Lithuania will continue to be a key destination for FDI in the years to come thanks to a number of reforms the country has implemented recently, believes Vilius Sapoka, the country’s minister of finance.
Mr Sapoka told fDi that, unlike other countries in Europe, Lithuania enjoys sound public finances and has conducted some “necessary” reforms such as the introduction of a “more flexible” labour code, and the implementation of tax incentives to help companies establish there. All of this should help position the Baltic country as one of the top countries for greenfield investments, he said.
Data from global greenfield investment monitor fDi Markets shows that Lithuania has seen a 31% increase in FDI between 2017 and 2018, rising from 61 projects in 2017 to 80 projects in 2018, and an 8.9% increase in the number of jobs created in 2018 compared with the previous year. Vilnius, the capital city, has seen the most investment, with a total of 43 projects tracked in 2018.
In recent years, the Lithuanian government has put a great focus on the tech industry, in a bid to become an international hub for start-ups and fintech firms.
To do so, the country has deployed an ambitious programme called STIG, which stands for start, technovate, invest and grow. This programme includes several reforms such as tax breaks for start-ups, a regulatory sandbox for fintechs willing to establish in Lithuania, as well as a very fast licensing process and a newcomers’ programme to ensure compliance issues are tackled in the most efficient way.
“The tax reforms we introduced recently, for instance, have helped reduce quite considerably the tax burden on companies willing to do business in Lithuania,” Mr Sapoka said. “As a result, Lithuania is now one of the top countries in the world when it comes to do business in tech.”
“Moreover, Lithuania benefits from a pool of talent [coming from] Eastern European countries, such as Ukraine, where people have the right skills and knowledge to come and work in the Lithuanian tech industry.”
Mr Sapoka nonetheless concedes that the fact that Lithuania is still a net receiver of the EU budget – at least until 2020, the date to which the current budget is set – has had a “very positive impact” on the country. “These investments have helped a lot, of course,” he said, “but I also believe that the reforms we have implemented helped leverage on those EU investments.”