Good for Business, Latvia, Legislation, Markets and Companies

The number of new companies registered in 2011 is the largest annual number since 1994, Lursoft indicates.

Lursoft explains that the rapid increase in the number of new enterprises was thanks to alterations to the laws and regulations on limited liability companies with small capital, informs LETA.

A total of 3,914 companies were liquidated last year – 2.26 times less than in 2010, when 8,835 companies folded. Therefore, the number of active enterprises last year increased by more than 14,000, setting a new record: now there are 184,459 active companies operating in Latvia.

Lursoft analysis also informs that the number of new enterprises increased the most in regions near Riga. In six regions, the growth was over 10%: Garkalne, Babite, Kekava, Adazi, Stopini and Carnikava regions.

Lursoft explains that this is due to active construction of private homes in the vicinity of Riga the past several years, which is why the number of economically active residents has increased significantly in these regions, and infrastructure has been notably improved. Second, inadequate property tax policy and other costs force businessmen to leave Riga and other major cities, where such costs are often incommensurate, notes Lursoft.

The number of new enterprises in Riga increased 6.48% last year. However, many liquidations were also registered in the capital in 2011, which is why the proportion of Riga companies in the total number of companies in Latvia has reduced from 48.6% to 46.13%. Nevertheless, Riga companies hold 74.1% of Latvian companies' total share capital.

All the major cities registered increases in the number of new companies, from 2.82% growth in Rezekne to 5.95% increase in Jurmala.

In nine regions, the number of new companies remained unchanged or reduced. Most of these regions are located at the eastern border of Latvia, and this trend is likely to continue if the tax and regional development policies do not change, indicates Lursoft.