Even though the global FDI flows remain below the pre-pandemic level, 2021 brought positive trends for Latvia as the Investment and Development Agency of Latvia (LIAA) helped attract 32 investment projects. The investment into the Latvian economy is forecasted to reach 643 million euros, and a total of 2650 new jobs will be created. In 2020, however, the attracted investments stood at 252 million euros.
“Use of technology, improving production efficiency and innovation is what makes Latvia competitive. The amazing export results were achieved not without the help of support initiatives by the Ministry of Economics, and made our GDP exceed the pre-pandemic levels by 1.7%. This year has been great in investment attraction as the government policy to introduce the ‘Green Channel’ for priority projects proved to be successful. By implementing a targeted investment attraction policy by LIAA and improving the Latvian investment environment, we were able to end the year with the best investment results in history,” says Jānis Vitenbergs, Minister of Economics of Latvia.
The main factors causing an increased investor activity were major changes in global supply chains. With rising concerns about supplies from China and other Asian countries, many companies seek to locate their manufacturing facilities closer to their main export markets. Companies that export services expand and locate their GBS centres in countries with a qualified talent pool. The labour costs are decreasing as the level of automatisation and robotisation increases. All these factors help Latvia and Europe compete with countries where the main advantage is cheap labour.
“Over the last two years, we have shifted our focus to high value-added projects. This means that we are reaching out to investors in such industries as bioeconomy, renewable energy, smart materials and photonics, ICT, smart mobility, and biomedicine. The outcome has exceeded the expectations as we have been able to increase the FDI four times and reach the all-time best result. We see companies expanding in Latvia, and our task is to support them by ensuring everything runs fast and efficiently,” says Kaspars Rožkalns, LIAA Director General.
This year, most projects were implemented in such industries as renewable energy resources, ICT, photonics, smart materials, biomedicine, bioeconomy, food processing, etc. A number of companies have started their operations in Latvia: ‘Inzpire.me’ (ICT, Norway), ‘Pulsar Optics’ (photonics, Lithuania), ‘Forpet Baltics’ (smart materials, Russia), ‘Syfud’ (food processing, Lithuania). In addition to this, there were those having decided to expand in Latvia: the ICT company ‘Webhelp’ (Sweden), a manufacturer of electronic devices ‘Lexel fabrika’ (France), and a producer of composite products ‘Norplast’ (Norway). It’s worth mentioning that the most investments came from Norway. This year, large-scale products were implemented in all regions of Latvia, including the largest cities and territories around them. And the work on several projects still continues.
Latvia must keep up the good work; therefore LIAA, together with the Ministry of Economics is working on new support programmes to help investors receive support for large-scale investment projects. One of such support mechanisms will be a programme administered by LIAA and ‘Altum’ with total financing of 100 million euros.
In the near future, Latvia will receive 80 million euros from the EU Recovery fund allocated to finance industrial parks in municipalities and support programmes to train highly qualified workforce, as well as the implementation of good practice in companies and the mini-MBA training.
Implementation of the ‘Green Channel’ initiative has been a major contributor that helped attract investments. Approved in February 2021, it supported implementation of 10 projects with a projected worth of 103 million euros. ‘Green Channel’ has been introduced to facilitate the administrative work in spatial planning, construction, and hiring highly qualified employees from abroad.
Attracted investments by LIAA in 2021:
- Investments attracted: 643 million euro
- New jobs created: 2650
- Successfully implemented investment projects: 32
- The average value of each investment project: 20 million euro
- The largest investment project has been implemented in the woodworking industry, with a projected investment value of 180 million euros
- The largest number of new jobs created: ‘Syfud’ in Liepāja with 800 projected new workplaces
- Bioeconomy – 5 projects
- Biomedicine – 4 projects
- ICT and GBS – 10 projects
- Smart energy – 3 projects
- Smart materials – 3 projects
- Other industries – 7 projects