OREANDA-NEWS. June 11, 2013. During the 17th meeting of the Government of Latvia and the Foreign Investors Council in Latvia investors acknowledged the economic development of Latvia and encouraged further implementation of a progressive policy aimed at improving the investment environment.

Regarding the priorities of the Government for the upcoming year the Latvian Prime Minister emphasised such measures as reducing the burden of labour taxes in order to strengthen Latvia's competitiveness. He underlined that the reduced labour tax burden should foster employment and enhance cost competitiveness. He also pointed out to the necessity to further improve the business environment by particularly singling out competitiveness, enhanced regulatory framework and resolution of the issues related to the efficiency of the court system.

Valdis Dombrovskis noted that the introduction of the euro would offer both new opportunities and challenges for Latvia. By joining the euro zone Latvia will possess new instruments for increased investments; however the Prime Minister stressed that this opportunity should be exploited in a sound way by ensuring the necessary conditions so that investments would mainly flow into production and sectors which produce marketable products.

Regarding the achievements in the previous year the foreign investors acknowledged the economic development which was strongly supported by a sound fiscal policy. They shared the view that Latvia would be able to join the euro zone in 2014 provided the sound long-term fiscal policy is further implemented by the Latvian Government.

The investors also acknowledged the implementation of the recommendation of the Foreign Investors Council in Latvia regarding the taxation policy and the commitment of the Latvian Government to reduce the labour tax burden in the coming years. Concerning the reforms necessary in the sector of higher education and vocational education the investors expressed their hopes for a further reform process in view of the high priority of this sector for the medium- and long-term development of the Latvian economy.

They also expressed support to the regulatory amendments undertaken by the Ministry of Justice aimed at ensuring faster and more efficient legal proceedings. However the investors also encouraged seeking solutions for stronger respect and confidence in courts and their judgements, thus developing a more secure business environment. The sides also discussed work on an improved insolvency procedure and on the development of the construction processes. They shared the view that commitment for further work is necessary.

The Foreign Investors Council in Latvia presented its reports on the macroeconomic and taxation policies, energy policies, structural changes in the waste management sector and matters related to public procurement, transport and logistics.

Regarding the macroeconomic situation the sides agreed that a sustainable and integrated development would require structural reforms, particularly in the areas of health care and education. Concerning the efficiency of the court system the investors noted that the institutional framework and strengthened internal capacity of the system are crucial for its sustainability. Thus, in order to further contribute to the current achievements, it is necessary to seek availability of alternative dispute resolution mechanisms, as well as seek ways for developing a more secure business and investment environment.

“Investment and business in the rapidly changing global environment require continuous development in order to secure competitiveness. But to overtake others it is necessary to develop twice as fast as the competitors. Currently Latvia is ahead of other countries in its economic development cycle, and it should further implement its reforms which would contribute to preserving the present rate of Latvia’s growth and development,” during the meeting said Hakan Berg, Honorary Chairman of the Foreign Investors Council in Latvia. “It is equally important, while working on new taxation policy initiatives and other initiatives, to take account of the plans and commitments already envisaged in the legislative acts which form a basis for future businesses development and investment plans of companies operating in Latvia”.

The investors acknowledged that the area of public procurement is an excellent example of productive cooperation of the investment community and the Government leading to a good result. The sides shared the view that the improved regulatory system of public procurement promotes fair competition and more efficient utilisation of public funds, therefore they agreed on further enhancement of the regulatory framework regarding the public procurement procedures for public service providers in order to ensure compliance of these procedures to the internationally accepted principles and best practice principles stipulated in the respective EU directives.

When addressing the importance of the energy sector for the national economy the sides agreed that continuous uncertainty regarding essential energy-related policies would cause adverse impacts on the national investment environment. Further successful development of the waste market in Latvia would require a comprehensive and viable policy framework aimed at strengthening fair competition in Latvia.

The sides also noted that it is necessary to further develop the transport infrastructure and to ensure quality investments in this sector. The Government and investors agreed on the necessity to further improve management quality which is crucial for a favourable investment environment.

According to the tradition, the meeting was chaired by Prime Minister Valdis Dombrovskis and the Honorary Chairman Hakan Berg, Member of Swedbank Group’s Board of Directors. A honorary visitor of the meeting was Dr. Christian Ketels, Principal Associate of Harvard Business School.
 
The discussion Staying Ahead of the Curve was focused on Latvia’s achievements in overcoming the crisis and on the challenges faced by Latvia on its way towards growth and stronger competitiveness. Participants of the discussion mainly addressed those matters which are of importance for the investors, including the necessity to further develop a favourable investment environment and potential challenges after Latvia would join the euro zone. Latvia’s representatives at this discussion were Prime Minister Valdis Dombrovskis, Minister for Economics Daniels Pavluts, Minister for Education and Science Vjaceslavs Dombrovskis, Minister for Transport Anrijs Matiss and Minister for Justice Janis Bordans.

The Foreign Investors Council in Latvia was represented at the meeting by many top managers, including companies British American Tobacco, Cemex, Coca-Cola Company, Dalkia, DnB, Ernst & Young, Eversheds International Limited, Fazer Group, Fortum Corporation, GE Money, GEFCO, GlaxoSmithKline, Indtec Baltic Coal, Klasmann-Deilmann, Knauf, KPMG, Linstow, Mariner, Narvesen Baltija, Neste Oil, NCH Advisors, PricewaterhouseCoopers, Rimi Baltic, RSA Group, SEB, SPI Group, Statoil Fuel&Retail, Stora Enso, Stockholm School of Economics, Swedbank, Telia Sonera, Uralchem, Vitol, as well as by chairperson of chambers of commerce of ten foreign countries (Denmark, Estonia, Finland, Germany, Netherlands, Norway, Sweden, Switzerland, United Kingdom and United States of America).

Information about the meeting of the Government and the Foreign Investors Council in Latvia:
The Foreign Investors Council in Latvia is a public organisation which unites ten chambers of commerce in Latvia, as well the biggest foreign countries which have provided significant investments into Latvia. The Foreign Investors Council in Latvia is committed to seek and recommend solutions in order to improve and develop the business and investment environment in Latvia in cooperation with the Government. According to the priority issues specific proposals of the Foreign Investors Council in Latvia are developed by a working group where investors’ companies and foreign chambers of commerce are represented.

The high-level meeting of the Government and the Foreign Investors Council in Latvia are held every year since 1999 aimed at ensuring structured information and exchange of views among investors and policy-makers in order to enhance the business environment and promote foreign investments into Latvia. The annual meetings of the Government and the Foreign Investors Council in Latvia are participated by ministers, top level officials and heads of the companies represented in the Foreign Investors Council in Latvia.