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Lithuania – a country of big opportunities
The Wall Street Journal recently published its annual “Index for Economic Freedom”, an economic ranking of nations. Lithuania, which was among top scorers, was heralded for having“the most improved economy in the history of the index.”
After a dramatic economic, political and social transformation process from a former Soviet republic to a modern European country, Lithuania has developed into an attractive location for foreign investors. Situated on the southeastern shore of the Baltic Sea, the country has a favourable strategic position as a gateway to the large emerging market economies in the region. Its political stability and excellent infrastructures are factors to be considered by investors wishing to take advantage of the economic take-off of the “Baltic Rim”, a market of major potential comprising some 110 million consumers and hosting major business clusters, home of many leading companies. Lithuania borders with the huge markets in the East (Russia and the CIS states with a population of 300 million people) and in the West (the present and future EU countries with a population of over 500 million people).
A good geographic location, proximity to big markets, excellent infrastructures, low operating costs, one of the best educated, efficient and cost-effective labour forces in the region with very competitive wages make Lithuania an excellent location for stable and profitable investment.
Lithuania is on a fast track in attracting foreign direct investment (FDI). It is predicted that cumulative FDI will exceed USD 3 billion by the end of 2001. Major countries investors are Sweden (21.6% of total investment), Denmark (16%), Finland (12%), USA (8.5%), Germany (6.4%), the United Kingdom (5.8%), Estonia (5.6%), Switzerland (4.2%), Norway (3.7%), Luxembourg (3%), etc.
Lithuania can boast a large number of multinational companies that have chosen to invest in our country in different sectors, including Germany’s Siemens (automotive electric), Japan’s Yazaki, Swedish/Finnish consortium Telia/Sonera (Telecom), major food and beverage companies like Carlsberg, Mars and Kraft Food, Italy’s Marzotto (textiles), US companies like Cargill (fertilisers),Williams International (oil refinery) and Philip Morris, The Netherlands Biofa (biotechnologies) and many others.
In the banking sector, Sweden’s SEB (Skandinaviska Enskilda Banken) has completed the acquisition of Vilnius Bank, our leading private sector bank, which is another proof of the confidence of the international financial community. Other foreign banks already in Lithuania: Germany’s Nord LB Bank and the Vereinsbank, Swedish-owned Hansabank of Estonia (which recently acquired, through privatisation, the former National Savings Bank), Nordea from Finland and Poland’s Kredyt Bank. Other Western banks have representative offices here. The presence of these Western banks has created a modern and stable banking system in Lithuania operating according to Western standards.
Lithuanian manufacturing plants of various multinational concerns have proved to be the most efficient plants among their international operations. Increasing FDI and reinvestment demonstrate the confidence of foreign investors in Lithuania’s political, economic and business climate. According to a Foreign Investors’ Survey recently conducted by LDA in 2000, 94 percent of current investors would invest in Lithuania again – up from 80 percent in 1997. Lithuania is moving fast towards integration into the EU through harmonising its legal, administrative and tax systems with existing EU standards and by December 2001 has closed 21 of 31 EU membership negotiation chapters.
The international business community has recognised Lithuania’s progress. The Wall Street Journal Europe published an evaluation of 27 post-communist countries according to 10 criteria (economic strength, integration into world economy, political stability, currency stability, rule of law, etc.). Lithuania was ranked among the top 7 countries together with Poland, Hungary, Slovenia, the Czech Republic and our Baltic neighbours.
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