Latvia: Investing

FDI in Figures

Before the country opened up to a market economy, the main source of the country's FDI came from privatizations. Today, a significant portion of FDI comes from re-investments and classic merger/acquisition operations. FDI flow continued to grow until it reached EUR 6.7 billion in 2007. Since Latvia joined the EU as a member, these flows have increased. The main foreign investments were made in the telecommunications, oil pipelines, real estate, retailing and banking sectors.

After the financial crisis of 2008-2009, the risk of the bankruptcy of the Latvian economy made foreign investments drop heavily. The rating organizations classified Latvia amongst the most risky in terms of investment destinations. Since the end of 2008, Latvia experienced an enormous fall in FDI flows, and these have started to revive very slowly since the second quarter of 2010. The largest investors in Latvia are Estonia, Sweden, Germany and Denmark.

Why You Should Choose to Invest in Latvia

Strong Points

The country's main strong points are:
- A skilled and inexpensive workforce;
- Legislation that is harmonized with the European Union and favorable to investments;
- A simple and attractive taxation system;
- The presence of strategic transit and logistics centers;
- High productivity;
- Low taxes; and
- A strategic geographical location, which allow access to Russia and to the former Soviet repulics.

Weak Points

The country's main weaknesses are:
- The limited size of its domestic market;
- The low numbers of foreign companies in the country;
- Economic instability and high market fluctuations. In this regard, the economic crisis, which Latvia is currently going through has shown the country's limitations, which remain subject to political and social instability and whose economy could deteriorate rapidly.

Government Measures to Motivate or Restrict FDI

Following its independence, Latvia decided to launch itself in the market economy and to acquire the capital it was lacking. It therefore progressively opened itself up to direct foreign investments. In order to attract foreign companies, the Latvian government offers financial assistance. Its strategy is especially to promote the high technology industrial sector. The different fundings enable the quality of services to be improved. A loan and semi-loan plan has also been launched to promote SMEs.

Procedures Relative to Foreign Investment

Freedom of Establishment

Yes

Acquisition of Holdings

A majority holding interest in the capital of a local company is legal.

Obligation to Declare

The agency for the promotion of foreign investment in the country provides information about the authorizations necessary for setting up business.

Competent Organization For the Declaration

Investment Agency of Latvia

Investment Opportunities

Investment Aid Agency

Investment Agency of Latvia
Development Agency of Latvia

Tenders, Projects and Public Procurement

Tenders Info, Tenders in Latvia
Globaltenders, Tenders & Projects from Latvia
Ted - Tenders Electronic daily, Business opportunities in EU 27
DgMarket, Tenders Worldwide

Other Useful Resources

BALTCAP Management is a Baltic III investment fund,  with investment by the BRED, which has about 80 M EUR at its disposal and which helps especially SMEs operating in one of the Baltic countries.
The Baltic Small Equity Fund supports SMEs which operate in a wide spectrum of industrial activities.

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