Foreign investors in Latvia deliver a downbeat verdict

The Foreign Investors Council in Latvia (FICIL) will give a gloomy take on the current investment climate in the country in its latest research, the influential body said in a release April 17.

FICIL has conducted an annual assessment of the investment climate every year since 2015. Dubbed the 'FICIL Sentiment Index' it is produced in cooperation with the Riga School of Economics and has become an important touchstone to gauge the mood of the investment and business community. 

This year's full findings will be presented on April 26, at 10:00 during a discussion will be streamed live here on LSM. However, ahead of the main presentation FICIL has released some of its key conclusions.

The investment climate in Latvia declined in the assessment of investors in 2023, reaching 1.9 points out of a possible 5, down 0.4 points on the 2022 result and in fact the lowest ranking yet recorded.

When asked about the reasons for the low rating in the research conducted by FICIL, the majority of investors highlighted the uncertain geopolitical situation, also mentioning the unavailability of qualified labor, high labor costs and an ill-considered regulatory framework

"Currently, foreign investors in Latvia feel cautious - the number of investors who plan to invest in Latvia in the future has decreased from 79% in 2022 to 67% in 2023, said Zlata Elksniņa-Zaščirinska, Chairwoman of FICIL.

Persistent problems include  "the unavailability of the workforce, low quality education, high bureaucracy and a lack of investment attraction mechanisms," she said, with a "high burden of red tape" also putting off entrepreneurs – a message startlingly at odds with official claims that Latvia is one of the most business-friendly places in the world with a highly educated workforce.

"Latvia's challenge is to define a long-term vision that would outline a clear strategy for the necessary changes. The vision is very important for investors to feel safe and welcome in Latvia," said Zlata Elksniņa-Zaščirinska.

The 2023 study paid particular attention to the administrative burden, directly highlighting it as a significant factor that hinders Latvia's competitive ability and investment attraction. "The administrative burden can be observed in almost all areas - construction, employment, the justice system, tax administration, etc. Investors point out that the administrative burden creates additional work, increases costs and creates a sense of uncertainty, discouraging further investments in Latvia," said FICIL in its preview release.

Only 67% of investors have confirmed that they will continue investing in Latvia, which is one of the lowest indicators in the history of the study. Several investors interviewed admitted that it has become easier to invest in other Baltic countries.

When published, the study will be available on the website:

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