Mission Latvia: An alternative for investments in Asia
Ivi Anna Buce
Director of Investment Projects Department
Investment and Development Agency of Latvia
Latvia
It is already clear that according to stock market index ratings, 2022 will be the worst year in the last ten years. According to Standard and Poor’s (S&P 500), the decline could reach 17%, roughly half the decline experienced by stock markets during the 2008 global financial crisis. Many tech companies continue to lay off their employees, with the most prominent examples being Meta and Twitter. A similar trend can be observed in Israel, which is a technologically advanced country. However, the situation is not the same everywhere and the Baltic states, including Latvia, have shown significant growth in attracting investment in recent years. This is largely due to the changes in global supply chains caused by the pandemic, as well as the continued availability of highly skilled professionals in the Baltic states and the reasonable costs of running a business.
Open for Smart Investments
According to the data of the EY Attractiveness Survey Europe, last year Latvia ranked fifth in Europe in terms of the number of new jobs per million inhabitants created by foreign investment projects, while Estonia was fourth and Lithuania – sixth. On the other hand, according to the number of new projects per million inhabitants, Latvia ranks 10th in Europe, while Lithuania is 11th, and Estonia – 24th.
Latvia, like the other Baltic states, has worked hard in recent years to improve the investment environment. Here are some examples of what has been done in Latvia. We have defined the investment priorities, and these are smart specialisation areas, covering sectors such as biomedicine, smart energy and mobility, photonics and smart materials, bioeconomy, IT, smart energy, and business service centres. Of the 32 investment projects handled by the Investment and Development Agency of Latvia in 2021, 25 were in these sectors.
Digitalisation and automation, as well as investment in research and development, are key to business competitiveness. A study by the Bank of Latvia and the Organisation for Economic Co-operation and Development (OECD) has found that companies that use state aid opportunities are about 30% more resilient in export markets than those that do everything on their own. Therefore, we provide a wide range of support tools for companies that see opportunities for their development in Latvia, starting with various types of training programmes such as Agile, Prince, Scrum and ending with digitisation vouchers, where small and medium-sized companies can raise up to 100 000 euros to co-finance their projects. At the same time, there is also a large investment programme, which can raise up to 10 million euros in the form of a capital discount. More about support opportunities in Latvia at investinlatvia.org.
Energy Victory March
We are aware that so-called smart investments are easy to move, therefore we work equally carefully with those investors who are already in Latvia, offering proactive after-sales service. After Latvia’s strategic shift in investment attraction, focusing on projects with higher added value, we have seen a rapid increase in interest from investors who want to develop science-intensive manufacturing and smart energy projects in Latvia. Industries focusing on biomedicine, electric car development, solar and wind energy projects are developing. A particularly vivid example is the offshore wind project ELWIND, which we are developing together with Estonia. It will be one of the first transnational projects of its kind in Europe. LIAA will carry out all the necessary preliminary work, including environmental impact assessments, to put this wind farm, which will be located approximately 16 km from the shore, up for public auction. It will not only be an energy project, but also a stimulus for the development of other related sectors. After the start of hostilities in Ukraine, energy is one of the hottest topics in Europe. It is also particularly relevant for us in two aspects – to ensure energy independence from Russia and to meet the EU’s common climate goals. ELWIND is expected to generate around 20% of the energy consumed jointly by Latvia and Estonia. Of LIAA’s portfolio of investment projects worth more than a billion, about two-thirds are related to energy.
Latvia – New Nordics
Many Nordic companies see the Baltic states as their home market. Latvian companies operate on a similar model. We try to adopt good practices and offer our own solutions. Latvia’s business environment is very flexible, and the size of the country allows us to quickly see what works and what does not. In a way, we are a testing ground, which is especially important for technology companies to check the viability of their products or services.
Latvia’s national image strategy is based on a mission-driven approach, which means that we want to focus knowledge and resources to achieve more ambitious goals. We want to double our export volume and our investment in research and development between now and 2027. These are ambitious goals, which is why smart investment is a key focus. Today the world is changing rapidly, manufacturing is returning from Asia to Europe, and Latvia is a great place to develop your projects!
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