Foreign investments

Foreign investment in Latvia has doubled this year, economist says / Article

Before the pandemic, foreign investment in Latvia was stable, at around 2-3% of Latvia’s gross domestic product. In 2020, foreign investment increased slightly, said Guntis Kalniņš, economist at Bank of Latvia.

“In the first half of this year, the flow of foreign investment even doubled, which may seem contradictory to intuition. We see foreign funds continuing to flow into many industries. Industry, commerce and the real estate sector set the tone for the overall volume. These are sectors that have always attracted foreign investors to Latvia. The development of these sectors is also good at the moment, and foreign investors see good prospects for the future, ”said the economist.

Traditionally, most foreign investments in Latvia come from neighboring countries, from the European Union. Recently, according to Kalniņš, the biggest producers are looking for locations closer to the market where they open their factories.

“One of the most recent examples is the manufacturer of cleaning equipment ‘Karcher’, which is building a factory in the municipality of Jelgava. The increased interest in neighboring regions is also reflected in the fact that the growth of foreign investment is also trending in the Baltic region, ”said Kalniņš.

The more foreign investment flows into Latvian regions, the better it will be for the Latvian economy as a whole, said Zlata Elksniņa-Zaščirinska, member of the Council of Foreign Investors in Latvia (FICIL).

“Unfortunately, it must be said that there are currently some sites of concentration of foreign investment. Of course, Riga and its surroundings are the main sites of concentration. But then we could, of course, also talk about Ventspils, Liepāja, Daugavpils, Valmiera. Probably also Rēzekne in the context of the special economic zone. Other places, even where to some extent there may be more human resources, like Latgale. There, foreign investment inflows are not as intense. If we plan to use the full potential, that is certainly desirable, ”said the head of the board.

“We often hear a lot of stories that municipalities want investors. At the same time, when an investor comes, it is very difficult to get a building permit or to build something because of the different environmental conditions, because of the objections of the people, etc. Infrastructure, a place where people can move and live, and good circulation are clearly important for further foreign investment in the regions, ”said Elksniņa-Zaščirinska.

Andra Feldmane, representative of the Latvian Association of Local Governments, said foreign investment in the regions should be of high added value. In addition, local entrepreneurs should be encouraged to expand their business. Elksniņa-Zaščirinska, on the other hand, stressed that more people with the necessary skills and education are needed to work in factories with high added value.

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