FDI in figures

Before the country opened up to the market economy, the main source of FDI came from privatizations. Now, a large part of FDI is made up of re-investment and classic merger/acquisition operations.
Despite the international media talking about economic instability, FDI flows have continued to grow and reached 6 707 million EUR in 2007. Since Latvia has been a member of the EU, the flows have grown. Latvia attracted 920 million EUR in the first quarter of 2007.
The main foreign investment has been in the telecommunications sector; petroleum transit; real estate and distribution; and the banking sector which includes 9 subsidiaries of foreign banks.

Why you should choose to invest in Latvia

Strong points

For investors, Latvia is attractive first of all because the workforce is well qualified and inexpensive. The country's other advantages are well known: harmonized legislation with the European Union and favorable to investment, a simple and attractive tax system, strategic transit and logistics poles. After the proclamation of its independence, Latvia decided to take advantage of the market economy and acquire the capital it needed. It opened up to foreign direct investment. Before this opening up, the main source of FDI came from privatizations. Now, a large part of FDI is made up of re-investment and classic merger/acquisition operations. For further information, consult the Ministry of Foreign Affairs.

Weak points

Despite its opening up, there are still not many international companies in the country. Economic instability and market fluctuations are the main negative factors which put foreign investors off.

Government measures to motivate or restrict FDI

To attract foreign companies, the Latvian government offers financial aid especially European and International. The strategy is to develop high technology industrial sectors as well as possible. Various forms of financing make it possible to improve the quality of services and thus attract the attention of foreign companies. Access to financing is an important objective to facilitate this access to financial resources for Latvian companies while limiting the negative effects of a State intervention on the market. The credit and semi-credit program will be launched to allow creators of SMEs to benefit from investment. The promotion of a company spirit is important to stimulate economic activity and company competitiveness by the creation of new companies and the strengthening of existing ones.

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

Finding assistance for further information

Investment aid agency

Investment Agency of Latvia
Development Agency of Latvia

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.