Latvia’s policy in attracting foreign direct investment (FDI) is aimed at strengthening an attractive investment environment and promoting the competitiveness of our country. According to the data of the Ministry of Economy, over the past three years, direct investment flows across the borders in the Baltic States as a whole increased by 35% compared to the pre-pandemic period (2017-2019). Especially large foreign investments have entered the manufacturing industry, trade, financial services, as well as professional, scientific and technical services sectors. In the long term, the income of foreign investors in Latvia shows a positive trend, which proves that FDI in our country is a profitable investment.
However, despite the positive investment dynamics, it should be taken into account that Latvia competes with other countries in the region in terms of attracting investors. Therefore, in order to promote the interest of foreign investors in the long term, it is essential to continue improving the advantages of our business environment – convenient logistics and access to ports, high-quality air traffic, modern telecommunications and communication infrastructure, as well as e-government options, which allow receiving almost all state services digitally.
The tax policy in Latvia is also competitive – for example, a 0% rate is applied to reinvested profits. Investors are also attracted by our Special Economic Zones and the benefits they offer. Some countries especially highlight tax credits for funds invested in research and development, but when explaining that reinvested profits in Latvia are not taxed, we look even more attractive than countries with such discounts.
Interest in engineering should be encouraged
Labor productivity in Latvia is high, and we no longer position the country as a center of cheap labor. Our work culture is more typical of the Nordic countries, which helps attract investments with high added value. At the same time, it is also important to show future perspectives so that investors are sure about the sustainability of our labor market, for example by increasing STEM (science – science, technology – technology, engineering – engineering and mathematics – mathematics) number of students.
Our common goal is to make engineering studies popular and stylish among young people, similar to what was achieved with the IT (information technology) industry, where the work of a programmer was presented as special and well-paid. The role of parents is also important in guiding children to study engineering, as artificial intelligence can automate many processes, but the human creative mind will still be required. Latvia already has a workforce capable of producing niche products, and quality workforce is a challenge worldwide. Many investors, choosing this place, trust that such a workforce is available in Latvia.
The focus of investors’ attention is the bioeconomy
The biggest demand from investors is still in the bioeconomy sector. There is also great interest in biomedicine, smart energy, photonics, ICT (information and communication technologies) and other sectors with high added value. A clear proof of this is that the Indian giant Tech Mahindra established a business processing service center in Riga this year.
Production of very specific niche products is also carried out in Latvia, for example for aviation – drones, hydrogen engines for airplanes, production of heart valves from artificial silk, etc. However, in order for the created product to be seen by the investor, it is essential for the Latvian Investment and Development Agency (LIAA) to promote cooperation with other countries and to position Latvia as an attractive investment destination in order to create favorable conditions for Latvian companies in the international environment. Active cooperation and strengthening the image of Latvia as a reliable and open country for innovation help companies to attract foreign partners and investors, which promotes the exchange of both capital and knowledge. This not only expands the opportunities of Latvian companies in foreign markets, but also strengthens Latvia’s economy as a whole, increasing export capacity and creating new growth directions.
That is why LIAA continues to develop representative offices in countries such as Spain and Indonesia to help entrepreneurs reach potential export partners and enter local markets more easily. Latvia is also focusing on the US market, where the goal is to attract investments of up to one billion.
LIAA is also improving the network of regional offices in order to help entrepreneurs search for new markets, establish themselves in existing ones and develop investment offers. If an investor opens a production plant in Latvia, in the case of further expansion, he often chooses Latvia as a new investment location, so after-service for investors is very important – providing them with local support and motivating them to continue investing here. The “green corridor” is also particularly important, which allows both local entrepreneurs and investors to carry out all procedures in an accelerated manner. Every entrepreneur appreciates an individual approach, and this is Latvia’s advantage, because in large countries, such as Poland, such an individual approach to every investor is not always possible.
The number of business ideas is increasing
LIAA offers a wide range of support programs for entrepreneurs, which is an essential stepping stone for young and ambitious business starters. These programs provide financial support, advice and practical resources to help overcome initial challenges and develop innovative ideas.
Our support programs are tailored to different groups of entrepreneurs, and it is important to build a connection between each project and the next, which is vividly demonstrated by those who receive recognition in the annual competition for innovative business ideas organized by the LIAA Cup of ideas. Its purpose is to provide ideas authors with support and an opportunity to validate their business ideas, demonstrate knowledge of methods and tools for their development, including innovation and technology components. Initially, we saw even very primitive products in the applications, which have become much more complicated over the years thanks to the seminars and trainings organized by LIAA. Number of applications this year Ideas in the cup is a record high – 386 business idea applications have been received, and the quality of the proposed ideas has grown significantly – innovative thinking is being done and, at the same time, in such a way that the conceived ideas can also be realized in production.
A great example is an underwater drone Pike from 2023 Cup of ideas middle of the laureates – a product that can serve both civilian and military needs, and which is expected to be sold in 2025. Likewise Ideas in the cup the received support made it possible to set up a workshop that serves to develop a design prototype for a folding cargo bike created in Latvia Vezum. Similar means of transport are already popular in many parts of the world, so the authors of the idea plan that over time this will also become a popular product not only in Latvia, but also in other parts of Europe.
Despite the positive interest of foreign investors in Latvia and our competitive advantages, including the active participation of young entrepreneurs in various incubation programs, we must not stop at what we have achieved. In order to promote long-term growth, it is essential to think about further increasing the number of STEM students, improving the business environment, as well as developing road and communication infrastructure. At the same time, it is important to promote Latvia and its products abroad, promoting both the growth of exports and the recognition of our entrepreneurs in the world. Only in this way will we be able to strengthen Latvia as an attractive, open to development and dynamic business center.
The author is the deputy director of the Latvian Investment and Development Agency for investment and energy issues
Why Latvia is the Place to Be for Foreign Investment: A Cheeky Review
Ah, Latvia! The land of beautiful landscapes, rich history, and an increasingly attractive investment climate. It’s like the attractive cousin you didn’t know you had, living in the Baltic States and throwing a party that everyone suddenly wants to attend. Thanks to their recent efforts in foreign direct investment (FDI), it’s now making headlines—and not just for the amazing Baltic Sea beaches.
Investment Boom or Just a Lot of Hot Air?
According to Latvia’s Ministry of Economy, direct investment flows in the Baltic region have surged by a whopping 35% in the past three years compared to that sleepy pre-pandemic world from 2017 to 2019. It’s like everyone suddenly woke up and decided that planting money in Latvia is the new cool trend. Who knew the manufacturing, trade, and financial services industries had such a party going on?
But hold your horses! With great investment comes great responsibility, and Latvia is not in a bubble, folks! They’ve got competition from neighboring countries, which means they need to keep stepping up their game. Think of it as a regional reality show: “Who Wants to Be a Foreign Investor?” with various countries vying to win over the elusive investor vote.
The Tax Game: Latvia Isn’t Playing Fair
Now, let’s talk about taxes because nothing attracts investors like tax policies that make them feel like they’ve stumbled onto a secret treasure map. Latvia’s tax policy is competitive—0% on reinvested profits! It’s like saying, “Hey investors, come on in! The water’s warm and there are no sharks here—only tax credits for Special Economic Zones!” When it comes to attracting funds, Latvia’s selling proposition is clearly win-win. Countries might boast about tax credits for R&D, but Latvia’s got the no-tax-leeching option, sending them into a frenzy of interest.
Engineering: Not Just for Nerds Anymore
If you’re thinking about the future, let’s talk engineering. Latvia aims to knock the stereotype of “cheap labor” off its pedestal and position itself as a high-value workforce powerhouse. You know, employees who don’t just push buttons, but actually know what those buttons do! The goal? To make engineering studies as fashionable as becoming a programmer. Seriously, who wouldn’t want to be the ‘Elon Musk’ of Latvia? Help your kids get into engineering, because pretty soon, they could be the ones turning the wheels of the bioeconomy.
Bioeconomy: Investors Love a Good Eco-Friendly Pitch
Speaking of bioeconomy, that’s where the money is focused! Investors are chomping at the bit for opportunities in biomedicine, smart energy, and ICT. Just look at Tech Mahindra, which waltzed right into Riga like it owned the place. Latvia is becoming home to niche production—from drones to hydrogen engines and even heart valves made from artificial silk. Who knew Latvia had a flair for the dramatic?
Marketing Latvia: The Best Kept Secret
Oh, and let’s not forget the Latvian Investment and Development Agency (LIAA), which is working harder than a caffeinated squirrel to promote foreign investment. Opening offices in Spain and Indonesia? That’s brilliant! They’re not just relying on word-of-mouth; they’re out there, waving banners like “Latvia’s Open for Business!” Imagine the scenes: Latvia, with its arms wide open while investors flock in like seagulls to a bag of chips!
More Ideas than You Can Shake a Stick At
The creative juices are flowing in Latvia, with LIAA applauding an impressive 386 business ideas this year alone! These youthful entrepreneurs are whipping up everything from underwater drones to folding cargo bikes. Ah yes, sustainable transport—the dream option for hipsters everywhere. The future looks promising, and if Latvia keeps this up, it might just dominate the idea market globally!
The Road Ahead: Keep the Momentum Going
But let’s not pop the champagne yet! Latvia needs to keep the pressure on. By ramping up STEM education and sprucing up the business environment, the country can ensure it stays attractive to foreign investors. So, Latvian authorities, keep rolling out those green corridors! Investors like it when their paper shuffling goes as smoothly as their money-making endeavors.
In conclusion, while Latvia may be the coolest under-the-radar investment destination at the moment, it can’t afford to let its guard down. Competition is fierce, and the stakes are high. So, let’s keep those innovative ideas flowing and keep promoting Latvia as a sparkling gem of opportunity in the Baltic Sea.
And remember, it’s not just about attracting investors; it’s about creating a buzz and reminding them they’re on the fast track to success while sitting in Latvia!
Author: The (not so) secret admirer of Latvia’s growing economy.
This HTML-formatted article takes a cheeky, observational tone to comment on Latvia’s growing economic status and engagement with foreign direct investment while maintaining a conversational style reminiscent of the humor and wit of Jimmy Carr, Rowan Atkinson, Ricky Gervais, and Lee Evans.
Latvia’s strategic approach to attracting foreign direct investment (FDI) is designed to enhance the investment landscape and boost the competitiveness of the nation. Recent statistics from the Ministry of Economy reveal that over the past three years, cross-border direct investment flows in the Baltic region surged by 35% compared to the pre-pandemic period of 2017-2019. Noteworthy capital inflow has been particularly concentrated in the manufacturing, trade, financial services, and professional, scientific, and technical services sectors. This sustained upward trajectory in foreign investors’ income underscores the attractiveness and profitability of investing in Latvia.
However, despite these encouraging investment trends, it is crucial to recognize that Latvia is vying with several countries in the region for investor attention. To cultivate long-term interest among foreign investors, ongoing enhancements to our business environment are essential. Key advantages such as seamless logistics, strategic access to ports, quality air traffic, state-of-the-art telecommunications infrastructure, and comprehensive e-government services— enabling digital access to virtually all state services— are vital for fostering investor confidence.
Latvia’s tax policy remains a strong competitive advantage; for instance, a remarkable 0% tax rate is applicable to reinvested profits. Additionally, the establishment of Special Economic Zones, which provide various incentives, further attracts investors. Although some nations tout tax credits for research and development investments, Latvia’s policy on reinvested profits being untaxed positions it as an even more appealing choice over those countries with such concessions.
Interest in engineering should be encouraged
Labor productivity in Latvia is impressively high, and the nation has evolved beyond being perceived solely as a cheap labor hub. Our work culture reflects values typically found in Nordic countries, which reinforces our appeal for investments with high added value. Demonstrating future sustainability in our labor market—particularly through bolstering the number of STEM (science, technology, engineering, and mathematics) students—is essential to reassure investors about long-term viability.
Our unified goal is to elevate the status of engineering studies among young individuals, drawing inspiration from successful campaigns within the IT (information technology) sector, where the role of a programmer is regarded as prestigious and lucrative. Additionally, familial encouragement is crucial in steering children towards engineering disciplines, as while artificial intelligence can automate numerous tasks, the unique creative skills of humans will remain indispensable. Latvia already possesses a skilled workforce adept at producing niche products, and this quality workforce is a universal challenge for many nations. Foreign investors recognize the availability of such a workforce in Latvia, thereby enhancing their trust in our market.
The focus of investors’ attention is the bioeconomy
The bioeconomy remains the hottest sector attracting investor interest. There’s also a burgeoning demand for biomedicine, smart energy, photonics, and ICT (information and communication technologies)—all characterized by high added value. A clear illustration of this interest is the recent establishment of a business processing service center in Riga by the Indian multinational, Tech Mahindra.
Latvia also engages in the production of highly specific niche items, such as drones for aviation, hydrogen engines for airplanes, and artificial silk heart valves. However, for these innovative products to capture the attention of potential investors, it is crucial for the Latvian Investment and Development Agency (LIAA) to actively foster international collaboration and elevate Latvia’s profile as a prime investment hub. Strategic partnerships and enhancing Latvia’s reputation as a trustworthy and forward-thinking nation will facilitate connections between local firms and international investors. This not only expands opportunities for Latvian businesses but also promotes overall economic growth, enhances export capabilities, and paves the way for new avenues of development.
In light of this vision, LIAA is intensifying efforts to establish representative offices in markets such as Spain and Indonesia, facilitating entrepreneurs in connecting with potential export partners. Furthermore, attention is directed toward the lucrative US market, with an ambitious target to attract investments amounting to one billion euros.
Alongside this, LIAA is refining the network of regional offices to empower entrepreneurs in identifying new market opportunities, solidifying their presence in established markets, and formulating compelling investment proposals. When investors set up production facilities in Latvia, they tend to view the nation as a preferred location for future expansions, emphasizing the importance of providing robust support and motivation for ongoing investment. The “green corridor,” designed to expedite operational procedures for both local businesses and foreign investors, serves as an additional advantage for Latvia. Unlike larger countries such as Poland, where personal engagement can be challenging, Latvia prides itself on delivering an individualized approach to every investor.
The number of business ideas is increasing
LIAA offers a comprehensive array of support programs for entrepreneurs, serving as a vital launching pad for aspiring business pioneers. These initiatives provide essential financial backing, expert advice, and practical resources, enabling new ventures to navigate initial hurdles and refine innovative concepts.
The various support programs are tailored to cater to diverse entrepreneurial cohorts, fostering a seamless progression between projects. This is exemplified by the annual LIAA organized competition, the “Cup of Ideas,” which acknowledges and supports innovators in validating their business propositions and showcasing their ingenuity in employing cutting-edge methodologies and technologies. Initially, applications featured rudimentary concepts, which have evolved into more sophisticated submissions over the years, thanks to extensive workshops and seminars hosted by LIAA. This year, we broke records with 386 business idea applications, demonstrating a remarkable increase in both the quantity and quality of submissions. Entrepreneurs are now engaging in innovative thinking that aligns with production feasibility.
An outstanding case is the underwater drone, known as “Pike,” which emerged as a laureate in the 2023 “Cup of Ideas.” This product is designed to meet both civilian and military needs and is anticipated to enter the market by 2025. Another notable innovation supported through “Ideas in the Cup” is a folding cargo bicycle called “Vezum,” tailored to cater to popular transport trends worldwide. The creators envision this product gaining traction not only within Latvia but also across broader European markets.
Despite the growing interest from foreign investors and the advantages of Latvia’s emerging entrepreneurs participating in numerous incubation programs, continuous progress is imperative. To sustain long-term growth, we must actively work towards increasing STEM enrollment, enhancing the business landscape, and developing transport and communication infrastructures. Concurrently, promoting Latvia and its products on the international stage is essential to elevate export growth and enhance global recognition for our businesses. Only through these collective efforts can we fortify Latvia’s status as a vibrant, development-oriented, and dynamic business hub.
The author is the deputy director of the Latvian Investment and Development Agency for investment and energy issues
Ies. This year alone, an impressive 386 business concepts were celebrated, ranging from underwater drones to sustainable cargo bikes. Clearly, creativity is running rampant, and the platform provided by LIAA is paving the way for Latvia to become a powerhouse of innovative ideas.
The Road Ahead: Momentum is Key
Despite the upbeat atmosphere in Latvia’s investment landscape, maintaining this momentum is critical. While we’ve seen impressive strides, we cannot rest on our laurels. There’s a pressing need to enhance STEM education further, ensuring future generations are equipped with the necessary skills to thrive in a rapidly evolving job market. Strengthening the business ecosystem will also be crucial to sustaining investor interest. The government’s ongoing efforts to cultivate an efficient, low-friction business environment will be essential to position Latvia as the go-to investment hotspot.
while Latvia is basking in the limelight as an emerging investment darling, it’s essential to stay vigilant. Global competition is fierce, and potential investors are always on the lookout for the next best opportunity. Hence, it’s not just about attracting funds; it’s about fostering a vibrant culture of innovation and sustainability that will ensure long-term prosperity. Let’s keep that buzz alive, keeping Latvia firmly on the radar of global investors searching for their next big win!
Author: A fervent advocate for Latvia’s burgeoning economic landscape.
