LITHUANIAN CONSTRUCTION SECTOR ANALYSIS
INTRODUCTION
The subject of this paper is the Lithuanian construction sector. The concepts of both narrow and broad construction sectors will be used in the paper. The narrow construction sector includes all activities classified as F under NACE Rev. 2. A detailed list of activities and the classification methodology are given in Annex 1. The broad definition covers the entire narrow construction sector and real estate activities, architectural and engineering activities and related technical consultancy, as well as certain manufacturing sectors related to the construction sector (see Annex 1).
The beginning of the paper provides a brief introduction of the Lithuanian construction sector, the number of companies operating in it, the overall production, and value added. The second part briefly discusses the country’s macroeconomic environment (GDP, inflation, unemployment, demographic situation, fiscal policy, entrepreneurship, finance opportunities). The third part focuses more on the main economic aspects of the construction sector. It deals with labour productivity, total turnover, construction costs, number of people employed, business confidence, access to finance in the construction sector, housing. The fourth part analyses sales in the domestic market, exports of construction products and services. The fifth part analyses foreign trade in regulated construction products. How many regulated construction products are imported by Lithuania, how many are exported? What is the proportion of products originating from Lithuania? Which product groups and specific products are most often imported and exported and who are the most important trading partners? The sixth part focuses on the main obstacles to the development of the construction sector in Lithuania, discusses such issues as collapse of companies, delays in payments, lack of skills. The seventh part deals with innovations in the construction sector. In part eight ‘National and regional policy and regulatory framework’ examines national strategies, programmes, development plans, and key regulatory legislation. The ninth part discusses the current state and country’s readiness to achieve the objectives of the national strategy ‘Construction 2020’, and discusses five aspects: investment conditions and volumes, skills, resource efficiency/sustainable construction, single market, and international competitiveness. The tenth part presents the sector’s perspectives. At the end of the paper there is a summary and conclusions.
The paper mainly uses data provided by the Statistical Office of the European Communities (Eurostat) and the Lithuanian Department of Statistics, as well as data provided by the Bank of Lithuania, the European Central Bank and AMECO (the macro-economic database of the European Commission). It uses the economic forecasts and insights provided by the Bank of Lithuania, analyses reviews and reports of the European Commission, the European Central Bank, the World Bank, and the annual reports of the Global Entrepreneurship Development Institute, the World Economic Forum, the Organisation for Economic Co-operation and Development (OECD). It examines the legislation, strategies and programmes of the Republic of Lithuania, reports of the European Investment Bank (EIB), the Lithuanian Labour Exchange.
1 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ I. KEY INDICATORS OF THE CONSTRUCTION SECTOR
According to the broad definition, the number of companies operating in the Lithuanian construction sector (see Annex 1) in 2016 was 51,412 (see Fig. 1). 57% were construction companies according to the narrow definition, 25% were real estate companies, 9% manufacturing, 9% architectural and engineering companies. The total number of companies has increased by 11% since 2008 (and doubled since 2010, when it was at its lowest (24,518) due to the crisis). Over the eight years, the biggest jump was in the number of architectural and engineering companies (55%); the number of companies in the construction sector increased by 31% according to the narrow definition, while the number of real estate companies decreased by 22%.
Fig. 1. Number of companies operating in the Lithuanian construction sector, 2008–2016
30000
25000
20000
15000
10000
5000
0 2008 2009 2010 2011 2012 2013 2014 2015 2016
Statyba Gamyba Nekilnojamojo turto veikla Architektūros ir inžinerijos veikla
Overall production in 2017 increased by 9.6%, with the highest growth seen in civil engineering production (16.3%); construction of buildings increased by 4.7% (see Fig. 2). However, compared to 2008, overall production is still down by 32.5%, construction of buildings by 37.1%, civil engineering by 25.3%.
Fig. 2. Lithuanian construction sector production index, 2008–2017 (2015=100)
200
150
100
50
0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Statyba Pastatų statyba Civilinė inžinerija
In 2016, the total value added in the construction sector was EUR 2.5 billion (see Fig. 3) according to the broad definition, with the largest share coming from the construction sector (50.2% or EUR 1.3 billion) according to the narrow definition. In the second place were real estate activities (28.3% or EUR 710 million), manufacturing made up 15.2% (EUR 380 million), architectural and engineering activities—6.4% (EUR 160 million).
2 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Fig. 3. Value added in the Lithuanian construction sector, 2016
0.6%
2.8% 5.0%
1.5%
Statyba Gamyba Nekilnojamojo turto veikla Architektūros ir inžinerijos veikla
II. LITHUANIAN MACROECONOMIC INDICATORS
In 2017, Lithuania’s real GDP reached EUR 32.3 billion per year, which was an increase of 3.9% compared to 2016. After a severe recession in 2009 (-14.8%), Lithuania’s GDP recovered fairly quickly and from 2010 onwards, increases by 3.3% per year on average.
In recent years, inflation has fluctuated strongly in Lithuania (see Fig. 4). The highest level was reached in 2008 (11.1%); deflation was recorded in Lithuania in 2015 (-0.7%), while in 2017 inflation jumped to 3.7%. Based on the forecast by the Bank of Lithuania of June 20181, inflation will bet 2.7% in 2018 and 2.2% in 2019.
Fig. 4. Annual inflation in Lithuania, 2000–2017 (%)
1.2 1.0 0.8 0.6 0.4 0.2 0.0 -0.2
Based on data by Eurostat, the average unemployment rate in 2017 in Lithuania was 7.3%, which was slightly below the EU average (7.6%). The unemployment rate in Lithuania is still higher than in 2008 (5.8%), but has sharply decreased in comparison with the highest unemployment rate of 17.8% in 2010. Youth (up to 25 YO) unemployment rate in 2017 in Lithuania was 13.5%; this indicator is also lower than in the EU (16.8%).
In 2017, Lithuanian population amounted to 2.8 million (see Table 1), but the projections indicate a 3.5% decrease by 2020, 15.4% decrease by 2030, 31.3% by 2050, with the population eventually
1 Bank of Lithuania. Lithuania’s economic development and outlook. 25 June 2018 https://www.lb.lt/lt/leidiniai/makroekonomines-prognozes-2018-m-birzelis
3 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ barely reaching 2 million (if other conditions remain constant). In addition to the deteriorating demographic situation, net migration has also been negative for the last ten years, with about 30,000 people on average leaving the country annually.
Table 1. Lithuanian population projection until 2050
Population Change (%) 2017 2,849,715 - 2020 2,749,762 -3.5% 2030 2,410,874 -15.4% 2050 1,957,377 -31.3% In 2017, 65.9% of the Lithuanian population were between the ages of 15 and 64, while 19.3% were older than 65 years (see Fig. 5). It is expected that the working age population will decrease from 65.9% to 54.9% by 2050, while the population aged over 65 will increase to 28.5% by 2050.
Fig. 5. Lithuanian population by age group, 2017
19% 15%
66%
iki 15 metų tarp 15 ir 64 metų vyresni nei 65 metai
Fiscal policy. The fiscal policy implemented by Lithuania meets the requirements for EU countries. In 2017, for the second year in a row, the general government has reached its budget surplus. The ratio of the general government surplus to GDP was 0.5%; in the EU Member States the indicator averaged -1.0%. The government deficit has decreased since 2009, when it was (-9.1%). Government debt in 2017 accounted for 39.7%. This indicator is well above the 2008 level of 14.6%, but is one of the lowest in the EU. In 2017, the ratio of government expenditure to GDP was 33.3%2. Reforms in the pension system have improved the long-term fiscal sustainability of Lithuania, but risks remain due to the uncertainty associated with pension adequacy.3
Entrepreneurship. In the Doing Business index published in 2018, Lithuania ranks 27th out of 190 countries4. The average time taken to register a company is 5.5 days, requiring 4 procedures, less than the average of OECD5 high-income economies (8.5 days and 4.9 procedures)6. In addition, the average start-up costs are 0.6% of income per capita, compared to 3.1% of OECD high-growth economies.
2 Based on the data from the Lithuanian Department of Statistics. 3 European Commission, Country Report: Lithuania 2018 // https://ec.europa.eu/info/sites/info/files/2018- european-semester-country-report-lithuania-en.pdf 4 World Bank Group, Doing Business 2018, Ease of Doing Business in Lithuania // http://www.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Annual-Reports/English/DB2018-Full- Report.pdf 5 OECD—Organisation for Economic Co-operation and Development 6 World Bank Group, Doing Business 2018, Starting a Business in Lithuania // http://www.doingbusiness.org/data/exploreeconomies/lithuania/#starting-a-business
4 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ However, the minimum capital is 19.3% of income per capita, compared to 8.7% of OECD high-growth economies.
According to the Global Entrepreneurship and Development Index, published in 2018, Lithuania ranks 29th among 137 countries worldwide 7 . Lithuania has strong aspects of human capital, internationalisation, product innovation; the country’s position is weakened by risk taking and competitiveness.
According to the 2017 SBA Fact Sheet & Scoreboard8, Lithuania is above the EU average in many respects. The country is in line with the EU average for skills and innovation, the single market and access to finance. The weakness remains unchanged since last year, i.e. ‘second chance’9.
In addition, the Lithuanian government has used part of the European Social Fund’s package for promoting entrepreneurship by introducing a financial instrument, i.e. the Entrepreneurship Promotion Fund (EPF). According to the data of 2015, EUR 14.5 million of EPF funds were allocated to small and medium-sized enterprises (SMEs) and start-ups in Lithuania through low-interest loans. SMEs were also offered free training and consultancy on how to strengthen their business skills10.
Access to finance. According to the Global Competitiveness Report 2017–2018, issued by the World Economic Forum, Lithuania ranks 41st out of 137 countries11. In terms of financial market development, however, Lithuania is ranked 59th: 52th in terms of ease of access to loans, and 62th in terms of venture capital availability. Lithuania ranks better in terms of affordability of financial services (36 th place) and availability of financial services (38th place). Areas for improvement are: financing through local equity market (81st place), soundness of banks (72th place). Unlike most Member States, bank financing for companies in Lithuania is less important, as companies rely mostly on their own funds.
In addition, according to SAFE 201712, Lithuania (together with Spain) grants the most small loans, while according to the number of rejected applications, Lithuania ranks fourth (11%). In fact, access to finance for start-ups and SMEs reveals potential investment barriers, while high financial costs can prevent receiving a loan13.
III. I. KEY ECONOMIC INDICATORS OF THE CONSTRUCTION SECTOR
In 2015, the labour productivity of real estate activities14 (EUR 26,300) was 2 times higher than that of architectural and engineering activities (EUR 12,300), which had the lowest productivity, and narrow construction activities (EUR 12,800) (see Fig. 6). In the second place in terms of productivity are manufacturing activities (EUR 1,900). In the 2008–2015 period, labour productivity declined in both the construction and the architecture and engineering sub-sectors. The biggest decline was seen in architectural and engineering activities (-17.5%) and in the narrow construction sub-sector (-3.8%).
7 Global Entrepreneurship and Development Institute, Country report, Lithuania // http://thegedi.org/countries/lithuania 8 European Commission, 2017 SBA Fact Sheet Lithuania // https://ec.europa.eu/docsroom/documents/29489 9 ‘Second chance’ means ensuring that honest businessmen who have experienced bankruptcy can quickly get a second chance. 10 European Commission, Lithuania: New trends in business finance // https://blogs.ec.europa.eu/promotingenterprise/lithuania-new-trends-in-business-finance/ 11 The Global Competitiveness Report 2017-2018 // https://www.weforum.org/reports/the-global- competitiveness-report-2017-2018 12 European Commission, Survey on the access to finance of enterprises (SAFE), Analytical Report 2017// https://ec.europa.eu/docsroom/documents/26641 13 European Commission, Country Report: Lithuania 2016 // https://ec.europa.eu/info/publications/2016- european-semester-country-report-lithuania_en 14 Eurostat data. Gross value added per employee.
5 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Labour productivity in real estate and engineering activities sub-sector, by contrast, grew by 80.0% over the same period; meanwhile in manufacturing the growth was 20.0%.
In 2016, total turnover in the broad construction sector amounted to EUR 7.4 billion. The construction sector was hit heavily by the economic crisis, which resulted in a decrease in turnover from EUR 9.1 billion in 2008 to EUR 4.6 billion in 2010 (-49.2%). Since then, the turnover has been increasing until 2015, although it has not reached the pre-crisis level. In 2016, total turnover decreased by 6.3% compared to 2015.
In 2016, the turnover of the narrow construction sector accounted for 58.4% of the total turnover, with the real estate activities coming in the second place; similar turnover was achieved in the manufacturing sub-sector, while the smallest share of turnover (5.4% or EUR 406 million) was achieved by architectural and engineering activities. The gross operating surplus in the broad construction sector in 2015 amounted to EUR 1.2 billion and exceeded the 2008 gross operating surplus by 2%.
Fig. 6. Labour productivity in the Lithuanian construction sector, 2008–2015
30
25
20
15
Tūkst. Tūkst. EUR 10
5
0 2008 2009 2010 2011 2012 2013 2014 2015
Statyba Gamyba Nekilnojamojo turto veikla Architektūros ir inžinerijos veikla
Construction costs have steadily increased since 2010 (see Fig. 7). The total turnover decreased, the gross operating surplus increased, construction costs also increased steadily, and therefore the gross operating rate15 increased from 12.3% in 2008 to 14.6% in 2015.
Fig. 7. Lithuanian construction cost index, 2008–2017 (2015=100)
15 The gross operating rate is a profitability indicator, calculated as the ratio of gross operating surplus and turnover.
6 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ 110 105 100 95 90 85 80 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Statybos sąnaudų indeksas (2015=100)
In 2016, the number of people employed in the broad construction sector amounted to 167,079, representing 12.3% of all employees. The majority of construction workers (61.6%) worked in the narrow construction sub-sector, 15.6% worked in manufacturing, 14.7% in real estate activities and 8.1% carried out architectural and engineering activities (see Fig. 8).
Fig. 8. The share of people employed in the construction sector by sub-sector, 2016
8%
15%
16% 62%
Statyba Gamyba Nekilnojamojo turto veikla Architektūros ir inžinerijos veikla
However, during 2008–2016, the total number of people employed in the broad construction sector fell by 23%. The drop was driven by a decline in employment in all sub-sectors due to the economic crisis. In fact, the number of people employed fell most during 2008–2010 (-40.1%); employment then continued to grow up until 2015. In 2016, there is a slight dip (-1.5%).
In 2016, 18,300 employees in the narrow construction sector were self-employed, accounting for 11.8% of the self-employed workforce. The number of self-employed people in the narrow construction sector has been declining since 2008, when it was 22,200 self-employed people and accounted for 15.2% of the self-employed workforce.
Business confidence. Due to the crisis, all confidence indicators 16 , in particular the construction confidence indicator, have diminished significantly. Between 2007 and 2009, consumer confidence dropped from 4.4 to -49.1, industry confidence dropped from 5.9 to -33.6, while construction confidence
16 Confidence indicators reflect the general attitude and expectations of a particular sector; each confidence indicator is calculated as a simple arithmetic mean of answers to specific questions.
7 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ dropped from 5.7 to -81.4. As of 2010, all confidence indicators have begun to rise. Consumer confidence from increased from -32.4 in 2010 to -10.1 in 2017. Industry confidence indicator recovered slightly faster, from -13,1 in 2010 to -2.8 in 2017. Construction confidence indicator also rose confidently and reached -23,1 in 2017. Unfortunately, construction confidence indicator remains strongly negative, reflecting the perception of risk in the sector and indicating that investors are cautious about long-term commitments.
Access to finance in the construction sector. Since 2011, the value of loans granted to the construction sector has fallen by 57%. In 2011, loans granted in the construction sector amounted to EUR 1 billion, in 2017 they were EUR 431 million 17. In 2017, loans granted to manufacturing, trade, transport, construction and real estate companies accounted for three quarters of all bank loans issued to non-financial companies. The value of loans granted in the construction sector has fallen the most among non-financial companies, while manufacturing companies (-13%) are in the second place. The gross value of loans issued to non-financial companies has risen by 6% since 2011.
The highest level of bad loans is recorded in the accommodation, catering and construction sectors and in real estate activities. On the other hand, the level of non-performing loans in these activities, in particular real estate activities, has been the fastest to decline in recent years, so if the current trends remain unchanged, banks will likely tend to lend more. In 2016, loan portfolios of real estate and construction companies increased most18.
Housing. The number of households in Lithuania in 2017 amounted to 1.35 million. This number is almost unchanged from 2008, even though the population has decreased by 11% over the same period, from 3.2 million in 2008 to 2.8 million in 2017. 67% of all households were in cities. The median equivalised net income19 increased by 43% between 2008 and 2016 from EUR 4,902 to EUR 7,033.
Due to the crisis, investment and housing prices have fallen sharply, as the housing price index fell by 35.1% between 2008 and 2010 (see Fig. 9). Growth since 2010 has continued to this day, as the index is up by 36.3% from its lowest point in 2010, but has not yet reached the pre-crisis level of 2008. The total value of loans granted for purchasing housing increased rapidly from less than EUR 1 billion in 2004 to EUR 6 billion in 2008. Since the early 2009, the total value of loans granted for housing has fallen slightly, but the growth that started in 2013 continues to this day. In 2017, the total value of loans granted for housing exceeds the pre-crisis level and is at EUR 7.3 billion20.
Fig. 9. Housing price index in Lithuania, 2008–2017 (2015=100)
140
130
120
110
100
90
80 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
17 Bank of Lithuania // https://www.lb.lt/lt/paskolos-ne-finansu-bendrovems-pagal-ekonomines-veiklos-rusis 18 Bank of Lithuania, Financial Stability Review 2017 // https://www.lb.lt/en/fss-financial-stability-review 19 The median equivalised net, or disposable income, is the median of total income of all households, after tax and other deductions, that is available for spending or saving, divided by the number of household members converted into equivalised adults; household members are equalised or made equivalent by weighting each according to their age, using the so-called modified OECD equivalence scale. 20 Bank of Lithuania (Data of 2018-04) // http://www.lb.lt/lt/paskolos-gyventojams
8 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Due to the economic crisis, the number of building permits issued in 2009, compared to 2008, decreased by 52.6%21. The downward trend continued until 2012, when the number of building permits issued during the year started to grow again and in 2016 and 2017 already exceeded the level of 2008. In 2017, the number of residential building permits decreased by 8% compared to 2016, while the number of non-residential building permits granted during the same period increased by 9%22. In 2017, the number of new completed residential buildings (6,420) decreased by 9% compared to the number of 2016 (7,051), but in comparison with the pre-2008 figure (4,027), it exceeded it 59%.
Since 2008, interest rates on loans granted for purchasing housing in Lithuania have been constantly decreasing. In 2017, the interest rates on loans (over 5 years) for housing were 1.6%, down from 5.7% in 2008 (see Fig. 10)23.
Fig. 10. Interest rates on loans (over 5 years) for housing (%) in Lithuania, 2008–201724
0.6
0.5
0.4
0.3
0.2
0.1
0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
The size of the rental market in Lithuania is relatively small, as only 10.6% of households in the country are tenants25. However, citizens with lower income are more likely to rent (18.1%) than citizens with higher income. Furthermore, the availability of social housing is limited. The overcrowding rate26 in Lithuania has dropped significantly during the last decade, from 53.5% in 2006 to 23.7% in 2016, yet is still well above the EU average (16.6%).
Infrastructure. In the Global Competitiveness Report 2017–201827, Lithuania ranked 47th in the field of general infrastructure development. It performed especially well in terms of the quality of railway infrastructure (27th), as well as the quality of overall infrastructure (29th), with the most room for improvement seen in the quality of air transport infrastructure (68th place).
IV. SALES OF PRODUCTS AND SERVICES IN THE CONSTRUCTION SECTOR
Domestic sales
21 Based on Eurostat data. 22 Based on the data from the Lithuanian Department of Statistics. 23 Based on the data of the European Central Bank // http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=124.MIR.M.LT.B.A22.J.R.A.2250.EUR.O 24 European Central Bank // http://sdw.ecb.europa.eu/browse.do?node=bbn5757 25 The State of Housing in the EU 2017/ http://www.housingeurope.eu/resource-1000/the-state-of-housing-in- the-eu-2017 26 The overcrowding rate describes how many people live in overcrowded dwellings based on the number of rooms per household, the size of the household and the age and marital status of its members. 27 The Global Competitiveness Report 2017-2018 // https://www.weforum.org/reports/the-global- competitiveness-report-2017-2018
9 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Top five most sold construction products 28 in Lithuania accounted for 44.6% of domestic sales of construction products29 in 2016 (see Table 1). Since 2008, only one of the top five positions has remained the same (prefabricated structural components for building or civil engineering (236112)), but the share of the most sold products in the construction product sales market remained unchanged.
Lithuania’s domestic sales structure differs from the EU average, with only two product groups falling into top five products with the most domestic sales in both markets. In the EU, only one position has changed since 2008 (Windows, French windows and their frames (162311)), while the first position has remained unchanged.
Table 1. Top 5 construction products with the most domestic sales in Lithuania and EU, 2016
Lithuania EU-28 Share in domestic Value, sales of Product Product EUR m construction products (%) Other structures 1 Fibreboards (162112) 88.1 11.4% (251123) Prefabricated buildings of metal Doors, windows, etc. 2 78.9 10.2% (251110) (251210) Prefabricated structural components for Ready-mixed concrete 3 68.6 8.9% building or civil engineering (236112) (236310) Medium-density fibreboards (MDF) Prefabricated buildings 4 58.0 7.5% (162115) of metal (251110) Windows, French 5 Ready-mixed concrete (236310) 50.8 6.6% windows and their frames (162311)
Exports of construction products and services
Top five most exported construction products in Lithuania accounted for 60.5% of the all construction product exports in 2016 (see Table 2). This share, like the entire top five, has remained the same since 2008, with only the order of the rankings changing.
The export structure of construction products in Lithuania differs from that of the EU, with only one product group falling into top five most exported products in both markets. The EU top five has also remained stable since 2008, with only one position changing (prefabricated buildings of metal (251110)).
Table 2. Top 5 most exported construction products in Lithuania and EU, 2016
Lithuania EU-28 Share in exports of Value, Product construction Product EUR m products (%) Ceramic tiles and flags 1 Prefabricated wooden buildings (162320) 145.4 16.6% (233110) Other structures 2 Assembled parquet panels (162210) 138.9 15.8% (251123)
28 Based on the EU product list PRODCOM 29 Domestic Salest = Value of Productst + Import Valuet - Export Valuet
10 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Medium-density Other structures and parts of structures 3 84.0 9.6% fibreboards (MDF) (251123) (162115) Pallets, box pallets and other load boards Marble, travertine, etc. 4 81.8 9.3% of wood (162411) (237011) Windows, French windows and their Prefabricated buildings 5 80.8 9.2% frames (162311) of metal (251110)
In 2017, Lithuania exported construction services for EUR 290 million, which was 22% more than in 2016 (EUR 238 million) and 4.5 times more than in 2010 (EUR 64.3 million). In 2017, EUR 63 million worth of construction services were imported in Lithuania, same as in 2016, but twice as much as in 2015 (EUR 28.3 million) and almost three times more than in 2010 (EUR 22.5 million). In 2017, foreign trade surplus in construction services amounted to EUR 227 million.
Almost 30% of all construction services are exported to Sweden, 23% to Norway, while the other countries account for less than 10% of all construction service exports. Exports of services in 2017 grew to all countries, except Estonia and Belarus. In total, in 2017, Lithuania exported construction services to 14 countries (including Belarus, the United Kingdom, Italy and Spain in addition to those in Fig. 11).
Fig. 11. Construction service exports by country, 2017
Švedija 29%
Norvegija 23%
Vokietija 8%
Belgija 7%
Danija 6%
Latvija 5%
Estija 4%
Prancūzija 3%
Suomija 3%
Nyderlandai 3%
0% 5% 10% 15% 20% 25% 30%
In 2017, construction services were imported by Lithuania from 8 countries. Almost half of the construction service imports in 2017 were accounted for by Germany, 35% by Latvia, 4% by Poland and Norway each.
V. LITHUANIAN FOREIGN TRADE IN REGULATED CONSTRUCTION PRODUCTS
In this section, the 6-digit classification of the Combined Nomenclature is used for the analysis of Lithuanian foreign trade in construction products. Construction products were selected on the basis of
11 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ the list of regulated construction products in Lithuania30 (a detailed list of products used in the analysis (over 130 categories of products) is given in Annex 2). Based on this list, the following 12 product groups have been identified:
1. Aggregates 2. Concretes and mortars 3. Thermal insulation materials and products 4. Concrete, reinforced concrete and natural stone products 5. Windows, doors and other partitions 6. Glass and products 7. Roof coverings and products 8. Wall, ceiling and floor coverings 9. Paints, varnishes, grouts, primers and coatings 10. Heating, plumbing and ventilation installations 11. Reinforcing steel, inserts and components 12. Metal bearing structures and their components
In 2017, regulated construction products imported to Lithuania accounted for EUR 794 million, while exported products accounted for EUR 1 billion. Foreign trade surplus of regulated construction products amounted to EUR 230 million.
In 2017, 16% more regulated construction products were imported to Lithuania than in 2016, while exports were 15% higher than in 2016. The import of regulated construction products has grown by an average of 8% annually over the last five years, while exports have grown by 9% annually (see Fig. 12).
Fig. 12. Foreign trade in regulated construction products in Lithuania, 2012–2017, EUR m
1200 1000 800 600 400 200 0 2012 2013 2014 2015 2016 2017
Importas Eksportas Balansas
In 2017, 70% (EUR 712 million) of the total export flow of regulated construction products consisted of products of Lithuanian origin and 30% (EUR 312 million) of re-exports. Over the past five years, this ratio has fluctuated slightly, but the share of regulated construction products of Lithuanian origin in total exports has remained over 60%, with the peak in 2016 (72%). In 2017, compared to 2016, exports of regulated construction products of Lithuanian origin increased by 12% and re-exports by 23% (see Fig. 13).
30 Order of the Minister of Environment of the Republic of Lithuania ‘On the Approval of the List of Regulated Construction Products’, 27 June 2018, No. D1-601 // https://www.e- tar.lt/portal/lt/legalAct/276ca3607a9f11e8ae2bfd1913d66d57
12 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Fig. 13. Exports of regulated construction products by export type, 2012–2017, EUR m
1200
1000
800
600
400
200
0 2012 2013 2014 2015 2016 2017
LT kilmės Reeksportas
In 2017, about 30% of all regulated construction product imports consisted of metal bearing structures and their components, of which almost EUR 230 million were imported to Lithuania (see Fig. 14). A fifth of the imports (almost EUR 150 million) were made up by paints, varnishes, grouts, primers and coatings. The following three product groups were almost equally distributed: heating, plumbing, ventilation installations (15%), windows, doors, partitions (12%), reinforcing steel, inserts and components (10%). These five product groups together accounted for 85% (EUR 674 million) of all imports of regulated construction products.
Fig. 14. Regulated construction product imports by product group, 2017
Metalinės laikančios konstrukcijos ir jų elementai 2.9% Dažai, lakai, glaistai, gruntai ir dangos 1.9% Šildymo, vandentiekio ir vėdinimo įrenginiai 1.5% Langai, durys ir kitos atitvaros 1.2% Armatūrinis plienas, įdėtinės detalės ir elementai 1.0% Betoniniai, gelžbetoniniai ir natūralaus akmens… 0.6% Sienų, lubų ir grindų dangos 0.3% Užpildai 0.2% Termoizoliacinės medžiagos ir gaminiai 0.2% Betonai ir skiediniai 0.1% Stogo dangos ir gaminiai 0.0% Stiklas ir gaminiai 0.0%
0% 5% 10% 15% 20% 25% 30% 35%
Out of all regulated construction products, the highest share of imports in 2017 was accounted for by iron or steel structures and their components (730890) and articles made of iron or steel (732690), as these accounted for 9% and 8% of the total imports of regulated construction products, respectively. (Fig. 15 shows shortened product names; the detailed names can be found in Annex 2 according to the code provided in brackets). Other product categories accounted for a significantly smaller share (3–4%
13 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ each). The top five products together account for almost 30% of all regulated construction product imports.
Fig. 15. Top 5 most imported regulated construction products, 2017.
Geležies arba plieno konstrukcijos ir jų dalys 9% (730890)
Dirbiniai iš geležies arba iš plieno (732690) 8%
Dažai ir lakai (320890) 4%
Jungiamosios detalės iš plastikų (391740) 4%
Aliuminio konstrukcijos ir jų dalys (761090) 3%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
In 2017, the main country of origin of regulated construction products imported into Lithuania was Poland. 22% of all regulated construction products imported to Lithuania were from Poland (EUR 177 million), with Germany being second (15%, EUR 120 million), and Latvia being third (8% or EUR 62 million). Figure 16 shows top ten countries of origin of imported regulated construction products, which together accounted for almost 80% of all regulated construction product imports. The top ten contains only 2 non-EU countries, namely China and Belarus, which together accounted for 9% of all regulated construction product imports.
Fig. 16. Regulated construction product imports by country, 2017
Lenkija 22%
Vokietija 15%
Latvija 8%
Švedija 7%
Italija 6%
Estija 6%
Baltarusija 5%
Kinija 4%
Ispanija 3%
Čekija 3%
0% 5% 10% 15% 20% 25%
In 2017, 29% of all regulated construction product exports consisted of metal structures and their components, of which Lithuania exported almost EUR 300 million (see Fig. 17). A quarter of all exports (EUR 245 million) were accounted for by windows, doors, partitions. Almost equally distributed were wall, ceiling and floor coverings and reinforcing steel, inserts and components, which accounted for
14 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ 14% and 13% of all regulated construction product exports, respectively. 7% were made up by exports of heating and ventilation installations. These five product groups together accounted for almost 90% (EUR 887 million) of all exports of regulated construction products.
The top two most exported regulated construction products are also the most exported regulated construction products of Lithuanian origin; three quarters of these construction products are of Lithuanian origin (see Fig. 18). The largest share (over 90%) of exported wall, ceiling and floor coverings, as well as thermal insulation materials and products are of Lithuanian origin.
Fig. 17. Total regulated construction product exports by product group, 2017
Metalinės laikančios konstrukcijos ir jų elementai 2.9%
Langai, durys ir kitos atitvaros 2.4%
Sienų, lubų ir grindų dangos 1.4%
Armatūrinis plienas, įdėtinės detalės ir elementai 1.3%
Šildymo, vandentiekio ir vėdinimo įrenginiai 0.7%
Dažai, lakai, glaistai, gruntai ir dangos 0.6%
Termoizoliacinės medžiagos ir gaminiai 0.3%
Betoniniai, gelžbetoniniai ir natūralaus akmens… 0.3%
Užpildai 0.1%
Betonai ir skiediniai 0.0%
Stiklas ir gaminiai 0.0%
Stogo dangos ir gaminiai 0.0%
0% 5% 10% 15% 20% 25% 30% 35%
Fig. 18. Regulated construction product export flows by product groups, 2017
15 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Metalinės laikančios konstrukcijos ir jų elementai Langai, durys ir kitos atitvaros Sienų, lubų ir grindų dangos Armatūrinis plienas, įdėtinės detalės ir elementai Termoizoliacinės medžiagos ir gaminiai Šildymo, vandentiekio ir vėdinimo įrenginiai Betoniniai, gelžbetoniniai ir natūralaus akmens… Dažai, lakai, glaistai, gruntai ir dangos Užpildai Betonai ir skiediniai Stiklas ir gaminiai Stogo dangos ir gaminiai
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%
Lietuviškos kilmės eksportas Reeksportas
Out of all regulated construction products, the largest share of exports in 2017 was accounted for by iron or steel structures and their components (730890), which made up 19% of the total exports of regulated construction products, 23% of exports of regulated construction products of Lithuanian origin, and 10% of re-exports of regulated construction products. The top five most exported regulated construction products, presented in Figure 19, represent 54% of all regulated construction product exports. Top five regulated construction products of Lithuanian origin, presented in Figure 20, together account for 66% of all regulated construction products of Lithuanian origin. Figure 21 presents the top five most re-exported regulated construction products in Lithuania in 2017. The top five of the most re- exported regulated construction products coincides with the most imported regulated construction products.
Fig. 19. Top 5 most exported regulated construction products, 2017
Geležies arba plieno konstrukcijos ir jų dalys 19% (730890) Daugiasluoksniai grindų skydai iš medienos 14% (441875)
Dirbiniai iš geležies arba iš plieno (732690) 12%
Mediniai langai, langai-durys ir jų rėmai (441810) 6%
Aliuminio konstrukcijos ir jų dalys (761090) 4%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Fig. 20. Top 5 most exported regulated construction products of Lithuanian origin, 2017
16 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Geležies arba plieno konstrukcijos ir jų dalys 23% (730890) Daugiasluoksniai grindų skydai iš medienos 19% (441875)
Dirbiniai iš geležies arba iš plieno (732690) 12%
Mediniai langai, langai-durys ir jų rėmai (441810) 7% Durys, langai, rėmai, slenksčiai iš aliuminio 5% (761010)
0% 5% 10% 15% 20% 25%
Fig. 21. Top 5 most re-exported construction products, 2017
Geležies arba plieno konstrukcijos ir jų dalys 10% (730890)
Dirbiniai iš geležies arba iš plieno (732690) 10%
Aliuminio konstrukcijos ir jų dalys (761090) 9%
Dažai ir lakai (320890) 6%
Jungiamosios detalės iš plastikų (391740) 4%
0% 2% 4% 6% 8% 10% 12%
In 2017, most of the regulated construction products were exported to Russia, 15% (EUR 152 million) of all regulated construction product exports, but 90% of this flow consists of re-exported products. Norway (14%) was in second, Sweden (10%) in third. Figure 22 shows top ten countries of origin of exported regulated construction products, which together accounted for almost 80% of all regulated construction product exports. This top ten contains 3 non-EU countries, namely Russia, Norway and China.
Fig. 22. Total regulated construction product exports by country, 2017
17 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Rusija 15%
Norvegija 14%
Švedija 10%
Vokietija 8%
Latvija 7%
Jungtinė Karalystė 6%
Danija 5%
Suomija 5%
Lenkija 4%
Kinija 3%
0% 2% 4% 6% 8% 10% 12% 14% 16%
Fig. 23. Exports of regulated construction products of Lithuanian origin by country, 2017
Norvegija 18%
Švedija 14%
Vokietija 11%
Jungtinė Karalystė 7%
Danija 7%
Suomija 7%
Latvija 5%
Kinija 5%
Lenkija 4%
Rusija 2%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Norway and Sweden are the main destinations for regulated construction products of Lithuanian origin. They account for 18% and 14% of exports of regulated construction products of Lithuanian origin, respectively (see Fig. 23). 97% of all exports of regulated construction products to Sweden and 88% to Norway are of products of Lithuanian origin. More than 90% of exports of regulated construction products to Denmark, Finland, Germany and China are of products of Lithuanian origin.
The main re-export market for regulated construction products is Russia, accounting for 44% of total re-exports (EUR 137 million). The top ten countries in terms of re-export of regulated construction products include six non-EU countries: Russia, Belarus, Norway, Kazakhstan, Uzbekistan, Ukraine (see Fig. 24).
Fig. 24. Regulated construction product re-export by country, 2017
18 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Rusija
Latvija
Baltarusija
Norvegija
Kazachstanas
Lenkija
Estija
Jungtinė Karalystė
Uzbekistanas
Ukraina
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
VI. MAIN OBSTACLES IN THE CONSTRUCTION SECTOR
In 2015, 8,648 company births were seen in the narrow construction sector, which was 10.2% less than in 2014 (9,634), but 3.6 times more than in 2009 (2,410). In 2015, 789 company deaths were seen, with the largest number of company deaths seen in 2008 (10,790). During 2009–2014, on average, about 5,000 company deaths in the narrow construction sector were recorded annually.
In the real estate sub-sector in 2015, 2,616 company births were registered, 17.5% more than in 2014 and as many as 2.4 times more than in 2009, but still less than in 2008 (4,606). In 2015, 391 company deaths were registered in the real estate subsector, which was the smallest number of company deaths in this subsector since 2007; the largest number of company deaths was recorded in 2008 (9,566). During 2009–2014, on average, 1,300 company deaths were recorded in this subsector annually.
In 2015, 649 company births were registered in the architectural and engineering sub-sector, which was 44,1% less than in 2014, but twice more than in 2008. In 2015, 466 company deaths were recorded in this subsector, with about 400 company deaths recorded annually.
Given these facts, the development of the construction sector in Lithuania in recent years can be considered sustainable, as this sector generated 6.1% of all of value added in 2016, which was only 1.0% more than the EU average (5.1%), when in 2008 this indicator was at 9.9% and was 3.6% above the EU average (6.3%).
19 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Trade credit
According to SAFE 2017 study31, only 19% of Lithuanian companies consider trade credit as a relevant source of finance. In the EU, 33% of respondents think that trade credit is relevant for their business. Over the last 6 months prior to the survey, 15% of all respondents in Lithuania used this source of finance, in the EU the number was 19%.
Late payments
Late payments have a significant impact on Lithuanian companies. According to the 2018 European Payment Report32, 35% of Lithuanian businesses have reported loss of revenue due to late payments; on the EU level, this figure is 18%. Lithuanian companies have lost an average of 1.42% of annual income over the past twelve months due to late payments by customers. This indicator is better than the average for European companies (1.7%).
Late payments also have a significant impact on the development of Lithuanian companies. 33% of Lithuanian companies indicate that late payments hinder the development of the company (16% on a European scale).
The average payment terms depend on the type of business transactions. In Lithuania, in business-to- consumer transactions, the average payment term is about 20 days, while in business-to-business transactions this term is 27 days; in the public sector it is 28 days.
Time and cost of obtaining building permits and licenses
According to the Doing Business 2018 report by the World Bank, Lithuania ranks 12th (among 190 countries) in terms of dealing with building permits. The number of procedures for obtaining a building permit is 13 (see Table 3) and is very similar to the OECD average (12.5)33. On average, it takes 75 days to build a warehouse in Lithuania, which is significantly faster than in the OECD countries (on average 154.6 days). In addition, most of these procedures are free in Lithuania, so the cost of obtaining building permits is five times lower than the OECD average (0.3% of the warehouse value compared to 1.6%).
Table 3. Time and cost of building permit procedures in Lithuania
Time (in Procedures Price days) Registering ownership of a land plot 0.5 EUR 3 Topographic survey of a land plot 21 EUR 175 Special architectural requirements for construction operations 21 free Water supply and sewage network design requirements 14 free Approval of design documentation and obtaining a building permit 14 EUR 72 Approval of the water supply and sewage network design and the signing of the 7 EUR 348 contract Documents for inspection and testing of water supply and sewage networks of 5 free engineering networks Connection to water supply and sewage networks 5 free Recruitment of a private cadastral firm and cadastral measurements of the 5 EUR 579 structure Application for a construction completion certificate 0.5 free
31 European Commission, Survey on the access to finance of enterprises (SAFE), Analytical Report 2017 // https://ec.europa.eu/docsroom/documents/26641 32 European Payment Report, 2018 // https://www.intrum.com/press/publications/european-payment-report/ 33 World Bank Group, Doing Business 2018, Dealing with Construction Permits // http://www.doingbusiness.org/data/exploreeconomies/lithuania/#dealing-with-construction-permits
20 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Final inspection 1 free Obtaining a construction completion certification 14 free Registration in the Land and Real Estate Register 1 EUR 749
Bureaucracy and corruption
Business representatives believe that the scale of corruption in Lithuania is decreasing. In the EU Single Market Scoreboard 201734, 21% of Lithuanian business respondents indicated that corruption had hampered the development of business in the country (compared to 28% in 2015; on the EU level, this figure was 37% in 2017), while 26% said they did not win a tender due to corruption (compared with 39% in 2015; on the EU level, this figure was 31% in 2017). However, 70% said that bribes and ties are often the easiest way to get certain public services in our country35. 40% of respondents said that corruption is widespread among officers issuing building permits. Small and medium businesses have in particular reported the need to make facilitation payments in order to obtain permits on time 36.
Ineffective state bureaucracy is mentioned as the second biggest hindrance to business in Lithuania37. Companies also complain that the interpretation of regulations is unclear, application is inconsistent, new legislation is implemented without sufficient information, without proper public consultation, there is a lack of legal certainty regarding the quality and complexity of laws. Lithuanian politicians often get caught up in corruption scandals.
Shortage of skills
In 2017, the number of job vacancies in the narrow construction subsector increased by 80% to 1,893, which was still lower than in 2008 (2,059), but was 6.7 times higher than in 2009 (283). The opposite is observed in the real estate subsector, where in 2017, the number of job vacancies decreased by 48% to 68 jobs and is higher than in 2008 (54).
In 2017, the participation of adults in education and training38 in the narrow construction subsector amounted to 5.9%, slightly more than in 2015 (5.6%), but 22% less than in 2009 (7.6%).
Among the professions with the most demand in Lithuania were construction engineers, builders, painters, carpenters and joiners, unskilled construction workers39. This shortage of workers relates, in particular, to the emigration of skilled workers to countries with higher pay and better working conditions. The shortage of construction and other skilled workers is the result of a small number of young people choosing vocational education training (VET).
In addition to commonly demanded construction workers, it is likely that the construction sector will need 35,000 to 40,000 employees trained in the energy performance of buildings. There are no official figures on the number of staff trained so far, but according to a survey of construction companies,
34 European Commission. EU Single Market Scoreboard // http://ec.europa.eu/internal_market/scoreboard/performance_by_member_state/lithuania/index_en.htm 35 European Commission. Flash Eurobarometer 457: Businesses’ attitudes towards corruption in the EU // https://data.europa.eu/euodp/data/dataset/S2177_457_ENG 36 Business Anti-Corruption Portal. Lithuania Corruption Report // https://www.business-anti- corruption.com/country-profiles/lithuania/ 37 The Global Competitiveness Report 2017-2018 // https://www.weforum.org/reports/the-global- competitiveness-report-2017-2018 38 Eurostat data. Level of participation in education and training (last 4 weeks, age 16–64). The indicator includes participation in both formal and informal education and is a measure of lifelong learning. 39 Lithuanian Labour Exchange // http://www.ldb.lt/Informacija/DarboRinka/Puslapiai/paklausios_profesijos.aspx (data of 09/04/2018)
21 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ about 40% of employees have received training on energy performance of buildings, and 30% on renewable energy40.
40 European Commission, Intelligent Energy Europe // https://ec.europa.eu/energy/intelligent/projects/en/projects/build-skills-lt
22 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Waste management
In 2014, 647,663 tons of construction and demolition waste were generated in Lithuania, which was 15% more than in 2012 (564,841 tons), and 92% more than in 2010 (388,150), resulting from the intensification of construction in the country during this period.
Waste management, including construction and demolition waste, is governed by the Law on Waste Management41, which establishes general requirements for waste prevention, accounting, collection, storage, transportation, utilisation and disposal. The Law on Pollution Tax42 defines the rules for the application of the pollution tax in order to promote pollution reduction and the implementation of waste management.
The Government has approved the National Waste Management Plan for 2014–2020 in order to reduce the impact of waste pollution, ensure a waste management system and establish waste management objectives. The waste management system should address issues of the population, ensure the quality of the environment, comply with the market economy standards; meanwhile, the share of recycled waste in 2020 should be at least 50%.
VII. INNOVATION IN THE CONSTRUCTION SECTOR
According EU Innovation Scoreboard 201743, Lithuania is ranked among average innovators, while the overall productivity of innovation and research and innovation is below the EU average. Lithuania is 16th among 28 European Union countries. The growth of Lithuanian innovation activity in 2016, compared to 2010, was the fastest and was 21%. The Lithuanian innovation system is considered relatively strong in such innovation areas as environment, human resources, and business–science collaboration, while in the areas of sales impact, attractive research and intellectual property the innovation system is relatively weak.
Business enterprise research and development (R&D) expenditure in the construction sector has shown fluctuations over the last year (see Fig. 25). In 2009, R&D expenditure in the narrow construction subsector dropped by 98.9% from EUR 2.6 million down to EUR 0.029 million in 2009, then in 2010 recovered strongly and reached EUR 1.4 million; during 2011–2013, decline in R&D expenditure was observed and then again strong recovery in 2014. In 2015, R&D expenditure in the narrow construction subsector amounted to EUR 0.76 million. In 2015, R&D expenditure in real estate activities amounted to EUR 0.057 million and the peak was in 2013, when it amounted to EUR 2.29 million44.
41 Law on Waste Management of the Republic of Lithuania. The Gazette, 08/07/1998, No. 61-1726 // https://www.e-tar.lt/portal/lt/legalAct/TAR.8D38517814F1/cThueyllRO 42 Law on Pollution Tax of the Republic of Lithuania. The Gazette, 28/05/1999, No. 47-1469 // https://www.e- tar.lt/portal/lt/legalAct/TAR.FFF9AE9162EE/tvLgZlioOt 43 European Commission. European Innovation Scoreboard 2017 // https://ec.europa.eu/docsroom/documents/24829 44 Eurostat data. Data for R&D expenditure in real estate activities is only available for 2010, 2012–2015.
23 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Fig. 25. Business enterprise research and development expenditure in the construction sector in Lithuania (2008–2015, EUR m)
3 2,5 2 1,5 1 0,5 0 2008 2009 2010 2011 2012 2013 2014 2015
Statyba Nekilnojamojo turto veikla
Total R&D personnel (full-time equivalent45) in the construction subsector fluctuated, as did R&D expenditure. In 2008, the narrow construction subsector employed 45 R&D employees, in 2015—66, while the largest number of R&D personnel was in 2014 (130). In 2015, real estate companies employed 8 R&D employees, while the highest number was employed in 2014 (10).
According to the 2017 EU Industrial R&D Investment Scoreboard46, no Lithuanian construction company was among the top 1000 EU companies in terms of R&D spending.
The Government of Lithuania is developing state programs and strategies for promoting innovation in various national economic sectors: renewable resources, energy waste management, construction and environmentally-friendly transport. One of the main initiatives is the Lithuanian Innovation Development Program 2014–2020, which aims to promote Lithuania’s competitiveness by creating an effective innovation system across all sectors47. In addition, the Smart Specialisation Strategy was launched in 201548. The strategy seeks to increase investment in research in order to develop competencies in business potential, strengthen scientific, technological development and innovation, and promote cooperation between public and private actors. One of the main priority areas for R&D is the ‘Technology for the Development and Use of Smart Low-Energy Buildings—Digital Construction’, which has an approved action plan for 2015–2020. The action plan describes in detail the steps taken to develop and implement digital construction technologies, building information models, new products, processes and methods in the construction market. Smart specialisation priorities were created by a group of independent experts, set up by the Lithuanian Research and Higher Education Monitoring and Analysis Centre (MOSTA)49. Monitoring is carried out by developing action plans that determine the basis and objectives of each priority. The second monitoring report on the implementation of MOSTA smart specialisation indicates that the investments into R&D50 infrastructure planned by the Ministry of Education and Science for 2014–202051 fail to allocate any finance to the ‘Digital Construction’ priority.
45 A full-time equivalent is obtained by converting the number of part-time research employees to the number of full-time research employees. 46 European Commission. The 2017 EU Industrial R&D Investment Scoreboard. R&D ranking of EU top 1000 companies // http://iri.jrc.ec.europa.eu/scoreboard17.html 47 Lithuanian Innovation Development Program 2014–2020. The Gazette, 30/12/2013, No. 140-7110 // https://www.e-tar.lt/portal/lt/legalAct/ab492740723811e3b29084acd991add8 48 http://sumani2020.lt/ 49 http://mosta.lt/ 50 Research and experimental (socio-cultural) development and innovation 51 Ministry of Education and Science of the Republic of Lithuania
24 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ According to the amount of finance of the EU research and innovation programme Horizon 2020, the least amount of funds is allocated to the digital construction priority (EUR 66,600, 0.22% of the funds).
The construction sector has been actively involved in the digitisation of the industry. In 2014, the Lithuanian Construction Association, together with 12 other associations, established a public institution ‘Skaitmeninė Statyba’ (Digital Construction) for the coordination of the Lithuanian digitisation process. The institution seeks to standardise building information modelling (hereinafter referred to as BIM 52), create, implement and develop a national construction classification. The institution represents Lithuania in the Nordic country section of the international ‘buidingSMART’ alliance.
VIII. NATIONAL AND REGIONAL POLICY AND REGULATORY FRAMEWORK
Policy schemes
The Ministry of Environment of the Republic of Lithuania is responsible for construction and housing issues. The Lithuanian Housing Strategy defining the housing policy was recognised in 2017 as a document that was not legally valid and was not actually implemented, or more precisely was not funded. The goals and objectives of the Housing Strategy are implemented through programmes that receive budget funding, for example, the Programme for the Renovation (Modernisation) of Multi-Apartment Houses, an action plan for the development of the social housing fund, etc. Nevertheless, the strategic goals set by the Housing Strategy remain relevant; therefore, it was decided to transfer them to the Master Plan for the Territory of the Republic of Lithuania. This is because it is directly related to sustainable development, addressing available/affordable, comfortable housing issues and expanding the range of housing products. The concept for a new plan is currently underway53.
The Ministry of Social Security and Labour approved the Action Plan for the Development of Municipal Social Housing Fund for 2015–2020, based on the funds of the European Regional Development Fund (ERDF54), intended to meet the growing demand for affordable housing. In particular, the action plan finances such projects as the construction of new social housing buildings, the reconstruction or maintenance of existing buildings (living quarters, dormitories, nursing homes, shelters, etc.) and the conversion of non-residential buildings into social housing. In addition, the plan aims to promote energy efficiency by encouraging households to buy social housing with a minimum energy grade of C. Finally, the action plan aims to create 1,150 new social housing units and increase their availability to eligible households. The overall budget for the implementation of the plan amounts to EUR 58.7 million, EUR 49.9 million of which are from the ERDF and EUR 8.8 million—from municipal budgets55.
In order to support low and middle income families in obtaining affordable housing, the Government has approved the Law On State Support to Acquire or Rent Housing, which provides that households entitled to receive social housing or to rent housing under market conditions shall be entitled to a compensation for some of the rent or lease payments. In addition, the state shall support selected beneficiaries (i.e., people under 35 years of age, families with three or more children, people with disabilities, etc.) by covering up to 20% of the mortgage loan56.
Finally, in November 2015, the Ministry of Environment approved the Guidelines of developing Lithuanian construction sector 2015–2020. This document defines the strategic objectives of the sector
52 BIM (Building Information Modelling) is a process that continues throughout the life cycle of a structure. BIM includes design, construction, operation and management, upgrading and eventually demolition of the structure. In order to reduce the environmental impact of a structure, it is very important to take into account all aspects of energy consumption. 53 https://lrv.lt/lt/naujienos/pradedamas-rengti-lietuvos-respublikos-teritorijos-bendrasis-planas 54 ERDF— European Regional Development Fund 55 Action Plan for the Development of Municipal Social Housing Fund for 2015–2020 // https://www.e- tar.lt/portal/lt/legalAct/5f9f8880df3c11e48b678a6bad30f55f/SdAoDCmKea 56 Law On State Support to Acquire or Rent Housing of the Republic of Lithuania // https://www.e- tar.lt/portal/lt/legalAct/e944ee00600111e4bad5c03f56793630/mYcwnjxkkS
25 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ up to 2020, as well as the objectives to be achieved in order to address the challenges associated with qualifications, energy and environmental requirements, market access, application of information technology and implementation areas. The strategic objectives of the guidelines include improving the sustainability of buildings; more efficient use of resources for the production, transport and use of construction products; promotion of sustainable cities and infrastructure and promotion of highly qualified training and continuous professional development57.
Construction regulation
The Law on Construction of the Republic of Lithuania58 is the main legal act governing construction operations in Lithuania. It sets out all the essential requirements for construction, reconstruction and repair operations within the country. It includes detailed procedures for research, design, construction, reconstruction, repair, operation, use and demolition works, as well as the relations between parties involved in construction activities. It also includes minimum energy performance requirements for buildings.
In addition, the construction process is also governed by various construction technical regulations, such as the classification of structures (STR 1.01.03:2017), structure design, expert examination of design documentation (STR 1.04.04:2017), supervision of construction works (STR 1.06.01:2016 ), accident at a construction works (STR 1.03.01:2016), completion of construction (STR 1.05.01:2017), etc.59
Article 42 of the Law on Construction of the Republic of Lithuania stipulates that designers of construction operations and construction contractors must have compulsory insurance against civil liability. For designers, this compulsory insurance covers damage caused to third parties due to inadequate design, and for construction contractors—the losses incurred due to inadequate construction operations for third parties. The amended version of the law also extends this obligation to the technical supervision of construction operations. In this respect, the principles of regulation and the main provisions are set out in the documents on the rules of compulsory civil liability insurance of the contractor, the rules of compulsory civil liability of the construction contractor, and the rules of compulsory civil liability insurance of the technical supervision administrator, which must be taken into account when entering into contracts for compulsory civil liability insurance.
Insurance may also be voluntary, including civil liability insurance and contractor’s all risk insurance, which covers damage caused during construction.
The principles of liability in the construction sector are defined by the Civil Code, which stipulates that liability may arise from non-compliance with an obligation stipulated in a law or a contract (for example, failing to complete a construction works within the time period specified in the contract or according to the specifications laid down therein), prohibited actions or negligence. In such cases, the contractor may need to remedy defects or compensate the customer for expenses. In the case of structural defects, the liability shall last 10 years, and in the case of deliberately concealed defects—20 years.
57 Order on the Approval of the Guidelines of developing Lithuanian construction sector 2015–2020 // https://www.e-tar.lt/portal/lt/legalAct/4a443e3087a811e5b7eba10a9b5a9c5f 58 Law on Construction of the Republic of Lithuania. The Gazette, 10/04/1996, No. 32-788 // https://www.e- tar.lt/portal/lt/legalAct/TAR.F31E79DEC55D/YvnvhJQEpn 59 A collection of applicable technical construction regulations only (29/05/2018) // http://www.am.lt/VI/index.php#a/16982
26 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ IX. CURRENT STATUS AND NATIONAL STRATEGY TO MEET CONSTRUCTION 2020 OBJECTIVES
Investment conditions and volumes
Investment in the construction sector, in particular non-residential property, is the main driving force behind the country’s investment.60.
Fig. 26. Investment in the construction sector in Lithuania, 2007–2017 (2015=100)
1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Statyba Gyvenamoji statyba Negyvenamoji statyba ir civilinė inžinerija
Absolute investment in the construction sector in 2017 amounted to EUR 4 billion, EUR 1 billion of which went to residential dwellings and EUR 3 billion into non-residential and civil engineering61.
The transport sector in Lithuania is considered to be strategically important and strongly contributes to the GDP. The country seeks to become a transport hub between the Nordic countries and Central Asia and China, but the transport infrastructure still needs to be improved. Only 6.5% of the railways are electrified, and the rail link from north to south is poorly developed62.
In order to overcome some of these challenges and to strengthen the connections, Lithuania has allocated EUR 1.1 billion of EU funding for transport infrastructure development for 2014–202063. EUR 177 million of the Connecting Europe Facility (CEF64) are allocated to transport projects65.
One of the most important strategic transport infrastructure projects is Rail Baltica, which is part of the European Union’s international transport corridor North Sea–Baltic Sea and part of the transport corridor (TEN-T) connecting the Baltic States with the European railway network66. In addition to EU funds, the Nordic Investment Bank has granted a EUR 144 million loan for the construction of a railway line from
60 European Commission, Country Report: Lithuania 2016 // https://ec.europa.eu/info/publications/2016- european-semester-country-report-lithuania_en 61 AMECO database // http://ec.europa.eu/economy_finance/ameco/user/serie/SelectSerie.cfm 62European Commission. Transport. EU transport Scoreboard. Electrified railway lines // https://ec.europa.eu/transport/facts-fundings/scoreboard/compare/energy-union-innovation/share-electrified- railway_en#2015 63 European Commission, EU transport Scoreboard // https://ec.europa.eu/transport/sites/transport/files/lt_en.pdf 64 CEF— Connecting Europe Facility 65 European Commission, Country Report: Lithuania 2016 // https://ec.europa.eu/info/publications/2016- european-semester-country-report-lithuania_en 66 http://www.rail-baltica.lt/
27 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ the Lithuanian–Polish border to Kaunas67. The project is expected to be completed in 2025; this date has been confirmed in the intergovernmental agreement signed by Estonia, Latvia and Lithuania.
Reductions in EU funds require alternative sources of investment in infrastructure and energy projects. To this end and in order to enable long-term investors to invest in infrastructure and energy projects, the first Lithuanian Energy and Infrastructure Investment Fund—the Energy and Infrastructure Baltic Fund (BEIF)—was established in 201668. The fund has EUR 100 million, but has not yet made any investments.
In 2017, BaltCap (a private equity and venture capital fund manager) set up the EUR 100 million ‘BaltCap Infrastructure Fund’69. The fund is expected to help meet the growing demand for investment in transport, energy efficiency and renewable energy sectors in the Baltic region. Together with other institutional investors, the European Investment Bank (EIB) has invested EUR 20 million in the fund.
The EIB is an important contributor to Lithuania’s investment in infrastructure. The Bank contributes to the modernisation of the country’s railways, providing a loan of EUR 68 million for the extension of the Klaipėda railway unit, as well as renewal and electrification of several railway lines70. Vilnius is using EIB financing, namely a EUR 50 million loan, for urban infrastructure, better roads, rehabilitation of the city centre, renovation of schools and kindergartens71. The EIB- and state-owned energy company group ‘Lietuvos Energija’ has signed an agreement for a EUR 190 million loan for the construction of a new cogeneration plant in Vilnius. The implementation of this project would solve the problem of landfill waste, reduce energy prices for urban residents, increase energy security and ensure clean energy production from renewable and local energy sources. The EIB loan for this project is allocated from the European Fund for Strategic Investments (EFSI)72.
Skills
Although the government seeks to improve the quality and attractiveness of VET, there are still challenges to be addressed. The number of students enrolled in VET institutions in 2011–2017 increased from 20,000 to 25,600, but in 2016–2017 school year again dropped to 20,00073. The proportion of VET students remains relatively low, i.e. 27.2% (in 2016) 74 . VET graduates have a quite high employment rate of 71.5% (in 2017, although down from 75.6% in 2015); for comparison, the EU average is 76.6% (in 2017)75.
In addition, Lithuania is affected by one of the highest skills mismatches in the EU: middle and low-skilled workers face high unemployment risks (13.5% and 29.8% respectively), while the unemployment risk of high-skilled
67https://www.nib.int/who_we_are/news_and_media/news_press_releases/1299/nib_finances_railway_infrastruc ture_in_lithuania 68 https://lordslb.lt/en/fund/baltic-energy-and-infrastructure-fund-3/ 69 https://www.vz.lt/rinkos/fondai/2017/07/03/baltijos-salyse--naujas-100-mln-eur-infrastrukturos- fondas#ixzz5HeVVg1eN 70 http://www.eib.org/infocentre/press/releases/all/2016/2016-017-eib-renews-support-for-lithuanian- railways.htm 71 http://www.eib.org/infocentre/press/releases/all/2016/2016-207-eib-to-support-vilnius-urban-investment- programme.htm 72 http://www.eib.org/infocentre/press/releases/all/2016/2016-317-european-support-for-cheaper-and-cleaner- heat-and-power-in-lithuania.htm (https://www.le.lt/index.php/naujienos/pranesimai-spaudai/svaresne-ir-pigesne- energijos-gamyba-lietuvoje-sulauke-europos-paramos-/3032) 73 During the same period, the number admissions to universities decreased from 33,400 in 2011 to 22,700 in 2017; the number of admissions to colleges dropped from 16,400 to 12,000 accordingly. 74 Compared to 47.3% in the EU (data only for 2015), in Lithuania the rate was 26.8% in 2015. 75 For comparison, the employment rate of higher education graduates in 2017 was 91.5% (up from 88.5% in 2015), while the employment rate of general education graduates in 2017 amounted to 73.1% (up from 67.2% in 2015)
28 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ employees is very low (4.2%, compared to 6.1% in the EU)76. The skills mismatch has been exacerbated by the crisis in the construction sector, as a number of jobs were lost. This has led to an increase of the structural unemployment rate, which was 8.5% in 201777.
Thus, there is a need to improve VET quality, attractiveness and responsiveness to labour market needs. In 2010, the Lithuanian government approved the Lithuanian qualification framework (LQF)78, setting up clear rules and requirements for getting qualification though different forms of education. The VET qualification acquired outside of the formal education and training is planned to be included in the LQF.
Some progress has also been achieved with the introduction of 2014–2016 Action Plan for the Development of Vocational Training, which introduces modular VET training and strengthens work- based learning79.
In order to improve the qualification of Lithuanian construction workers, several initiatives have been launched. Notably, the Guidelines of developing Lithuanian construction sector 2015–202080 set the objective of encouraging high-skilled training and continuous professional development, including the promotion of professional qualifications in accordance with market needs, as well as the use of EU programmes, such as Build Up and Erasmus+ for developing effective trainings.
Furthermore, as a result of the Build Up skills project81, the Guidelines for the Professional Development of Building Workforce in Lithuania82, which aims to create a strategy to meet Europe 2020 targets, including an action plan to identify the need for skilled workers, their training measures and priorities, as well as the certification procedures. In addition, the guidelines seek to establish a voluntary system for development and recognition of professional competences and skills of the building workforce in Lithuania in relation to requirements for nearly zero energy buildings.
Resource Efficiency / Sustainable Construction
With regard to the progress made in implementing the national targets of Europe 2020 strategy, Lithuania has achieved the general renewable energy target and has made significant progress in energy efficiency. According to its national energy efficiency target, the country is to reach a 17% reduction in the final energy use by 2020, compared to the 2009 level (740 ktoe less). This entails attaining a level of 6.49 Mtoe of primary and 4.28 Mtoe of final energy consumption by 202083. The country is performing well with regard to energy efficiency in buildings, as supported by national funding schemes and EU funds. More effort is needed to achieve the energy efficiency target by increasing the share of renewable energy in the transport sector.
76 European Commission, Country Report: Lithuania 2016 // https://ec.europa.eu/info/publications/2016- european-semester-country-report-lithuania_en 77 AMECO database // http://ec.europa.eu/economy_finance/ameco/user/serie/ResultSerie.cfm 78 Government of the Republic of Lithuania, decision ‘On the Approval of the Lithuanian Qualification Framework’, the Gazette, 15/05/2010, No. 56-2761 // https://www.e- tar.lt/portal/en/legalAct/TAR.BC967702800C/TAIS_405326 79 Order of the Minister of Education and Science of the Republic of Lithuania ‘On the Approval of the 2014–2016 Action Plan for the Development of Vocational Training’ // https://www.e- tar.lt/portal/lt/legalAct/52b2e96047bf11e483c6e89f9dba57fd/jfZEVNfPNc 80 Order on the Approval of the Guidelines of developing Lithuanian construction sector 2015–2020 // https://www.e-tar.lt/portal/lt/legalAct/4a443e3087a811e5b7eba10a9b5a9c5f 81 European Commission, Intelligent Energy Europe // https://ec.europa.eu/energy/intelligent/projects/en/projects/build-skills-lt 82 Guidelines for the Professional Development of Construction Workforce in Lithuania to meet the 2020 energy efficiency targets // http://energinisefektyvumas.lt/wp-content/uploads/2013/08/BUS_GAIRES.pdf 83 European Commission, Country Report: Lithuania 2018 // https://ec.europa.eu/info/sites/info/files/2018- european-semester-country-report-lithuania-en.pdf
29 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ One of the country’s largest priority projects and the main funding scheme for renovation of residential buildings is the Programme for the Renovation (Modernisation) of Multi-Apartment Houses, aiming to encourage the energy efficient renovation of apartment blocks built before 199384. The programme was initially enforced in 2005, offering state grants of up to 50% of the costs of the renovation works, with the balance provided by commercial banking loans.
Nevertheless, it ran out of funds by 2007 due to limited state resources, and the European Commission, EIB and the government therefore signed an agreement in 2009 to relaunch it using JESSICA85. The JESSICA Holding Fund was thus set up and capitalised with an initial investment of EUR 227 million, of which EUR 127 million from the ERDF and EUR 100 million from the national budget. The programme offered loans amounting to up to EUR 200,000 per building, repayable over 20 years at a fixed interest rate of 3% per annum. A 50% grant to prepare the relevant renovation documentation was also available, as well as a 100% subsidy on all expenses for low-income applicants. Moreover, beneficiaries could claim a 15% loan rebate from the Holding Fund if the renovated building achieved the minimum energy efficiency class D (i.e. a 20% reduction in energy costs) and an additional 15% grant from the Climate Change Programme in case of a 40% reduction in energy costs. Eligible costs under the programme include the reorganisation of heating and hot water systems, ventilation and recuperation systems, insulation of roofs, walls, partition, replacement of windows, doors, upgrading of lifts, as well as management of other engineering systems of general use (sewage, wiring, fire protection, drinking water pipelines).
Since its launching in 2005 until 2012, 479 multi-apartment houses were renewed in Lithuania. (The renovation of multi apartment buildings was funded through the JESSICA initiative until 2013). For the period 2014–2020, it falls under the remit of the newly established Multi-Apartment building modernisation fund (DNMF), which provides soft loans through its EUR 74 million allocation. Since the approval of the new multi-apartment building renovation model in 2013, 1973 apartment blocks have been renovated, 533 apartment blocks are currently being renovated and 576 investment plans have been reconciled86.
The EIB, in cooperation with Šiaulių Bankas, supports the renovation and modernisation of multi- apartment buildings in Lithuania87. In addition, in order to maximize the funds of the Programme for the Renovation (Modernisation) of Multi-Apartment Houses, the EIB, together with the Ministry of Finance and the Ministry of Environment set up a Risk Sharing Fund in late 2016, funded by EU Structural and Investment Funds (from the European Regional Development Fund) and national funds. The fund aims to support investments that promote energy efficiency in order to reduce energy costs. The Fund gives banks the opportunity to increase lending under the modernisation programme, thus increasing its scope and awareness throughout Lithuania. It is expected that this guarantee will allow banks to provide up to EUR 500 million in modernisation loans, which would allow upgrading up to 32,500 apartments and nearly 1,500 apartment blocks by 2023 and would increase the available public
84 Programme for the Renovation (Modernisation) of Multi-Apartment Houses // https://www.e- tar.lt/portal/lt/legalAct/TAR.AE67B6739526/WThqaVWCcL 85 JESSICA (Joint European Support for Sustainable Investment in Cities) is an initiative of the European Commission, developed in cooperation with the European Investment Bank (EIB) and the Council of Europe Development Bank (CEB). It provides financial engineering instruments that support sustainable urban development and renewal projects. 86 http://atnaujinkbusta.lt/ 87 http://www.eib.org/infocentre/press/releases/all/2016/2016-137-eib-and-siauliu-bankas-renew-support-for- urban-renewal-in-lithuania.htm (https://www.sb.lt/lt/naujienos/eib-ir-siauliu-bankas-atnaujino-parama-miestu- finansavimui-lietuvoje/) ir http://www.eib.org/infocentre/press/releases/all/2017/2017-066-lithuania-new- support-for-energy-efficiency-in-multi-apartment-buildings.htm (https://www.sb.lt/lt/naujienos/lietuva-nauja- parama-daugiabuciu-namu-energijos-vartojimo-efektyvumui-didinti/)
30 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ resources 5 times, as the demand for energy efficiency investments in residential dwellings grows across the country88.
In addition, to further comply with the European Energy Efficiency Directive 2012/27/EU, the government approved the Public Buildings Energy Efficiency Programme in 201489. The programme aims to renovate public buildings by increasing energy efficiency in them and achieve 60 GWh worth of savings in annual primary energy consumption by 2020. To this end, the Energy Efficiency Fund (ENEF)90 was set up in 2015, funded by the ERDF with funds amounting to EUR 79.6 million. The Fund encourages investments in energy efficiency projects through the following financial products: soft loans for financing the renovation of central government buildings, which will benefit from up to EUR 65.1 million, and guarantees of up to 80% on loans granted by commercial banks for street lighting modernisation projects (up to EUR 14.5 million).
Finally, in line with the targets of the Europe 2020 Strategy, EUR 971 million of EU Structural and Investment Funds (ESIF) for 2014–2020 were allocated to priority axis 4 ‘Promoting Energy Efficiency and Production and Use of Renewable Energy’91.
Single market
Lithuania performs well with respect to the metrics of the EU Single Market Scoreboard 92 . Infringements, Internal Market Information System and Trade Integration in the Single Market for Goods and Services indicators report positive scores. Performance in Public Procurement was satisfactory. Business opinion on corruption in the country has improved, although corruption remains the biggest hindrance for businesses, with the second biggest business hindrance being ineffective state bureaucracy; complaints have also been received on unclear interpretation of regulations and complicated legislation (for more details, see ‘Bureaucracy and corruption’ in Section ‘IV. Main obstacles in the construction sector’).
In terms of cross-border provision of construction services, Lithuania is regarded to impose some excessive and unjustified requirements in its national rules, thus hampering the provision of services across the domestic market. The European Commission issued a letter of formal notice to Lithuania requesting it to remove its multidisciplinary restrictions on certain construction service providers93.
The professions of architects and civil engineers are regulated in Lithuania, i.e. in line with the regulated profession concept defined by Directive 2005/36/EC of the European Parliament and of the Council. Carrying out these activities require certain professional qualifications. An attestation for architects is issued by the Chamber of Architects of the Republic of Lithuania94. Similarly, civil engineers need a specific authorisation to carry out activities related to the structural part of the building design documentation; they are attested by VĮ Statybos Produkcijos Sertifikavimo Centras (State Enterprise
88 http://www.eib.org/infocentre/press/releases/all/2016/2016-224-lithuania-to-generate-up-to-eur-500-million- for-energy-efficiency-with-eib.htm (https://finmin.lrv.lt/lt/naujienos/lietuva-daugiabuciu-atnaujinima-skatins-ir- privaciu-investuotoju-lesomis) 89 Public Buildings Energy Efficiency Programme // https://www.e- tar.lt/portal/lt/legalAct/151b04b0793411e49adea948c356b2ec/UHthckFdHG 90 http://www.vipa.lt/naujienos/163 91 2014-2020 Action Programme for European Union Funds Investments // http://www.esinvesticijos.lt/lt/dokumentai/2014-2020-metu-europos-sajungos-fondu-investiciju-veiksmu- programa 92 European Commission. EU Single Market Scoreboard // http://ec.europa.eu/internal_market/scoreboard/performance_by_member_state/lithuania/index_en.htm 93 European Commission. Press release database // http://europa.eu/rapid/press-release_IP-16-3646_lt.htm 94 Lithuanian Chamber of Architects // http://www.architekturumai.lt/atestavimas/atestavimo-tvarka/
31 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Centre for Certification of Construction Products) 95 . The main reasons given for regulating the professions are linked to ensuring the protection of consumers and recipients of services, as well as the preservation of the natural and urban environment.
With regard to the implementation of Eurocodes 96 , all Eurocode Parts are published as National Standards and translated in Lithuanian. Moreover, National Annexes are published on 58 Eurocode Parts. The use of Eurocodes is voluntary in Lithuania, and national regulations can be used in parallel97. Their use in Public Procurement is prescribed by the Law on Public Procurement98.
International competitiveness
Lithuania ranks 41st out of 137 economies in the 2017–2018 Global Competitiveness Index99. In terms of internationalisation, Lithuanian SMEs are above the EU average and in the SBA Factsheet achieved the best result in the EU. Lithuania has been particularly praised for simplified border control procedures and the availability of trade information, reflecting the strong commitment of the government to facilitate administrative procedures related to internationalisation. Cooperation between border agencies also reflects the government’s desire to increase cross-border cooperation and facilitate the access of domestic SMEs to the international market100.
Lithuanian construction companies have been increasingly expanding to foreign markets over the last years, in order to diversify risks and due to the insufficient demand on the local market Revenues from contracts abroad have been growing by an average of 25% annually over the last three years.
The internationalisation of Lithuanian SMEs is being promoted through several initiatives. The New Opportunities LT (Naujos galimybės LT) instrument provides subsidies to business associations, Chambers of Commerce and cluster coordinators to participate in international exhibitions, fairs and trade missions abroad. With a budget of around EUR 30 million, the scheme covers up to 50% of eligible costs, up to a maximum of EUR 500,000101. The measure supports a variety of projects across different sectors, such as ICT (information and communication technology), textiles, food and construction. For instance, EUR 433,560 has been allocated to the Confederation of Lithuanian Industrialists (Lietuvos pramonininkų konfederacijos, LPK) for the project ‘Promotion of the internationalisation of the Lithuanian construction, food technology and environmental sectors’. Under the project, SMEs providing goods and services relating to healthy food and eco-friendly lifestyle will be supported in expanding their existing markets and exploring new ones. The project allows 13 companies to present 31 products in an international exhibition. Exhibitions on construction, food technology and environment sectors in Lithuania will be held in Finland, Norway, Lithuania, Latvia, Estonia, Poland and Belarus. Furthermore, EUR 392,950 has been granted to the LPK for the project ‘Lithuanian construction and landscaping sector abroad’. Under the project, 6 companies and their 24 products will be presented in construction
95 Centre for Certification of Construction Products // http://www.spsc.lt/cms/index.php?option=com_content&view=category&layout=blog&id=39&Itemid=62 96 Eurocodes, i.e. EU standards for the design of structures and buildings, started to be used in Lithuania as our country became a member of the EU. 97 State of implementation of the Eurocodes in the European Union // http://eurocodes.jrc.ec.europa.eu/showpublication.php?id=537 98 Law on Public Procurement of the Republic of Lithuania // https://www.e- tar.lt/portal/lt/legalAct/TAR.C54AFFAA7622/tEzUrLXKCg 99 The Global Competitiveness Report 2017-2018 // https://www.weforum.org/reports/the-global- competitiveness-report-2017-2018 100 European Commission, 2017 SBA Fact Sheet Lithuania // https://ec.europa.eu/docsroom/documents/29489 101 2014–2020 Investments of European Union Funds in Lithuania // http://www.esinvesticijos.lt/lt/patvirtintos_priemones/naujos-galimybes-lt
32 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ and landscaping international exhibitions in Lithuania, Poland, Belarus, Latvia, Russia, Ukraine, Germany102.
The Expo Certificate LT (Expo Sertifikatas LT) was introduced in 2015 to support certifications for exported goods and services. Through a budget of approximately EUR 2.5 million for the period 2014– 2020103, the facility offers subsidies to cover up to 50% of costs related to the certification and transportation of Lithuanian products and services intended for export. The facility supports a variety of products from different sectors, including construction products, healthcare, food and ICT. Applicants intend to export production to Europe, USA, Japan, China, Indonesia, Malaysia, South Korea, Thailand, the Commonwealth of Independent States (CIS) countries104.
X. OUTLOOK
Having successfully recovered from the 2008 crisis, Lithuanian economy has been growing ever since 2010. This positive trend is expected to continue over the coming years. Real GDP, which grew by 3.9% last year, is forecast to grow significantly this year and next year (3.2% and 2.7%, respectively) 105. As for the construction sector, growth is expected to slow down due to limited opportunities in the domestic market and gradually completed EU integration projects. It is expected that in the next ten years (2018– 2027), the construction sector will grow on average by 2.9% annually106.
The number of workers in the broad construction sector has been experiencing a revival since 2011 (with a slight dip in 2016), and this trend is also predicted to continue, as the number of construction companies has been growing constantly since 2010. Value added and turnover are also projected to grow in the broad construction sector.
The housing market has overcome its lowest point in 2010 and the housing prices are now rising, especially in big cities, but while nominal prices continue to rise, real values, adjusted for inflation, are actually decreasing. Demand remains weak, total real estate transactions in 2017 increased by 3% 107. Nevertheless, the construction of residential buildings contributes positively to the economic activities of the Lithuanian construction sector.
Civil engineering and non-residential building segments are particularly dependent on public investment, which is mainly supported by EU funds. As the funds from the previous EU funding period (2007–2013) have run out and the implementation of projects funded under the current period (2014– 2020) has not yet gained momentum, the flow of EU funds to Lithuania has decreased. As a result of this decrease, the value added by the construction sector in 2016 also decreased, mainly due to the construction of engineering structures and the construction of non-residential buildings. It is assumed that 2018 will be marked an increase in funding from the EU support funds, which fell in 2016–2017, and this will increase the activity of the construction sector108.
102 Lithuanian Business Support Agency // http://lvpa.lt/lt/naujienos/skirtas-finansavimas-pagal-priemones-expo- sertifikatas-lt-ir-naujos-galimybes-68 103 2014–2020 Investments of European Union Funds in Lithuania // http://www.esinvesticijos.lt/lt/patvirtintos_priemones/expo-sertifikatas-lt 104 Lithuanian Business Support Agency // http://lvpa.lt/lt/naujienos/priemones-expo-sertifikatas-lt-kvietimui- pasibaigus-30 105 Bank of Lithuania. Lithuania’s economic development and outlook. 25 June 2018 https://www.lb.lt/lt/leidiniai/makroekonomines-prognozes-2018-m-birzelis 106 BMI Research, Lithuania Infrastructure Report. January 2018 // https://store.bmiresearch.com/index.php/lithuania-infrastructure-report.html 107 Global Property Guide, Real property values stable in Lithuania. February 2018 // https://www.globalpropertyguide.com/Europe/Lithuania/Price-History 108 Bank of Lithuania. Lithuania’s economic development and outlook. 25 June 2018 https://www.lb.lt/lt/leidiniai/makroekonomines-prognozes-2018-m-birzelis
33 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ According to the Lithuanian Construction Association, the construction sector outlook in Lithuania is closely linked to the efficient use of EU Structural Funds. Conversely, it would be difficult to maintain a business based solely on internal resources.
Lithuania will have to fill the capacity gap opened by the closure of the main nuclear power plant by creating new opportunities for electricity and gas connections, as well as renewable energy sources, especially wind. Several projects are currently underway, but their financing and implementation in the energy infrastructure sector are highly fragmented, suggesting that the sector’s growth will remain slow over the next decade109.
The transport sector is strategically important. Lithuania seeks to take advantage its convenient geographical position by not only being an important transit country between Russia and the EU, but also becoming a transport hub between the Nordic countries and Central Asia and China. Several public– private partnership programmes are designed to support road, rail and port projects funded by the EU and Norway. One of the most important strategic transport infrastructure projects is the Rail Baltica project supported by EU funding. All this leads to a rather bright outlook of the Lithuanian transport infrastructure sector over the next decade.
In conclusion, it is expected that in the coming years the growth of the Lithuanian construction sector will slow down, but the construction sector in Lithuania will remain the largest in the Baltic States. The development of the construction sector in the medium term will be mostly determined by the development of transport infrastructure, as well as housing renovation and non-residential construction (namely the development of hotels and business centres)110.
109 BMI Research, Lithuania Infrastructure Report. January 2018 // https://store.bmiresearch.com/index.php/lithuania-infrastructure-report.html 110 Ministry of Finance, Lithuanian economic outlook for 2016–2019 // https://finmin.lrv.lt/uploads/finmin/documents/files/LT_ver/Aktual%C5%ABs_valstyb%C4%97s_finans%C5%B3_ duomenys/ERS_aprasymas_20160909_EN_skelbimui.pdf
34 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ SUMMARY AND CONCLUSIONS
In 2017 in Lithuania, the total construction output increased by 9.6%, with the highest growth in civil engineering output (16.3%); construction of buildings increased by 4.7%. However, compared to 2008, production is still down. The total number of companies in the broad construction sector grew by 11% from 2008 to 2016, but the total number of people employed dropped by 23%. Profitability decreased by 19% down to EUR 7.4 billion over the same period and the gross operating surplus increased by 2% to EUR 1.5 billion (2015).
In 2017, construction service exports increased by 22% compared to 2016 (up to EUR 290 million). The main construction services markets were Sweden and Norway, with more than 50% of construction services exported to them in 2017.
In 2017, EUR 794 million worth of regulated construction products were imported to Lithuania, and exported for EUR 1 billion were exported. Foreign trade surplus of regulated construction products amounted to EUR 230 million. The import of regulated construction products has grown by an average of 8% annually over the last five years, while exports have grown by 9% annually. In 2017, 70% of the total export flow of regulated construction products consisted of products of Lithuanian origin.
In 2017, metal bearing structures and their components was the most imported and the most exported group of regulated construction products. The main import markets for regulated construction products were Poland and Germany, from which almost 40% of all regulated construction products were imported. Seven of the ten major export markets for regulated construction products are EU countries. The first place and the largest share in exports of regulated construction products is taken the Russian market, but 90% of this flow consists of re-exported construction products. Norway, Sweden and Germany are the main export destinations for regulated construction products of Lithuanian origin.
The housing price index increased by 9% in 2017, although it is still 12% down from 2008. In 2017, the number of residential building permits issued fell by 8%, but already exceeds the 2008 level. The construction of 6,420 new residential buildings was completed in 2017, which is 9% less than in 2016, but as much as 59% more than in 2008. Given the limited supply of affordable housing, the Government introduced the Action Plan for the Development of Municipal Social Housing Fund for 2015–2020 to support the construction and renovation of social housing buildings, allocating EUR 58.7 million budget. Also, the Law On State Support to Acquire or Rent Housing was passed, providing for compensation for part of the rent and the possibility to cover up to 20% of the housing loan for selected beneficiaries.
In order to increase investment in infrastructure, EUR 1.1 billion of its EU funding for 2014–2020 Lithuania allocates for the development of transport infrastructure. The EIB also strongly supports the development of infrastructure by financing modernisation of railways, improving the roads in the capital, rebuilding the city centre, renovating schools and kindergartens.
Lithuania seeks to improve the energy efficiency of buildings by implementing the Programme for the Renovation (Modernisation) of Multi-Apartment Houses, financed by the Multi-Apartment building modernisation fund, allocating EUR 74 million in soft loans. In addition, the Energy Efficiency Fund provides loans for financing central government public buildings renovation and street lighting modernisation projects through its distribution of EUR 79.6 million of ERDF funds. Various initiatives and strategies for the development of digital construction technologies, such as BIM, have been introduced.
The construction market in Lithuania is the largest in the Baltic States, but the growth of the construction industry will slow down over the next decade, with the maturation of the housing market and the completion of EU-funded energy and transport interconnection projects. In the next ten years,
35 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ an average annual growth of 2.9% is expected. It should be determined by the development of transport infrastructure, housing renovation, non-residential construction, as the EU continues to invest in the improvement of energy and transport networks. The main obstacles to growth in the construction sector will remain limited public funding, low demand and a shortage of skilled workers.
36 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Annex 1 The definition of the construction sector, presented in ECSO111 country databases and factsheets, is based on the second, most recent (2008) revision of NACE classification. NACE (from the French term ‘Nomenclature Statistique des Activités économiques dans la Communauté européenne’) is a statistical classification of economic activities in the European Community. For more information on the classification methodology, including a comprehensive list of sectoral and subsectoral codes and their definitions, see: http://ec.europa.eu/eurostat/documents/3859598/5902521/KS-RA-07-015-EN.PDF
The definition of the construction sector adopted in the preparation of the database and the leaflet is as follows:
Narrow construction sector: F sector; Construction: as defined in NACE Rev.2:
NACE F—Construction F.41 Construction of buildings F.41.1 Development of building projects o F.41.10 Development of building projects F.41.2 Construction of residential and non-residential buildings o F.41.20 Construction of residential and non-residential buildings F.42 Civil engineering F.42.1 Construction of roads and railways o F.42.11 Construction of roads and motorways o F.42.12 Construction of railways and underground railways o F.42.13 Construction of bridges and tunnels F.42.2 Construction of utility projects o F.42.21 Construction of utility projects for fluids o F.42.22 Construction of utility projects for electricity and telecommunications F.42.9 Construction of other civil engineering projects o F.42.91 Construction of water projects o F.42.99 Construction of other civil engineering projects n.e.c. F.43 Specialised construction activities F.43.1 Demolition and site preparation o F.43.11 Demolition o F.43.12 Site preparation o F.43.13 Test drilling and boring F.43.2 Electrical, plumbing and other construction installation activities o F.43.21 Electrical installation o F.43.22 Plumbing, heat and air conditioning installation o F.43.29 Other construction installation F.43.3 Building completion and finishing o F.43.31 Plastering o F.43.32 Joinery installation o F.43.33 Floor and wall covering o F.43.34 Painting and glazing o F.43.39 Other building completion and finishing F.43.9 Other specialised construction activities o F.43.91 Roofing activities o F.43.99 Other specialised construction activities n.e.c.
111 ECSO -European Construction Sector Observatory.
37 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Broad construction sector: covers all activities of sector F and other sectors, namely: real estate activities (NACE L), architectural and engineering activities and related technical consultancy (NACE M), and certain subsectors of production related to the construction sector (NACE C).
NACE L—Real estate activities L.68.1 Buying and selling of own real estate L.68.2 Renting and operating of own or leased real estate L.68.3 Real estate activities on a fee or contract basis NACE M—Professional, scientific and technical activities M.71.1 Architectural and engineering activities and related technical consultancy NACE C—Manufacturing C.16.2 Manufacture of products of wood, cork, straw and plaiting materials C.23.3 Manufacture of clay building materials C.23.5 Manufacture of cement, lime and plaster C.23.6 Manufacture of articles of concrete, cement and plaster C.23.7 Cutting, shaping and finishing of stone C.25.1 Manufacture of structural metal products
38 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Annex 2 List of regulated construction products according to Combined Nomenclature 1. Aggregates 251710 Pebbles, gravel, broken or crushed stone, of a kind commonly used for concrete aggregates, for road metalling or for railway or other ballast, shingle and flint, whether or not heat-treated 251720 Macadam of slag, dross or similar industrial waste, whether or not incorporating the materials cited in the heading 2517 10 251730 Tarred macadam 251741 Marble granules, chippings and powder, whether or not heat-treated 251749 Granules, chippings and powder, of stones of heading 2515 or 2516 (other than marble), whether or not heat-treated 271500 Bituminous mixtures based on natural asphalt, on natural bitumen, on petroleum bitumen, on mineral tar or on mineral tar pitch 381600 Refractory cements, mortars, concretes and similar compositions (other than preparations based on graphite or other substances containing carbon) 2. Concretes and mortars 382440 Prepared additives for cements, mortars or concretes 382450 Non-refractory mortars and concretes 3. Thermal insulation materials and products 680610 Slag-wool, rock-wool and similar mineral wools (including intermixtures thereof), in bulk, sheets or rolls Exfoliated vermiculite, expanded clays, foamed slag and similar expanded mineral materials (including 680620 intermixtures thereof) Mixtures and products from heat-insulating, sound-insulating or sound-absorbing mineral substances 680690 (other than those of headings 680610, 680620, 6811 or 6812 or Section 69) 4. Concrete, reinforced concrete and natural stone products 251511 Marble and travertine, crude or roughly trimmed 251512 Marble and travertine, merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape 251520 Ecaussine and other calcareous monumental or building stone; alabaster 251611 Granite, crude or roughly trimmed 251612 Granite, merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape 251620 Sandstone 251690 Porphyry, basalt and other monumental or building stones, whether or not roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape (other than granules, chippings and powder, whether or already with coin or building stone characteristics with apparent specific gravity > = 2.5, granite and sandstone) 680210 Tiles, cubes and similar articles, whether or not rectangular (including square), the largest surface area of which is capable of being enclosed in a square the side of which is less than 7 cm; artificially coloured granules, chippings and powder 680221 Marble, travertine and alabaster, simply cut or sawn, with a flat or even surface 680223 Granite, simply cut or sawn, with a flat or even surface 680229 Other stones, simply cut or sawn, with a flat or even surface 680291 Marble, travertine and alabaster products, with a flat or even surface 680292 Calcareous stone, grained, decorated or otherwise worked 680293 Granite, polished, decorated or otherwise worked, but not carved, of a net weight of 10 kg or more Monumental or building stones, of any shape, grained, decorated or otherwise worked 680299 Cement, concrete or artificial stone blocks and bricks, whether or not reinforced 681011 Prefabricated structural components, used in construction or civil engineering 681091 Refractory bricks, blocks, tiles and similar refractory ceramic constructional goods, other than those of 690210 siliceous fossil meals or similar siliceous earths containing, by weight, singly or together, more than 50 % of the elements Mg, Ca or Cr, expressed as MgO, CaO or Cr2O3, Refractory bricks, blocks, tiles and similar refractory ceramic constructional goods, other than those of 690220 siliceous fossil meals or similar siliceous earths containing, by weight, more than 50 % of alumina (Al2O3), of silica (SiO2) or of a mixture or compound of these products Other refractory bricks, blocks, tiles and similar refractory ceramic constructional goods Ceramic building bricks 690290 Ceramic flooring blocks, support or filler tiles and the like 690410 690490 5. Windows, doors and other partitions 392520 Doors, windows and their frames, door thresholds made of plastics 392530 Shutters, blinds and similar articles and parts thereof, from plastics
39 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ Builders’ ware from plastics for floors, walls, partitions, ceilings, roofs, etc.; plastic gutters and 392590 accessories; railings, fences and similar barriers from plastics; large shelves for installation and permanent installation in shops, workshops, etc. from plastics; architectural jewellery, for example, plastic friezes; fittings and similar products for continuous installation in buildings, from plastics Windows, French windows and their frames 441810 Wooden doors, their frames and thresholds 441820 Wooden concrete constructional work 441840 Wooden shingles and shakes 441850 Wooden posts and beams 441860 Builders’ joinery and carpentry of bamboo (excluding windows, doors and their frames and thresholds, 441891 stakes and beams, assembled flooring panels, wooden concrete decoration panels, prefabricated buildings) Builders’ joinery and carpentry of wood, including glued laminated wood (other than bamboo, windows, 441899 doors and their frames and thresholds, stakes and beams, assembled flooring panels, wooden concrete structures, shavings, prefabricated buildings) Doors, windows and their frames, door thresholds made of aluminium 761010 Aluminium structures and parts thereof, for example, aluminium, plates, rods, profiles, tubes and the 761090 like, prepared for use in construction (other than those of heading 9406) 6. Glass and products 700312 Cast glass and rolled glass non-wired sheets, made from coloured throughout the mass (body tinted), opacified, flashed or having an absorbent, reflecting or non-reflecting layer 700319 Cast glass and rolled glass non-wired sheets, not otherwise worked (other than those of heading 700312) Cast glass and rolled glass wired sheets 700320 Glass profiles, whether or not having a reflecting or non-reflecting layer, but not otherwise worked 700330 Glass, in the form of sheets or profiles, coated or covered with absorbent, reflecting or non-reflective coating, curved, worked edges, engraved, drilled, enamelled or otherwise worked, but not framed or 700600 fitted with other materials 7. Roof coverings and products 680300 Worked slate and articles of slate or of agglomerated slate 690510 Roof tiles 690590 Ceramic chimney covers, enclosures, chimney liners, architectural ornaments and other ceramic construction products 8. Wall, ceiling and floor coverings 391810 Floor coverings, self-adhesive or not, in rolls or in the form of plates; wall or ceiling coverings of vinyl chloride polymers 391890 Floor coverings, self-adhesive or not, in rolls or in the form of plates; wall or ceiling coverings of other plastics 441873 Assembled flooring panels of bamboo or with at least the top layer (wear layer) of bamboo Assembled flooring panels for mosaic floors made of wood, other than bamboo 441874 Assembled multilayer flooring panels made of wood, other than bamboo 441875 Assembled flooring panels made of wood (other than multilayer panels and panels for mosaic floor) 441879 Glass floor cubes and other small glassware, whether or not on a backing, for mosaics or similar 701610 decorative purposes Paving blocks, slabs, bricks, squares, tiles and other articles of pressed or moulded glass, whether or not 701690 wired, of a kind used for building or construction purposes 9. Paints, varnishes, grouts, primers and coatings 320810 Paints and varnishes (including enamels and lacquers) based on synthetic or chemically modified natural polyesters, dispersed or dissolved in a non-aqueous medium 320820 Paints and varnishes (including enamels and lacquers) based on synthetic polymers or chemically modified natural acrylic or vinyl polymers, dispersed or dissolved in a non-aqueous medium Paints and varnishes (including enamels and lacquers) based on synthetic polymers or chemically 320890 modified natural polymers, dispersed or dissolved in a non-aqueous medium; solutions classified under headings 3901–3913 Paints and varnishes (including enamels and lacquers) based on synthetic polymers or chemically 320910 modified natural acrylic or vinyl polymers, dispersed or dissolved in an aqueous medium Paints and varnishes (including enamels and lacquers) based on synthetic polymers or chemically 320990 modified natural polymers, dispersed or dissolved in an aqueous medium (other than those based on acrylic or vinyl polymers) Glaziers’ putty, grafting putty, resin cements, caulking compounds and other mastics; painters’ fillings 321410 Non-refractory surfacing preparations for façades, indoor walls, floors, ceilings or the like 321490
10. Heating, plumbing and
40 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ ventilation installations 391731 Flexible tubes, pipes and hoses, having a minimum burst pressure of 27.6 MPa 391732 Flexible tubes, pipes and hoses, not reinforced or otherwise combined with other materials, without fittings 391733 Flexible tubes, pipes and hoses, not reinforced or otherwise combined with other materials, with fittings Flexible tubes, pipes and hoses, reinforced and otherwise combined with other materials (other than 391739 those having a minimum burst pressure of > = 27.6 MPa) Fittings, for example joints, elbows, flanges from plastics, pipes, tubes and hoses 391740 Bathtubs, showers, sinks and plastic washbasins 392210 Toilet seats and covers made of plastics 392220 Bidets, toilet bowls, toilet containers and similar sanitary ware, of plastics (other than bathtubs, shower 392290 trays, sinks, washbasins, toilet linen and covers) Porcelain or china porcelain sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, 691010 flushing cisterns, urinals and similar sanitary fixtures Ceramic sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, flushing cisterns, 691090 urinals and similar sanitary fixtures (other than porcelain or china porcelain) Sinks and washbasins, of stainless steel 732410 Baths of cast iron, whether or not enamelled 732421 Baths of steel sheets 732429 Other sanitary ware and parts thereof, of iron or steel 732490 Sanitary ware and parts thereof, of copper 741820 Sanitary ware and parts thereof, of aluminium 761520 Fans for table, floor, wall, window, ceiling or roof fans, with a self-contained electric motor of an output 841451 not exceeding 125 W Non-electric central heating radiators and parts thereof, of cast iron 732211 Non-electric central heating radiators and parts thereof, of iron, other than of iron or steel 732219 Non-electric air heaters and hot air distributors (including distributors which may also distribute clean or 732290 conditioned air) with motor-driven fans or blowers and parts thereof, of iron or steel 11. Reinforcing steel, inserts and components 730110 Sheet piling of iron or steel, whether or not drilled, punched or made from assembled elements; Welded angles, shapes and sections, of iron or steel 730120 Railways and tram rails made of iron or steel 730210 Railway or tramway switch blades, crossing frogs, point rods and other crossing pieces, of iron or steel 730230 Railway or tramway fish-plates and bedplates, of iron or steel Other components of railway or tramway structures, of iron or steel 730240 Stranded wire, cables, plaited bands and the like, without electric insulation, with steel core 730290 Stranded wire, cables, plaited bands and the like, without electric insulation, without steel core 761410 Other products of iron or steel wire 761490
732690 12. Metal bearing structures and their components 721610 U, I or H-shaped sections, of iron or non-alloy steel, with a height of less than 80 mm, not further worked than hot-rolled, hot-drawn or hot-extruded (extruded) 721621 L-shaped sections, of iron or non-alloy steel, with a height of less than 80 mm, not further worked than hot-rolled, hot-drawn or hot-extruded (extruded) 721622 T-shaped sections, of iron or non-alloy steel, with a height of less than 80 mm, not further worked than hot-rolled, hot-drawn or hot-extruded (extruded) 721631 U-shaped sections, of iron or non-alloy steel, with a height of less than 80 mm, not further worked than hot-rolled, hot-drawn or hot-extruded (extruded) 721632 I-shaped sections, of iron or non-alloy steel, with a height of less than 80 mm, not further worked than hot-rolled, hot-drawn or hot-extruded (extruded) 721633 H-shaped sections, of iron or non-alloy steel, with a height of less than 80 mm, not further worked than hot-rolled, hot-drawn or hot-extruded (extruded) 721640 L or T-shaped sections, of iron or non-alloy steel, with a height of less than 80 mm, not further worked than hot-rolled, hot-drawn or hot-extruded (extruded) 721650 Other angles, shapes and sections, of iron or non-alloy steel, not further worked than hot-rolled, hot- drawn or hot-extruded (extruded) 721661 Angles, shapes and sections, of iron or non-alloy steel, not further worked than cold-formed or cold- finished, made from flat-rolled products 721669 Other angles, shapes and sections, of iron or non-alloy steel, not further worked than cold-formed or cold-finished: 721691 Angles, shapes and sections of iron or non-alloy steel, made from flat-rolled products, cold-formed or cold-finished, and further worked 721699 Other angles, shapes and sections, of iron or non-alloy steel, whether or not cold-formed or cold-finished (other than flat-rolled products)
41 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/ 730810 Bridges and bridge sections of iron or steel 730820 Towers and lattice masts of iron or steel 730830 Doors, windows and their frames, door thresholds made of iron or steel 730840 Equipment for scaffolding, barriers, supports or shafts from iron or steel 730890 Other iron or steel structures and parts thereof 731700 Nails, waisted wicks, drawing pins, edge nails, clutches (other than those of heading 8305) and similar articles of iron or steel, with or without heads of other materials, but excluding products of this kind with copper heads 731811 Coach screws made of iron or steel 731812 Other wood screws made of iron or steel 731813 Screw hooks and screw rings made of iron or steel 731814 Self-tapping screws made of iron or steel 731815 Other screws and bolts, with or without nuts and washers, of iron or steel 731816 Nuts made of iron or steel 731819 Other threaded articles of iron or steel 731821 Spring washers and other lock washers made of iron or steel 731822 Other washers made of iron or steel 731823 Rivets made of iron or steel 731824 Locks and wrenches of iron or steel 731829 Other products without threads of iron or steel 741510 Nails and tacks, drawing pins, staples and similar articles of copper or of iron or steel, with copper heads Washers (including spring washers) made of copper 741521 Rivets, crimpers, twine and similar threads, not threaded, of copper 741529 Screws; bolts and nuts made of copper 741533 Other copper threaded products 741539
42 © VšĮ „Versli Lietuva“ │ www.verslilietuva.lt/lt/analitika/