At its sitting of 23 January, the Cabinet of Ministers supported the Draft Law on Innovative Entrepreneurship and Support for Priority Projects drafted by the Ministry of Economics. The draft law has been developed with the aim of increasing export-oriented investments and creating a regulatory environment favourable for testing and examining of new, innovative products, technologies and services, thus contributing to competitiveness of national economy. In addition, the draft law identifies the areas of priority projects, as well as provides an opportunity to create support measures to enhance entrepreneurship and export capacity.
A priority project within the meaning of the draft law is a project for investment attraction or a project promoting export capacity, which contributes to the achievement of the objectives specified in development planning documents, national industrial policy or digital transformation policy, for example, an increase in productivity, development and commercialisation of innovations, growth of export turnover, attraction of major investment projects of strategic importance to the economy, etc., or contributes to the elimination of such market failures that hinder the effective achievement of these objectives, for example, reduce the administrative burden or shorten the time of the coordination processes at the public administration institutions.
The new regulation will provide a strong incentive for expanding the range of Latvian export projects, providing an opportunity to apply the so-called 'green corridor' principle to exporting companies, if the investment in respective project exceeds EUR 5 million. The 'green corridor' has so far been applied only to major foreign investment projects. It is also very important that the new law includes the principles and conditions of the so-called regulatory sandbox, which is the first step towards actual introduction of this preferential treatment for research and innovation projects,” emphasises Minister for Economics Viktors Valainis.
The draft law defines the following areas of priority projects:
- five smart specialisation areas* and net-zero emission technologies have been identified in Latvia;
- international business service centres;
- tourism and events, such as major events;
- productivity-enhancing projects where the average compensation of employees is not less than the EU average remuneration for employees in the previous reporting year;
- construction, transport or logistics (in the case of investments related to the provision of services and infrastructure in areas of smart specialisation);
- construction of low-rent dwellings and social housing;
- security and defence.
The draft law also includes a delegation to the Cabinet of Ministers to adopt the Cabinet Regulations by December 2024 that will define the procedures by which priority projects will be served (‘green corridor’). It is planned that the Cabinet Regulations will include the qualification criteria for projects, procedures for the submission and evaluation of priority projects, implementation and monitoring, conditions and procedures for granting and losing a status of a priority project, etc.
In order to facilitate the development and placement of innovations into market, it is necessary to create an environment for innovation developers that allows for the smooth practical testing of new products, technologies or services, minimising the administrative burden and facilitating the harmonisation process. To this end, the draft law includes provisions for the establishment of regulatory sandboxes. In addition, the draft law includes a delegation to the Cabinet of Ministers to adopt regulations for the establishment, implementation, monitoring and termination of regulatory sandboxes by the end of 2024. The regulatory sandbox within the meaning of the draft law is a specific legal framework, incl. in a specific limited area where there are conditions differing from effective laws and regulations, within which economic operators and scientific institutions can test and examine innovative products, technologies and services for the commercialisation of the relevant solutions.
For detailed information on the Draft Law on Innovative Entrepreneurship and Support of Priority Projects please visit the Legal Acts’ Portal.
The current framework for priority investment projects is based on the Law on the Management of the Consequences of the Spread of COVID-19 Infection of 10 June 2020 and is included in Cabinet Regulation No 83 “On the Servicing of Priority Investment Projects” of 4 February 2021. The effective ‘green corridor’ framework provides for procedures and services set out in the regulatory framework to be provided as a matter of priority and within a timeframe, reducing the expected processing time by at least 50 %. Since 1 March 2021, the status of priority investment project has been granted to 25 investment projects with a total contribution of more than EUR 308 million and more than 1150 jobs created.
*There are 5 RIS3 areas defined in Latvia, which are enshrined in the National Industrial Policy Guidelines for 2021-2027: (a) knowledge-intensive bio-economy; (b) biomedicine, medical technology, pharmacy; (c) photonics and intelligent materials, technologies and engineering systems; (d) smart energy and mobility; (e) information and communication technologies.