Latviski English По-русски
Wednesday 21.02.2018 | Name days: Eleonora, Ariadne

Economic diary. Latvia defends against foreigners

(+1 rating, 1 votes)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThere were two major events in Latvia this week. Both demonstrated the intentions of Latvian authorities to defend the country’s domestic market from the influence of foreign investors.

Saeima’s Economic, Agricultural, Environmental and Regional Policy Committee supported amendments to the Law on Land Privatisation in Rural Areas in the second reading. These amendments are meant to make sure that a single legal or private person is only allowed to buy no more than 2,000 ha of agricultural land. Changes to regulations are meant to prevent speculations with arable land.

The bulk of debates in the parliament revolved around two important matters – maximum allowed area of land to be allowed to be bought by interested parties regardless of their citizenship and place of registration and the introduction of restrictions on land transactions for citizens of other EU countries. According to Deputy Chairwoman of the Farmers’ Saeima, Maira Dzelzkaleja, the latter would allow authorities to sort out Latvia’s legislation in order not to allow speculations to take place after May 1st, when the moratorium on the procurement of agricultural land is set to end.

It should be added that the associations present in this sector do not have the same views on this matter. The Farmers’ Saeima and Latvian Association of Agricultural Cooperatives believe the restriction should be set at 3,000 ha, as it was previously proposed by the Agriculture Ministry. Executive Director of Latvian Association of Agricultural Cooperatives Evija Gunika explains that there are already 22 agricultural enterprises in Latvia that own areas as large as 2,000 ha. The current redaction of the law practically closes off any and all development roads for these enterprises.

Chairwoman of the Latvian Farmers Federation Agita Hauka believes that by approving these amendments, deputies are trying to lobby interests of oligarchs who work in accordance with the American scheme of large farms that own 2,000 – 6,000 ha of arable land. According to the expert, given the current rural farming model in the country, Latvian farmers need 250-300 ha or land to be competitive. This is why the organization had initially offered to set the maximum area at 500 ha, as it is in Lithuania. Agriculture Ministry has made it its priority for 2014-2020 to develop small and medium farms.

According to data from the Latvian Farmers Federation, there are currently 64,000 agricultural enterprises in Latvia. Only 400 of them own areas of arable land larger than 500 ha.

Too many people around

Another legislative initiative came from the National Alliance this week. This political power offered to temporarily stop the issuing of residence permits to investors from third countries. The alliance explained that it is in the interest of state security. Amendments to the Immigration Law have been handed in for review.

According to Romans Naudins, Environmental Protection and Regional Development Ministry and member of the National Alliance, people who receive residence permits in Latvia are usually wealthy people. Therefore, such people can have a potential influence on politics in Latvia. Not by the means of armoured tanks, but by the means of mass media.

Meanwhile, according to information from Office of Citizenship and Migration Affairs, Latvia’s economy has already received EUR 97 million over the past three months from foreign investments in real estate and business in exchange for residence permits.

According to deputy manager of the office, Maira Roze, the number of people who are interested in acquiring residence permits in Latvia has recently increased. People are aware of the upcoming changes, so they hurry to make it before then. The office has been receiving an average of 190 applications every month since the beginning of the year.

Investment and Development Agency of Latvia believes the situation in Ukraine presents some degree of opportunity for Latvia. Investments continue to pour into the country from the east. This is mostly because the situation in Latvia is far more predictable than it is in Ukraine. This is why foreign enterprises often decide to relocate their production to Latvia, says the head of the agency, Ainars Ozols.

President of Latio, Edgars Sins, believes Latvia’s real estate market does not have an alternative driving engine other than residence permits in exchange for investments. Banks are reluctant to issue loans, export remains unstable and the transport sector lacks cargo to handle.

At least we have a place to live

This week, Swedbank Institute for Private Finances presented a survey on budgets of households in Baltic capitals. As it turns out – households in Riga are the poorest in the region. Results show that households in Riga typically have only EUR 660 left after paying for utilities and living expenses. This amount is equal to 53% of their monthly income. In Tallinn, on the other hand, this figure is EUR 1266 (71% of monthly income). That of Vilnius is EUR 670 (56%).

This makes households in Tallinn more financially capable of spending money on other things – clothes, household goods, medicine, education, entertainment and other things. Households in Vilnius and Riga are required to plan their expenses more carefully, so that they can allocate money on immediate necessities.

There is some good news as well. Most Baltic residents, according to Eurostat, live in private or family homes – 72% in Latvia, 85% in Lithuania and 64% in Estonia. Living in a private apartment is much cheaper in comparison with rented apartments or apartments bought in credit.


Leave a reply

  1. W. says:

    I think the benefits of foreign investors in real estate far outweigh the disadvantages. They bring money to the economy, and even if they leave their apartments empty they pay property tax every year.

    With farm land it is of course different. It is not good if some giga corporation buys up all the land and make monster farms. On the other hand, can the situation on the country side be any worse than it is now? Poor and abandoned :(

    Thumb up 0 Thumb down 0

Latvian President believes country’s financial system is stable; prime minister plans to report to European Council

«Latvia’s financial system is stable, and there is no reason to worry about possible instability of the banking system. Banks continue working as usual,» says the President of Latvia Raimonds Vējonis.

Corruption Perception Index in Latvia experienced no major changes in 2017

Latvia’s positions did not improve much in Transparency International’s compiled Corruption Perception Index 2017, said Delna – Society for Openness acting director Liene Gātere in an interview to Rīta panorāma programme.

Latvian citizens arrested in Britain under suspicions of organizing slavery

Five people were arrested in a joint international operation by Latvian and British law enforcement operatives, as confirmed by Latvian State Police.

Opinion: Russia is trying to use the situation to create chaos in Latvia

Russia is trying to use the established situation to create chaos in Latvia. Efforts, however, are fated to fail, says chairman of Saeima’s Defence, Internal Affairs and Corruption Prevention Committee Ainars Latkovskis.

Dismissal requested for Latvia’s Finance Minister; parties worried about finance sector sinking deeper

Latvia’s Finance Minister Dana Reizniece-Ozola has failed to prevent the decision made by United States Department of the Treasury, which is ruinous for the country’s financial sector and humiliating for its reputation, says chairman of New Conservative Party Jānis Bordāns.

Defence Ministry: a massive information campaign is being realized against Latvia

Considering events of the last several days in the country’s banking sector and the arrest of the governor of the Bank of Latvia – Ilmārs Rimšēvičs – it is entirely possible that someone is currently realizing a massive information operation. Its structure and execution is not unlike the one observed in USA, France and Germany during the pre-election period, BNN was told by Latvia’s Defence Ministry.

Latvian parliament to search for ways to dismiss current Bank of Latvia governor

Members of Latvia’s Saeima plan to search for a solution in the matter regarding the possible dismissal of the governor of the Bank of Latvia Ilmārs Rimšēvičs.

Bank of Latvia governor: I have received death threats

«This situation is incredibly complicated. This situation is quite possibly the most complicated one I have ever been in. I feel a great deal of support from people I don’t know, as well as my friends and family members. I have decided to not back down – I am innocent. The the people attacking my reputation have only one goal in mind – to have me step down,» said the governor of the Bank of Latvia Ilmārs Rimšēvičs during a press conference on Tuesday, 20 February.

Proportion of people working in Latvia’s culture sector is larger than the average in EU

The number of people working in Latvia’s culture sector is equal to 4.5% of the total number of employed people in the country. This proportion is also larger than the average one across the European Union, according to data published by Eurostat.

Ministry: idea for compulsory secondary education should be put on hold for now

Considering that Latvia’s Education and Science Ministry has several ongoing industry reforms, it would be best to put the proposal for compulsory secondary education on hold, said Education and Science Minister Kārlis Šadurskis during a meeting of Saeima’s Education, Culture and Science Committee.

Association: ECB should become more involved in resolving Latvia’s financial scandal

Association of Latvian Commercial Banks sees a need for the European Central Bank (ECB) to become more involved in the discussion and help resolve the situation, considering evaluation of ABLV Bank’s business model is in direct competence of ECB.

Hesburger to invest 11.5 million euros in Baltics this year

The largest fast food catering restaurant network in Finland and Baltic States – Hesburger – plans to invest approximately EUR 11.5 million in business development this year. EUR 5.5 million are planned to be invested in Latvia’s market, says Hesburger Development Director Ieva Salmela.

Air temperature drops below -30° C in certain parts of Northern Europe

On Tuesday, 20 February, air temperature in central and northern parts of Finland dropped to -27° C… -31° C in morning hours. In Norway, close to the Finnish border, air temperature has dropped as far as -34° C, according to data from meteorological stations.

FCMC suspects someone may want to undermine Latvia’s financial sector

It is not impossible that someone may want to undermine Latvia’s financial sector, said chairman of Latvian Finance and Capital Market Commission Pēters Putniņš in an interview to Rīta Panorāma programme on Tuesday, 20 February.

European exchange indexes decline; Wall Street enjoys a holiday

European exchange indexes declined on Monday, 19 February. No trading was performed at American stock markets, because the country was celebrating President’s Day.

Party: Latvian banking system’s crisis threatens Skanste neighbourhood's development

There are serious risks associated with European Union’s co-financed project for the revitalization of Skanste neighbourhood, including construction of Skanste tramway line, says member of Riga City Council and For Latvia’s Development party Viesturs Zeps.

Public opinion: KGB documents should be made publicly accessible immediately

Latvia’s society believes the KGB documents should be made publicly accessible immediately. In addition, residents say they are confident in their ability to discuss those documents without the country’s supervision, which takes the form of expert opinions prevailing over society’s moral views, as stated by guest researcher of History Institute of the University of Latvia M. His. Marta Starostina.

For Latvia’s Development: the prime minister is gone, but finance minister claims otherwise

«What we have observed in the past several days is that Latvia’s financial sector has received several heavy strikes as a result of the government’s uncoordinated and chaotic actions. Prime Minister Māris Kučinskis has evidently ‘disappeared’ and offers no clear plans to resolve the crisis, whereas Finance Minister Dana Reizniece-Ozola says different things in every interview. Such behaviour will not help resolve the crisis. It could instead pull the country’s financial sector in a much deeper crisis,» says chairman of For Latvia’s Development Juris Pūce.

Bank of Latvia provided ABLV Bank with a loan of 97.5 mln euros in exchange for securities pledge

The Bank of Latvia has provided ABLV Bank with a loan worth EUR 97.5 million in exchange for securities pledge, as confirmed by the financial institution.

Prime Minister: Bank of Latvia governor is not allowed to take official post

As a security measure, the governor of the Bank of Latvia Ilmārs Rimšēvičs has been applied with a prohibition to take post, said Latvian Prime Minister Māris Kučinskis after a meeting of the Cabinet of Ministers.

Poland's halt to logging in ancient forest came after irreparable damage

Although Poland has stated logging in the old-growth Bialowieza forest has been stopped, Warsaw has failed to reveal the amount of trees already cut down.

«A good friend» pays 100,000 euro bail for arrested governor of the Bank of Latvia

Corruption Prevention and Combating Bureau (CPCB) has applied a bail of 100,000 euros for the arrested governor of the Bank of Latvia Ilmārs Rimšēvičs. The bail has already been paid to the State Treasury account, as confirmed by his lawyer Saulvedis Vārpiņš.

NP: ABLV blames Latvian officials for misleading foreign institutions

Last week, the reputation of Latvia’s second largest bank – ABLV – was seriously impacted. It is believed that money laundering was this bank’s main operation, and that it failed to comply with the prohibition on cooperation with North Korea. The bank is also accused of bribery. US Department of the Treasury Financial Crimes Enforcement Network rarely speaks so directly of any credit institution, says Nekā personīga programme.

Changes to third-country student residence in Estonia to add more responsibilities to university staff

The Estonian government has backed planned amendments are to the Aliens Law implementing an EU directive into Estonian law, which change how third-country nationals on enter and reside in Estonia if they are study or performing research work.

Russia criticises U.S. charges of Russian meddling in U.S. election

The Foreign Minister of Russia, Sergei Lavrov, has criticised the charges announced by the U.S. Federal Bureau of Investigation, against 13 Russian nationals and three companies for election meddling.