Pondering Brexit, optimistically looking into the future

The Brexit vote in early summer and US elections in late autumn have shaken up the investor communities around the world. The argument goes that in today’s globalized world no one can escape the geopolitical storms that cause uncertainty in ever-more connected markets and developed trade routes. However, the Baltic region and Latvia in particular have weathered strong winds before and, thus, continue to plan for long-term, as well as  build on its economic success of recent years. Latvians have learned that each storm carries with it a chance to adjust the sails and strengthen the chosen course. Moreover, historically Latvia has had close trading relationship with the United Kingdom and with its population of 64 million it will continue to be an interesting market for Latvian companies.

This has been an exciting year for Latvia, which on July 1st became the 35th member of the Organization for Economic Cooperation and Development (OECD) reconfirming country’s commitment to defined and high standards in business operations, the investment environment and protection. Latvia also kept climbing up the annual World Bank’s “Ease of Doing Business" rank where it currently stands in 14th place next to Finland and Australia. Starting business and registering company in Latvia has never been easier.

Moreover, the Latvian parliament just approved a new law to create a tax regime, one not matched anywhere else in Europe, that will effectively double venture capital investors’ money in young Latvian start-ups. The law was passed with almost unanimous support in parliament and will enter into the force on 1 January 2017. Latvia has a simple tax system with the corporate income tax rate of just 15%. The new law makes Latvia an even more attractive base for start-ups and adds to the already lively start-up ecosystem in centre of Baltic-Nordic growth region. The British fin-tech companies, especially the start-ups are welcome to join the growing community in Latvia and enjoy all the benefits whilst growing their business here.

The traditional woodworking and engineering sectors are weathering political storms and remain the pillars of Latvia’s exports while the IT sector has moved ahead of the food sector to become the third largest export sector for Latvia. This is due to the fact that Latvia has created modern and effective telecommunications infrastructure with fast upload/download internet speeds that help Latvia economy to keep pace and contribute to world’s tech industry innovations. For example, Latvian born fin-tech companies like Bitfury (blockchain technology), Creamfinance (paperless loans), Mintos and Twino, which provide peer-to-peer lending platforms, ranked among the largest and fastest growing in Europe. Moreover, the internet in Latvia is not only fast but secure - data processing centre Dattum operated by Lattelecom and conforming to Tier III standards, is the most secure in the Baltics and Northern Europe region. In short - Latvia has one of the best communication infrastructures in the world enabling creation of efficient ITC systems and allowing companies to grow in safety.

On 2nd December, the Investment and Development Agency of Latvia, together with the British Embassy in Latvia and pan-Baltic law firm Klavins Ellex organised a forum in Riga, ‘’What to do about Brexit-growing your business in times of global turbulence” to discuss with Latvian and UK businesses the consequence of Brexit for their businesses. Despite many uncertainties brought by the Brexit vote, the mood at the forum was optimistic and the Ambassador of Latvia and the United Kingdom both agreed, “Whatever the Brexit, our companies want to make success of it.” Therefore, as the year closes Latvia feels optimistic and grateful about businesses that operate here either home-grown or foreign. We maintain close contact with our clients, partners and friends who have chosen to invest in our economy to support and guide them through the uncertain times the world politics have presented in 2016.

Alise Pīka, Deputy Head of Representative Office in the UK,
Investment and Development Agency of Latvia