Analytics, EU – Baltic States, Investments, Markets and Companies, Taxation

Photo: AHK

As many as 1,700 entrepreneurs in 21 countries, including Central and Eastern Europe, Nordic countries and China, participated in the survey. In Latvia, the survey was conducted among 78 foreign business representatives.

Out of a total of 21 criteria, Latvia's rating in 13 criteria has decreased compared to the previous year. Foreign investors were particularly critical of the tax system and the fight against corruption, and their opinion has worsened also about the productivity and public tenders in Latvia.

Latvia received higher ratings only in three criteria - access to state aid, vocational education system and availability of specialists.

However, when it comes to choosing a country to do business in, foreign entrepreneurs from all 21 countries ranked Latvia quite high - as No. 6 or up one notch from the ranking given to it by the businesses actually working in Latvia

The survey showed that 83% of entrepreneurs are satisfied with the current economic situation in Latvia as 23% said it was good and 60% called it satisfactory. Also, 47% said the current economic situation in Latvia was better than in 2017 and only 12% expect the situation to deteriorate in the future.

Most or 62% of businesses think their turnover will keep growing but in 2017 as many as 80% expected further growth of their turnover. Fewer expect growth of exports this year but none thinks their exports will shrink. Also, 43% of respondents plan to hire more staff in 2018 and nearly a half intend to increase their investments in Latvia.

Compared to all 21 countries covered by the survey, Latvia's ratings are above the average in 14 criteria. Quality of deliveries by local suppliers, labor costs, payment discipline and higher education system in Latvia all received high ratings but the fight against corruption and the tax system are Latvia's weaknesses compared to other countries.

The new tax reform in Latvia received mostly negative reviews. Just 14% of the respondents are satisfied with it, while 44% are dissatisfied.

The survey also showed that two out of every three companies or 64% of respondents would again choose Latvia for their investments.

Latvia still has a good reputation among foreign investors but this may change, unless it improved its performance in the 13 areas in which its ratings has dropped, especially as regards the tax system, the fight against the corruption and productivity, said Florian Schroder, CEO of AHK.