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Wednesday, 24.04.2024, 10:28
Activating business and research: additional EU’s investment initiatives
However, there is still a sizeable investment gap in the EU
states’ development sectors, in particular in the following important for
growth spheres:
- Investment
in higher-risk activities, e.g. in research
and innovation is still inadequate; it is actually damaging
the member states’ industrial and economic competitiveness in Europe and
globally, as well as really decreasing citizens’ quality of life. Further
increase in investment is hampered by the low return on investments and
generally low incentives.
- Infrastructure investment activities in the EU states stood at 1.8% of the European aggregate GDP in 2016, down from 2.2% in 2009, the lowest in 20 years. The contraction in government investment continued to be significant in the periphery countries*) – down to 2.1% - while the cohesion countries**) saw a sharp decline from high levels linked to the funding cycle of the European Structural and Investment Funds (ESIF since 2015).
Note: *) The
“periphery countries” (6) are Cyprus, Greece, Ireland, Italy, Portugal and
Spain.
**) The “cohesion countries” (12) are Bulgaria, Croatia, the
Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania,
Slovakia and Slovenia.
However, the member states have to address increasing structural investment needs in
the face of technological/digital changes and globalisation, which include such
sectors as new skills in the labor market, SMEs growth, sustainability issues and
population ageing, to name a few.
See more in the EIB’s investment report 2017-18 in:
http://www.eib.org/attachments/efs/economic_investment_report_2017_key_findings_en.pdf
Investment growth in the EU reached an average annual rate
of 3.2% in the period 2013-2016, which exceeds the pre-crisis (1995-2005)
average of 2.8%.
The EFSI, as the
main EU’s investment-administration body, provided € 26 bn guarantee from the EU
budget, complemented by € 7.5 billion allocation of the European Investment
Bank’s capital. The total amount of € 33.5 billion aimed at unlocking
additional investment of at least € 500bn by 2020. The EFSI projects are implemented
by the EIB Group and are subject to the usual EIB procedures. With EFSI
support, the EIB Group is providing funding for economically viable projects,
especially for projects with a higher risk profile though very feasible in
implementation.
Commission’s initiative
The European
Parliament as one of the EU’s co-legislators, agreed in mid-January 2019 on a
specific “InvestEU” program aimed at boosting private and public investment in the
member states. Thus, the Commission called on all states to both support
the initiative and inaugurate productive discussions among the EU’s legislative
institutions and bodies.
The InvestEU Fund is policy-driven and will support four
main areas: sustainable infrastructure; research, innovation and digitisation;
small and medium businesses; and social investment and skills.
With the apparent success of the EFSI, the Commission
suggested an extend its capacity to boost investment further. The so-called
"EFSI 2.0" extends the lifetime of the fund from mid-2018 to end 2020
and increases its investment target from €315 billion to at least half a
trillion euros. In December 2017, the European Parliament and the states agreed
on the "EFSI 2.0" Regulation and it became law on 30 December
2017.
On the EU investment plan: https://ec.europa.eu/commission/priorities/jobs-growth-and-investment/investment-plan-europe-juncker-plan_en
The new investment
programme marks an important step towards a creation under one roof the
EU's financial instruments for investment in the EU states, which should
trigger at least €650 billion of investment in the coming years, as the European states need more investments to
boost jobs, innovation and skills.
The program consists of the InvestEU Fund, the InvestEU
Advisory Hub and the InvestEU
Portal.
For example, the InvestEU
Fund is aimed at mobilizing public and private investment in the EU
states to reduce still sizeable investment gap in the states. The new Fund will
notably:
- Providing
a guarantee: the Commission suggests collecting €15.2 bn in the
InvestEU Fund. This amount is composed of €38 billion guarantee from the
EU budget to be used to support strategically important projects in the
member states. Assembling private and public investments, the Commission
expects the InvestEU Fund to trigger more than €650 bn in additional
investment across the EU states in the next 7years;
- Creating
a diversified and flexible investment portfolio. The InvestEU Fund will support four
policy areas: a) sustainable infrastructure; b) research, innovation and
digitisation; c) small and medium-sized businesses; and d) social
investment and skills. InvestEU’s flexibility will rest on its ability to
react to market changes and policy priorities that change over time;
- Streamline
and simplify: The InvestEU program will have a single, coherent
governance structure and reporting requirements, avoiding overlaps. A
single fund will integrate the many different EU-level financial
instruments and the subsequent applicable rules that accompany them. This
means a strengthened focus on policy areas and objectives: thus InvestEU
will be strongly linked to the Union’s policy priorities;
- Capitalise
on the local, national and EU-wide expertise of our financing partners:
Given its role as the EU's “public bank”, its capacity to operate in all EU
states, and its experience in managing the EFSI, the European Investment
Bank (EIB) Group will remain the Commission's main financial partner under
InvestEU program. In addition, the EU states' national and regional
promotional banks and other institutions which can offer specific
expertise and experience may become financial partners, subject to
conditions;
- Help
the states leverage their EU funds more effectively: the EU states
will have the option to channel some of their allocated Cohesion Policy
Funds into the InvestEU budget guarantee. Any funds channeled into the
Fund will benefit from the EU guarantee and its high credit rating, giving
more efficiency to national and regional investments. If the states choose
to do this, the funds will be earmarked for that particular country. To
facilitate a seamless deployment of the InvestEU fund, the Commission
is also working on further streamlining state aid control of the
EU states' money channeled through InvestEU.
More information in the following web-links:
- Press release: InvestEU Programme to support jobs, growth and innovation in Europe;
- Memo: InvestEU
Programme - questions and answers
- Factsheet: What is InvestEU?;
- Factsheet: InvestEU - what will it finance?; = Proposal for a Regulation establishing the InvestEU Programme;
Source:
Commission press release at:
http://europa.eu/rapid/press-release_IP-19-444_en.htm?locale=en
Supporting innovations agencies in Latvia
There are numerous institutions and agencies to assist
private and public initiatives in innovative activities from both Latvian and
European sides. The picture seems quite bureaucratic, but so is the situation
in other EU states as well. For example, in Lithuania there are even 13
different agencies and centers. See more in: http://eiah.eib.org/find-support/resources/lithuania
There are 6 agencies in Denmark, 14 in Germany and 15 in
France.
See: supporting services for investment: http://eiah.eib.org/find-support/resources/index.htm
The following supporting agencies shall be mentioned in
Latvia:
a) ALTUM is a Latvian
state-owned development financial institution, which offers state aid for
various target groups with the help of numerous financial tools, generally
assisted by the EU and EIB resources (such as loans, credit guarantees,
investing in venture capital funds, etc.). ALTUM develops and implements state
aid programmes to compensate for the market's shortcomings that cannot be
solved by private financial institutions.
ALTUM provides loans and credit guarantees, offers insurance
for business export deals and investment to venture capital funds, and offers
non-financial support in the form of consultations, education, mentoring, and
more. ALTUM supports enterprises at different stages of their development,
starting with developing business ideas to carrying out large projects if
financing is not available in the private finance sector. State aid financial
instruments administered by ALTUM, are meant for business start-ups,
enterprises, rural enterprises and individuals.
See more on Altum in:
https://www.altum.lv/en/
and https://www.altum.lv/en/services/business-start-ups/seed-and-start-up
b) Baltic Association
of Science/Technology Parks and Innovation Centers (BASTIC) is a
development, supporting and practice exchanging network that connects, informs
and educates the innovation community in Baltic Sea region. The aim of BASTIC
is to develop and intensify the cooperation between innovation communities in
Baltic Sea region; to implement common regional activities and to make common
statements for local and international agencies or organizations for the
benefit of technology based entrepreneurial community.
See more on BASTIC in: http://www.bastic.eu/
c) Latvian European
Bank for Reconstruction and Development office focuses on supporting
investments in energy security and energy efficiency, strengthening the
financial sector and improving the competitiveness of the export sector.
See more in: http://www.ebrd.com/latvia.html
d) The Investment and
Development Agency of Latvia, LIAA is to promote business development by
facilitating more foreign investment, in parallel increasing the
competitiveness of Latvian entrepreneurs in both domestic and foreign markets.
See more in: http://www.liaa.gov.lv/en
e) Latvian
Association of Technology Parks, Centers and Business Incubators (LTICA) aims:
to create permanent links among all the business support structures in Latvia; raise
the qualification of its members; represent and protect members interests at
various (non-) governmental institutions; create an information network to
support technology-oriented SMEs; promote the establishment of new business
support structures; support technology transfer and innovation; create contacts
and participate at various different international and regional associations.
See more in: https://www.spica-directory.net/associations/?id=40
f) Latvian Business
Angels Network. The goal of the association is to extend and develop the
network of investors in Latvia and support new and perspective projects. This
is why we organise Investment Sessions, during which investors and new
entrepreneurs meet with each other. See more in: http://latban.lv/en
g) State Employment
Agency, SEA. It is the supportive body for contracting authorities and
economic operators in Latvian public procurement. It aims at: capacity building,
prepares guidelines and instructions, drafts standardised tender and contract
documents, prepares annual reports to the Latvian government on the monitoring
and functioning of public procurement. In addition, it offers trainings and
capacity building in collaboration with the Latvian School of Public
Administration such as green public procurement trainings. It also manages an
e-procurement platform and provides trainings to contracting authorities
through jointly held seminars on the procurement legal framework and
e-procurement benefits.
SEA offers to the employers a possibility to participate in
active employment measures with financial support of SEA. See: http://www.nva.gov.lv/index.php?new_lang=en
h) State Regional
Development Agency (SRDA) is an authority operating under the supervision
of the Latvian Ministry of Environmental Protection and Regional Development.
The SRDA
initial activities were to administer programs for
entrepreneurs in specifically supported territories and implementing various
state and EU structural funds to finance local/municipal support programs. Presently,
the SRDA’s main task is to provide various digital and e-services for
governmental and municipal institutions.
See more in: http://www.vraa.gov.lv/en and in: http://eiah.eib.org/find-support/resources/latvia
Note: according to Bloomberg’s research, among 60
most innovative countries Lithuania is on the 37th position, Estonia
on the 36th place and Latvia on the 42nd position. On top
of the list are South Korea, Germany, Finland, Switzerland, Israel, Singapore,
Sweden, USA, Japan and France. The rating’s composition takes into account
expenditures for scientific research and development and the number of
high-tech companies. For example, in Lithuania investments in R&D increased
by 13,5% in 2017, compared to a year before to about € 372 mln and reached 0,9%
of GDP; in Latvia it is about 0,6%, while in Estonia –about 3%.
Out of 2500 world top industrial R&D companies,
577 firms based in the EU account for more than a quarter (27%) of global
investment. US companies (778) constitute 37% of business R&D investment,
Japanese (339) 14%, Chinese (438) 10% and companies from the rest of the world
(368) 12%. Worldwide R&D growth was driven by the ICT services and
producers sectors (13% and 11% respectively), followed by the health sector (7.7%)
while the lowest R&D performance was shown by the industrials sector (3.3%)
and by aerospace & defence (-4.3%). companies
based in the US and China showed a much higher R&D growth rates (9.0% and
20.0% respectively).
Source: http://iri.jrc.ec.europa.eu/scoreboard18.html