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	WHY INVEST IN LATVIA?           Latvia with its unique geographical location on the Baltic coast and in the centre of the Baltic countries has for centuries been a significant industrial hub and a junction of international trade. Today, thanks to the strategic location and free trade agreements, Latvia has become a convenient place for investment and an ideal springboard to vast Russian and EU markets with 600 million consumers.           The good transport infrastructure and transit opportunities intensify the advantage of the geographical location of Latvia. Three major ice-free ports and a growing international airport, a network of roads and railways contribute to Latvia as a transport superpower.           Latvia offers politically and economically stable environment for foreign businesses, which is an important factor in the selection of investment locations. Latvia’s status as a EU Associate Member State and approach to a full membership is a pledge of long-standing stability. Besides, Latvia can boast its economic growth, which is proved with economic indicators and credit ratings awarded by international agencies. Central- and Eastern European Countries Credit Ratings for Long-term Loans in Foreign Currency (01.1999) Country Moody's Standard & Poor's Fitch IBCA Slovenia A3 A A- Czech Republic Baa1 A- BBB+ Estonia Baa1 BBB+ BBB Latvia Baa2 BBB BBB Hungary Baa1 BBB BBB Poland Baa3 BBB BBB+ Slovakia Ba1 BB+ BB+ Croatia Baa3 BBB- BBB- Lithuania Ba1 BBB- BB+ Kazakhstan Ba3 B+ BB Roumania B3 B- B Russia B3 CCC- CCC Bulgaria B2 B B+ Ukraine B3 np np Source: Moody`s, Standard & Poor`s, Fitch IBCA A reference to the table: The credit ratings awarded by the international agencies show that Latvia is a safe place to invest and put Latvia among the most successful Central- and Eastern European countries. Inflation in Central- and Eastern European Countries Source: Business Central Europe   Average Growth of Gross Domestic Product (1996 - 1998)   Source: Business Central Europe A reference to the figures: In recent years, Latvia has seen the lowest inflation and important growth of GDP among Central- and Eastern European countries, which proves the economic growth and stability of development in Latvia. Latvia’s Foreign Trade by Group of Countries Source: Central Statistical Bureau of Latvia A reference to the figure: Latvian export and import markets have during recent years changed substantially and the national economy is not dependent on a single market. In 1991, Latvia’s main trade partners were Russia and other CIS countries, while in 1999, 64.9% of Latvian export and 55.7% import turnover originate from trade with EU countries. Foreign companies operating in Latvia especially appreciate the highly qualified, educated and easily adaptable workforce speaking several languages and available at prices which are by far lower than those in the investor countries. The Latvian government recognises the contribution of foreign investment to the national economy and actively promotes the inflow of foreign investment. Latvian legislation is liberal and encouraging to investment. Foreign investors are provided the same opportunities as national businesses and even offered special incentives. Business conditions in Latvian free ports and special economic zones are particularly beneficial. Corporate Tax Rates in European Countries (01.1999) Source: Latvian Development Agency A reference to the figure: An inherent feature of the favourable investment climate in Latvia is the low corporate tax, which is the second lowest in Europe. Latvians are proud of their national currency - the lat. The tight monetary policy and the non-deficit budget secure the long-standing stability of the lat, which has since its introduction in 1992 not been subject to considerable fluctuations. It is a freely convertible, strong and secure currency fully covered with gold and foreign currency reserves. Exchange Rate of the Lat against the Main European Currencies Source: Bank of Latvia A reference to the figure: Since the introduction of the national currency - the lat - in 1992, its exchange rate against the main currencies has remained virtually unchanged. The capital city of Latvia, Riga, is, beyond doubt, the capital of the Baltics. It is located in the centre of the Baltic countries and is an important transport hub, a rapidly growing financial and commercial centre, the most important market in the Baltics and the metropolis of culture, tourism, education and entertainment. Most representative offices of foreign companies servicing the whole region are located in Riga. Foreign investors have evaluated the advantages of Latvia as a place for investment. Many companies well known in the world have already noticed Latvia, and the inflow of foreign investment keeps growing from year to year. Latvia is among the leaders in Central- and Eastern European countries by accumulated foreign investment. Accumulated Foreign Investment in Latvia Source: Central Statistical Bureau of Latvia A reference to the figure: The rapid growth of foreign investment in Latvia shows that foreign investors appreciate the favourable investment environment and the economic growth of Latvia. Foreign Investment in Latvia by Investor Country (01.01.1999) Source: Central Statistical Bureau of Latvia A reference to the figure: The EU is the leading foreign investor in Latvia. Other major investor countries are the United States, Russia and Singapore. Foreign Investment in Latvia by Sector of the National Economy (01.01.1999) Source: Central Statistical Bureau of Latvia A reference to the figure: Transport and communications appears to have been the most attractive sector for foreign investors. It proves once again that Latvia qualifies for the name of an important transport and transit hub. Among production sectors, woodworking and food processing have received the bulk of investment. The most prospective production sectors capable of attracting foreign investment are: Information Technologies. A state-of-the-art telephone and data communications network, allied to the availability of highly qualified, inexpensive IT specialists, make Latvia an ideal contract manufacturing and outsourcing base. Electronics and mechanical engineering. These sectors provide a long tradition of excellence and the availability of relevant skills for the investor. Chemical and pharmaceutical industries offer a highly developed scientific research structure, and strong links to the Russian and CEE markets. Wood processing. With 45% of Latvia covered by forests, wood products are its principal export commodity. Food processing industry offers high quality raw materials and long standing traditions of trading with Russia and the Baltic Region. Textiles industry. Well qualified, experienced and inexpensive labour makes Latvia an excellent base for high-quality and cost-effective textile production Excellent transportation structures and a long industrial tradition, with West European work practices, support the investor in all of these sectors. Written by: The Latvian Development Agency © The Latvian Institute, 1999 This fact sheet can be freely copied, distributed and cited, on condition that the Latvian Institute is acknowledged as the source. The Latvian Institute is a non-profit organisation (a State Corporation with limited liability) established to disseminate knowledge about Latvia abroad. It produces publications, in several languages, on many aspects of Latvia.
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