Foreign SMEs and land acquisition the reality of regulation (the case of Estonia)

Abstract

Purpose

This paper seeks to examine academic literature and business regulation for land acquisition in Estonia in relation to small and medium enterprises (SMEs). The objective of the paper is to give information beneficial for the enhancement of the business environment, for SMEs. Furthermore, to assist foreign SMEs decision making related to land acquisition within Estonia, an important country within the “Northern Dimension” of the expanded European Union (EU).

Design/methodology/approach

This exploratory paper makes use of World Bank Surveys, primary business law sources together with an interview from a business within the country assessed giving a grass‐roots perspective.

Findings

The investigation reaffirms the importance of SMEs within former economies from a Soviet background such as Estonia. It also emphasises the correlation between economic growth, land acquisition and business law and identifies the significance and “key” aspects of land acquisition for an SME. Furthermore, it assesses Estonia's exemption from the movement of free capital within the EU affecting land acquisition by a foreign SME. It shows it is slightly more difficult for an SME from another EU Member State to acquire land (including a size restriction on agricultural land). Additionally, the notarisation process could be reformed in Estonia which would quicken and cheapen the procedure for land acquisition by SMEs. It emphasises that overall a very positive progression has been made by Estonia within its business law environment conducive to land acquisition by SMEs.

Practical implications

This research demonstrates the reality of Estonian land acquisition regulation and its positive progression. It shows that for an entity from another EU state (other than Estonia) it is restricted from acquiring certain types of land. Additionally, unofficial costs, a legacy from the Soviet period are almost non‐existent within the Estonian land registration system. Some of the gaps within the World Bank Surveys are filled by the interview, although further evaluation is needed from other academics.

Originality/value

The research highlights the importance of land acquisition for SMEs, a new EU Member State's exemption from the free movement of capital and the reality of land acquisition regulation for an SME in Estonia.

Citation

Gordon Dickinson, P. (2010), "Foreign SMEs and land acquisition the reality of regulation (the case of Estonia)", Journal of International Trade Law and Policy, Vol. 9 No. 1, pp. 83-96. https://doi.org/10.1108/14770021011029627