Businessmen are largely considered criminal frauds, not honest taxpayers. Until businessmen manage to prove the opposite, this belief stands. At the same time, however, some of the largest corruption scandals take place in the government sector. Officials do not even consider the possibility of exacting structural changes there in order to save resources, Director General of Melnā Kafija Martins Cakste told BNN.
Melnā Kafija produces freshly ground black coffee in Latvia. Since autumns 2010, this company has been part of Swedish Löfbergs Lila Group. It now represents Löfbergs products in Baltic States and Eastern Europe. The company also produces its own brand of coffee in Kekava – Malna Coffee and Professional. The company also produces private orders. The company’s products are sold in Latvia, Russia, Lithuania, Estonia, Finland, Denmark, Belarus and other countries.
What are some of the most notable recent events in your sector?
We see growing demand for coffee beans in retail trade sector. It shows consumers’ desire to drink quality coffee and the fact that society’s purchasing power has improved lately. We also fee a rise in interest for organic products.
Can you say economic conditions are improving and there is a lot of potential for economic growth in the market?
The good news is that average wages in the country have reached their pre-crisis level. This gives a good economic improvement for domestic consumption in a long-term perspective. Compared with last year, the company’s turnover has grown 11%.
How would you describe the government’s economy policy aimed at improving the economic situation in the country?
Aside from use of European funds, the country currently does nothing to improve economic development. Quite the contrary – the government tries to solve budget problems at the expense of businessmen. In order to make things easier, better and more competitive for Latvian businessmen, officials make decisions that result in the opposite. Micro-enterprises are no longer interesting. They will likely die out after the transition period’s end. Instead of raising tax-free allowance, the government has decided to raise minimum wages. Businessmen are largely considered criminal frauds, not honest taxpayers. At the same time, some of the largest corruption scandals take place in the government sector. The government doesn’t even consider exacting any structural changes to save resources.
How is the industry affected by Latvia’s policy? What changes to legislation would you like to see? What helps? What makes things more complicated?
It is important to direct strategy in state policy in a way to acquire more funds from growing economy, not growing tax burden. In order to receive more money from the so-called shadow economy, it is necessary to liquidate contraband and create a tax system in which small entrepreneurs want to pay taxes, not introduce hundreds of control mechanisms, which is an expensive and ineffective mechanism. Currently the government does little to support honest taxpayers. Even the State Revenue Service’s Whitelist has little to no effect. It is also possible for companies with questionable tax-paying practice to partake in state procurement projects. The desire of our governing institutions to welcome EU directives by interpreting them and adding unnecessary control mechanisms, running ahead of other member states does not in any way benefit our country’s competitiveness. Often it seems that the government desires to merely justify the existence of the administrative apparatus and its growth, not work and develop the country’s business environment.
All activities the state carried out in relation to export improvements and use of European funds to develop different industries are welcome.
How would you describe the industry’s position in the Baltics? What about competition with Estonia and Lithuania?
Coffee in Latvia is applied with 1.4 EUR/kg tax, which is not found in Lithuania and Estonia. Looking at other neighbours – Poland and Finland – they have reduced VAT on food products. This creates a significant difference in prices and increases the risk of contraband, which impacts the wallets of Latvian residents.
We remain the largest coffee producer in Baltic States and, thanks to large export share, we feel rather stable. It is sad to see that café chains with Latvian products are developing slowly, while Lithuanians actively conquer our market.
What can you can your ‘trump card’? What is your ‘Achilles’ heel’?
Our trump is the fact that people do not refuse good coffee even in a time of war. It is a drink that invigorates and gives energy for the entire day. It is the second most popular products after oil.
Our Achilles’ heel is the exchange. Dollar and euro fluctuations and the price of beans can create certain problems for the industry.
Can you say there is a lack of skilled workers in Latvia?
Our company looks at business development with hopes for the future. We try to secure appropriate wages and work conditions. This makes staff turnover low and attraction of new specialists easy.
What do you predict for the next five years? Will the situation in the industry improve, worsen or remain the same?
The industry tends to grow bit by bit every year as long as there are no economic crises. If the economy retains moderate growth in the next five years, our industry will continue growing.