In the large and medium enterprise support programme advertised in January, where it was possible to receive a credit with capital discount of 10 million euros, 45 applications were received with the total planned investment amount of 1.46 billion euros. Enterprises where the planned amount of investments exceeded 10 million euros could apply for support. This programme was developed by the Ministry of Economics (MoE) in collaboration with the Investment and Development Agency of Latvia (LIAA) and the Development Finance Institution ALTUM.
Ilze Indriksone, Minister of Economics: “A high added value product, produced in Latvia, generates large added value and development possibilities for all of the economy. The interest of economic operators to develop large scale projects shows once more their interest to develop production in Latvia, build new factories, create new jobs, and, in accordance with the situation in the world, make a more rapid transition to new business projects.”
Economic growth and reaching the economic goals of the country depends to a large extent on the investments stimulating the growth of export. The goal of the new programme is to support the implementation of economically significant projects, helping to develop products of higher added value and increase Latvia’s total amount of exports up to 27 billion euros in 2027. The total amount of funding of the programme is 100 million euros.
As per the data shown in the project applications, annually, the total amount of investments implementing all 45 projects will reach 1.46 billion euros, and generate a growth in exports of 673.4 billion euros. 2544 new jobs will be an added profit. The projects submitted represent such industries as wood manufacturing, food industry, mineral materials, metal working and machinery, electronics, pharmacy, information services, etc. It is very important that project applications have been received from all the Latvian regions. Nineteen applications were submitted from Riga and Pierīga, 8 from Vidzeme, 7 are planned to be implemented in Zemgale, 6 in Latgale and 5 in Kurzeme.
“Part of the projects, especially those focussing on the introduction of knowledge-intensive products into production would be difficult to implement without state support, therefore such a programme is a huge step towards the reindustrialisation of our economy or a transition to the production of higher added value products. Projects at a high degree of readiness also compete for the support, and they most probably would be implemented at a smaller scale even without the state support. This confirms that these projects are viable and will be able to quickly provide a return to the economy,” LIAA Director Kaspars Rožkalns describes the projects submitted.
LIAA will evaluate the projects submitted following such criteria as the jobs created and the salary amount of the employees, the amount of export planned, the investment of commercial operators into research and compliance with one of the smart specialisation directions. Also it will be evaluated, if at least 20% of the planned investments in the investment project are aimed towards investments in the use of green technologies in the process of product production and service provision and production of other products aimed at the reduction of the impact of climate change. In accordance with the support programme provisions, the projects will be ranked according to the amount of points received, and ALTUM will review them in this order, based on the financial criteria. The maximum duration of project assessment is up to the beginning of August.
Reinis Bērziņš, ALTUM chairman of the board: “The capital discount included in the programme, which is a complete or partial reduction of the loan amount, is an attractive solution for economic operators; therefore, we expect high-quality business projects and healthy competition. The investment projects that have received the confirmation of LIAA and are promoted for the loan award shall be assessed further, based on compliance and financial criteria. The amount of the loan will be in the amount of at least 30% of the attributed costs of the investment project, depending on the place of project implementation and the size of the enterprise.”
To receive an ALTUM loan, the company shall correspond to the status of a large or medium enterprise, the project shall correspond to the sectors eligible for support, the implementation of the project cannot be started before the receipt of the funding, and the planned project shall provide for investments to begin production or expand it. The loan shall be issued in the amount of the capital discount, and the amount of funding provided by other funders cannot be smaller than the ALTUM loan. The amount of the loan will be in the amount of at least 30% of the attributed costs of the investment project, depending on the place of project implementation and the size of the enterprise. The maximum amount of the loan will be up to 10 million euros.
If the project indicators are fulfilled, the capital discount shall be applied in three parts, for each year of the loan monitoring. If in the entire monitoring period, the economic operator shall reach the indicators shown, the capital discount will be 100%, which means all of the principal loan amount will be cleared.
For a detailed study of the Cabinet Regulation No. 503 “Regulation for capital discount for investment projects for economic operators to enhance competitiveness” adopted on 6 July 2021, visit this link.