Up until now weak state policy for the development of the construction industry has been slowing down the competitiveness of Latvian companies in other countries, preventing them from using export potential to its full extent, believes head of Latvian Building Contractors’ Partnership Baiba Fromane.
Only a small number of construction companies perform constriction work outside of Latvia. At the same time, there is a tendency for the number of construction service exports to increase. 65 companies performed exports of services in the first half of 2016 (70 in 2015 and 55 in 2014), according to information from the Economy Ministry.
«Building contractors do everything they can to realize projects abroad. But if they are forced to fight with bureaucratic requirements and obstacles in their home country, it becomes very hard to invest in additional resources for exploration of new markets. On top of that, often companies have no such resources,» – Fromane admits.
The expert mentions the fact that construction industry is one of the most tightly regulated industries, because it’s associated with state security and defence. At the same time, in spite of the efforts of Single EU market to enhance exports of services, each country has its own rules and laws governing this industry.
Sworn lawyer Ilze Kramina admits that this is why it is highly important to perform preliminary market study. It helps determine if a country has a special permit or license system or other kinds of obstacles.
Even if a company does not plan to perform business activities in another country, but also plans to perform specific services, it is necessary to pay attention to efforts aimed to protect one’s interests. For example, if a company signs a contract in regards to the provision of specific services in a foreign country, it is important to pay attention to aspects like laws and dispute-settling order to ensure it is possible to protect one’s interests in the event of a problematic situation, Kramina explains.
Construction industry provides many jobs. In the EU, every tenth person works in the construction industry. In some Nordic countries this proportion reaches 13%.
Fromane emphasizes that Latvia’s building contractors will be more competitive if serious work is performed to sort out the country’s business environment and provide stable support to businessmen.
The introduction of classification of construction businessmen and development of standardized contracts this year will help sort out the business environment. Exports of construction services can be improved further by accessible export loan guarantees and other reasonable risk management and settlement options, agrees Director of Economy Ministry’s Construction and Housing Policy Department Edmunds Valantis.