Every recession can serve as a spring-board for institutional and societal change. Governmental spokesmen in Latvia have clearly expressed their intention of using this recession to lay a foundation for a sustainable economy.

Three areas of development have been identified: transports and logistics, wood-working and engineering industries.

Due to its geographical location, Latvia has served as a gateway for the expansion of European markets eastward and provided access for those seeking new trading networks. Even during times of crisis! Recent statistics confirm this.

- The three ports - Riga, Ventspils and Liepaja – have during the first seven months of this year only lost 0.6% of their turnover and the state-owned railway company Latvijas dzelzcels has actually increased its freight totals by 1%, says Guntis Rubins, the representative of the Investment and Development Agency of Latvia in Sweden.

- Its affiliate, Latvian Cargo, is the fifth-largest cargo carrier in Europe, focusing on routes to Russia and Belarus, as well as Central Asia and China. Special efforts have been made to expand distribution centers. A new high-capacity center is already under construction in Jekabpils.

- The international airport of Riga is steadily growing and will become one of the major hubs in Northern Europe, says Guntis Rubins. A significant percentage of its volume, 4 million passengers, is transit passengers. Even air cargo has increased during the crisis, an anomaly for the industry.

- Significant steps have been taken to transform the export markets of the Latvian wood-working industry. An increasing percentage of exports now reflect the emphasis on high value-added manufacturing. Prior to the recession, this was not the case, says Guntis Rubins.

- Many good investments have already been made, but there is no dearth of opportunities, especially in the wood waste industry.

The export of cellulose products and energy efficient wood fuel has increased substantially. An example is the partly Swedish-owned company, Latgrant, which supplies the Swedish market with pellets. Another one is a large factory in Ventspils, producing and exporting an innovative building panel, Dendrolight, in accordance with a Swiss issued patent.

Swedish investors have discovered the engineering industry, but there is room for more investments. Salaries and staff costs have declined significantly since the onslaught of the recession. Also property prices and rents have decreased. This may induce some to call to mind the business climate during the years of uncontrolled growth, but there are important differences:

- Plan economy was abolished in the belief that the market regulates itself in a market economy, says Guntis Rubins. But this recession has proved that this is not the case and in the future we must think differently. We are also seeing a focus on productivity, innovative growth and long term strategies for returns. Those companies who were reluctant to cooperate previously are now advocates of joint efforts.

A number of Latvia’s success stories on the export market can be attributed to the country’s renowned educational infrastructure in various engineering fields. Sidrabe successfully exports flat-acid solar batteries which it has developed and produces; another example is the Real Sound Lab with its system for measuring speaker sound. The beauty care company Madara is also among those that should be mentioned in this context.

- There are plenty of creative and skilled people, more Latvian companies have also begun to invest abroad. The economic structure is becoming more mature and sophisticated, says Guntis Rubins.

- I can promise you that a number of very interesting opportunities for Swedish investors will appear later this fall.

                                         
                                                                                    Austra Krestlina