NEWSLETTER

Info about Baltic markets

LITHUANIA

Over the past few years, Lithuania has become a leading location for foreign investors and a competitive centre for product sourcing in the region.

The main reason is a highly skilled, efficient and low cost alternative to production in the West, along with a stable and strong production stepping stone to the huge markets in the East. Added to this, impressive economic growth, a stable currency and attractive incentives for investors in Lithuania's Free Economic Zones and Industrial Parks, make Lithuania the premier location in the Baltic region.

General information
  • Lithuania has common borders with Latvia, Belarus, Poland, Russia, and is larger than the other two Baltic States, Latvia and Estonia.
  • At 65,300 sq. km (25,206 sq. mi.), Lithuania is even bigger than Belgium, Denmark, the Netherlands and Switzerland.
  • 70% of its lowland plains and hilly uplands are arable land and 27.6% - forested. Lithuania's 722 rivers, more than 2,800 lakes and 99 km (61.5 mi.) of Baltic Sea coastline are mostly devoted to recreation and preservation of nature.
  • Major cities include: Vilnius (542,300 inhabitants); Kaunas (378,900); Klaipëda (192,900); Šiauliai (133,800) and Panevëžys (119,700).
Population and Language
  • 66.9% of Lithuania's 3.5 mil. Citizens live in urban areas, giving the country a population density of 53.5 people per square km (138.6 people per sq. mi.).
  • The population is 83.5% Lithuanian, 6.3% Russian, 6.7% Polish, and 3.5% other (Belarusian, Ukrainians, Latvians, etc.).
  • The official state language is Lithuanian, which is closely related to Sanskrit and belongs to the Baltic family of Indo-European languages.
  • Main religion - Roman Catholic.
Currency
  • Lithuania’s currency is the Litas (LTL), equal to 100 Lithuanian cents. Under a Currency Board system, the Litas is presently pegged to the Euro at a rate of 3.4528:1. Under the Currency Board, the amount of currency in circulation is tied to reserves of the Bank of Lithuania.
  • All litas in circulation are backed by gold and foreign currency reserves. Currency and dividends are easily transferred from Lithuania to other countries. Lithuania has signed agreements to avoid double taxation with the majority of European countries, incl. Denmark.
Economy
  • Lithuania has one of the fastest growing economies in Central and Eastern Europe, with the private sector now producing about 80% of the country's GDP.
  • Lithuania's well-developed industrial base includes electronics, chemicals, machine tooling, metal processing, construction materials, food processing and light industry, including the manufacture of textiles, clothing, furniture and household appliances, and is complemented by strong transportation and service sectors.
  • Russia remains Lithuania's major trade partner. However, the volumes of bilateral Lithuanian-Russian trade have decreased considerably as compared to the situation several years ago. The biggest export countries are UK (14%), Russia (12%), Germany (10%) and Latvia (9%). The biggest import countries are Russia (22%) and Germany (18%).
  • The labour force is sufficiently qualified; 44% of all working population has a technical or another type of education, and 18% has university education. Two thirds of the working population are employed in the private sector.
  • Salaries are rather low - the minimum monthly salary amounts to € 120 approximately, and an average monthly salary reaches around € 330. The working week is 40 hours; a four-week vacation is granted annually.

Lithuania has the best infrastructure in the region according to investors and inter-national organizations. The country has four international airports, an ice-free seaport and a satellite-based telecommunications system. Its already extensive road network is being upgraded with the assistance of the EU, the EBRD and the European Investment Bank. The European Union has recognized Lithuania as the prime transport centre in the region linking the EU with the East. The EU's transportation commission designated two routes running through Lithuania, a North-South road and rail route connecting Scandinavia with Central Europe, and an East-West route linking the huge Eastern markets with the rest of Europe, as among the ten most important in Europe.

Lithuania is strategically located in the gateway between the EU and the CIS. Parallel to the Pan-European Transport Corridor II, which connects Russia, Belarus, Poland and Germany, a sea route connecting Belarus, Lithuania and the Baltic Sea can serve as another arterial road between the East and the West. At present, the port of Klaipeda handles cargoes that go to and come from Russia, Kazakhstan at one end and Germany, the Netherlands, the U.S., and then South America and Asia at the other end.

Privatisation is still underway. The first stage of privatisation was completed in 1995. In 1998, 344 enterprises were privatised for almost € 600 million. Privatisations for € 65 million were made in the first half of 2002, and many more interesting enterprises, buildings, etc. are continuously presented for privatisation.

Foreigners can buy buildings and land that belongs to them. Foreign nationals cannot buy agricultural land currently. However, a decision has been made to amend the legislation when adequate preparation is made for that - the main principle will be a 7 year transitional period, beginning from the 2004-membership in EU.

LATVIA

Latvia is one of the Baltic States, along with Lithuania and Estonia. Latvia was a republic of the USSR until 1991, when it regained its independence. In 1993, the country held its first post-Soviet democratic elections. Since the early 1990s, Latvians have been working to transform the country’s centralized, Soviet-developed economy into one based on the principles of the free market.

General information
  • Latvia is situated on the eastern shores of the Baltic Sea. Its landscape is characterised by lowland plains and rolling hills. Forests cover 44.3% of its territory. The average elevation of Latvia is 87 meters above sea level.
  • Area: 64 589 sq.km (about 24,600 sq mi), of which 2,550 sq km (980 sq mi) is inland water.
  • Latvia is highly urbanized. Some 59 percent of the population lives in urban areas, with nearly one-third of the total population residing in capital city Riga.
  • Regions: Kurzeme, Zemgale, Vidzeme, Latgale. Largest cities: Riga, Daugavpils, Liepaja, Jelgava, Jurmala, Ventspils, Rezekne.
  • Total length of the national border: 1862 km. Latvia has borders with Estonia, Russia, Belarus, and Lithuania. Length of Latvia's Baltic Sea coastline: 494 km.
  • Longest river entirely within Latvian territory: the Gauja, 452 km. Largest river flowing through Latvian territory: the Daugava, total length 1005 km, of which 352 km are within Latvian territory. Highest point: Gaizinkalns, 311.6 metres.
  • Latvia is a democratic parliamentary republic. Legislative power is in the hands of a unicameral parliament. The country's head of state is the President, who is elected by the parliament for a period of four years.
Population and Language
  • Resident population (2002): 2 346 000, an average population density of 37 persons per sq km (95 per sq mi)
  • Ethnic composition (2002): 58.2% Latvians, 29.2% Russians, 4.0% Belarusian, 2.6% Ukrainians, 2.5% Poles, 1.4% Lithuanians, 0.4% Jews, 0.4% Roma, 0.2% Germans, 0.1% Estonians, 1.0% other ethnicities. The ethnic mix of the population of Latvia is largely the result of massive post-war immigration, which resulted in a decline in the proportion of ethnic Latvians from 77% in 1935 to 52% in 1989.
  • 67.9% of Latvia's population resides in urban areas. The largest cities are Riga (population 747 000), Daugavpils (113 000) and Liepaja (88 000).
  • The official language of the Republic of Latvia is Latvian. Latvian is a Baltic language and is considered one of the oldest of the Indo-European languages. It is a non-Slavic and a non-Germanic language, similar only to Lithuanian. The most widely spoken foreign languages in Latvia are English, Russian and German
  • Lutheranism, a Protestant denomination, is the traditional religion of most Latvians, with the exception of those in eastern Latvia, who are predominantly Roman Catholic.
  • Latvia has an adult literacy rate of nearly 100 percent.
Currency
  • The national currency is the lat (LVL), which consists of 100 santims. The Latvian currency has remained stable since its launch in 1993. Latvian lat and Euro exchange rate is 0.6450:1 (2003 09 11).
Economy
  • Latvia has one of the fastest growing economies in Central and Eastern Europe. Today the economy of Latvia is among the healthiest of the former Soviet republics.
  • In comparison with the analogous period of the previous year, gross domestic product (GDP) in the first half of 2003 increased by 7.5% (6.2% in the second quarter this year). Consumer prices in August 2003 rose by 3.5% compared with the corresponding month of the previous year. The leading manufacturing branches are food products, particularly goods made from milk and sugar refined from beets; textiles and clothing, notably leather and rubber footwear; wood products, such as plywood and paper; and transportation equipment, primarily buses.
  • Industry, including manufacturing, construction, mining, and power generation, accounts for 26 percent of the workforce.
  • In 2002, Latvia's exports rose by 12.1%. Wood and articles of wood made up 33.6% of Latvia's exports, base metals and articles of base metals 13.2%, textiles and textile articles 12.8%, prepared foodstuffs 7.1%, machinery, mechanical appliances and electrical equipment 6.5%.
  • The main categories of imports in 2002 were machinery, mechanical appliances and electrical equipment (21.3%), products of the chemical and allied industries (10.4%), transport vehicles (9.8%), mineral products (9.7%), base metals and articles of base metals (8.4%).
  • The European Union is Latvia's foremost trading partner. In 2002 Latvia's exports to and imports from the EU comprised 60.4% and 53.0% of total exports and imports respectively (by comparison, 10.0% of exports went to the CIS, while 13.1% of imports came from the CIS).
  • Major export partners for Latvia in 2002 were Germany (15.5%), United Kingdom (14.6%), Sweden (10.5%), Lithuania (8.4%) and Estonia (6.0%). Major import partners: Germany (17.2%), Lithuania (9.8%), Russia (8.8%), Finland (8.0%) and Sweden (6.4%).
  • In July 2003 19.2% employed person work in manufacturing or energy branch; 17.3% in trade, hotels and restaurants; 14.6% in agriculture and fishery; 9.4% in transport, storage and communications branch; 7.6% in construction; 5.8% in financial intermediation and business activities.
  • The average monthly gross wage in the II quarter of 2003 was 191.15 lats (about 300 Euro). The duration of the business week set by the Latvian legislation is 40 hours.

Since achieving independence, Latvia has aspired to reintegrate with Europe. This widely held goal allowed the to establish a market economy such as found in Western European nations. These policies allowed prices for goods to be set without government involvement; restrained government spending; and privatized agricultural land, small businesses, and banking institutions.

ESTONIA

With Latvia and Lithuania, Estonia is one of the Baltic States. After independence was restored in 1991, Estonia adopted a new, democratic constitution and accelerated its transition from the centralized economy of the Soviet period to a free-market one.

General information
  • Estonia, republic in northeastern Europe, bounded by the Gulf of Finland (an extension of the Baltic Sea), by Russia, Latvia, and by the Baltic Sea and the Gulf of Riga.
  • Estonia covers an area of 45,227 sq km (17,462 sq mi). The country has more than 1,500 islands; the largest, Saaremaa and Hiiumaa. The mainland has a coastline 1,393 km (866 mi) long. Forests cover nearly 50 percent of Estonia’s territory.
  • Estonia is mostly a low-lying plain, with some hills in the central and southern regions. Wetlands cover more than 20 percent of the country’s territory. Lakes and reservoirs cover an additional 5 percent, with the two largest lakes, Lake Peipus (Peipsi Järv) and Võrtsjärv. The longest river in Estonia is the Pärnu.
  • Estonia is highly urbanized. Some 69 percent of the people live in cities or towns, with nearly one-third of the total population residing in the capital, Tallinn. Other important cities include Tartu, an industrial and cultural center, and Pärnu, Estonia’s leading seaside resort.
  • The legislative branch consists of a unicameral (single-chamber) national legislative body, the Riigikogu. The head of state is the president, who is granted very limited executive authority.
Population and Language
  • The population of Estonia, estimated at 1,408,556 in 2003, is the smallest of any republic of the former USSR. Population density is 31 persons per sq km (81 per sq mi)
  • Ethnic Estonians are 64 percent of the people. They are ethnically and linguistically close to the Finns. Russians make up the largest minority with 29 percent of the total population. Other minorities include Ukrainians, Belarusians, and Finns.
  • The official language of the republic is Estonian, which with the Finnish language belongs to the Finno-Ugric subfamily of Uralic languages.
  • About 46 percent of the people of Estonia are practicing Christians, including Lutherans, Methodists, and Orthodox Christians. Estonia also has very small numbers of Jews and Muslims
  • Estonia has an adult literacy rate of nearly 100 percent.
Currency
  • In 1992 Estonia became the first former Soviet republic to issue its own stable currency, the kroon. Estonian kroon (EEK) is fixed to the Euro at a rate of 15.64664:1.
Economy
  • The USSR used Estonia as an outlet to the West, an interaction that gave its residents the highest per capita income in the Soviet Union, a high level of education, and frequent contact with Western institutions. When Estonians regained independence in 1991, they built quickly on these advantages to institute a free-market economy.
  • As a country with a small population and limited natural resources, Estonia views trade as a key to economic growth.
  • Estonia's gross domestic product (GDP) rose by 6% in 2002. Consumer price index was 3.6% in 2002.
  • Machine building, electronics manufacturing, and electrical engineering dominate Estonia’s industrial sector. The processing of the country’s fish catch and farm products also adds value, and timber is used to make paper and other wood products. Mining is focused on extracting oil shale and peat. The oil shale is processed into gas and chemicals and used to generate electricity, some of which is exported. The principal agricultural activity is raising animals for meat and milk production.
  • The industrial sector employs 32 percent of workers.
  • In July 2003 machinery and equipment made 25.1% of Latvia's exports, wood and products thereof 15.5%, metals and products thereof 10.3%, textiles and products thereof 8.7%, agricultural products and food preparations 7.8%.
  • The main categories of imports in July 2003 were machinery and equipment (28.1%), transport equipment (18.4%), metals and products thereof (9.7%),
  • Major export partners for Estonia in July 2003 were Finland (2,2.1%), Germany (13.0%), Sweden (12.9%), Latvia (7.9%), Lithuania (5.0%), Russian Federation (4.9%). Major import partners: Finland (15.7%), Germany (11.7%), United States (8.2%), Sweden (7.3%), Russian Federation (6.7%).
  • Salaries are rather low - an average monthly salary reaches around € 390.

Estonia has trade and investment agreements with Western countries, and the country’s trading system is one of the most barrier-free in the world.

Estonia experienced a rapid reorientation of its trading relationships after the breakup of the Soviet Union. Trade with Western economies, particularly those in Nordic countries, increased substantially while the flow of goods between Estonia and other former Soviet republics dropped precipitously. Finland has become Estonia’s principal trading partner, and many Finns travel by boat from Helsinki to shop for bargains in the markets of Tallinn.