On Friday, June 1, the annual meeting of the Government and the Foreign Investors' Council in Latvia (FICIL) was held. The investors praised the Government's initiatives to improve the investment environment and called on the Government to continue transition from overcoming the crisis to sustainable growth. The parties agreed to focus on combating tax evasion during the next period.
Prime Minister Valdis Dombrovskis emphasized: "Previous reporting period was particularly important for two reasons – as a result of successfully implemented structural reforms, Latvia is experiencing very rapid economic recovery after three years of crisis and Latvia's achievements have gained considerable international recognition. We continue to work to ensure that Latvia becomes an increasingly attractive country for entrepreneurship. However, there are still barriers preventing from the use of full potential of the Latvian economy. Therefore, in the next reporting period, the government will continue to pay special attention to combating the shadow economy and improving the judicial system".
Håkan Berg, Honorary Co-chairman of the FICIL High Council Meeting, Chief Risk Officer and CEO member, Swedbank group said: "We express our sincere appreciation to the Latvian Government for concluding the international loan program and for implementation of a responsible fiscal policy as evidenced by the improved credit rating of Latvia by one notch from"BB+" to "BBB-" for long-term and short-term local and foreign currency commitments that was submitted in May by the international credit rating agency "Standard & Poor's", establishing also a stable outlook for the rating. Latvia's accomplishments will help to improve the competitiveness of Latvia in global markets and promote future financial stability of Latvia. Latvia has become a model for other European countries, and FICIL is satisfied that the Latvian Government has made several changes to legislation by incorporating the FICIL's recommendations".
The participants of the meeting appreciated the Government's accomplishments to improve the macroeconomic situation and the changes introduced in the area of taxation, education, public procurements, capital markets as well as other areas. The investors stressed that after overcoming the crisis we have entered a new phase, during which it is necessary to decide responsibly and creatively on the steps to be taken to improve the business and investment climate. Jerry Wirth, Chairman of the FICIL's Board, representative of the American Chamber of Commerce in Latvia said: "Every end is a beginning of something new. The crisis fire is extinguished, and now it's time for Latvia to write its own recipe for success. The global environment remains unstable. Latvia has to remain vigilant and keep in mind the factors that led to a crisis in Latvia, and to avoid the previous mistakes".
To supplement the discussion on the trends of the national economy development policy, a presentation on industrial policy as a means to foster economic growth was delivered by the FICIL's special guest - Dani Rodrik, Professor of International Political Economy at Harvard University.
FICIL submitted the opinion reports on the macroeconomic and tax policy, efficiency of the judicial system, improvement of the insolvency process and competitiveness of state-owned capital companies.
The FICIL's opinion report on the macroeconomic and tax policy presents the conclusion that the Government should focus its efforts on combating the shadow economy and tax evasion and should continue to study how changes to tax laws and administrative requirements will affect different sectors, as well as should improve the communication of different aspects of tax policy to the society. Developing the mechanisms for investment attraction, the representatives of specific sectors and investor groups should take into account both systemic importance of a certain tax and a broader context of the taxation system.
FICIL's opinion report on the judicial systems includes proposals how to rationalize the procedure for solving commercial disputes and how to increase efficiency of the judicial system. FICIL has concluded that in order to improve the business environment, there is a need to make improvements in the area of discipline of the parties to a case, incl., to reduce opportunities for postponing consideration of a case, to shorten legal proceedings and to improve communication between the parties to a case. The requirements for the courts of arbitration are also set. The Council believes that as a result of improving the judicial system, the problems of lengthy and opaque legal proceedings, different case law etc. would be solved. While in the opinion report on the insolvency process, investors provide answers how to reduce the gap between what is written and how the law works in practice.
Analysing the competitiveness of state-owned capital companies, the FICIL's opinion report stresses the need to follow the same professional principles in governance of the state-owned capital companies as in governance of any other capital company. To improve the competitiveness of state-owned companies and to introduce a good corporate governance practice, the state should explicitly give up "political principles of corporate governance" and other practices impeding good governance.
At the conclusion of the meeting, the Memorandum of the 16th High Council Meeting of the Government of Latvia and the Foreign Investors' Council was approved outlining the issues discussed and the development objectives to continue the dialogue on improving the business environment and investment climate in the country. The foreign investors expressed readiness to continue to improve the business environment and investment climate in the country by discussing with the Government both concrete and general strategic proposals and by following the progress made in their implementation. Next meeting of the Government of Latvia and the Foreign Investors' Council is scheduled for spring 2013.
The Latvian Government was represented by the Prime Minister, Minister for Defence, Minister for Economics, Minister for Finance, Minister for the Interior, Minister for Culture, Minister for Welfare, Minister for Justice, Minister for Health and Minister for Agriculture.
On the part of the Foreign Investors' Council in Latvia, the meeting was attended by senior executives of the following companies: British American Tobacco, Cemex, Coca-Cola Company, Dalkia, Ernst & Young, Eversheds International Limited, Fazer Group, Fortum Corporation, GE Money, GEFCO, GlaxoSmithKline, Indtec Baltic Coal, Knauf, Latvija Statoil, Linstow, Narvesen Baltija, Neste Oil, NCH Advisors, DNB, PricewaterhouseCoopers, Rimi Baltic, RSA Group, SEB, SPI Group, Stockholm School of Economics, Stora Enso, Swedbank, Telia Sonera, Uralchem, as well as Chairmen of the Chambers of Commerce of ten foreign countries (United States of America, United Kingdom, Denmark, Estonia, Netherlands, Norway, Finland, Switzerland, Germany, Sweden).
The photos of the annual meeting of the Government and the Foreign Investors': http://www.flickr.com/photos/valstskanceleja/sets/72157629993802904/
Group photo: http://www.flickr.com/photos/valstskanceleja/sets/72157629994212432/
The Foreign Investors' Council in Latvia is a public organization that brings together the largest foreign companies which have made substantial direct investments in Latvia as well as ten foreign Chambers of Commerce and Industry in Latvia. The FICIL is actively searching for and proposes solutions to improve and develop the business and investment environment in Latvia in cooperation with the Government of Latvia. According to the priority issues raised by the investors, the working groups, composed of representatives of the investors' companies and foreign Chambers of Commerce, develop concrete proposals within the framework of FICIL.
The High Council Meetings of the Government of Latvia and FICIL have been taking place annually since 1999 with the objective to ensure structures exchange of information and opinions between investors and local policy makers with a view to improve the business environment and encourage foreign investments in Latvia. The ministers, senior officials and senior executives from each FICIL member company’s headquarters monitoring foreign investments in Latvia participate in the annual meetings of the Latvian Government and FICIL.
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