More details are emerging of the agreement signed between IKEA, the Swedish furniture company, and Klaipedos Mediena, the largest plywood, chipboard and furniture manufacturer in Lithuania, to build a furniture factory in the coastal town of Klaipeda.

The factory will cost $4.5m to build, with 75% of investment coming from IKEA, which has also pledged to buy the furniture produced at fixed prices for at least five years. Another two letters of intent were signed, planning for the building of two more factories by 2003.

The Lithuanian Development Agency (LDA) helped IKEA find a partner for the project and chose the location.

The mill exports about 85% of its products to the US and Europe. The LDA also reported that FDI in Lithuania increased by 8.4% in the first six months of 2001. The biggest investor countries in Lithuania are Denmark, Sweden, the US and Germany.