Lithuania: A discovery for industrial companies

ROL, AQ wiring systems, IKEA Industry Lithuania, System Air, Dovista A/S – these are only several Scandinavian companies which have recently decided to start their business in Lithuania, one of the fastest growing countries in the European Union. Why did Scandinavian companies choose such a small Baltic country?

What is special about the Free Economic Zones (FEZ)?

Giedrius Valuckas, Chairman of the Board of Šiauliai Free Economic Zone (FEZ) – the third largest FEZ – in Lithuania says that foreign investors are attracted to several factors: "A 0 percent income tax is applied to companies operating in FEZ for the first 10 years of business, and only half of the income tax rate is applied for the next six years. A 0 percent real estate rate is applied during the entire period of operation in FEZ. In addition, foreign investors have positive opinions on the competencies of Lithuanian employees and the business-friendly political environment."

It is still possible to lease an area as large as 90 hectares within Šiauliai FEZ. Of course, smaller land plots which would meet the needs of investors can also be formed. Today, Šiauliai FEZ is able to provide investors with both up to 20 megawatts (MW) of electricity, as well as everything necessary for a quick start and successful further activities: paved roads, lighting, sewerage and water supply systems, and the operator of FEZ can take care of all other matters of setting up a company.

Lithuania is among the pioneers of Industry 4.0

Lithuania is ranked 14th out of 190 countries in the Ease of Doing Business ranking of the World Bank, and is ranked 13th out of 162 other countries according to the index of economic freedom of the Fraser Institute. "Lithuania values foreign investors, therefore it is no surprise that the main companies that invested in our country are from the USA, Sweden, Great Britain, Germany, Norway and Denmark. As many as 39 foreign industrial companies were established in Lithuania over the past eight years. Industry creates approximately 19 percent of added value in Lithuania, and 65 percent of products produced here is exported", - says G. Valuckas.

Foreign investors choose Lithuania for five main reasons: investor-oriented talents, world-class infrastructure and living conditions, excellent price-quality ratio, business-friendly environment, and financial incentives. Lithuania has a population of around 2.8 million, 1.5 million of which are of working age. Lithuania's economic growth has reached around 4 percent in the past years. According to the Cushman & Wakefield Manufacturing Risk Index, Lithuania is the second most attractive country in the world for industrial investment (after China).

Chairman of the Board of Šiauliai FEZ G. Valuckas has been working in the engineering industry for many years and contributed to various Lithuanian and foreign company projects. "The entire world, particularly advanced European countries, is now talking about the Fourth Industrial Revolution. Lithuania is no exception and surprises many with the fact that the European Commission mentions it as one of the examples on how to follow the Industry 4.0 route. Lithuania has a number of measures promoting digitisation, but a more important thing is that it has a general understanding of business and knows that Industry 4.0 is the next step towards another level of industry"., - says G. Valuckas.

Šiauliai town

Šiauliai

Why is it worth investing in a smaller city?

It is quite common for Scandinavian businesses to operate in small cities where true clusters or closer cooperation between different companies are formed. "Šiauliai is a small city located in the northern part of Lithuania and, even though its population is only 100,000 thousand people, the city has been famous for its industry since ancient times, therefore we view Šiauliai as the centre of engineering industry where both automotive, as well as plastic, metal or wood processing industries can be successfully developed. We view these fields in Šiauliai as essential", – says G. Valuckas. Therefore, when selecting companies operating in Šiauliai FEZ, operators of the zone welcomed the fact that parent companies of enterprises operating in FEZ have long-term experience in developing production projects and applying Industry 4.0 solutions. "Our vision is successful and diverse cooperation between companies operating in Šiauliai FEZ, because we believe that the most successful businesses are those that are happy to share their experience, and are open to partnerships and new ideas", - says G. Valuckas.

One of the greatest advantages of the city of Šiauliai is its convenient geographic location: it is not too far from the sea, and there is also the possibility to choose between Riga (Latvia) and Klaipėda (Lithuania) seaports. In addition, Riga, which is located not too far from Šiauliai, has a large airport. And Šiauliai also has its own airport – part of the military Zokniai airport located next to FEZ, which holds the NATO base designed for the cargo terminal and civil aviation. Lastly, the advantage of Šiauliai FEZ is good relations with the municipality and its institutions. "We often emphasise to our investors our good relationship with the municipality based on mutual understanding. We are grateful to the city's leaders that they are taking care of FEZ. They are interested in our raised issued and put efforts to resolve them. And newly emerging investors verify the fact that the results of our cooperation are already visible", – says G. Valuckas.

Šiauliai FEZ is managed by Investment Partner which is the operator of FEZ. For more information, please visit: www.investmentpartner.lt