Looking at the results of foreign investment attraction in the first six months of 2024, it is noticeable that higher value-added producers and service providers are entering Latvia. “This is largely due to wage growth in the national economy, as we can no longer compete with significantly cheaper labor costs. We are more competitive in the skilled labor segment than in the so-called simple professions, which require many employees for relatively lower wages,” explains Laura Strovalde, Deputy Director for Investment and Energy of the Investment and Development Agency of Latvia (LIAA).
In the first 6 months of this year, 28 investment projects have been implemented with the participation of LIAA, which will invest a total of EUR 263 million in the economy and create 1245 new jobs. Among the success stories, sectors such as ICT, bioeconomy, smart energy and mobility, smart materials and photonics, etc. are represented. Of the projects launched this year, 13 are in Riga, nine in Kurzeme, three in Latgale, two in Vidzeme and one in Zemgale. Traditionally, Riga has the largest number of projects, but Kurzeme is not far behind, where, especially in Liepaja and Ventspils, good conditions are being created for investors to enter the production sector.
Examples of the projects that have been implemented include the business services centre of the technology group Tech Mahindra, which opened in Riga, Jaunā Teika, in early July and is expected to create at least 500 new jobs. Tech Mahindra is an international company with more than 145 000 professionals serving more than 1100 customers. The company currently has vacancies in Riga for customer support professionals with foreign language skills in languages such as Dutch, Swedish, German, Finnish, Norwegian, Danish and Polish, as well as team coordinators, team leaders and quality analysts.
“Tech Mahindra’s expansion in the Baltics is an important step in the company’s growth strategy. Latvia’s thriving technology ecosystem, skilled workforce, strong IT infrastructure and favourable government policies make Latvia an ideal hub for accessing European markets. This expansion underlines our commitment to regional growth and technological development in Europe, thereby providing our customers with the opportunity to rapidly expand and grow their businesses,” said Birendra Sen, Head of Business Process Services at Tech Mahindra.
With the rapid development of the smart energy sector, CTE Wind International, a French onshore wind turbine foundation design company, has started operations in Latvia. The company has offices in Poland, Spain, Portugal, the USA, Australia, Brazil, Vietnam, France and now Riga.
NLS Mix Technologies, a Ukrainian company, is in the process of establishing an animal feed production facility in Ventspils.
The bioeconomy industry is also developing, with several projects currently underway, using biorefinery to extract high added value products from biomass. In June, the Golden Fields Alternative Protein facility was opened in Liepaja, with an investment of EUR 16 million, and in October, the Asns Ingredient project will be launched in Jelgava, with a planned investment of more than EUR 100 million. Work is also continuing with Estonian investor Fibenol, which plans to invest up to EUR 700 million to build one of Europe’s most advanced biorefineries in Latvia, where biomass will be used to produce a range of industrial products to replace those derived from fossil fuels.
“There are currently another 200 potential investment projects in various stages of readiness, with an investment volume of EUR 10.5 billion. Experience to date shows that at least a fifth of incoming projects are implemented. The expected EU economic recovery in the second half of the year and the reduction in interest rates will speed up project implementation, which will make it easier to attract financing,” emphasises Laura Strovalde, adding that the average investment project takes three years to complete.
To stimulate new investment in Latvia, it is essential to continue work on improving the Green Corridor framework, extending it to make it easier to attract the necessary employees in priority industries. The development of the housing market, especially in the regions, is a key issue, as in many municipalities it is the lack of housing that is the limiting factor in attracting investment.
“LIAA aims to attract investment of EUR 660 million in 2024 and to increase this to EUR 1 billion over the next three years. To achieve this goal, it is essential to prioritise the process of attracting investment throughout the public administration, as well as to review the tax policy to stimulate municipalities to think more about creating jobs in their territory,” said Laura Strovalde.
