Construction, Latvia, Legislation, Real Estate, Shadow economy

Photo: flickr.com

Prime Minister Maris Kucinskis (Greens/Farmers) said before signing the memorandum that the new agreement will make the construction industry a close aide to the government, while the government expresses confidence that the industry will be able to regulate itself and deal with its issues.

"The government has decided to take the path of mutual trust. Today, the government and the construction industry commit to cooperation as partners," Kucinskis said.

Economics Minister Arvils Aseradens (Unity) praised the construction industry's resolve to participate in solving its problems. "The construction industry has reached a new level of maturity as it wants to tackle problems together with the government," the economics minister said.

Aseradens noted that the issues identified in the construction industry include a lacl of medium-term planning documents, administrative requirements, public procurement, shadow economy, an absence of ethical standards, etc. "Reforms cannot be implemented without the industry's support," Aseradens said.

Finance Minister Dana Reizniece-Ozola voiced hope that the construction industry will improve its competitiveness in the following years, as currently only 3% of its players are showing export capacity. The minister also said that many of the 25,000 construction firms operating in Latvia at the end of 2015 paid less than EUR 10,000 in taxes last year and that 14% of the sector's enterprises manage to recover more taxes than they pay.

"I hope that the export capacity is mature enough and increasingly realizes the importance of paying taxes," Reizniece-Ozola said, calling the signing of the memorandum a day of trust, paving the way not only to discussions but also real deeds.

Baiba Fromane, the head of Latvian Partnership of Building Contractors, underlined that the construction sector needs fundamental reforms. "It takes unity and work to achieve significant change. The memorandum of understanding is a step towards solving the problems," Fromane said.

The memorandum, signed today by the prime minister, economics minister, finance minister and 12 construction associations, calls to reduce the shadow economy in construction, which currently accounts for an estimated 40%, by half in three years' time. The Latvian Partnership of Building Contractors commits to funding an annual assessment of the industry's shadow economy and to work out an annual action plan for combating the shadow economy.