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Discover Latvia – Your Partner forCo-operation!
April, 2011
By Rudolfs Bremanis
Economic Counselor
Embassy of Latvia in Washington, DC
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LIAA International Presence
Representativeoffices in 10countries:
DE, DK, FR, UK,
NL, NO, PL, RU,SE, JP
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Location of Latvia (main facts)
3
Territory 64.6 ths. sq.km
Population 2.2 mln
Language Latvian
Highest point 311.6 m
Lowest point sea level
Forest coverage ~ 55%
Retirement age 62
National currency Lats
Average monthly salary 682 EUR
Member state EU, NATO
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Investment Attraction Methodology
Municipalities
Privatecompanies
UniversitiesResearchinstitutes
Government
Investors
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GDP by Current Prices and Kind of Activity
0.0
5000.0
10000.0
15000.0
20000.0
25000.0
2003 2004 2005 2006 2007 2008 2009 2010
m l n E U R
Services (G-O) Construction (F)
Electricity, gas and water supply (E) Manufacturing (D)
Mining and quarrying (C) Agriculture, hunting, forestry and fishing (A)
GDP per capita by current prices (2010): €8093
Strong currency Lats, pegged to EUR: 1 LVL = 1.42 EUR
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8.7%10.6%
12.2%
10.0%
-4.2%
-18.0%
-0.3%
3.3% 4.0% 4.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
2004 2005 2006 2007 20132009 2010 2011 20122008 2014
Forecast
Highest GDP Increase, Deepest Fall,Stable Recovery
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Gross domestic product,constant prices
0.8
-1.5
-4.7
-10.1
-17.8 -18.1-19.1
-16.8
-6.0
-2.1
2.9
3.7*
-25
-20
-15
-10
-5
0
5
I II III IV I II III IV I II III IV
2008 2009 2010
GDP,seasonally adjusted, % q-o-q GDP, seasonally unadjusted, % y-o-y
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Fiscal Strategy to PreventExcessive Budget Deficit
Maastricht criteria
20142013
General government deficit (% of GDP)
* Assesment of Ministry of Finance
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Export and import of goods%, y-o-y
-50.0
-40.0
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
2006'I II III IV 2007'I II III IV 2008'I II III IV 2009'I II III IV 2010'I II III IV
Export Import
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Transport vehicles
5.9%
Mineral products
6.1% Prepared foodstuffs
7.5%
Products of the
chemical and allied
industries
7.7%
Vegetable products
5.5%
Textiles and textile
articles
4.4%
Live animals and
animal products
4.3%
Plastics, rubber
and articles thereof
3.3%
Miscellaneous
manufactured
articles
2.8%
Machinery and
mechanical
appliances;
electrical
equipment12.7%
Base metals and
articles of base
metals13.9%
Wood and articles
of wood
19.3%
Other
6.6%
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Positive FDI Trends
2.22.6
3.3
4.2
5.7
7.5
8.1 8.1 8.3
2.6 2.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
b i l l i o
n E U R
Cumulative FDI into Latvia, billion EUR
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Financial
intermediation
22%
Real es tate
15%
Services
14%Manufacturing
13%
Wholesale and
retail trade
12%
Others
10%
Transport,
storage1%
Hotels and
restaurants
1%Agriculture,
hunting and
forestry
3%
Construction
2%
Electricity, gas
and water supply
4%
ICT
3%
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Other countries
15%
Lithuania
3%
Norway
3%
United Kingdom
2%
Austria
2%
Luxembourg3%
United States
3%
Finland5%Ireland
4%
Russian Federation
4%
Cyprus
5%
Iceland
2%
Switzerland
2%Malta
2%
Germany
5%
Netherlands
7%
Denmark
7%
Sweden
12%
Estonia14%
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Competitivecost structure:
15% CIT
Openmarket
The right
mix oflabour pool
atreasonable
cost
In 2011 Latvia ranks 24th in the world in termsof business - friendly countries – that is theease of doing business, starting a business
and getting credit.
(World Bank, Doing Business 2011)
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Open Market and Security
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Equal treatment of foreign investors
By law, foreign investors have the same rights and duties as local investorsThe foreign investor may be sole founder and owner of a company
Foreign companies registered in Latvia are entitled to buy land and property
Efficient start-up procedure (company registration in 1 day)
The foreign investor may request a temporary residence permit having
Invested in Latvia
Active dialogue between the Foreign Investors’ Council in Latvia (FICIL) andthe Latvian Government
WAIPA recognized LIAA’s success in fostering cooperation with FICIL by awarding ” IPA’s success in policy advocacy”
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0% 5% 10% 15% 20% 25%
Corporate income tax
Personal income tax
Employers social tax
Employee social tax
VAT
15%
25%
24.09%
11%
22%
Tax System
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Special Economic Zones (SEZ) – Riga, Ventspils, Liepaja, Rezekne:
80% rebate on real estate tax and CIT (valid until 2017)
only 5% CIT is payable if a company operates within a SEZ
Corporate income tax rebate for large-scale investment projects
25% of total initial long-term investment up to EUR ~49.8 million (LVL 35million)
15% of the part of the total initial long-term investment exceeding EUR~49.8 million (LVL 35 million)
Beneficial depreciation ratio for new technological equipment – taxpayers may calculate tax depreciation from a higher initial value of fixed
assets using a coefficient of 1.5
Loss carry forward – tax losses can be carried forward for up to 8years (in SEZ – up to 10 years)
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Incentives Supported by EU Funds
Incentives for R&D
8 Contact Points for Technology Transfer
Labour related incentives
Business Incubators
Attraction of financial resources
• Programme for Start-ups
• Programmes for growth and improvement of competitiveness ofbusinesses
• Credit Guarantees
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High university enrolment rates (2009/2010 indicators)*:
Education
50 students per 1 000 inhabitants
26,8% of places are state subsidized 51% study social sciences
18% study engineering and naturalsciences
*Source: Ministry of Education and Science, 2010
Multi-lingual
English: 70% of population under 40 speak English
Russian: 80% of Latvian residents speak Russian
Northern European culture and work ethic
Latvians are highly motivated and keen to take on newchallenges
Investments in infrastructure 2004-2006 more than 35 MEUR invested in modern
research infrastructure
2007-2013 additional 210 MEUR planned
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Availability of Labour Pool (I)
800
850
900
950
1000
1050
1100
1150
1200
1250
1300
I II III IV I II III IV I II III IV I II III IV
2007 2008 2009 2010
Number of employed persons Economical ly active population
Number of employed persons andeconomically active population
(thousands)
Number of job seekers and availablevacancies (thousands)
0
50
100
150
200
250
300
I II III IV I II III IV I II III IV I II III IV
2007 2008 2009 2010
0
5
10
15
20
25
30Number of job seekers (left axle)
Number of vacanci es (right axle)
Unemployment rate in Riga as at February, 2011 - 9.9%, 14.5% - in Latvia
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On a Europe wide level Latvia is among TOP 10 by investment andrevenue in the telecommunications industry (14th report, Information Society, EU)
International partnership 4cE – Central and Eastern European utilityalliance teamed for telecoms service provision, offers cross-borderbroadband connections of 2 Mbps to 2.5 Gbps
Latvia ranks 3rd globally by download speed 26.21 Mb/s and 3rd byupload speed 13.53 Mb/s (The Global Broadband Speed Test, www.speedtest.net)
6th globally by average measured internet connection speed 6.0Mbps(“State of the Internet” report Q3 2010 by Akamai, www.akamai.com)
Broadband internet penetration rate in 2009 – 17.4%(BB lines per 100 population; 14th report, Information Society, EU)
Highly Developed Communications Infrastructure
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Internationalpartnership 4cE –partnership of Centraland Eastern European
Cross-border Broadband Connections
4cE offers cross-border
broadband connectionsof 2 Mbps to 2.5 Gbp
Participants: Germany,Denmark, Czech
Republic, Austria,Poland, Latvia,Lithuania and Estonia
Fib i l T l i i N k
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Fibre-optical Telecommunications Network
Latvia is co founder of theBaltic Optical Network
(BON) which operates as afibre-opticaltelecommunicationsnetwork covering the wholeregion
Dark (available) fibre rentalis possible and can beprovided by severalcompanies – Optron,Lattelecom, Baltcom Fiber,
Latvenergo IT&T , LatvianRailway and others
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Latvia – Gateway Between Europe and CIS
Accessibility
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19 Airlines Operate 84 Direct Flights to/fromRiga International Airport
Accessibility
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Strong International Presence
P i l B i L i i L i
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Potential Business Locations in Latvia
Ri M li f h B l i
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Riga – Metropolis of the Baltics
FDI Magazine’s Cities and Regions of the Future 2010/2011 ranked Riga No.1Large European City for Cost Effectiveness
Riga is the largest city in the Baltic StatesRiga: 722,485 / 1,3 million (with suburbs)
Stockholm 788,269Copenhagen 656,582
Helsinki 569,892
Oslo 560,484
Vilnius 542,287
Tallinn 400,200
2009 Riga International Airport won the
prestigious RoutesandOAG (OfficialAirline Guide) Airport Marketing Award in
Europe as the best airport in
Scandinavia and the Baltics leaving
behind Copenhagen and Stockholm
airports.
Riga hosted such global
events as NATO Summit 2006,
Ice Hockey Championship2006 and EuroBasket Women
championship 2009
Historic Centre of Riga is includedin UNESCO World Heritage List
Opera, 6 Theatres, 5 Cinemas, 35
Museums83 hotels in Riga (10 new ones openedin 2009)
27 institutions of higher education
2 international schools
1 international kindergarten
Perfect place for business and leisure !
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Perfect place for business and leisure !
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2 Perses Street, Riga, LV-1442, LatviaPhone: +371 6 7039400E-mail: [email protected]
http://www.liaa.gov.lvhttp://www exim lv
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