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picking up

After a period of stagnation typified by an abundance of red tape stymieing investment and construction, Kaunas is entering a new age of growth. The city’s mayor, Visvaldas Matijosaitis, explains to Natasha Turak how his private sector experience gave him the edge.

Kaunas mayor Visvaldas Matijosaitis is a former businessman who two years ago had no plans to run for office. Asked what improvements Kaunas has made during his tenure, he responds: “It’s a shame that you didn’t visit the city two years ago, so that you could have seen the comparison.”

“I personally did not plan on becoming the mayor,” he continues. “In 2011 I joined the Kaunas City Council with a public movement, Kaunas United, to see why there were so many problems in the city. All of the questions related to infrastructure development, public spaces, green areas and moreover investment attraction… all those questions were stuck at that time.”

Bigger, faster, stronger

Mr Matijosaitis describes an investment environment in which it took eight years to obtain building and construction permits for developments such as shopping centres, and cites his private sector experience as essential in finding pragmatic solutions for a city with such weak growth. 

“From a business point of view, the city was looking like a forgotten child,” says Mr Matijosaitis. “But now our urban development division knows very well that there are terms established by law, and they have six to eight months to issue a construction permit and they must follow the terms if they want to work further. All the investors know that as well. When we are talking about investments, it is not only foreign investment, it is also local investment and Lithuanian businessmen, and now they know that the terms are short and that they will not have to wait for years and years for permission to start their business.”

The past two years have seen the planning of 12 new business centre projects, and three are already under construction. “Two years ago there was only one crane in the entire city, and it was hardly working,” says the mayor. “A few years ago, nobody was willing to come here, but now the situation has changed dramatically.”

The three business centres under way are projects by Lithuanian investors, Mr Matijosaitis adds. “We are still working on attracting foreign investors in this field. So the city is putting a lot of effort into supporting the investors that are developing new projects in Kaunas,” he says. Measures include improved infrastructure for employee parking and roads, and attractive tax rates: real estate tax varies from zero to 4%. 

Plugging the brain drain

One thing the mayor stresses is the quality of his city’s workforce, fostered largely by Kaunas University of Technology and other scientific and medical institutions. An enduring challenge is keeping students in the country after graduation – many leave for the UK or other EU countries that offer higher salaries.

“Kaunas has very big potential when it comes to our students and of course some students leave the city to work in other countries, but it is a challenge for us to create jobs and to keep them,” he says. With this in mind, the mayor is optimistic about the UK’s vote to leave the EU. “It could help us. Quite a lot of talented Lithuanians will come back to Lithuania to boost our economy here,” he says.

“The present city government will never create a fairy tale for investors,” he continues. “But recently quite a lot of businesspeople have been visiting the city, talking about investments in apartments and manufacturing. There will be no unnecessary obstacles for possible investors. This would probably be hard to find in Germany or France, where there are often obstacles for businesses. So the city is waiting for the money.”  

This article is sourced from fDi Magazine
fDi Magazine

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