bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 17.02.2020 | Name days: Konstance, Donats
LatviaLatvia

Opinion: minds of high-rank officials still plagued by soviet ideology

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUBecause of businesses formed in Latvian municipalities, especially Riga, the country’s economy is divided into ‘clans’ that each pull in their own direction without giving the thought of how much damage such behaviour could deal to the economy and how much the country stagnates because of that, said Competition Council chairperson Skaidrīte Ābrama in an interview to BNN.

This implies many high-ranking officials believe monopoly is the best way to manage the country – something of a soviet way of thinking. This only increases corruption risks. There are also serious concerns that by offering advantageous conditions for their companies, municipalities thereby ignore more professional and more efficient solutions.

In Latvia, involvement of the state and municipalities in business activities is very common. Lately this tendency has been on a rise – especially after the crisis. The share of state companies in Latvia’s economy has always been large. However, with the Competition Law it was possible to push out as many as was possible at the time, as well as outline what it and what is not permitted, says Ābrama.

CC believes there is a problem with municipal companies that do not have dominating position on the market – ones it is impossible to apply with Competition Law’s regulation regarding abuse of dominating position. «This is free territory – do what I want and do what the municipality wants. But with such thinking we end up in a controversy. This is about market development, promotion of business activities and that the state and municipalities should not create artificial obstacles. Lately, however, the opposite has been happening – private businesses have been actively interfered,» says Ābrama.

CC chairperson says to improve market economy’s development from the side of municipalities and the state, it is necessary to make it clear that we need business activity, and that it is each person’s private initiative. «People need to find a hobby they like, develop it, find a way to turn it into a business and then compete with one another. The state and municipalities should not interfere. If there is no private initiative, there is no business. How will the state survive in such a situation?»

It should be said that the Saeima had submitted to the Competition Council amendments to the law with which it was possible to reduce public persons’ direct and indirect decisive influence over state and municipal capital associations, as well as prohibit state and municipal institutions from discriminating market participants by creating uneven competition conditions.

«However, the previous Saeima had a large presence of municipal lobbyists, and politicians wanted to see what the big heads of municipalities would say. Because of that, our initially proposed amendments became toothless: only the first principle [on prohibition for state and municipal officials to discriminate companies] remained. They have to comply with competition neutrality principle. That is all,» says Ābrama.

She stresses that CC’s initial proposal included a stricter regulation, like the one Lithuania has had since 90s. «All of it was crossed out in the end. But that was the previous Saeima. I don’t know about the current one, because two thirds of its members have been replaced. We got some hopes after talking with National Economy Committee,» says Ābrama.

«Politicians do no always comprehend why the Competition Council speaks about the need to improve Latvia’s market economy and competition between municipalities and private companies. This means their minds are still ruled by monopolism and soviet views. Such a way of thinking makes development of the country stagnant, because it does not represent conceptual political thinking. High, ineffective administrative costs will remain if this monopoly and municipal lobby also remains in the country,» says Ābrama.

She believes law amendment approval in Latvia lasts years.

«Riga municipality does not have environment for fair competition»

Surveys of businessmen often outline serious problems – composition distortion by the state and municipalities, non-compliance with competition neutrality principle, says the council’s chairperson.

She told BNN that 60% of Latvian companies are concentrated in Riga. However, business competition is continuously distorted because of the municipality. «The municipality [Riga] here provides companies with resources in a non-transparent way. Secondly, no procurements are really organized. Even if a procurement is organized, there is usually only one company with realistic chances of winning. Municipalities use their advantages and create special conditions that limit private companies. Consumers are forced to use ‘bonuses’ provided by municipalities, because they seem more convenient, while private businesses suffer from unequal competition conditions created by municipalities.»

«Why are these companies beneficial for municipalities? It’s because they don’t have to think about securing equal competition. I do it how I know to do it – no supervisory institution can understand why administrative costs appear or why services are not provided with appropriate quality. This is easier for municipalities,» says Ābrama.

She adds: «These are the reasons that make it clear for us as a supervisory institution there is market distortion. Currently we are trying to make it so the new Saeima has better understanding of market competition, because the last parliament definitely did not have any interest.»

«Cooperation with Environment Protection Ministry is also absolutely lukewarm»

CC found in a study that 8% of interviewed municipalities would be ready to support their owned capital associations’ involvement in competition distortion. Ābrama says in practice this share is larger, because in reality CC faces many cases, which is something indicated by the large number of complaints.

«In such cases CC needs to assess the situation – we send requests to municipalities to ‘change their behaviour’. We also send additional letters to Environment Protection and Regional Development Ministry. It should be said that small municipalities follow [CC] recommendations like they are law and respect the council’s advice, whereas large municipalities, especially Riga, ‘knows what is and what is not written in the law’. Because of that, warnings issued to them are usually ignored,» says Ābrama.

She says CC invites the ministry to participate, too, because it is the ministry responsible for this field. Unfortunately, the ministry reacts slowly and cooperation in general is lukewarm.

According to Ābrama, businesses aiming for fair operations and innovations do not require political support to assist with growth of their business. It is important for no obstacles to be put in their way and for them to be allowed to work in peace.

«Municipalities have not formed a single export-worthy company»

«Municipalities have not formed a single company able to export goods or services to other countries. We have discussed this matter with Latvian Chamber for Commerce and Industry. If we see a priority in the country to develop some specific industry in early stages of development, it is necessary for competitiveness to develop not just on a local level between municipalities but also outside Latvia. But there isn’t a single municipal company that has reached a level of export capacity,» says Ābrama.

According to the council’s chairperson, it proves once more what global competition theorists say: that by creating advantages for their companies, the state and municipalities make them inefficient and incapable of competing, because they lack competition pressure.

«With that, I can see Latvia’s economy is not provided with an engine for competition that always pushes forward. This is why our economy is generally stagnant. Every now and then we can show in numbers that we export, but currently I see our country’s economy is behind Lithuania, which was behind us a couple of years ago,» says Ābrama.

Latvia is behind Lithuania’s Competition Law

CC chairperson says since the 90s Lithuania has had very strict regulations that prevent public persons from creating advantages. If this happens, the country’s competition institution commences and investigation. «There have been court rulings in regards to violations. If I’m not mistaken, a year ago Lithuania’s Seimas voted in favour of fining public persons who breach the law.»

Latvia is significantly behind Lithuania’s Competition Law. While Lithuania is already ahead with application of fines on public officials for abusing power, Latvian municipalities are still allowed to create benefits and limit completion for other companies, continues Ābrama.

«Latvia’s economy stagnates from the lack of political progress. It is a matter of priorities – where do we go to ensure economic benefits and where do we concentrate resources? Even Russia strictly supervises to ensure public involvement does not slow down market development, because the current situation is not exactly favourable for Russia’s economy. This means all existing regulations are reviewed to ensure no distortion towards private businesses. Russia’s economy has come so far that they understand that nothing good can be expected without private businesses. Unfortunately, Latvia has yet to reach the same conclusion,» says Ābrama.


Leave a reply

  1. Zerry says:

    THANK YOU! Finally someone tells how it is. I know companies who don’t even want to participate certain tenders because it is non-sense. Winner is known in advance. And energy sector is so rotten. Big boys’ playground.

  2. Lh says:

    Honest and straight assessment of the situation. Thank you!Hope people who should read it also read the council’s opinion.

  3. Andris says:

    There may be a structural problem and a mentality of wanting quick returns on investment and not understanding the need to invest in the building of capacity and capability in business knowledge and skills. The building and operating of successful collaborations an partnerships does not happen by magic. Assessing business risks going forward dies not happen by magic.

    Lack of investment in vocational business capability would be a start.

Saeima deputies put off vote on final MPC system report; say more time needed

On Monday, 17 February, Saeima’s Parliamentary Investigative Committee for Mandatory Procurement Component System did not vote on the final report. Approximately thirty minutes were spent discussing the fact that not all members of the committee have had an opportunity to study the latest redaction of the document.

Latvia’s president presents no plan for Misāne matter after meeting with heads of institutions

After meeting with representatives of the management of responsible institutions on Monday, 17 February, Latvia’s President Egils Levits did not present a clear action plan for Kristīne Misāne’s situation. However, he did stress the importance of civil activity, including the rising role online petitions.

Rubber stretching. 11th anniversary of Aivars Lembergs’ trial

Rubber stretching is a process that supposedly progresses but yields no benefits to anyone except the person doing the stretching. This allegory can be used to describe Aivars Lembergs’ trial, which has continued for 11 years.

101 applications submitted for project on preservation of cultural and historical heritage

A total of 101 applications for a total amount of EUR 1.68 million have been received for Riga City Council’s announced tender, as reported by Riga City Council chairman’s advisor Baiba Gailīte.

FKTK chief: Latvia has earned the right to avoid being «greylisted»

Latvia has earned the right to avoid being added to Financial Action Task Force «grey list», said the head of Latvia’s Finance and Capital Market Commission Santa Purgaile in an interview to Latvijas Radio on Monday, 17 February.

Latvian government signs new contract for Latvia’s pavilion in Expo 2020

The government has signed a 1.4 million euros worth contract for the construction of Latvia’s pavilion at Expo 2020, which will be held in Dubai, as confirmed by Economy Minister Ralfs Nemiro

Eurostat: Latvia’s GDP growth reportedly below average in EU in Q4 2019

When compared to the same period of the previous year, Latvia had a lower GDP than the average in the European Union in Q4 2019, according to data published by Eurostat for 20 of the union’s countries.

Signature collection for a referendum on municipal snap election regulations fails

According to provisional results from the Central Election Commission, it has not been possible to collect enough signatures to initiate a referendum over Saeima’s approved changes to municipal snap elections regulations.

Denmark plans to have Latvian citizen Misāne handed over to South African Republic

On Friday, 14 February, the Danish court ruled not to release Latvian citizen Kristīne Misāne from custody. In the South African Republic the woman is accused of kidnapping her own child, as LTV was informed by Misāne lawyer.

Week in Lithuania: retailer Maxima got in trouble, Turkish firm’s assets frozen, New Agency set up

Lithuania's concessions provided to the Polish business group Orlen, operating an oil refinery in Lithuania's Mažeikiai, have helped to improve bilateral relations but were not the key element in their thaw, Lithuanian President Gitanas Nausėda said this week.

BNN summary of the week: Levits urges protecting officials. Riga City Council toppled. Tax changes planned

The BNN gives you a summary of the key events of the past week, told in news stories of the following topics: Serious signals; Perseverance; Dismissal; Tax changes; Media supervisors; Inflation; Slower over the bridge and Belief protectors.

Prime minister orders development of proper government MPC monitoring rules

Latvian Prime Minister Krišjānis Kariņš has ordered Economy Minister Ralfs Nemiro to immediately commence work on a new mandatory procurement component monitoring project and submit it as soon as possible to ensure efficient control over the system, as confirmed by the prime minister’s office.

1 700 medics infected with coronavirus in China; six dead so far

More than 1 700 medics in China are confirmed infected with the new coronavirus. Six of them have already died, as confirmed by healthcare officials.

Number of foreign guests hosted in Latvian places of accommodation up 1.6%

2.85 million foreign and Latvian visitors stayed at Latvian tourist accommodation establishments in 2019, which is 1.6 % more than in 2018. Compared to the previous year, the number of nights spent by visitors increased by 2.6 %, reaching 5.51 million in 2019.

Experts approve Riga Central Station’s Rail Baltica regional train reception solution

A solution has been found to install a four-lane railway section at Riga Central Railway Station to replace the existing two-lane section. This will help secure not only international and airport connectivity for Rail Baltica trains but also further improve intercity and suburban train services, as reported by the project’s representatives.

Beness Aijo asks Vladimir Putin for political asylum; claims Russia has released him

Beness Aijo, who fled Latvia to avoid criminal prosecution for calls of a violent overthrowing of the government, has asked Russian President Vladimir Putin to provide him political asylum. He also claims Russian authorities have released him from custody.

Share prices plummet on stock markets over concerns for coronavirus

On Thursday, 13 February, share prices around the world plummeted as concerns over the Covid-19 coronavirus epidemic in China. London Stock Exchange index declined shortly after British Finance Minister Sajid Javid’s sudden resignation.

Saeima to add considerable amendments to Criminal Procedure Law

On Thursday, 13 February, Latvian Saeima approved amendments to the Criminal Procedure Law that provide the duty to provide truth in testimony if a person uses the right to testify.

Week’s end in Latvia will be snowy, rainy and windy

Strong wind, which may reach a speed of 25 m/sec along the coast, is expected at this week’s end in Latvia. Air temperature, however, will remain mostly unchanged, as reported by Latvian State Environment, Geology and Meteorology Centre.

National Alliance and New Unity may run in Riga City Council elections separately

Following the decision made by the New Conservative Party to run in upcoming Riga City Council snap elections separately, a similar decision will likely be made by the National Alliance «All for Latvia – For Fatherland and Freedom/LNNK» and New Unity.

Airbnb and Vilnius sign «historic» agreement, taxmen to zero in on short-term rentals

Long chastised for little regulation, Airbnb, a popular short-term rentals platform, was praised this week in Lithuania after capital city Vilnius and Airbnb inked an agreement, envisioning that from February 1 onwards Airbnb will automatically collect Vilnius city tourism tax due per night and per person and transfer the sum directly to the City of Vilnius on behalf of hosts.

Latvian parliament dissolves Riga City Council

The Saeima has decided to dissolve Riga City Council. The city council remains active, however, because the law on its dismissal will come to force the next day after its promulgation. Now President Egils Levits has ten days to make his decision on the promulgation.

Tallinn residents reject proposal to limit driving speed to 40 km/h

Residents of Tallinn have rejected mayor Mihhail Kõlvart’s proposal to limit driving speed within city limits to 40 km/h, forcing the municipality to look for other ways to control road traffic speed, as reported by Estonian public media ERR.

Journalists Kalderauska and Eglītis approved as members of National Electronic Mass Media Council

On Thursday, 13 February, Latvia’s Saeima approved journalists Ieva Kalderauska and Jānis Eglītis as new members of the National Electronic Mass Media Council.

European Parliament urges putting an end to illegal pet trade

To protect animal welfare, pet owners and public health, the European Parliament urges the European Union to come up with an action plan to put an end to illegal pet trade, BNN was informed by EP press-secretary in Latvia Jānis Krastiņš.


Do NOT follow this link or you will be banned from the site!