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LATVIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 9,671 8,406 7,500 94
         
GNI per capita
 US $ 4,070 3,480 3,230 79
Ranking is given out of 208 nations - (data from the World Bank)

Books on Latvia

REPUBLICAN REFERENCE

Area (sq.km) 
64,589

Population
2,306,306

Principal 
ethnic groups 
Latvians 52.0%
Russians 34%
Belarusians 4.5%

Capital 
Riga

Currency 
Lats

President
Mrs Vaira 
Vike-Freiberga



  

Update No: 289- (27/01/05)

Manufacturing companies come to Latvia 
The European Union's 10 new member countries are attracting new manufacturing companies from across Europe. Latvia, which has seen its fair share of foreign investment since EU membership in May, has ambitions to become one of the most appealing destinations for producers-exporters. 
Recently the Cabinet of Ministers approved an export development plan for 2005 - 2009. The main thrust of the plan is to give a boost to Latvian manufacturers' competitive edge and to help them find new markets for their products. To demonstrate the seriousness of the government's intentions, Prime Minister, Indulis Emsis, on September 24 even toured Lavijas Finieris, one of Latvia's leading wood-processing plants.
In one of the biggest manufacturing-related investments this year, the U.S. fibreboard company Jeld-Wen announced it would build a 40 million euro wood- treatment facility in Latvia, which management ultimately chose over Spain. The factory will produce fibreboard skins, 95 percent of which will be exported for use in Jeld-Wen factories across Europe.
Latvia's membership in the EU significantly influenced the company's decision to stay in the Baltic country, says Ralfs Dakters, a client executive in the Latvian Investment and Development Agency's investment and trade promotion division.
"The first attraction for Jeld-Wen was EU criteria. They needed to build in the EU, as they will be exporting to the other Jeld-Wen factories in Europe," says Dakters. "The second attraction was the low corporate income tax, which is only 15 percent in Latvia. The third attraction was the natural resources. The type of wood fibre here suited their needs, plus it was of a high quality and quantity."
Jeld-Wen, which was established in Latvia in 1994, is also aware of the country's cost-effective labour benefits. The average gross monthly wage in Latvia is approximately 200 lats (300 euros).
In another high-profile project, Germany's AKG, a manufacturer of vehicle radiators, teamed up with Russian automotive producer ZIL, to invest 20 million euros into a new factory that will create 250 jobs in Jelgava over the next three years.
As Dakters explains, "With accession to the EU - coupled with Latvia's geography of having the European market on the left and the CIS market on the right - Latvia has become a 'one-stop shop' for foreign investors." 
Indeed, Latvia ranks among the top 10 countries internationally in terms of business start-up time and length of bankruptcy procedures. According to a World Bank report, one can register a business in Latvia within two business days.
"We now have a good quality of projects coming into Latvia from across the globe," says Dakters.
Latvia has access to a consumer market of over 660 million, and its abundance of sea and road transport links provides easy accessibility to surrounding countries - hence, the importance of the government's manufacturing development program.
"The government is now showing their intention to be an investment-friendly country. Not just saying it, but actually doing it," says Dakters. 
Through LIDA, the government has proved its commitment to foreign investors, offering not only start-up help, but also support after the investment's implementation. Foreign representatives of LIDA situated in France, Germany, Russia, Kazakhstan, the Netherlands, U.K. and Sweden - with offices in Norway and Denmark - testify to Latvia's intention of attracting foreign manufacturers.
Investors also have the opportunity to enter the state support program, which offers grants for entrepreneurship, participation in international exhibitions, modernization, the development of new products, and for increasing the qualifications of employees. 
As if this is not enough, LIDA is currently accepting applications for EU grants.
"The grants which are being offered at the moment are an additional incentive for foreign investors," Dakters says. "Many grants are geared specifically for manufacturing companies. We definitely hope to attract more manufacturers from abroad."

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ENERGY

More investment from Latvijas Gaze

Latvian gas distribution company Latvijas Gaze plans to invest 120m lats in development in 2005-2010, company president, Adrians Davis, said at an extra-ordinary shareholders' meeting on December 3rd, New Europe reported.
He said that these funds would be used to increased the reliability of gas supply infrastucture, increase the capacity of the Incukalns underground gas storage facility and also to build new pipelines. Over the next year Latvijas Gaze will decide on increasing the capacity of the Incukalns underground gas storage facility from 2.3bn cubic metres at present to 5.0-6.2bn cubic metres. "This is due to the need to implement a project to supply southern Finland with gas from Incukalns," Davis said. 
The second project in terms of investment is to build gas pipelines in Latvia. He explained the company plans to build about 200km of pipelines per year. The company's budget for 2005, which was approved on December 3rd, includes investment of 24.88m lats, which was a little less than planned investment for last year. Davis said that the company justified its request to the Latvian regulator to increase gas tariffs.

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FOREIGN INVESTMENT

Investments surge 50% in Latvia

In the first three quarters of 2004, foreign investments pouring into Latvian companies and banks went up 50.5% in a year, totalling 695.4m lats, the Bank of Latvia announced recently, New Europe reported.
In the same period foreign investments made by Latvian companies totalled 437.6m lats, so net inflow was 257.8m lats or 124.4m lats more than the same period as the year before, the Bank of Latvia said. Increase of funds assigned of re-investment of profits (part of the profit which is not paid out to the shareholders but invested back into the growth of company) was of 55.6m lats and investments in the other capital forms (loans, lending, trade credits) was up 63m lats. Nearly half of all investments for the same period came from three countries - Estonia (61.5m lats), Finland (29.4m lats) and the United Kingdom (23.7m lats).

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TRANSPORT

Ventspils Nafta builds new rail terminal

Ventspils Nafta Terminals, a subsidiary of the holding company Ventspils Nafta, has completed construction of a rail platform for oil and oil products at a total cost of 12.9m lats, Ventspils Nafta Press Secretary, Gundega Varpa, said recently, the Baltic News Service reported.
The new rail terminal has a capacity of 4.5m tonnes of crude oil or 5.5m tonnes of diesel per year; it is 402m long and can unload 66 tank cars simultaneously. The press secretary said that the new platform would make it possible to improve the use of the terminal's capacity, increase the assortment of freight being trans-shipped and avoid having tank cars standing idle. Unlike the other three rail platforms at the terminal, at which only oil products can be unloaded, the new platform can handle both types of freight. Ventspils Nafta transhipped 7.3m tonnes of oil and oil products in the first 10 months of 2004, down 24 per cent year-on-year.

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