to Finland are mainly directed towards enterprises engaged in manufacturing (28%), wholesale and retail trade, information and communication, electricity, gas, steam and air conditioning supply. According to GlobalData’s FDI Projects database, in 2021, 44% of Finland’s total inbound greenfield FDI came from communications, media, software, IT services and business and professional services.

The country’s strengths include a highly educated workforce, a knowledge-based and innovative economy, a reputation for stability and lack of corruption, competitiveness, a strategic position at the centre of a dynamic zone formed by Russia, Scandinavia and the Baltic countries and its orientation towards high technology, research and development. In 2022, the country's government announced several tax incentives for foreign investors to conduct research and development activities in Finland. Among the country’s weak points are the small size of its market, a high vulnerability to the international situation, substantial labour costs and a high degree of dependence of the country’s banking sector on the Swedish and Danish financial sectors. Furthermore, significant amendments to the Monitoring of Foreign Corporate Acquisitions Law (172/2012) entered into force, widening the scope of acquisitions that are subject to mandatory pre-approval. Overall, Finland has a very friendly business environment, as shown by the fact that the country ranks 12th out of 82 countries in the Economist Business Environment ranking; as well as 8th out of 63 countries in the World Competitiveness Index published by the International Institute for Management Development (IMD).

What to consider if you invest in Finland

Strong Points

The country's strong points:

• Political stability
• A strategic geographic location between Scandinavia, Russia and the Northern European expanding markets
• A multilingual population
• One of the least corrupt countries in the world
• Expertise in green technology, manufacturing, health and the ICT industry
• An extremely industrialised economy, based mainly on the free market and with a high work productivity 
• High spending in R&D
• High-end industries

Weak Points

Finland's main weak points:

• Geographic vulnerability
• A decrease in industrial competitiveness
• Fragility of the banking sector (regional exposure, especially to Russia)
• A small internal market
• Ageing population 
• Deterioration of the current account
• Large household debt

Government Measures to Motivate or Restrict FDI

Finland does not discriminate between foreign and national companies. As such, support in the form grants, loans, tax benefits, equity participation, guarantees, and employee training can be available to all firms. Subsidies for start-up companies are available for establishing and expanding business operations during the first two years of activity. Investment aid can be granted to companies in the regional development areas, especially SMEs (but also bigger companies in case of significant job creation).
In order to promote foreign investment, the government has created a Team Finland network that serves as a one-stop shop for businesses.

Bilateral investment conventions signed by Finland

Finland is a signatory to over 80 bilateral investment treaties. You can consult them on UNCTAD's International Investment Agreements Navigator.