Foreign investors say Latvian investment climate in 2019 still "average"

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The Foreign Investors' Council in Latvia (FICIL) presented its annual Sentiment Index at the Stockholm School of Economics in Rīga January 15, and the occasion revealed that while things seem to be improving in general, the pace of improvement could certainly be picked up.

Introducing the Index, researcher Dr. Arnis Sauka said foreign investors had revealed they were more prepared to increase their investments in Latvia than in previous years, and that while this was certainly positive news, Latvia was still lagging behind both Estonia and Lithuania.

According to investors, Latvia’s investment climate in 2019 was still seen as average, reaching 2.6 points out of five, which is an improvement by only 0.1 point in comparison with 2018.

“Under the current circumstances, foreign investors in Latvia feel relatively well, and the share of companies planning to increase investment has risen from 55% in 2018 to 64% in 2019. However, entrepreneurs emphasise a number of unresolved problems hindering Latvia’s competitiveness in attracting new investment, such as lack of workforce, worsening of the demographic situation, quality of education and the high share of shadow economy," said Sauka.

"In addition, labor costs continue to rise sharply, which may lead to a situation in the coming years where some companies look for other locations for functions that generate lower added value. Latvia’s challenge is to improve the competitiveness so that we are prepared for a situation where the outflow of investments with lower added-value will have to be replaced with new, high added-value investments,” said Sauka.

Martins Panke on FICIL Sentiment Index
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FICIL executive director Martiņš Panke told LSM a similar message, while acknowledging some encouraing signs that government and other state institutions now seemed more ready to engage with business and investors - as evidenced by the involvement of representatives of the financial regulator, tax service and anti- money laundering officials in duscussions at the launch of the Index. 

The Foreign Investors’ Council in Latvia (FICIL) is a non-governmental organisation that brings together the largest companies from various countries and sectors that have made significant investments in Latvia, as well as thirteen foreign chambers of commerce, the Stockholm School of Economics and French Foreign Trade Advisors.

The full findings of the Sentiment Index are available to download in English and Latvian at the FICIL website.

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