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COUNTRY PROFILE
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Latvia |
Print article The Latvian capital, Riga |
Latvia boasts one of the fastestgrowing economies in the European Union and has seen sustained and substantial yearon- year growth since the mid 1990s. The country has proven attractive to investors of all sizes due to its stability, attractive tax regimes and considerable potential for further growth. The Latvian government is on course to adopt the Euro as its currency from 1 January 2008.
Industries and services
Manufacturing accounts for a large part of Latvia’s economic output, especially in the areas of synthetic fibres, agricultural machinery, fertilisers, processed foods, pharmaceuticals, paper processing, textiles and timber. In recent years the service industry has seen a dramatic rise, partly due to the phenomenal growth in tourism.
Transport
Latvia generally has an impressive transport infrastructure. Riga Airport is well prepared for a sharp increase in traffic, and in addition to a recently completed terminal is currently constructing another new terminal. There are also airports at Liepaja and Ventspils, two major port cities on the west coast. There is a reasonably good road and rail network linking all parts of the country. The Via Baltica, a highway which connects Helsinki with Central Europe via the Baltic states, is almost complete and a Via Baltica railroad is also being planned.
Infrastructure
Latvia has a state-of-the-art digital telecommunications network in place. Riga and Ventspils are on a major transshipment corridor between Russia and the West. Large quantities of oil, gasoline, ammonia and other chemicals are transported along this corridor as the Latvian rail system has the same gauge as Russia and the CIS countries. Latvia has three major seaports in Riga, Liepaja and Ventspils, each of which has container terminals, ro-ro facilities and warehousing, while 84% of their capacity is ice-free.
Economic competitiveness
To attract foreign investment, freeports have been established in Riga and Ventspils. A special economic zone has also been set up in the flourishing city of Liepaja. The cost of doing business is still relatively cheap in Latvia, with the average wage only being 170 lats net per month. After acceding to the EU on 1 May 2004, all foreign trade rules and international treaties currently in force within the EU became binding for Latvia. EU internal trade constitutes approximately 80% of Latvia’s foreign trade.
Banking
There are more than 20 banks operating in Latvia under international bank supervision standards, 80% of which are foreign-owned. Only approximately ten banks offer a full range of banking services to both private and corporate customers. All the others have positioned themselves in certain niche markets with specialised services. In addition to an extensive network of ATM terminals, most banks also provide internet banking and/or mobile banking services to their customers.
Tax advantages
The Latvian government has repeatedly stated its commitment to doing all it can to attract foreign investment. Its corporate tax policy of 15% is among the lowest in the EU, while there is special corporate income tax relief for largescale investment projects, as well as for companies operating within specially designated economic zones. Foreign companies are taxed on Latvian-source income. VAT is 18%, although some goods are exempt. Personal income tax is at a flat rate of 25%.
Starting business
Latvia is ranked among the top 10 countries in the world in terms of business start-up time, according to a recently published World Bank report. Foreigners can set up a business in the form of a limited liability company (a SIA company), a stock company (an A/S company) or as a branch of a company. There are two types of stock companies: public stock and closed stock. Only the former can be listed on the stock exchange. Most domestic companies are launched as SIA firms, due to the relative cheapness and ease with which they can be established.
Living standards
Living standards in the capital Riga are generally good, although there is poverty and underinvestment in some rural areas. Riga is the largest and most cosmopolitan of the three Baltic capitals, and currently enjoys the reputation as one of Europe’s “hottest” destinations. Property prices are rising at an exponential rate.
Work force
Latvia has a highly educated, skilled and motivated workforce. Nearly all the people are fluently bilingual in Latvian and Russian, while an increasing majority are proficient in English. The country’s literacy rate is 99.8%.
Facts in brief
Latvia’s location is Eastern Europe, bordering the Baltic Sea, between Estonia and Lithuania. Most of the country is composed of fertile, low-lying plains, with some hills in the east
 Riga Bay |
Its climate is maritime: wet, moderate winters
Natural resources include peat, limestone, dolomite, amber, hydropower, wood, arable land
Agricultural products are grain, sugar beets, potatoes, vegetables, beef, pork, milk, eggs; fish
Industries include buses, vans, street and railroad cars; synthetic fibres, agricultural machinery, fertilisers, washing machines
Lativia’s legal system is based on a civil law system
Diplomatic representation in the US — Chief of mission: Ambassador Maris Riekstins
Diplomatic representation from the US — Chief of mission: Ambassador Catherine Todd- Bailey
Contact Information
American Chamber of
Commerce in Latvia
Torna 4,II-A
Room 301
1050 Riga
Latvia
Tel: +371 721 2204
E-mail: amcham@amcham.lv
Website: www.amcham.lv
Useful websites
| www.bank.lv | Bank of Latvia |
| www.ltn.lv | Latnet directories |
| www.lv | Welcome to Latvia |
| www.em.gov.lv | Ministry of Economics |
| www.csb.lv | Central Statistics Bureau |
| www.latinst.lv | Latvian Institute |
| www.ocma.gov.lv | Office of Citizenship and Migration Affairs |