Business climate improvements need to continue, say foreign investors

The last five years have seen improvements in Latvia's business culture, particularly with regard to rules governing insolvency administrators, but there is still plenty to do to make the country more attractive to foreign investors, the leading representative body of foreign investors said December 5.

Speaking on Latvian Radio, Ilze Znotina of the Foreign Investors Council In Latvia (FICIL) said: "We can definitely confirm that the situation has improved overall. And over the last five years there has been a huge change. When we started we were really in a deep pit in the area of ​​insolvency - there were many specific groups and people were intimidated, ordinary traders, and often law enforcement officers were not particularly capable of combating these groups. But now there has been a positive change, especially during the last year," said Znotina.

For years, insolvency administrators had an unenviable reputation as a law unto themselves and sometimes seemed little more than legalized gangsters, but recent legal amendments have belatedly cracked down on their abuses.

Znotina also pointed to the Foreign Investors Council's 2016 study on insolvency in Latvia, which helped usher in the changes made to the law to prevent malicious misconduct, and it is also important that politicians, officials and law enforcement agencies have actively begun to focus on these issues, she said.

In addition, the Office of the Economic Crimes Police and also the Corruption Prevention and Combating Bureau (KNAB) "have shown many good examples this summer that they can take on these criminal groups". 

A number of improvements have also been made to the work of the Insolvency Administration department, but its work capacity is still insufficient.

"This has led to a positive change. But we certainly cannot say that these positive changes should end here," said Znotina.

It is still unclear why the state does not want to analyze the effectiveness of the insolvency system and the work of certain administrators. "The state has still not provided enough funds to analyze the data at its disposal, according to the 21st century," said a foreign investor.

Currently, a main problem is the existence of companies that are active in name only, which makes it difficult for creditors to pursue claims in such cases, she said.

However, FICIL is most concerned about the political culture and the "shameless lobbying of individual interests" citing controversial legal amendments proposed by the National Association governing insolvency in the banking sector : "We saw that everything was aimed at solving a particular problem for a particular grouping rather than for the common good of the state," Znotina said.

 

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