About 20,000 hectares of unkempt forest is on sale in Estonia.
TALLINN — In a bid to gather funds for the state budget the Estonian Land Board has put 20,000 hectares of unkempt forest on sale, but is only selling the land in one hectare slots making it unattractive for large investment groups.
“The land is sold in pieces because this enables the interested parties with lesser financial opportunities, local businesses and forest owners to buy the land. Not just the big funds and corporations,” Ants Erik, CEO of Metsatervenduse forest management company told Baltic Reports.
He expects local businesses to pick up land that they will use for business purposes.
“I believe that most buyers will probably not be local people, but rather local businesses and businessmen or entrepreneurs who already own some sort of properties in that area,” Erik said.
The 2010 national budget has tasked the Ministry of Environment with selling the untended land for 716 million krooni (€45.7 million). The sales is part of a wider move by the government to sell national real estate to boost the budget and move toward euro adoption by 2011.
The selling of unused real estate or other properties has been planned for both 2009 and 2010 state budgets. This is planned as a state budget income and the money will be used in different expenditures already planned in the state budget, the finance ministry told Baltic Reports.
The finance ministry said that the land was not only a cash cow, but a burden to the tax payer in its current state.
“Maintaining of unused properties or land that the state does not need costs money and needs special attention and workforce. This is not reasonable use of taxpayers money, specially if someone else can use the property,” Piret Seeman, public relations officer at the Ministry of Finance told Baltic Reports.
“The Ministry of Finance of Estonia is currently conducting an inventory for all of the state properties. Owning properties that are not used is not in the states benefit, but can be a benefit to private sector for example,” Seeman added.
Other companies in the country, however, say the government is shooting itself in the foot selling the plots one by one.
“We introduced the grounds on sale to two American funds which invest in forests, but they weren’t interested in the offer. The state is currently selling about 20,000 hectares in pieces, but funds would buy from 5,000 hectares, with actual market price. A hectare of land cost about 20,000-25,000 krooni (€1,280-€1,580) during boom years, but the state’s initial asking price is bigger,” Toomas Kamsi, manager of forest management company Fest-Forest told local media.
Meanwhile, Minister of Economy Jaanus Tamkivi said that selling the land in big chunks to overseas investors wouldn’t be politically acceptable.
Erik said that the forest would be looked after better with individual owners.
“The registered immovables that the state is selling were not sold during the land reform and have been unmanaged for over 20 years. We shouldn’t confuse traditional state forests with these unused plots of land. The state forests are not being sold. On the contrary, the State Forest Management Center — the state — is adding large plots of it to the state forests,” he said. “So the sale of these plots is a good thing, because it means the lands will go under active management, which only benefits to the forests and the economy as a whole.”
