Latviski English По-русски
Monday 23.07.2018 | Name days: Magda, Magone, Mērija

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 :(

Lursoft: catering sector in Latvia – how much industry leaders earn and pay in taxes

Using a study and compiling data on companies’ business activities for the past three years, Lursoft wanted to find out if it is true catering companies in Latvia work with losses, and what their tax contribution is.

Shooting attack in Canada claims lives

A shooting attack has taken place in Toronto, Canada, with two people having been killed died and 13 others injured.

Farmers in Estonia active in Open Farm Day

Estonian farmers have held their fourth Open Farm Day as over 250 farms in the Baltic country invited everyone interested to experience growing and making of domestic food and agricultural products.

Police commence investigation of an offshore network owned by Lembergs’ daughter

Latvian State Police has commenced an investigation following journalists’ publication of materials about an offshore network owned by suspended Ventspils Mayor Aivars Lembergs’ daughter.

Polish Sejm rushes to change defiant chief Judge of Supreme Court

Poland's legislators have passed rules to hasten the changing of a new Supreme Court chief as part of far-reaching judicial reform that has been criticised by the European Commission among others.

Heat wave to continue in Latvia along with thunderstorms and heavy rain at times

The heat wave active in Latvia will not back off this week – days will remain hot and night-time air temperature will not drop below +20° C. Heavy rain and thunder will be observed nearly every day this week, according to Environment, Geology and Meteorology Centre.

Bulgarian parliament opposes readmission of migrants from EU countries

Bulgarian parliament prohibited the its government from signing bilateral agreements with other European Union member states on readmitting migrants first entered the bloc in Bulgaria.

Week in Lithuania. Liberals ex-leader fails to recover confiscated cash

Eligijus Masiulis, a former Liberal Movement leader on trial in a major political corruption case, has failed to recover cash that was found and seized during searches of his home.

BNN summary of the week: open presidential election in Latvia and no more plastic bags for shoppers

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

SRS: cash register reform still stagnates, but has become much faster than it was last year

The cash registers reform continues stagnating. However, it has become much faster than it was a year ago, as reported by State Revenue Service.

Specialists to search for solutions to topical environmental problems in Ventspils

On Friday, 20 July, a meeting was held between Ventspils Commercial Port representatives and specialists from State Environment Service.

Children with functional disorders to receive services financed by EU funds

Child invalids will have access to social services intended to improve their social skills and mobility. More than EUR 4.2 million has been allocated for this goal from the European Social Fund, as confirmed by Latvia’s Central Financing and Contracting Agency.

Producer price level in industry up 4.3% in Latvia

Compared to June 2017, the average level of producer prices in Latvian industry increased by 4.3 % in June 2018. Prices of products sold on the domestic market rose by 4.8 % and those of exported products by 3.7 %.

Total tax debts in Latvia in July – 1.212 billion euros

At the beginning of July total tax debts in Latvia, including outstanding debts, halted debts and debts applied with repayment term extensions, accounted for EUR 1.212 billion, which is 0.8% less than a month prior, according to data from the State Revenue Service.

Survey: every third Latvian resident has received illegal loan offers

Nearly every third resident in Latvia or 31% of respondents admit having received offers to use illegal loan services, as concluded in a survey performed by Latvian Alternative Financial Services Association and SKDS.

Libya opposed to EU's idea to establish migrant centres in North Africa

Libya is against the solution of the European Union to set up migrant centres in the North African country as a means to keep migrants from arriving in the bloc and Libya would not be convinced with financial support, its Prime Minister Fayez al-Sarraj has noted.

Arrest warrant on Catalan ex-President cancelled by Spain

The Supreme Court of Spain cancelled a European arrest warrant for former Catalan regional leader Carles Puigdemont, as Germany refused to extradite him to face accusations of rebellion for declaring the independence of Spain's region, Catalonia in 2017.

Latvian government plans to allow handing expired food to charity

Latvia’s Agriculture Ministry has prepared amendments to the Law on the Supervision of the Handling of Food that provide permission to hand over certain types of food products to charity after the end of their expiry date.

Estonian industrial producer prices up 2.9% since June 2017

Estonian industrial producer price index has risen by 2.9% between June 2017 and the first summer month this year, resulting in an increase of export prices as well, Estonian statisticians have estimated.

Putin urges NATO to quit «irresponsibly» developing ties with Ukraine, Georgia

Russia's President Vladimir Putin cautioned NATO against developing deeper relations with Ukraine and Georgia, evaluating such a policy was irresponsible and would have consequences for the military alliance.

Latvian parliament not in a hurry to support president Vejonis for a second term

Political parties represented in the Saeima are not eager to support President Raimonds Vējonis for his remainder for a second term.

Weather in Latvia will remain warm and even hot at times

Weather in Latvia in the nearest couple of days will be dictated by a cyclone. Because of that the sky will be partially covered by clouds; thunderstorms are also expected, as reported by State Environment, Geology and Meteorology Centre.

Hungary sued in EU Court for criminalising help to illegal immigrants

The European Union's executive body has stated that a law in Hungary that criminalises support for illegal immigrants is in breach with EU law and Hungary has now been referred to the European Court of Justice for the alleged non-compliance.

Estonians buy alcohol in Latvia; country loses EUR 20 million in six months

Latvian stores located close to the Latvian-Estonian border have sold 1.6 million litres of strong alcoholic drinks in the first half year of 2019. This means Estonia has lost more than EUR 20 million in taxes, according to data from Association of Estonian Alcohol Producers and Importers.

Lithuania’s election watchdog slams ruling LFGU over popular TV series

Political messages can be channeled in various ways and the ruling now Lithuanian party, LFGU has chosen a very delicate way of the communications – through a TV series featuring the beauty and the ambiance of Naisiai, a picturesque settlement in Siauliai district.