LIAA Presentation Apr2011

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Discover Latvia – Your Partner forCo-operation!

April, 2011

By Rudolfs Bremanis

Economic Counselor

Embassy of Latvia in Washington, DC



LIAA International Presence

Representativeoffices in 10countries:

DE, DK, FR, UK,

NL, NO, PL, RU,SE, JP



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

http://upload.wikimedia.org/wikipedia/commons/3/30/EU27-2008_European_Union_map.svg



Investment Attraction Methodology

Municipalities

Privatecompanies

UniversitiesResearchinstitutes

Government

Investors



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



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



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



Fiscal Strategy to PreventExcessive Budget Deficit

Maastricht criteria

20142013

General government deficit (% of GDP)

* Assesment of Ministry of Finance



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



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%



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



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%



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%



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)



Open Market and Security

http://images.google.com/imgres?imgurl=http://www.werkbuch-nl.de/bilder/eulogo.jpg&imgrefurl=http://www.werkbuch-nl.de/unten.htm&h=317&w=480&sz=30&hl=en&start=9&um=1&tbnid=4g7xaBrLs-O5TM:&tbnh=85&tbnw=129&prev=/images%3Fq%3DEUlogo%26svnum%3D10%26um%3D1%26hl%3Den



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”



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



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)



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



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



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



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



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



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



Latvia – Gateway Between Europe and CIS

Accessibility



19 Airlines Operate 84 Direct Flights to/fromRiga International Airport

Accessibility

http://www.riga-airport.com/uploads/resized_images/a6933c4aee744b33505f763f0fcb6eba.jpeg

http://www.riga-airport.com/uploads/resized_images/0b0e685bab3969441a0de6ca0ac7a630.jpeg

http://www.riga-airport.com/uploads/resized_images/396715696947cf99d21a86f4f60e078f.jpeg



Strong International Presence

P i l B i L i i L i

http://www.linstow.lv/

http://www.storaenso.com/

http://www.dnbnord.lv/

http://www.pwc.com/lv/lv/index.jhtml

http://www.ey.com/LV/en/Home

http://www.gemoney.lv/

http://www.exigengroup.com/



Potential Business Locations in Latvia

Ri M li f h B l i



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 !



Perfect place for business and leisure !

http://www.gertrudescentrs.lv/foto.php?id=21&lang=lat



2 Perses Street, Riga, LV-1442, LatviaPhone: +371 6 7039400E-mail: [email protected]

http://www.liaa.gov.lvhttp://www exim lv

LIAA Presentation Apr2011

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