bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 21.05.2018 | Name days: Ingmārs, Ernestīne, Akvelīna
LithuaniaLithuania

Lithuania‘s second-largest city Kaunas grabs major investments in 2017

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Linas Jegelevičius for the BNN

With the year winding down, Kaunas, Lithuania‘s second-largest city, has received some heart-warming news that, potentially, can prompt more upbeat front-page headlines in the future.

This week, Germany’s Continental, a leading German automotive manufacturing company specialising in tyres, brake systems, interior electronics, automotive safety, powertrain and chassis components and other parts for the automotive and transportation industries, announced of intentions to build a factory in Kaunas and invest 95 million euros in the facility, becoming the biggest greenfield investment in Lithuania’s history.

The news was followed by the other head-line grabber by Hollister, a US-based global manufacturer of medical devices and equipment, which on Wednesday, November 8, announced of launching construction of a 50-million-euro production complex in proximity of Kaunas.

Another German automotive giant Hella started building a 30-million-euro plant in the Kaunas free economic zone (FEZ) in mid-October.

Continental plans to create around 1,000 new jobs in the new electronic components plant, governmental foreign investment promotion agency Invest Lithuania said on Monday, November 6. Egidijus Jurgelionis of the agency told BNS that the exact location of the new plant was yet to be announced.

In the new facility in the Kaunas district, Continental will produce passenger safety and smart driver assistance systems, including door and seat control units, gateways and intelligent glass control units as well as radar sensors for comfort functions such as Adaptive Cruise Control (ACC) and safety functions such as Emergency Brake Assist (EBA).

«Building the first Continental plant in Lithuania is an important part of our growth strategy in Europe,»  Hans-Jurgen Braun, head of 28 Central Electronic Plants worldwide at Continental, is quoted as saying.

«Continental’s decision to set up in Lithuania may be the key breakthrough that will cause not only car manufacturers but also other major participants of the supply chain to pay close attention to Lithuania,» Mantas Katinas, managing director at Invest Lithuania, said in a press release .

Shayan Ali, future CEO of Continental in Lithuania, said production was expected to start by mid-2019.

Founded in 1871, the technology company generated sales of 40.5 billion euros in 2016 and currently employs more than 227,000 people in 56 countries.

Meanwhile, Hollister, a US-based global manufacturer of medical devices and equipment, has launched construction on a 50-million-euro production complex close to Kaunas. The production facility on the Kaunas free economic area is expected to create around 300 new jobs.

Headquartered in Illinois, Hollister has manufacturing and distribution centre on three continents and offices in over 25 countries. It sells products in more than 80 markets around the world.

According to Invest Lithuania, the past year of 2016 was «another record-breaking year» for foreign direct investments (FDI) in Lithuania and this year has produced even more foreign direct investments (FDI).

Lithuania attracted 36 FDI projects in 2016, which were thought to create 3,716 jobs over the next three years. By comparison, 28 foreign capital companies decided to set up operations in Lithuania in 2015, creating 2,370 jobs.

The year of 2017 has started off with a major arrival– Holland’s Macaw, an award-winning employer and digital solution provider, announced it is establishing in Vilnius its first office outside the Netherlands.

Some of the other newcomers this year are worth mentioning, too. The Danish window and door manufacturer Dovista set up a division in Marijampolė in southern Lithuania and is implementing one of the largest greenfield investment project in the country’s history; Ryanair has expanded its aircraft maintenance base in Kaunas.

Swedish capital companies were the biggest creators of jobs in Lithuania in 2016: over the next three years they plan to employ 1,340 specialists in Lithuania. German companies came second with 750 new jobs planned, whilst Danish and Finnish capital companies are set to create 300 new positions each.

In 2016, foreign direct investment projects were also brought to Kaunas, Klaipėda, Panevėžys, Marijampolė, Kėdainiai and Vievis.

Yet against the European background, Lithuania‘s performance in foreign direct investments (FDI) seems quite lacklustre.

In mid-2017, the FDI level per thousand inhabitants stood at 5,2 in Lithuania and, in that regard, only Romania (3,7) and Greece (2,7) did worse, meanwhile Latvia and Estonia, the other Baltic neighbours, boasted a remarkably better indication – 15,9 in Estonia and 7,4 in Latvia.

In another EU FDI ranking in the past summer, evaluating the EU member states’ investment capacities, Lithuania was also placed at the very bottom in most of the parameters (outward and inward FDI stocks, outward and inward FDI flows), although in some of the graphs Lithuania has improved, sitting comfortable in the mid-section of the ranking.

Lithuania has long positioned itself as a country with a cheap workforce, but due to the EU’s record-high emigration and bad demographics, it has become pretty expensive in recent years and cannot lure investors with a cheap labour, experts note.

«Indeed, a dozen years ago, many UK and German textile manufacturers were eager to open up here (Lithuania)… paying the tailors 300-400 euros. Now the wage has risen by three times. Other investors see a similar spike in the labour costs,» says Sigitas Besagirskas, president of Vilnius’ Industry and Business Association (LPVA)

Importantly, in the age of high-tech innovations and digital services, it is a high technology industry that encourages larger FDI into countries. Yet, Lithuania cannot boast of them – the high-tech industry’s input into the year’s GDP is a mere 2,5 per cent, one of the worst indicator in the EU. In comparison, it is 4,5 per cent in Estonia, the Baltics’ leader, and the EU’s statistical average is 4,7 per cent.

«Unless we manage to turn it around, the prevailing low and mediocre technological level manufacturing will get us nowhere,» the expert noted.

According to the LPVA head, the issue of shrinking workforce and scarcer tax money in the state coffers can be addressed through automatization and robotization of the production and service sectors.

«The essence is simple: already innovative companies become more such and those employed earn more and contribute more in taxes to the social security budget. Only that way the increasing army of the unemployed can be handled without a strain to the state,» Besagirskas told BNN.

For Lithuania, the polestar should be Ireland that has enjoyed a marvellous economy run since 2008 economic crunch.

To mirror the Irish success, Lithuania needs not only to overhaul its tax system, which is subject to multiple changes with a new government in office, but also thoroughly review its labour laws and overhaul the education system experts believe.

The country’s education system encompasses 47 universities and colleges in Lithuania. Although the demand for the specialties in most of them is way lower or non-existent, yet the schools, whose funding depends on the number of students, keep them intact.

For Besagirskas, the pillar of a country’s success is its image in the world.

«Again, Estonians can boast of Skype and zero profit tax for reinvested profits, although the latter does not always work well in the country,» he says.

According to the expert, Lithuania ought to do «way more» in servicing foreign investors.

«What is often characteristic for us that we tend to do only the initial work – meet the investor, sit down with him and sign an agreement. After that, the investor often is left alone puzzled how to get permits, where to find necessary workforce and et cetera. Only the Tauragė and Panėvežys municipalities stand out as the most investor friendly and helpful municipalities,» Besagirskas emphasised.

Ref: 020/111.111.103.5190


Leave a reply

Estonian producer prices higher by 2.1 on year, due to energy supplies

Estonian producer price index of industrial output increased by 2.1% between April 2017 and April this year, Estonian statisticians have estimated.

Vitol: limitation of shell companies’ activities cannot possibly affect transit companies

Changes to the law that provide restrictions for shell companies cannot possibly affect transit companies. Because of that, claims voiced prior to adoption of said amendments and their possible impact on transit sector seem rather confusing, says Vitol Baltic chairman Robert Kirkup.

De Facto: Latvian minister’s business partner manufactures ships for Russian army

Latvian Agriculture Minister Jānis Dūklavs’ business partner in Piebalgas alus brewery – Russian businessman Igor Shekhelev – manufactures ships for the Russian army, as reported by De Facto programme of LTV.

Property-sharing site Airbnb agrees to share owner income with tax authority

The home-renting service Airbnb has agreed to automatically report homeowners' income to tax authorities in Denmark in a landmark agreement, which is expected to make it easier to detect tax evasion by homeowners, who are renting out rooms and houses on the website.

Latvia shipped 11.7% more oil products in Q1 2018

As part of the postponed excise tax payment regime, the volume of oil products shipped from Latvia in Q1 2018 was 13,869 or 11.7% larger than the one recorded in the same period of 2017, according to data compiled by the State Revenue Service.

What have Italian makers of government agreed on?

In Italy, the two populist parties preparing form a national government have published joint policies including tax cuts, a guaranteed basic income for the poor and deportations of 500,000 migrants.

Thunderstorms expected in Latvia this week as well

On Monday, 21 May, weather in Latvia will not change much – dry and not cloudy for the most part. On Tuesday and Wednesday, however, precipitation areas will pass through Latvia, bringing heavy rainfall, thunderstorms and strong wind, as reported by Latvia’s Environment, Geology and Meteorology Centre.

Week in Lithuania. Liberal Movement to turn to court over VSD statements

The board of Lithuania's Liberal Movement has decided to turn to court over information published by the State Security Department, allegedly damaging the party's reputation.

BNN summary of the week: distorted state administration, Liepājas metalurgs recovery, and Latvia unemployment level

BNN offers a summary of this week’s topical news in a variety of categories: Change; Growth; Business; Fight; Future; Opinion

New approach to combating drunk drivers – forced correction programme

Latvia’s Justice Ministry reports that the administrative penalties reform proposes introducing stricter punishments for drunk drivers. If a person is caught drunk driving, their license would be confiscated. On top of that, to recover the license, that person would have to pass a social correction programme.

Latvian MEP to «cause a scandal» where he can to stop school reform

Members of the European Parliament Andrejs Mamikins and Miroslavs Mitrofanovs have gathered support from 114 of their fellow MEPs to request the Latvian government and Saeima to review the already approved amendments to the Education Law and General Education Law that govern realization of the national minorities’ school reform, as confirmed by Mamikins.

Germany criticises U.S. attempts to block Nord Stream 2 gas pipeline

As to the controversial Nord Stram 2 Russian gas pipeline via Baltic sea to Germany, the German Economy has evaluated that American attempts to block it could be aimed at increasing U.S. a planned Russia-Germany gas pipeline to increase its own energy exports.

Number of complaints about taxi services at Riga International Airport on a rise

The number of complaints about taxi services at Riga International Airport continues to increase, said the airport’s board chairperson Ilona Līce in an interview to 900 seconds programme of LNT.

Ryanair sees Estonia as important market, considers local hub option

Irish low-fare airline Ryanair considers Estonia an important market, the firm's chief executive Michael O'Leary noted while visiting Tallinn earlier in the week.

Minister: UN should act to call violators of international law to justice

«The United Nation Security Council, as the main institution maintaining peace and security, has a special responsibility, because its activities affect compliance with international law,» says Latvia’s Foreign Affairs Minister Edgars Rinkēvičs.

Banks to report private persons whose account turnover exceeds EUR 15,000

From 18 May onward, banks will have to report private persons whose annual account turnover exceeds EUR 15,000, as provided by the Cabinet of Ministers’ supported order, under which the State Revenue Service is to be provided with information about a private person’s turnover and balance.

Baltic States request expanding NATO’s battalion with air and naval forces

Baltic States plan to request expanding international NATO battalion with air and naval forces, as confirmed by Lithuanian Foreign Affairs Minister Lino Linkevičiaus, who met with US President’s National Security Advisor John R. Bolton in Washington alongside his Latvian and Estonian colleagues.

Poland uncovers Russian hybrid war networks

Poland has detained a Russian national suspected of working with accomplices to stimulate social tension with neighbouring Ukraine and neutralised two Russian hybrid war networks, the Polish Internal Security agency has stated.

Weather in Latvia to remain moderately warm in Latvia; precipitation to be low

On Friday, 18 May, some areas of Latvia will experience thunderstorms. However, starting from the end of the week, weather will become dry again with little precipitation. Rain cloud will form above Latvia in the second half of the week, as reported by Latvian Environment, Geology and Meteorology Centre.

Construction output rise in Latvia was more rapid than EU’s average level in Q4 2017

Compared to last year’s October-December, Latvia’s construction output in Q4 2017 grew 19.9%, which is a much more rapid rise than the average in the European Union, according to data published by Eurostat on Thursday, 17 May.

Latvian Saeima’s committee does not support Kušners’ re-approval in Bank of Latvia council

On Thursday, 17 May, Saeima’s Budget and Finance Committee decided not to recommend Edvards Kušners for a repeated term in the council of the Bank of Latvia.

Control Service Chief: wages in the service should be twice as large

Wages in the Anti-Money Laundering or Control Service should be equal to what is paid to people working in the Finance and Capital Market Commission, so twice as large as it is now, said Control Service’s Chief Ilze Znotiņa in an interview to Ir magazine.

SEB Bank’s factoring portfolio up 41% in the first quarter of 2018

In addition, similar to the volume of goods and services of Latvia’s exporting companies, which had increased unexpectedly rapidly in Q1 2018 – by 15%, there has also been a significant increase for the number of factoring deals.

Latvia experienced a rapid increase in registration of new cars in January-April period

In the first four months of 2018, Latvia has experienced a more rapid increase of newly registered cars than the average in the European Union, according to information from European Automobile Manufacturers' Association.

In Slovak Kuciak's investigation, phone of his colleague journalist confiscated

As Slovak law enforcement continues to investigate the murder of Ján Kuciak, prosecutors have confiscated the smart phone of a colleague of the investigative journalist – a move condemned by the country's media organisations.