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International Internet Magazine. Baltic States news & analytics Friday, 29.03.2024, 16:40

Foreign investors in Latvia show improved sentiment

BC, Riga, 10.01.2018.Print version
The mood of the investors doing business in Latvia has become more upbeat over the past year, Arnis Sauka, an associate professor at the Stockholm School of Economics in Riga (SSE Riga), said today during the launch of the FICIL (Foreign Investors' Council in Latvia) Sentiment Index 2017, informs LETA.

The expert noted at the same time that the existing problems largely remain the same and are mainly related to demographic issues and labor shortages.


The surveyed investors have graded the growth of Latvia' s appeal in the eyes of foreign investors with 2.5 points out of five, up from 2 points a year before. Latvian policy-makers' efforts to improve the investment climate has been graded with 2.9 points as compared to 2.3 points in 2016.




Demographic issues, availability of labor force, as well as healthcare and social services have been named as the three areas on which no particular progress has been achieved over the past year. The demographic situation has received 1.6 points out of five, with 74% of the surveyed investors saying they saw no improvement in this area.


“True, one cannot expect the demographic situation to change fast, but you still want to see at least some progress. If it can be seen, the dynamic will not be negative,” Sauka told LETA, explaining that the investors do not count births. They analyze the political initiatives aimed at improving the demographic situation.


The availability of labor force has been graded with 2.7 points, with 71% of respondents in the survey seeing no improvement. “Significantly, it is not about the productivity of the labor force, but rather about its availability,” Sauka said, adding that the investors consider the productivity of Latvia' s labor force to be good enough.


As for the Latvian healthcare and social system, its quality was graded with 2.5 points last year, with 71% of respondents in the survey feeling that no progress has been achieved in this area last year. Most investors, or 57%, see no improvement in the Latvian judiciary, 55% say that the quality of business legislation has not improved and 52% complained about uncertainty about various future decisions.


“The investors are talking about extremely lengthy and complicated legal proceedings which can paralyze their daily work. Others, meanwhile, note some improvement. But the term 'inefficiency' dominates in their comment,” said Sauka.


Meanwhile, the Latvian education system and science has received a better assessment, as the investors have graded this area with 3.1 points, with 17% of respondents fully and 40% partly agreeing that there has been some progress in this area over the past year.


Support and communication on the part of the government has also received a better evaluation, with 33% of respondents fully and 24% party acknowledging improvement.


The survey shows that there is no unanimity about the quality of the Latvian tax system, as 17% of investors acknowledging improvement, 40% tending to agree with this opinion, and 43% saying that the system has not improved over the past year. “You can read between the lines that the investors just do not believe that everything will remain as it has been adopted,” Sauka said.


The government's decision not to tax reinvested profit has earned the highest praise from the investors, followed by export loan guarantees and support to startups. The “zero bureaucracy” plan is regarded by the investors as the least feasible.


The FICIL Sentiment Index 2017 has been drawn up in cooperation with the Foreign Investors' Council in Latvia and covers 42 foreign companies that have made investments in Latvia.

 

The full report is avaible here.

 






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