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Monday 23.07.2018 | Name days: Magda, Magone, Mērija

Economic Diary. Latvia 5th week of 2012

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This week Latvian government demonstrated typical helplessness in solving serious problems in business and economy. But they were aroused with small time home labor.

The poor locksmith

The Competition Council fined the Latvian Locksmith Brotherhood 500 LVL for developing a unified service price list. According to the department, this price list reduces the competition between members of the brotherhood even if the recommended prices are not applied in service cost calculations.

Explanation as follows. You come to receive a duplicate of you key and you were charged, say, 0.5 LVL and not 1 LVL as recommended in the price list. So, the Council believes that there is a price conspiracy, even though the locksmith sold you his services for a cheaper price and you are the one who benefited from it.

Latvian Locksmith Brotherhood has only 30 members; however, the Council managed to find time and research this complicated case thereby using up taxpayer money. Apparently the organization has nothing better to do.

The example of the work done by the French Antimonopoly department is just asking to be mentioned. This department managed to fine thirteen leading perfumery companies 40 million EUR for a price conspiracy. Among the fined companies are: Chanel, Christian Dior, L’Oreal, Clinique, Estee Lauder, Jean-Paul Gaultier, Issey Miyake, Clarins Fragrance Group, Hermes, Guerlain, LVMH Fragrance Brands, Sisheido Europe and Yves saint Laurent. The fine was issued to the Sephora, Marionnaud and Nocibe distribution networks. Every company has to pay from 90 thousand to 4.1 million EUR, depending on the period of membership in the cartel. The companies made deals with retail merchants thereby creating a fixed price and the amount of the maximum possible discount from 1997 to 2000, to support retail prices on a maximum possible level, French Antimonopoly department states.

They’ll grab us by the…wallets, again

On the other hand our Saeima deputies have been busy this week. They introduced amendments to several Laws right in the first hearing.

Amendments to the Law of State Revenue Service widen the authority of SRS in cases of collecting taxes, duties and fines abroad, so that Latvian residents – individuals and legal persons – would not rest knowing that – SRS has a long reach.

Also the parliamentarians supported amendments to the Law of Taxes and Duties specifically the parts linked to cash transactions. From now on legal persons will need to declare all cash transactions worth more than 1000 LVL, even if they were made by individuals. Previously the threshold sum was 3000 LVL. Furthermore the maximum sum of a cash transaction is decreased from 10 to 5 thousand LVL. During the week Saeima deputies also managed to approve the new Law of Credit Registry. The Registry started its work on January 1st 2008, and databases from the registry of debtors are the foundation. The new normative act will not change the credit registry in fact – the information about debtors, their guarantors, sum amounts etc. will still be generalized there. However, in the future access to some parts of this data will be restricted. This way the information about amounts of losses, supply costs, accounting methods of debt obligations, their classification, and quality assessment, amount of savings, main sum and interest rates will only be available to use by the Financial and Market Commission and Latvijas Banka. On the other hand registry members – credit institutions, commercial societies which provide financial services linked to credit risks, savings and insurance societies – will only have access to information that is linked to them. But the debtor and his guarantees will not be able to access this information.

Who says «meow» first?

This event can be considered as no less than a breakthrough in public relationships. Especially if we recall the story about Latvijas Krajbanka collapse, and the panic surrounding Swedbank. The Financial sector development Council has conceptually approved the two level Crisis situation communication plan. If one of the financial sector members has problems, the Finance market and Capital Commission will be the first to respond. It will relay firsthand information to the media, perform first monitoring operations and respond to the consumers’ panic. If the situation does not does not stabilize, the second level of communications will be activated, using which the Prime-minister and ministers can send calming statements to the public. This, according to the plan’s developers, should bring clarity to the process of communications with society and rule out any inter-department discussions about who should be the first to go out to the public and give a speech.

European Commission defends Palink

Palink trade enterprise insolvency, which operates Iki and Cento trade networks in Latvia, has gotten the attention of European Commission Vice-president Vivien Reding and EU internal market commissar Michel Barnier. They wrote a letter to the Minister of Justice of Latvia Gaidis Berzins with a demand to explain some peculiarities of the local procedure of declaring financial insolvency. High ranking European officials did so based on the plea of the German Palink shareholder – Rewe Group Company.

Specifically, the commissars ask whether or not it is possible to challenge the verdict of Riga Kurzeme District Court or to cancel it in a higher instance, as well as what instruments can the Prosecutor General and Supreme Court can use to protest this verdict. The letter also contains one sensitive issue: is it normal to declare an enterprise insolvent, if the reason for this is being argued over in a Court, and the auditors did not conclude the enterprise to have any problems with carrying out their obligations.

According to the authors of this letter, the Court violated a number of norms as well as basic rights of the enterprise by declaring it insolvent. After assessing the answers they expect to receive before the 14th of February, part of Latvia’s funding could be put in question.

BNN already reported: on the 5th of January 2012 Riga Kurzeme District Court declared Palink insolvent based on the plea of Sergey Gushin, who according to the cession assignment received the right to demand 30 thousand EUR from the debt of Palink to the Landeks construction firm.

Here dwells a Russian spirit, this smells of Russia

The only positive note is linked to people coming to our country. When compared to 2010, last year the number of requests to receive Latvian citizenship increased by 18.5% – up to 163.3 thousand. The growing popularity of Latvia among foreigners brings notable benefit to the State budget: the review of requests for citizenship cost these people 3.97 million LVL – by 600 thousand more than last year. Compared to 2010, the highest activity is expressed by Russians (+25%), Belarusians (+16%) and Ukrainians (+28%). As a result people from these three countries brought approximately a half of the aforementioned funds.

State secretary of the Ministry of Foreign Affairs Andris Teikmanis admitted: the contribution of serviced tourists in consular department is hard to evaluate, but overall foreign guests left no less than 150 million LVL here.

Also in comparison to 2010, last year the number of requests for residence permits doubled – up to 3 thousand. And again Russians and Ukrainians lead the way, which is confirmed by statistics of the Citizenship and Migration Department: citizens of these two countries make up more than 80% of investor visas.

According to the data from the Latvian Tour agencies and operators Association, the number of Russian tourists increased last year by 40% in comparison to 2010. And it is likely this is not the last argument in favor of developing first cooperative projects for popularizing Latvian rural tourism in Russia. They will be presented on the Balttour 2012 exposition, which is scheduled to open on the 9th of February.


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