Are Baltic Tigers back on track?

Transcription

1 Are Baltic Tigers back on track? Royal Danish Embassy, Vilnius Phone: Vilma Jarasiuniene (Commercial Adviser) viljar@um.dk

2 Agenda 1. What do you know about the Baltics? 2. Intro about Baltic Countries 3. Macro statistics 4. Taxes & Salaries 5. Developments in Purchasing Power 6. Exports from Denmark to Baltics 7. Market indications and possibilities 8. Culture 9. Success story 10. Upcoming events

3 1.What do you know about the Baltics?

4 However...

5 2.Intro Lithuania Latvia Estonia Inhabitants Currency Litas (euro 2014) Lat (euro 2014) Euro Life-time (Men/Women) 68,0 / 78,9 68,6 / 78,4 70,6 / 80,8 Ethnicity Lithuanian: 84 % Russian: 5 % Polish: 6 % Other: 5 % Latvian: 62 % Russian: 27 % Other: 11 % Estonian: 69 % Russian: 26 % Other: 5 %

6 3. Macro Statistics: GDP growth, % * Lithuania Latvia Estonia

7 3. Macro Economics FDI inward stock, bn EUR

8 3. Foreign Investment 2012 Realised FDI projects : 27 in Lithuania 7 in Latvia 25 in Estonia In Lithuania-investments from Denmark and USA created the most Lithuanian jobs. Mostly in scientific manufacturing, software and pharmaceutical sectors In Latvia investments from Russia, Sweden and Norway in business services and financial intermediation sectors In Estonia- investments from Sweden, Hong Kong and Norway in software, machinery and equipment manufacturing

9 3. Macro statistics Unemployment, %

10 4.Taxes & Salaries Lithuania Latvia Estonia Value added tax (vat) 21 % 21% 20% Corporate income tax 15 % 15% 21% Personal income tax 15 % 25% 21% Social security Employer 31% 24% 33% + 1% Employee 6% + 3% 11% 2% + 2% Average Gross Monthly Salary (EUR), 2012

11 5. Developments in Purchasing Power, % Estland Letland Litauen Danmark E Source: Eurostat

12 6. Export from Denmark to the Baltics, 2012 Source: Danish Trade Council

13

14 7. Lithuania: Market Indicators- most attractive sectors Furniture Metal processing and machinery Textile and clothing Over 700 companies More than 20,200 skilled employees Attractive salary level, with monthly average: EUR 572 (Gross) More than 700 companies Over 15,000 of skilled employees Attractive salary level, with monthly average (2012, 2Q): EUR 654 (Gross) Over 1,000 companies More than 25,000 skilled employees Some 2,500 new textile specialists graduating every year from local high schools Attractive salary level, with monthly average: EUR 458 (Gross) Wood products Involves over 1,000 companies Over 18,200 employees Monthly average salary: EUR 542 (Gross) Engineering Involves over 2,000 companies Over 50,000 employees Able to provide some 5,000 more jobs for new projects, including for outsourcing Can use network of business support Existing: 4 Industrial parks, 5 science/business valleys and 2 Free economic zones (FEZ) New: 5 new FEZ established at the end of 2011 Various schemes of the EU financial support for businesses The Lithuanian furniture and wood products sector has a long history and are known as being excellent suppliers in both finished products and components. The sector: Export oriented and 68% of production goes to export Flexible - more than 98% are SME companies Has good infrastructure: Klaipeda sea port Very good roads Improving railways Export oriented 48% of production go to export. Denmark together with Germany, Norway, and Sweden are the major import countries Flexible - More than 90% are SME companies Good infrastructure Sea port in Klaipeda Very good roads Improving railways Short delivery time One of the most specialized and diversified textile manufacturing industries within the EU. Able to provide very specific products and make needed quality tests. The Lithuanian Textile Institute conducts more than 60 technology tests for quality, hygienic and environmental requirements Export oriented, more than 76% of production goes to export Offers competitive prices

15 High-Tech Provider of more than 80% of the worlds scientific Nano lasers Discoveries in bio- nano- technologies, fundamental physics Investing in new sectors of economy World s No.2 by Internet download speed in 2012 World s No.6 and Europe s No.1 fiber-to-the home (FTTH) optic communication penetration World s No.2 by mobile phone application development Europe s densest network of public internet access points Europe s No.7 in terms of using internet for business 1st in the World Competitiveness Rankings for communication technology Market indication Energy Main tasks (part of the National Energy Strategy) re energy and heat sectors: Increase efficiency of energy consumption renovation of buildings (households and public) with reduction of heat consumption by 30-40% by 2020 (in comparison to the level of 2009) EUR 2.2 billion should be invested Significant increase part of renewable energy sources in energy production by 2020 Target 60% of heat production from renewable 23% of renewables in the final energy consumption (current level 15%) Internet download speed in the world in 2012, Mb/s Hong Kong 36,4 LITHUANIA 34,2 Luxenbourg 29,3 Taiw an 28,6 Singapore 26,4 South Korea 27,6 Latvia 27,2 Romania 26,3 Save energy and heat, via Upgrade of the old energy and heat transmission system and grid (renovation outdated transmission grid, replacing old boilers, building CHP plants) by 2020 Saving around 3 TWh EUR 0.4 billion to be invested to replace 75% of old grid. Netherlands Sw eden 23,8 25,4

16 Market indication renovation of housing Renovation of multi-family buildings Lithuanians spend 13.3% of their income for heating of 50 m2 (to compare in Nordic countries that takes - 1.5%). National (long term) plan: To refurbish apartment block buildings After renovation, average energy savings have to reach around 50% per single building State support program JESSICA, established with target: 1000 multifamily buildings-blocks to be renovated by 2015 After renovation each block should save 125 MWh a year EUR 290,000 are the estimated costs to renovate 1 apartment block (60 apartments, each approx. 50 sq. m.). Funds. There are EUR 227 million in the JESSICA Fund - mainly from the EU Structural Funds and it will be increased further. Leading municipalities have already initiated the process of renovation using the support funds in combination with mechanism of loans coverage from the money saved for heating.

17 Latvia: market indication- most attractive sectors IT Metal Food & Beverages Health & Sciences - Well-developed export market - State support - Western work culture - Highly-developed logistic and communication infrastructure - Low prices on electricity - Large investment rate leads to high level of production - The sector accounts for app. 2% of Latvia s GDP - Most enterprises are SME with less than 10 employees - There are several internationally recognized academic IT institutions in Latvia. App. 1,000 students graduate each year - Traditionally a leading sector - Easy access to raw materials - Competitive work force - Excellent logistic infrastructure - A shift towards more complicated production is currently happening - The sector covers app. 12% of Latvia s total export - Since 2000, the sector has grown more than 250% - The sector covers a broad range of products from basic metals to electronics, machinery, and equipment for manufacturing medical, precision, and optical instruments - Largest industrial sector in Latvia, accounting for more than 23% of the value added in manufacturing - Strong supply chain - Access to quality ingredients many ingredients are locally grown - Ecological agriculture for natural ingredients - Abundance of skilled and competitive labour - Industry standards and sustainability Well-developed transit infrastructure - Large effort to make improvements in efficiency - Cheap and well-educated work force - New business opportunities within medical tourism - Strong R&D capacity - Strong traditions in chemistry - Well-established production infrastructure - Health care is one of the largest sectors with 50,000-60,000 people employed Wood Greentech Transport & Logistics - Traditionally a strong sector - Easy access to raw materials - Qualified work force - Sustainable industry (FSC certification) - App. 8% of companies registered in Latvia are linked to the forest sector - More than 1,800 companies in the sector - The sector accounts for app. 20% of Latvia s exports and 80% of the sector s output is intended for export - Supported by the government and EU - Large experience and expertise in green energy, especially water power - The largest exporter of RES in the EU - More than 40% of Latvia s total energy consumption is sustainable energy - Renewable energy resources contribute with more than 25% to Latvia s total exports - There are several vocational programmes with over 30 degree courses relevant to the sector - Traditionally a centre for transportation and storage - Admission to Russian and European markets - Expected raise in freight volume - Non-biased, e.g. regarding truck transportation - Competitive work force

18 Estonia: Production possibilities Production (especially timber industry) Electronics and Machinery Estonia Service sector (call centers; financial mediation) Small agricultural sector IT

19 7. Baltics: Market Possibilities Most Educated Talent Pool in the EU Lithuania: 1 st in the World Competitiveness Rankings in literacy. 1 st in the share of female labour force in the World. 1 st in the EU for completion of secondary/higher education. 4 th in the EU for share of graduates of total population. Availability of Multilingual Employees - 92% of population speaks at least one foreign language (EU average is 54%). 52% of population speaks at least two foreign language. Scandinavian languages are gaining popularity -5 universities and 1 college teach Scandinavian. Ability to apply for funding through various EU funds Special Economic Zones- Which are the two most favourable conditions for developing business activities. Easy Access to both Eastern and Western Markets Lithuanian truck fleet counts more than vehicles and transports more cargo than Estonian, Latvian and Russian together. More than 810,000 square meters of logistics and warehousing facilities. Cost-Effective Business Development Location - Labour costs are more than four times lower than the EU average. World Class ICT Infrastructure

20 8. Culture Important differences: Estonia: brands itself as Nordic rather than Baltic country Latvia: Brands themselves as a centre of Baltics Lithuania: Proud to be Lithuanians and feels more Europeans Common cultural characteristics: Like teenagers lack of experience, but full of energy and keen to learn Flexible Multilingual Able to understand different cultures Eastern, Western and Nordic Hard working, even workaholics

21 8.Culture Formalities: Danish Informalities: Formal nation Handshake Handshake and eye contact Negotiating Womanwatch out! Suit Hygge Open Humor Smile Punctuality Deadlines Eye contact Jeans On time Open Opinion Team First name Personal space Pround of being Lithuanian

22 9. Success Story: COMPUTER SCIENCES CORPORATION (CSC) - The global leader in IT services, employing 91,000 professionals around the world, Computer Sciences Corporation (CSC), entered the Lithuanian market in 2007 via Royal Danish Embassy in Vilnius. Lithuania was selected by the CSC Nordic as the geographically best place and most cost efficient for the expansion of business in the Baltic Sea Region. Also, Lithuania was evaluated as the country maintaining very close and successful business relations with Northern European countries. Investment amounted to Euro million. Now there are more than 250 professionals in the representative company (IT help desk) based in Vilnius.

23 10. Upcomming events: Visit of DI delegation and the Crown Prince to Lithuania October 8-10, 2013

24 See you in the Baltics!