This Brochure Was Made by Students of University

This brochure was made by students of University of Latvia from faculty of Economics and Management (International economics and commercial diplomacy study programm) , for entrepreneurs and partners from abroad.

1 Picture from - http://foto.lu.lv/arhiivs/2003/37.ned._08.09.-14.09.2003/slides/ek_fak01.html

1 Contents.

1. The Economic environment 5

1.1 Macroeconomic indicators 5 1.2 Entrepreneurship 6

1.2.1. Main facts 6

1.2.2. Geographic 6

1.2.3. Business sectors 10

1.2.4. Labour force advantages 13

1.2.5. Favourable tax rebate system 14

1.2.6. Special Economic Zones (SEZ) 16

1.2.7. State support instruments 16

1.2.8. Business Incubators 17

1.3 Foreign Investment 18

1.3.1 Foreign direct investment by sector 18

1.3.2 Foreign direct investment in Latvia - surplus (billion EUR) 20

1.3.3 Top five countries for direct investment * (million.EUR) and trends 20

1.3.4 Foreign direct investment, 2011 21

1.3.5 French accumulated direct investment in Latvia (mln. EUR 21

1.3.6 Major foreign investors in Latvia, 2012 22

1.3.7 Major companies with French capital in Latvia, 2011 23

1.4 State’s role in improving the economic environment 23 2. Legal Environment 27

2.1 Foreign Investment Opportunities 27

2.2 Performance requirements/Governments Incentives 29

2.3 Capital Markets and Portfolio Investment 31

2.4 Labour Law 31

2.5 Intellectual property rights 32

2 2.6 Judicial Questions (Investor Protection) 33

2.7 Anti-Corruption policy 35 3. Tehnological Environment In Latvia 37

3.1 Tehnological environment in Latvia 37

3.2 Tehnological support institutions 38

3.3 Companies 41

4. Social issues 45

4.1 Income 45

4.2 Demography 46

4.3 Employment and unemployment 47

4.4 Education 48

4.5 Crime level 49

4.6 Language 49

4.7 Mentality 51

4.8 Religions and holidays connected to religions 51

4.9 Official holidays 52

4.10 Means of money sttlements for goods and services 52

4.11 Alcohol and tobacco 52

4.12 Weather and climate 53

4.13 Telephone numbers in case of emergency 53

Mains Sources and links2 55

2 Pictures for contents from – http://balticexport.com/?article=asv-biznesa-zinu-portals-iesaka-rigu-ka-vienu-no-piecam-pievilcigakajam-eiropas- pilsetam&lang=lv http://www.twip.org/image-europe-latvia-riga-view-riga-panorama-lv-15667-14171.html

Rīgas ostas akmeņogļu pārkraušanas piestātne. Fotogrāfējis A.Buks 17.07.2009. {{CC-BY-SA-2.5}}

I The Economic environment

1.1 Macroeconomic indicators 3

In recent times foreign direct investments have been rapidly increasing. In 2010, in comparison to 2009, foreign direct investments have increased by 25.65 %. The forecast for the future, taking into account 2011 statistics, is that foreign investments will continue increasing.

Exports are the Latvian economic “driving force”. At the moment the export sector has a tendency to increase. In 2010, in comparison to 2009, it increased by about 77 %.

The import development trends are closely connected to export growth, which is reflected in the rapid growth of intermediate and capital goods in intermediate and capital goods imports. Latvian foreign trade increased, because of import turnover growth, which increased for the quarter.

The registered unemployment rate in 2010 in comparison to 2009 increased by 3.6 %. The highest registered level of unemployment: Latgales region – 22.6 %, the lowest unemployment rate: Riga region – 11.0 %.

In 2010, in comparison to 2009, GDP has diminished by 0.3 %. According to seasonally adjusted data, the fourth quarter of 2010 over the third quarter of 2010 has increased by 1.1 %, but over the fourth quarter of 2009 – by 3.6 %.

In 2005 inflation was 6.7 %, but in 2010 it was already – 1.1 %. Central Statistical Bureau data show that consumer prices in 2011 increased by 4.0 %, including for goods rose by 4.9%, but for services - by 1.6 %. In 2010 consumer prices rose by 2.5 %. Forecast for inflation level in Latvia has positive tendencies, because we have been able to reduce the level of inflation.

3 Central Statistical Bureau of Latvia ; www.csb.lv

1.2 Entrepreneurship

Business infrastructure

1.2.1 Main facts4:

National currency: Lats ( LVL ) ( 1 LVL= 1.42 EUR ). Can’t pay with EUR, except in Statoil, McDonalds.

Payment system: cash, credit cards.

International memberships: EU, WTO, UNO.

In 2014 Latvia will launch EUR.

Considering that Latvia is in EU from 2004, Latvia has accomplished Maastricht treaty criteria. 1.2.2 Geographic:

Crossroads: Latvia is on the east coast of the Baltic Sea at the crossroads of Northern and Eastern Europe, bordered by Estonia to the north, Russia and Belarus to the east, Lithuania to the south and has a maritime border with Sweden to the west.5

Main Ports : Riga, Ventspils and Liepaja

With both European and CIS road networks, as well as Latvia’s ports6:

 the shortest route between the EU and the CIS;  specialised, high-capacity railway corridor linking  Latvian ports with Russia and the Far East

Riga International Airport: competitive Baltic passenger hub, high-speed cargo distribution centre. Riga International Airport is the centre of the Baltic States airports. AIR BALTIC CORPORATION (airBaltic) is a stock company that was established in 1995. The primary shareholder is the Latvian state with 99.8% of stock.7

4 Bank of Latvia; http://www.bank.lv 5. Investment and Development Agency of Latvia (2pp); Latvian Business Guide 6 Investment and Development Agency of Latvia: Latvian Business Guide. Transport and logistics. (20 pp) 7 AirBaltica; http://www.airbaltic.lv/public/korporativa_informacija.html

6 Railway:  Latvia bases transport sector development on service of two big markets - European Union and CIS. Certainly cooperation with CIS countries plays a major role, as they have a common railway system, as in the Baltic States the railways were railed according to the standard of Russia - their width is 1520 mm, but in Europe the standard width is 1435 mm. 8

Source: European Commission

8Ministry of Transport of the Republic of Latvia; Transit, http://www.sam.gov.lv/satmin/content/?cat=112

Source: Investment and Development Agency of Latvia

 Key elements of Transport infrastructure: 1) GDP growth; 2) The traffic net of Latvia is formed by motor roads, railroads, sea, rivers, cross-country oil, petroleum product and gas pipes; 3) Being in the middle of the international motor roads and railroads; 4) Latvia bases transport sector development on service of two big markets - European Union and CIS and Asia market; 5) The geographical situation determines Riga's economic competitiveness at the international level. 9  The Trans-European railway Rail Baltica, linking Helsinki(FIN) – Tallinn(EST) – Riga(LV) – Kaunas (LTU)– Warsaw(PL) and continuing on to Berlin(DE), is to be developed within the territories of the co-operating EU Member States. Rail Baltica will support the wider EU goals of parity of access to services and infrastructure of EU Member States and development of sustainable modes of transportation, improved balance and interoperability between different means of transportation and the establishment of links with the rest of the EU rail network. 10

9 Satiksmes ministrija, Rail Transport in Latvia; Lambert M Surhone, Mariam T Tennoe, Susan F Henssonow, Birzietis G. Pārvadājumi; Jelgava: LLU, 2008, http://www.latvija2030.lv/upload/telpiska_perspektiva.pdf 10 Rail Baltica: http://rail-baltica.com/pub/

8 Oil & Gas  Pipeline systems for transit and distribution of Russian oil/natural gas. 11  Inčukalns Gas Reservoir is the largest natural gas-storage reservoir in Europe, with a capacity of approximately 4.4 billion m3.12

11 Latvijas Gāze; http://www.lg.lv/index.php?id=194&lang=lat 12Latvijas Gāze; http://www.lg.lv/index.php?id=194&lang=lat

9 1.2.3 Business sectors a) Economic structure

Economic structure in 2010

Primary industry 10% Other Business 16%

Manufacturing 14%

Series1; Electricity, Series1; Public gas and water supply; 1,9; 2% Services; 21,8; 22% Constructions 7%

Series1; Trade, hotels and restaurants; 19,3; 19%

Series1; Transport and communications; 9,9; 10%

Source: www.csb.lv

Promising business sectors are13:

-Wood processing - Metalworking and mechanical engineering -Transport and storage -Information technology -Environmental technology -Health care -Life sciences

13 Central Statistical Bureau of Latvia ;www.csb.gov.lv

10 b) Structure of manufacturing

Structure of manufacturing in 2010

The manufacture Electrical and optical 2% Other industries equipment 1% 1%

Machinery and equipment Food Industry 1% Metals and metal 15% products 10% Light industry 1%

Series1; Other non- Woodworking metallic mineral 16% products; 39,2; 39%

Series1; Chemical and allied; 10,5; 11% Series1; Paper and

printing; 2,7; 3%

Source: www.csb.gov.lv

The chemical sector in Latvia has great potential, with numerous new product development and manufacturing opportunities. The production of pharmaceutical preparations can be developed even further through a combination of local raw materials and the new product development potential of Latvia's research institutions. 14

Sector Advantages 15

 established manufacturing infrastructure  strong R&D capability,  geographical and cultural proximity to eastern markets

14 Investment and Development Agency of Latvia.Biotechnologies Chemicals and Pharmaceuticals. Source: http://liaa.gov.lv/eng/trade_with_latvia/industry_profiles/biotechnologies_chemicals_and_/ 15 Investment and Development Agency of Latvia., Industry profiles: http://www.liaa.gov.lv/eng/trade_with_latvia/industry_profiles/biotechnologies_chemicals_and_/

Picture from - http://www.saf.lv/lv/34/45

Development trends within the sector include16:

bio-tech lab equipment manufacture bio-reactor manufacture bio-fuel production generic pharmaceuticals manufacture sub-contracting of research services, production and packaging

1.2.4 Labour force advantages

Latvians have the highest foreign language skills among the EU countries. 17

The most in-demand specialists are IT professionals and sales specialists.18

Latvia’s labour force is rated in the top five in the world in terms of university students per capital and possesses a northern European culture and work ethics. 19

The official rate of registered unemployment in December 2011 was 11.5 percent.20

Latvians generally are hard working, reliable and quick to learn. Unfortunately there is a shortage of mid and senior-level managers with western-style management skills, but these things at the moment are improving21

Foreigners agree that Latvians are good labour force.22

From January 1, 2011 the legally specified minimum wage is LVL 200 (approximately 285 Euros) per month. Companies must keep wages above this minimum. European Union influence on the wage setting process is limited.23

16 Investment and Development Agency of Latvia., Industry profiles: http://www.liaa.gov.lv/eng/trade_with_latvia/industry_profiles/biotechnologies_chemicals_and_/ 17 LIAA Human resources. http://liaa.gov.lv/eng/invest_in_latvia/latvian_business_guide/human_resources/ 18 LIAA Human resources. http://liaa.gov.lv/eng/invest_in_latvia/latvian_business_guide/human_resources/ 19 LIAA Human resources. http://liaa.gov.lv/eng/invest_in_latvia/latvian_business_guide/human_resources/ 20 State Employment Agency; http://nva.gov.lv/index.php?cid=6&mid=330&txt=342&t=stat 21 Latvian Investment Climate 2009 by Ina Dimireva; http://www.eubusiness.com/europe/latvia/invest 22 Latvian Investment Climate 2009 by Ina Dimireva; http://www.eubusiness.com/europe/latvia/invest 23 Ministry of Wlefare of The Rebublic of Latvia; www.lm.gov.lv

1.2.5 Favourable tax rebate system

Tax rates24

Country Corporate Individual VAT % WTH on WTH WTH income income dividends on on tax % tax % % interest royalties % % Latvia 15 25 22 5 /15 5 /10 5 /15 Greece 20 0 /45 23 25 40 25 Russia 20 13 18 15 20 20 Turkey 20 15 /33 18 15 10 20 Estonia 21 20 20 0 0 /21 10 Luxembourg 21 0 /38 15 0 /15 0 0 Ukraine 23 15 /17 20 15 15 15 Denmark 25 38 /59 25 0 /15/ 28 25 25 United 26 0-50 20 0 20 20 Kingdom Finland 26 6.5-29.75 23 28 0 28 Sweden 26.3 0-57 25 30 0 0 Norway 28 28-49 25 0 /25 0 0 Monaco 30 0 19.6 0 0 0 Spain 30 24-45 18 19 19 24 Germany 30 /33 14-45 19 25 0 15 /20 France 33.3 5.5-40 19.6 25 18 33.33 Belgium 33.99 25- 50 21 0 /15 /25 15 15

Source: Tax Rates Around the World 2012, Deloitte Wutholding Tax Rates 2011

Tax reductions of up to 40% of the investment for companies that invest in large projects that are supported by the State. 25 Tax reductions of up to 30% of the investment in hi-tech firms (a deduction of 20% in other sectors)26 Latvia is one of the EU countries which have the lowest taxes in income, labour force etc. 27

24 Tax Rates Around the World 2012, Deloitte Wutholding Tax Rates 2011;http://www.worldwide- tax.com/#partthree; http://www.deloitte.com/assets/Dcom- Global/Local%20Assets/Documents/Tax/dtt_withholding_tax_rates_2011.pdf 25Tax Rates Around the World 2012; http://www.worldwide-tax.com/latvia/lat_invest.asp 26 Tax Rates Around the World 2012http://www.worldwide-tax.com/latvia/lat_invest.asp 27 LIAA Taxation. http://liaa.gov.lv/eng/invest_in_latvia/latvian_business_guide/taxation/

15 Latvia’s corporate income tax rate is among the lowest in Europe at a flat rate of 15% and dividends to EU citizens are not taxed. Personal income tax is also at a low flat rate of 26%. 28 To encourage investment, corporate tax discounts (as much as 80%) as well as 0% rates for VAT, customs and excise duties are offered to companies setting up there. 29 1.2.6 Special Economic Zones (SEZ) 30, state assistance, business incubators

SEZ means the benefits for an Investment in a Development Area.

There are 2 free ports and 2 special economic zones in Latvia.

The free ports are in the Riga area and in the area of Ventspils. The special economic zones are in Liepaja (near the sea) and Rezekne (to the east of Latvia, near to border with Russia and Belarus) regions.

Direct and indirect tax benefits are granted in the 4 areas on condition that the sales of a company in the SEZ within Latvia do not exceed 20% of total sales.31

The main benefits are32: - Exemption from VAT. - Exemption from customs duty on imports and exports. - An 80% - 100% exemption from real estate tax. - A rebate of 80% on corporation tax. - The option to offset losses 10 years forward

1.2.7 State support instruments33

Technological centres, technological parks, industrial parks, business parks and business incubators.

Innovation centres, business support centres, consulting and information companies, innovation application centres and regional development agencies.

Extensive assistance is also available from the Investment and Development Agency of Latvia (LIAA)

In addition, special government funding programmes are available to assist export-oriented business activities.

28 LIAA Taxation. http://liaa.gov.lv/eng/invest_in_latvia/latvian_business_guide/taxation/ 29 LIAA Taxation.http://liaa.gov.lv/eng/invest_in_latvia/latvian_business_guide/taxation/ 30 Latvia foreign Investments incentives: http://www.worldwide-tax.com/latvia/lat_invest.asp 31 Latvia foreign Investments incentives: http://www.worldwide-tax.com/latvia/lat_invest.asp 32 Latvia foreign Investments incentives: http://www.worldwide-tax.com/latvia/lat_invest.asp 33 LIAA; Business ABC, support programmes: http://liaa.gov.lv/lv/biznesa_abc/atbalsta_programmas/

16 1.2.8 Business Incubators

Business Incubator is regional social and economic development authority whose task is to evaluate and support new business formation and growth opportunities in their early stages.34 Latvian business incubators are mainly supported business ideas related to different types of technologies: IT, environment, telecommunications, electronics, engineering, computer design, etc., as well as related to production, creating products with high added value and export opportunities.35 Creative and innovative work is inspired by the creative environment, allowing free and intensive inter-reaction with all parties involved in the business processes.36

BI locations in Latvia 37

Source: Investment and Development Agency

34 Kurzeme Business incubator home page: http://www.kbi.lv/lat/left/23/inkubatori-latvija 35 LIAA; State supported programme- Business incubators in ‘’ Latvia’s regions and Technologic parks’’ http://www.liaa.gov.lv/uploaded_files/v_Avotins.pdf 36 LIAA; State supported programme- Business incubators in ‘’ Latvia’s regions and Technologic parks’’ http://www.liaa.gov.lv/uploaded_files/v_Avotins.pdf 37LIAA; http://www.liaa.gov.lv

17 38 1.3 Foreign Investment •Foreign direct investment - 8.2 billion EUR

1.3.1 Foreign direct investment by sector

Foreign direct investment by sectors in 2010 Foreign direct investment by sectors in 2010 ; Public, social and personal services; 1,32; 1% Foreign direct investment Foreign direct investment by sectors in 2010 ; Other by sectors in 2010 ; ; 12,14; 12% Agriculture, hunting and Foreign direct investment forestry; 2,98; 3% by sectors in 2010 ; Operations with real Foreign direct investment estate, renting and by sectors in 2010 ; business activities; 24,25; Electricity,gasand water 25% supply; 3,72; 4%

Foreign direct investment by sectors in 2010 ; Foreign direct investment Transport, storage and by sectors in 2010 ; communication; 7,32; 7% Financial intermediation; 22,88; 23%

Foreign direct investment Foreign direct investment by sectors in 2010 ; by sectors in 2010 ; Wholesale and retail; Manufacturing; 12,5; cars, motorcycles, 13% personal and household goods repair; 11,89; 12%

(Total: 8250.1 million. EUR) * Residues of the 2010 31st December Source: The Bank of Latvia

38 Baltic Export; http://balticexport.com/?article=arvalstu-investiciju-vide-latvija&lang=lv

18 • Cumulative foreign direct investment in equity capital of Latvian companies 5.63billion EUR

• Foreign direct investment per capita: 3700.5 EUR

• Countries that invested the most: Estonia, Sweden, Denmark

• Most foreign investors have invested in financial and real estate sectors - according to latest data from,2010, foreign direct investments in company equity capital increased by 500 million. LVL (711 million. EUR)

• 85% of foreign investment is concentrated in Riga and its surrounding area • The largest investor in Latvia is the EU. Around 80% of foreign investment by European countries

• Changes in the Immigration Law allows to obtain residence permits in Latvia for foreign (non-EU) investors. These are the people of Russia, China, India and the Central Asian and Transcaucasian countries.

• On 18 February 2011 the French investments in Latvian companies registered equity capital amounted to 25.63 million EUR (20th place), and 176 Latvian - French joint ventures were registered in the Register.

• The largest French investors in Latvia:

1. Saint Gobain Isover (timber, building materials, sanitary goods, wholesale, 100% owner of "Saint - Gobain Construction Products') – 14.85 million EUR;

2. Societe Generale Consumer Finance (monetary intermediation, credit services, Real estate activities on a contractual basis or on a fee - 100% of LLC "Inserviss Group") – 4.25 million EUR;

3. Dalkia INTERNATIONAL SA (Offices and activities of holding companies, 100% owner of "Dalkia Latvia") - 1.62 million LVL;

4. Affiliated Computer Services Solutions France SAS (49% holder of "Rīgas karte") - 1.16 million EUR;

5. Gefco (Shipping, 100% owner of "Baltic Gefco’) – 0.70 million EUR.

From January 1, 2011 Latvia has updated the corporate income tax (CIT) credit for investments in certain sectors: from 5 million (about 7 million. euro) to 35 million (50 million. EUR).

19 Special support will be given only for food products (excluding agriculture and fisheries), the production of wood products, chemical products and pharmaceutical, computer, electrical and optical equipment, as well as metals and fabricated metal products, except for the steel industry and shipbuilding.

If a foreign investor buys real estate in Latvia, in Riga for a minimum of 100 thousand LVL (142 thousand. EUR), but in the regions for – 50 thousand LVL (71 thousand EUR), or invests 25 thousand LVL (36 thousand EUR) into shares of the company, and within a year in taxes the company will pay 20 thousand LVL (28 thousand. EUR), or will invest 200 thousand LVL (285 thousand EUR) in Latvian situations, then you can get a temporary residence permit.

1.3.2 Foreign direct investment in Latvia - surplus (billion EUR)

Source: lursoft.lv 1.3.3 Top five countries for direct investment * (million.EUR) and trends

Source: lursoft.lv

20 1.3.4 Foreign direct investment, 2011

(Total: 8,250.1 million. EUR) * residues Source: The Bank of Latvia

1.3.5 French accumulated direct investment in Latvia (mln. EUR)

Source: The Bank of Latvia

21 1.3.6 Major foreign investors in Latvia, 2012 No Investor Country Field 1 Aktsiaselts Hansapank Estonia Banking/Finance 2 Bank DnB NORD A/S Denmark Banking/Finance 3 SKANDINAVISKA Sweden Banking/Finance ENSKILDA BANKEN AB 4 Rugby Holding B.V. Netherlands Other Business Activities 5 EKTORNET LATVIA AB Sweden Other Business Activities 6 TILTS Denmark Communication services COMMUNICATIONS A/S 7 BITE Lietuva UAB Lithuania Communication services 8 GE Capital International USA Banking/Finance Financing Corporation 9 PALINK Uždaroji akcine Lithuania Wholesale and retail bendrove trade 10 European Bank for United Banking/Finance Reconstruction and Kingdom Development 11 Tele2 Sverige Aktiebolag Sweden Communication 12 LINSTOW AS Norway Real Estate 13 UniCredit Bank Austria AG Austria Banking/Finance 14 Patras Holdings B.V. Netherlands Real Estate 15 Eurotank Holding Sarl Switzerland Logistics 16 NEW EUROPE REAL United Real Estate ESTATE LTD Kingdom 17 TRANSŅEFTEPRODUKT Russia Transport AO 18 Euromin Holdings (Cyprus) Cyprus Other Business Activities Limited 19 OJAY LIMITED Bailiwick of Other Business Activities Guernsey 20 YIT Construction Ltd Finland Construction services Source: Lursoft.lv39

39 Lursoft;http://www.lursoft.lv/lursoft-statistika/Lielakie-investori&id=7

22 1.3.7 Major companies with French capital in Latvia, 2011

Investor Latvian enterprise Field SAINT-GOBAIN PRODUITS SIA “ SAINT-GOBAIN Wood, construction materials and POUR LA CONSTRUCTION CELTNIECĪBAS PRODUKTI sanitary equipment wholesale S.A.S. ” Societe Generale Consumer SIA “ INSERVISS GROUP ” Financial intermediation Finance Societe Valmy Defense 22 SIA “ DALKIA LATVIA” Activity of head offices Affiliated Computer Services Commercial Services Solutions SAS SIA “ RĪGAS KARTE” GEFCO SIA “ GEFCO BALTIC” Freight shipping SIA “ EMMA Eurasia Multinational Alliance ” JC Decaux Europe Holding SIA “ JCDecaux Latvija ” Advertising agencies ALSTOM HOLDINGS SIA “ ALSTOM LATVIA ” Architectural and engineering activities Somfy SA SIA “ Somfy” Electronic and telecommunications equipment and parts wholesale

Oberthur Technologies S SIA “ Oberthur Technologies Computer programming Latvia” LUTAK SA SIA “ FARIGA SEAFOOD” Fish and fish products processing and preserving Source: lursoft.lv

1.4 State’s role in improving the economic environment

The country supports a variety of measures for plans for, directly improving the business environment. The process is conducted by different ministries and organisations: Ministry of Economy, Investment and Development Agency of Latvia, Latvian Export Import Directory. Measures such as: the training of workers (training courses for unemployed, "Simtlatnieku programme"), start a business ("Business Incubators", start- up capital), the promotion of innovation (Competence centres) business promotion (national and international level), the availability of renewable resources and energy security.40

40Ministry of Economics of Republic of Latvia, “Support programs”; www.em.gov.lv/em/2nd/?cat=30253&lng=lv

24 State aid: advancing grants for participation in international exhibitions and trade missions, consultancy, modernisation of business-related infrastructure, development of new products and technologies, increasing the qualifications of employees.41 Provides with: funds, subsidies, grants, loans and guarantees, which are financed from the European Regional Development Fund, the Ministry's budget. 2007-2013 funding of aid programs is 242.83 million Ls (169. 98 EUR)42 The Latvian government is responsible for fiscal policy, but the Bank of Latvia, whose main role is monetary policy, is responsible for the financial environment. The Financial and Capital Market Commission (FKTK) regulates the financial and capital markets. More than 20 commercial banks and 9 branches of foreign banks operate in Latvia.43 The leading institutions operating the securities market in Latvia are NASDAQ OMX and the Latvian Central Depository. 44 Latvia’s most common tool for assessing the business environment is, the World Bank's international study Doing Business. The World Bank Doing Business 2011, placed Latvia 24th out of 183 countries. 45 Latvia is among those countries (85% of the Doing Business study included) in, which in the last 5 years, reforms have facilitated the conduct of business.46

41 Investment and Development Agency of Latvia; file - „Latvian business guide 2010” 52lf http://www.liaa.gov.lv/lv/sakumlapa/publikacijas/anglu_valoda/ 42Investment and Development Agency of Latvia; file - „Latvian business guide 2010” 9lf http://www.liaa.gov.lv/lv/sakumlapa/publikacijas/anglu_valoda/ 43Investment and Development Agency of Latvia; file - „Latvian business guide 2010” 34lf http://www.liaa.gov.lv/lv/sakumlapa/publikacijas/anglu_valoda/ 44 Investment and Development Agency of Latvia, “Financial Environment”; http://www.liaa.gov.lv/eng/invest_in_latvia/latvian_business_guide/financial_environment/ 45 “Latvijas Vēstneša” legislation forum, MK order No.54“Business Environment Action Plan for 2011” www.likumi.lv/doc.php?id=225784 46“Latvijas Vēstneša” legislation forum, MK order No.54“Business Environment Action Plan for 2011” www.likumi.lv/doc.php?id=225784

Picture from - http://www.lak.lv/pub/

26 II Legal Environment

Latvia is a member of European Union and WTO, therefore all WTO/EU laws, regulations and directives have legal force on it’s territory 2.1 Foreign Investment Opportunities

• Business activities in Latvia are regulated by the Commercial Law, which is the legal framework for establishing, registering, operating and closing a business. This law emphasise the three business legal entities47:

 individual entrepreneurs

 partnership (general and limited)

 corporations (joint stock and limited liability companies).

• The Commercial Law was established on January 1st 200248, and this law ensures protection for creditors, requires off-shore companies to disclose their shareholders, pose accountability requirements for managers, and forbids companies from using cash reserves to purchase their own shares.

• EU citizens can freely purchase land in Latvia49. Governmental entities, and companies registered in the Register of Enterprises of the Republic of Latvia shows that more than 50 percent of the companies are owned by:

• Latvian citizens and/ or Latvian governmental entities;

• Physical or legal persons from other countries (with which Latvia has signed and ratified an international agreement on the promotion and protection of

47 EUbusiness, Investment Climate in Latvia 2009 by Ina Dimireva [tiešsaite] Pieejams http://www.eubusiness.com/europe/latvia/invest 48 Law and technology resources for legal professionals ,Feature-Latvian Law Guide by Ilona Ceica and Ligita Vasermane [tiešsaite] Pieejams http://www.llrx.com/features/latvia.htm 49VIT Klima International Real Estate Consultant . How to buy property in Latvia [tiešaite] Pieejams http://www.klima.cz/Latvia.htm

27 investments by 31 December, 1996 , or for agreements signed after this date, in cases when this agreement provide for reciprocal rights to land acquisition)

• Physical and legal persons who do not fit into the above categories can purchase land and property (except territories in Latvia’s border area, protected areas of other public waters, land50 of state nature reserves, as well as dune area of the Baltic Sea and the Gulf of Riga, and land usable for agriculture and forestry) in compliance with the general plan of the specific region. Furthermore, foreign investors can lease land for up to 99 years.

• The Law on Privatization of State and Municipal Property regulates the privatization process in Latvia. The Latvian Privatization Agency (LPA)51opened in 1994 to perform the privatization program.

• The three major methods are:

 public offering  auction for selected bidders  international tender

• Government decides whether to keep a certain number of shares in companies that are vital to the state’s strategic interests or not.

• When the greenfield investment is made, the government does not screen investment projects (there are exceptions in special cases, when a certain type of licence is required)

• Overseas Private Investment Corporation (OPIC) political risk insurance coverage is possible for U.S. investments in Latvia.

• Latvia also is a member of the Multilateral Investment Guarantee Agency (MIGA)

50Global Property Guide [tiešsaite] Pieejams http://www.globalpropertyguide.com/Europe/Latvia/Buying-Guide 51Valsts akciju sabiedrība Privatizācijas Aģentura [tiešsaite] Pieejams http://www.pa.gov.lv/LPA/Lpa.php?ID=3.7 Picture from - Foto: Reinis Hofmanis, f64 : http://nra.lv/latvija/politika/11918-satversmes-tiesa-liek- atmaksat-pensionariem-ietureto-naudu.htm

2.2 Performance requirements/Governments Incentives

• All of the investment incentives and requirements apply equally to local and foreign businesses.

• Series of incentives are offered by the Latvian government, that apply to foreign and domestic investments, special economic zones, in several free ports, and in special support regions52

• Incentive packages are available, that apply to projects that have a “state-supported investment” status and to the hi-tech goods producers

• No VAT for investors and customs duties on fixed assets that are imported as long-term investments

• No tax on profits

• Rights to private ownership are secured by the Latvian constitution

• Foreign citizens can enter Latvia for temporary business activities for up to three months in a half-year time period53

• Foreigners are required to obtain residence and work permits for longer time periods54

52 EUbusiness, Investment Climate in Latvia 2009 by Ina Dimireva [tiešsaite] Pieejams http://www.eubusiness.com/europe/latvia/invest 53 Human Rights. Law "On the Entry and Residence of Foreign Citizens and Stateless Persons in the Republic of Latvia" [tiešsaite] Pieejams http://www.humanrights.lv/doc/latlik/resperm.htm 54 EUraxes. Latvia [tiešsaite] Pieejams:http://www.euraxess.lv/en/lapa/92/Entry,_Visas,_Residence_and_Work_Permits/ Picture from - http://www.em.gov.lv/em/2nd/?cat=30103

Picture from - http://www.ctb.lv/lat/celi/gallery/?doc=125&side=celi

30 2.3 Capital Markets and Portfolio Investment

• Latvian government policies do not interfere in the free flow of financial resources or the allocation of credit.

• July 1, 2001 - launch of the unified capital and financial markets regulator

• 2000 Law on Consolidated Capital Markets Regulator, 2004 Law on Financial Instrument Market,55 and several other laws and regulations - regulate Securities markets

• The RSE (Riga Stock Exchange) was the first exchange in Eastern Europe to create an index in cooperation with Dow Jones.

• Now new platform is operating - NASDAQ OMX Riga

2.4 Labour Law

• Since Latvia joined the EU many professionals can find employment opportunities in other EU countries that have opened their borders. Unofficial statistics shows that more than 100,000 people have moved to other EU countries since May 1, 2004.

• A new Labour Law came into effect on June 1, 200256

• The law:

 addresses discrimination issues

 provides more detailed provisions on rights and duties of employees' representatives

 creates a new institution - the Work Dispute Settlement Commission - that can be established in a factory

• Full-time employees in Latvia work 40 hours a week.

55 Finanšu un Kapitāla Tirgus Komisija [tiešsaite] Pieejams http://www.fktk.lv/en/law/financial_instruments_market/laws/ 56 Eironline.European Industrial Relations observatory on-line. Labour Law examined [tiešsaite] Pieejams http://www.eurofound.europa.eu/eiro/2004/05/feature/lv0405103f.htm

31 • There are 5 working days per week (employers are allowed to schedule 6 working days per week)

• Employees are entitled to 4 calendar weeks of annual paid vacations per year.

• An employer is prohibited from entering into an employment contract with a foreign individual who does not have a valid work permit.

• The Latvian government is committed to adhere to the ILO (International Law Organization) convention protecting worker rights.

2.5 Intellectual property rights

• Copyrights, patents and trademarks are protected in Latvia since 199357

• New Law on Copyrights was adopted by the Parliament in the year 200058. It is more detailed version of the previous law. If there has been a violation of intellectual property rights, the foreign owners may seek redress trough the appellation council at the Latvian Patent Office; in such cases court action can also be sought.

• The criminal law stipulates penalties for copyright violations.

• In July 1994, the Trade and Intellectual Property Rights Agreement between the United States and Latvia was signed.

• January 1993, Latvia has been a member of the World Intellectual Property Organization (WIPO)

• September 1993 a member of the Paris Convention

• August 1995 - a member of the Berne Convention

• August 1997 - signed Geneva Convention for the Protection of Producers of Phonograms against Unauthorized Duplication of their Phonograms

57 Katzarov . Patent & Trademark Attorneys. Latvia [tiešsaite] Pieejams http://www.katzarov.com/trt-latvia.htm 58 World Intellectual Property Organization . Latvia [tiešsaite] Pieejams http://www.wipo.int/wipolex/en/details.jsp?id=2950 Picture Copyrights belongs to Māra Džeriņa

32 2.6 Judicial Questions (Investor Protection)

• In 1993 Law on Judicial Power - introduced a three-tier court system59. Currently, judicial power is exercised by town, city and rural districts; regional courts; and the Supreme Court.

• Constitutional Court reviews the compatibility of edicts and acts of the President of the Republic, the government and local authorities with the constitution and the law. Unless otherwise stipulated by law, district courts are the courts of first instance in all civil, criminal and administrative cases.60

• Regional courts are vested with the authority of appellate review for district court verdicts. In addition, regional courts are courts of first instance for cases specified in the Civil Code (such cases include claims exceeding LVL 15,000 (approximately USD 30,000)

• The Supreme Court consists of the Senate and two Chambers of Court: the Civil Chamber of Court and the Criminal Chamber of Court.

• City and regional courts are administered by the Ministry of Justice www.tm.gov.lv. However, improvements in the judicial system are needed to accelerate the adjudication of cases, to strengthen the enforcement of court decisions, and to upgrade professional standards.

• The Civil Procedure Law, which came into force on March 1, 1999, contains a section on arbitration courts. This section was drafted on the basis of the UNCITRAL model law, thus providing full compliance with international standards. The law also governs the enforcement of rulings of foreign non-arbitral courts and foreign arbitrations.

59 Legislation online. Latvia [tiešsaite] Pieejams http://legislationline.org/countries/country/19 60 Republic of Latvia Supreme Court [tiešsaite] Pieejams http://www.at.gov.lv/en/about/operation/system/ Picture from - http://m.nra.lv/zinas/ekonomika/33946-interesi-par-akciju-pardosanu-svezai-izradijusi-50-latvijas- finiera-akcionari.htm

33 • A register of arbitration institutions was established in 2005. At the moment there are 156 arbitration institutions registered in Latvia www.ur.gov.lv (in most commercial agreements today, the parties opt to refer their disputes to arbitration rather than to the Latvian courts).

• 1958- Latvia joined New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and thus judgments of foreign arbitral courts that are made in accordance with the convention can be enforced in Latvia.

• There are two laws governing bankruptcy61 procedure:

 the Law on Insolvency - January 1, 2008

 the Law on Credit Institutions62 (regulates bankruptcy procedures for banks and other financial sector companies) - 1995

• The Law on Insolvency controls how the enterprise or natural person becomes solvent again and to protects the creditor's interests by applying reconciliation, rehabilitation or bankruptcy procedure in case of limited solvency or insolvency.

• Bank bankruptcy is regulated by - The Law on Credit Institutions and the Law on Deposit Insurance

61 Latvijas Republikas Uzņēmumu Reģistrs [tiešsaite] Pieejams http://www.ur.gov.lv/?a=945&v=en 62Finanšu un Kapitāla Tirgus Komisija [tiešsaite] Pieejams http://www.fktk.lv/en/law/credit_institutions/laws/credit_institution_law

34 2.7 Anti-Corruption policy

• Perception of corruption is defined as an obstacle. Latvia is 44th63 among the world's corrupt countries.

• In 1998 - Law on Money Laundering64, and a new law on conflict of interest is adopted

• Latvia signed - Criminal Convention on Corruption of the Council of Europe and United Nations Convention against Corruption.

• Latvia is in pending process with OECD about Convention on Combating Bribery.

• Crime and Corruption Prevention Council chaired by the Prime Minister is an institution responsible for fighting corruption. The Ministry of Justice is the day- to-day supervisor of the CCPC Secretariat.

• Anti-Corruption Bureau is an independent agency it is responsible for operational activities and fights the corruption incidents.

63 World Audit organization [tiešsaite] Pieejams http://www.worldaudit.org/corruption.htm 64Finanšu un Kapitāla Tirgus Komisija [tiešsaite] Pieejams http://www.fktk.lv/texts_files/AML%20Systems%20Latvia%202011.pdf Picture from - http://www.bt1.lv/bt1/intertextil/?link=w0100000

Picture from - http://www.boot.lv/tehnika/riga-sacentisies-visas-baltijas- sumo-roboti#

36 III Tehnological Environment In Latvia

3. 1 Technological environment in Latvia

Knowledge and innovation are the main resources of Latvia’s national development goals. According to the annual Global Innovation Index developed by INSEAD (European Institute of Business Administration) Latvia takes the 36th place. 65 According to the European Innovation scoreboard 2010 which was published in 2011 Latvia takes the 30th place. For Latvia the average growth of the indicators contained there was 4.8%, which is significantly more than the average 1.8% growth for the other 27 EU member states. 66 The general improvements in recent years are observed in the human resource support sector. The number of applications for European patents and Community trademarks has risen. A slightly smaller increase can be observed in the export of high technology products. Latvia has the fastest internet speed in the Baltic and Nordic countries – 24.4 megabits per second (Mbps) by measuring the average fastest connection moments as well as the fastest average connection speed – 6.3 Mbps.67 On the 23 of July 2009 the government of Latvia signed a cooperation agreement with the European Space Agency. Latvia intends to fulfill the membership in Euroepan Space Agency’s projects in the material science, satellite construction, electronics and other engineering fields. 68 European Space Agency’s experts’ overall impression of Latvia was: “a country with adequate industrial and intellectual infrastructure and technical capabilities for space technologies”69

65 Homepage of INSEAD- The business school for the world. The Global innovation index 2011 - http://www.globalinnovationindex.org/gii/main/analysis/rankings.cfm#CGI.SCRIPT_NAME# 66 Report of the Ministry of Economics of the Republic of Latvia about the development of Latvia’s economy 109. p 67 Homepage of news agency TVNET - http://www.tvnet.lv/tehnologijas/internets/386121-latvija_atraks_internets_neka_citur_baltija_un_ziemelvalstis 68 Treaty between the Government of the Republic of Latvia and the European Space Agency about cooperation in the space sector for peaceful purposes 69Governmental report on the project „Treaty between the Republic of Latvia and the European space agency” Picture from - http://www.reitingi.lv/lv/archive/sports/34779.html

37 3.2 Technological support institutions

Riga Biomaterial Innovation and Development Center is the biggest and most modern biomaterial research center in Latvia70 Latvia Technology Park was founded in 1996 using the experience of the world’s most developed countries in creating technological parks. The main task of LTP is to promote commercialization of science through modern technologies, to support the start-up and develop technological and innovative businesses, the support of small and medium-size production companies. LTP is a member and active participant of the IASP (International Association of Science Parks), IRC (Innovation Relay Centre), BASTIC (The Baltic Network of Innovation Centers), LATICA (Latvian Association of Technological Parks, Centers and Business Incubators). LTP participates in the development and implementation of various local and international (Phare, Leonardo da Vinci etc.) projects. 71

The main objective of the foundation "Ventspils High Technology Park" (VHTP) is to provide all the necessary infrastructure and support services for the development of companies that are engaged in the field of high technologies and perform its activity in the city and region of Ventspils. The priority fields of VHTP are IT, telecommunications, electronics, mechanical engineering, industrial automation, computer-aided design, and space technologies.

VHTP has several structural units:

Business Incubator that provides infrastructure and support services for companies in their early stage of activity. This structural unit also provides services of pre-incubator for prospective entrepreneurs. Service Department of the Technology Park that provides infrastructure and support services for companies in their after-incubation or expansion stage, and also for research and educational centers. Development and Marketing Department, the main objectives of which are the development and implementation of VHTP projects, marketing and public relations, as well as the coordination of activities of Latvian Space Technology Cluster.

70 Homepage of Riga Biomaterial Innovation and Development Center - http://rbiac.rtu.lv/eng/?p=507 71 Homepage of Latvia Technology park - http://www.ltp.lv/pub/index.php?lang=eng

38 One of the most impressive projects that has been developed in VHTP is the first Latvian satellite – Venta 1. It will be launched in 2012. 72

Latvian information and communication technology association has made the promotion of education in the IT&T sector and the increase of students in this sector one of its main priorities73

The Polymer Laboratory of the Latvian State Institute of Wood Chemistry develops cryogenic isolation materials which are suitable for low temperatures. The institute is cooperating with the German company „Astrium” which is involved in European Space Agency’s projects. 74 To facilitate technology transfers Investment and Development Agency of Latvia continues to support 8 Technology transfer contact point activities (At the University of Latvia, Riga Technical University, Latvia University of Agriculture, Riga Stradiņš University, Ventspils University, Art Academy of Latvia). The main lines of action of Technology transfer control points are to give information about scientific institution services, and knowledge and technology transfer, preparation of offers about commercialization of research results, to organize business and scientific co-operation seminars, conferences and matchmaking events.75 Investment and Development Agency of Latvia together with The Latvian Technological Centre continue to provide the activity of Enterprise Europe Network in Latvia. Latvian Academy of Sciences founded in 1946 Is an institution of national importance, non-governmental scientific body which brings together more than 300 scientists from the fields of natural science, engineering science, social science and humanitarian science, whose work is financed and supported by the state.76

72Homepage of Ventspils High Technology park - http://www.vatp.lv/en/about-us 73 Homepage of Latvian Information and Communication Technology Association http://www.likta.lv/EN/About_us/Pages/about_us.aspx 74 Informative report on the development of the Space technology sector and the creation of space related national policy

75 Homepage of Ministry of Economics of Republic of Latvia - http://www.em.gov.lv/em/2nd/?lng=en&cat=30281 76Homepage of Latvian Academy of Sciences - http://www.lza.lv/index.php?option=com_content&task=view&id=279&Itemid=123

http://www.a4d.lv/lv/raksti/tads_saules_akmens/

40 3.3 Companies

SIA Baltic Scientific Instruments – manufactures specialized analyzers, detectors, spectrometers and radiation controllers, which are used in space exploration. The company has taken part in many projects related to space technologies. The number of completed space technology related orders from 1995 to 2009 is worth more than 900 000 Euro. Many of these orders were connected to NASA and the European Space Agency77 SAF Tehnika manufactures telecommunication devices, voice and data transmitting devices. The company develops, manufactures and distributes digital microwave radio devices. Devices created by “SAF Tehnkia” provide wireless communication solutions for digital voice and data transmission78 SIA Plazma, Keramika, Tehnoloģija – manufactures ceramic and nanopowders which are used for space machinery’s ceramic parts 79 SIA HEE Photonic Labs – manufactures optical components for telescopes and laser rangefinders 80 A/S Neomat – produces nanopowders used in aviation and in space technology 81 SIA GeoStar – deals with the modification, integration, construction and maintenance of GPS and communication devices 82 A/S Sidrabe – works with vacuum technologies. The optical vacuum coatings for glass which are manufactured in A/S Sidrabe are widely used in everyday technology – TVs, mobile phones – and also in the high and space technology sector. 100% of A/S Sidrabe’s production is exported 83 JZ Microphones is a company which manufactures microphones and recording accessories. The company is competing with the leading manufacturers on even terms. Others try to imitate JZ Microphones’ uniqueness. JZ Microphones’ unique sound consists of a correct design and a capsule which is also called the microphone’s heart. It provides the correct production of sound in order for backwards going waves and reverberation not to occur. JZ Microphones is one of the three companies which control this technology 84

77Homepage of Baltic Scientific Instruments - http://www.bsi.lv/about_us_eng.html 78 Homepgae of SAF, Customized Microwave Solutions - https://www.saftehnika.com/company/about-us 79 Homepage of Plazma and Ceramic Technologies - http://www.plazmaker.lv/index.php 80 Homepage of High and Engineering Photonic Labs - http://www.heephotonic.eu/?1 81 Homepage of NEOMAT Nano Powders - http://www.neomat.lv/ 82 Homepage of GEOSTAR - http://geostar.lv/main.php?m=1 83 Homepage of SIDRABE, Customized Vacuum Coating Systems - http://www.sidrabe.com/company 84 Homepage of JZ Microphones - http://jzmic.com/eng/

Picture from - http://www.origo.lv/lv/par-origo/origo

42 Dartz - the manufacturer of exclusive and custom made armored cars has been in the business for ten years, but recently it has started to aggressively conquer the world market. It is owned by people from Riga, the capital of Latvia. Clients from Brazil, United Arab Emirates, China, the Hollywood film industry, and such clients like the rapper Jay-Z have been interested in the armored cars created by Dartz.85

OSCar eO is the first electric rally car created in Latvia. It is a serious racing car with a four wheel drive, one electric engine, 210 kilowatts, 800 Newton meters, one electric generator, one internal combustion engine (which starts the electric generator), 240 liter fuel tank and what is most important 160 small accumulators which give 600 volt voltage. OSCar eO has successfully taken part in the 2012 Dakar rally. The first two stages of the Dakar rally have proven that electric cars are equivalent to traditional cars in long and difficult driving conditions86

85 Homepage of Dartz Armored cars - http://dartzkombat.com/en/ 86 Homepage of Oscar eO - http://driveeo.com/

Picture From - http://liveriga.wordpress.com/page/4/

IV Social issues

4.1 Income

Since 2008 the average gross income for the people Personal monthly average gross income employed have decreased by 10% 690

660

In 2011 Latvia was the third from the end in the EUR 630 600 list, leaving Bulgaria and Romania behind, with the average gross income per capita, which is 48% from the EU 27 level.

The national minimum monthly wage has increased 3.5 times since 2001. National minimum monthly wage

300 In terms of the size of the national minimum 250 monthly wage, Latvia is in the same group as 200

EUR 150 Bulgaria, Romania, Lithuania, Estonia, Hungary, 100 Slovakia, the Czech Republic and Poland. 50 Countries from this group do not exceed 400 EUR as a minimum monthly wage.

The size of pensions in Latvia has increased by Average size of pensions paid 90% since 1993. (1993.-2010.)

300

In 2010 government costs for pensions was 9% 200

from the GDP in comparison with the EU 27 13% EUR 100 from the GDP. 0

45 4.2 Demography

The population of Latvia in 2011 was 2.23 million (in the past 11 years it has decreased Population (2001.-2011.) by 135 thousand inhabitants) and this fact 2400000 shows the need for workforce in Latvia. 2350000

Two ethnical groups are very explicit by 2300000

numbers in Latvia – Latvians (59.9%) and 2250000 Russians (27.5%); 2200000

In 2011 65.8% were working-age population, whereas 20.5% older than working age. 13.7% of the inhabitants were younger than working age.

In Latvia, there are significantly more working age women than working age men. Resident population af working age by gendre

780000 In 2011 there were 30 thousand more working 760000 740000 age women than working age men. 720000 Male 700000 Female 680000 67% of the inhabitants of Latvia live in towns and cities, whereas only 33% - in rural territories. Considering this, the bulk of the potential workforce concentrates in urban areas.

46 4.3 Employment and unemployment

Since 2008 the number of older workers Employment rate of older (retired people) employed has decreased by workers (%) 11%, which in EU 27 has been growing 65 60 since 2006. It creates a good situation for the 55 working age people to find a job and climb 50 EU27 the career ladder. 45 Latvia 40

In 2010 only 2.3% of the employed in Latvia were above 64 years of age.

From 2008 to 2011 the average labour cost Labour cost index (2008=100) in Latvia has plummeted by 35%. 109 107 105 Labour cost in Latvia is 7% smaller in 103 Latvia comparison with the EU 27. 101 99 EU 27 97 A full time employee works 40 hours a week.

The bulk of the unemployed is between 15 to 34 years of age, which is 55% of the unemployed.

The biggest unemployment rate in Latvia is in the rural territories, not in the capital city Riga. It shows that creating workplaces in the rural territories is perspective and necessary.

47 4.4 Education Youth education attainment level In 2009 youth education attainment level in (%) Latvia exceeds the EU 27 by 2%. 81,5 Latvia has 15% less people with low 80,5 79,5 educational attainment (age group from 25 to EU 27 78,5 Latvia 64 years) than the EU 27. 77,5

In 2008 Latvia spent 0.7% more money on education than the EU 27.

In 2010 about 10 000 people have graduated vocational schools. Consequently, the demand in production and vocational industries will increase during the next years.

The number of graduates from universities and Expenditure on education as % of colleges has doubled from 2000 to 2010. GDP 5,8

5,6 Since 2000, the bulk of university graduates is 5,4 in social sciences, merchandising and law, EU27 5,2 which is 14 500 in year 2010. Latvia 5

4,8 The number of people with qualifications in healthcare and social welfare has constantly increased from 2000. In 2010, the number has

quadruplicated.

The number of people with qualifications in engineering, production and construction has increased from 1 400 to 2 500 since year 2000.

The number of people with qualifications in agriculture is the least, which in year 2010 was 230. Nevertheless, it has increased by 41% when compared to year 2000.

The number of people with qualifications in service industry has tripled since year 2000.

48 4.5 Crime level

Decrease in the crime level in Latvia: Since 1993 the number of crimes in Latvia has decreased:

 for murders – 4 times;  for criminal body injuries – 3 times;  for rape and sexual assaults – 2 times;  for hooliganism – 2 times;  for property robberies from flats – 2 times;  for the violation of transport movement safety requirements with tough consequences – 2 times

Increase in the number of persons convicted: - Since 1990 the number of persons convicted for committing a crime has grown for 35% (from 7159 to 9607 persons convicted).

4.6 Language

The official language of Latvia is Latvian; The Latvian language consists of Latin letters. While speaking, the accent is on the first syllable and mostly all letters are pronounced; The second wide spread language is the Russian language, which is mainly used by the inhabitants of the Russian origin or elderly people; Knowledge of the German language is widespread among elderly people. The English language is widely used and understood among young people.

Picture from - http://www.hc.lv/izklaide-kultura/zinas/latvijas-menesi-daugavpili/

Picture from - http://dziesmusvetki.lndb.lv/9-visparejie-latviesu-dziesmusvetki/objekts-4/

50 4.7 Mentality

Latvians have an agricultural west culture in both social life and business; Latvians are meticulous, which means their attitude for paper work and bureaucracy is punctilious; Deadlines and the sequence of jobs to do is important in both social life and business; Latvians behave in a formal manner, when cooperate with unknown, unfamiliar partners, as opposite to informal attitude when doing business with familiar partners; Topics concerning nationality or ethnic background should be avoided during conversations; People are expected to arrive at an event or a business meeting in or at least on time. The maximum time for being late – 15 minutes; Business meetings in Latvia require formal dresscode; Smoking during business meetings is allowed only in the places marked for that purpose; Using alcoholic beverages during business meetings is not common in Latvia; The usual working day is from 8:00 AM till 6:00 PM; There is no precise and determined lunch time break and the working day has no fixed breaks.

4.8 Religions and holidays connected to religions

Most popular churches:  Catholic Church The first Friday, Saturday and Monday in spring after full  Lutheran Church moon - Easter time;  Orthodox Church - January 7 – Christmas for Orthodox believers – Unofficial holiday (the employer decides whether to assign a work-off day or not) which is mostly celebrated by the Orthodox churches believers.  Others have Christmas time from December 24 until December 26.

Picture from - http://baltictravelnews.com/modules/printer_view/print_view.php?pub_id=42629&l=lv

51 4.9 Official holidays

Official holidays when government institutions and the most of the services’ providers do not work:  May 1 – Labour day;  May 4 – The Day of Renovation of Independence in Latvia;  July 23 – July 24 – Midsummer’s Eve, Night and Day (Summer solstice);  November 18 – The Day of Proclamation of the Republic of Latvia, which was in year 1918;  December 24 – December 26 – Christmas (Winter solstice);  December 31 – January 1 – New Year’s Eve.

4.10 Means of money sttlements for goods and services

Legal tender of Latvia – 1 Lat (LVL) = 100 santims Widely accepted credit/debit cards: VISA, VISA Electron, MAESTRO and MASTERCARD Payments can be settled only through the currency of Lats (LVL). An exception – some cafés, restaurants and souvenir shops where other currencies (e.g. USD, EUR) are also accepted.

4.11 Alcohol and tobacco

Smoking is not allowed:  In educational and nurturing organizations;  Closer than 10 metres from the entrance of buildings with governmental organizations in them;  In shelters of public transportation stops;  In staircases, corridors and other public rooms of apartment buildings;  In public buildings, constructions and rooms (in cinemas, concert halls, sport halls, other sport buildings and constructions, post office and other organizations’ areas, discotheques, ballrooms, etc.), except for areas specially marked for smoking;  In public transportation vehicles, except for long-distance trains and ships which may have special wagons or cabins for smokers;

52  In parks, small public gardens and swimming areas, except for places specially marked for smoking;  In cafés, restaurants and other public catering places, except for summer (open air) cafés in which smoking is allowed only in places specially marked for smoking. Alcoholic beverages and cigarettes can be purchased and used only by persons who have reached the age of 18; Alcoholic beverages in retail shops can be purchased only from 8:00 AM to 10:00PM (22:00). This limitation does not affect places and/or events where alcoholic beverages are being distributed and used immediately (e.g., pubs, cafés, hotels); Penalty for driving a vehicle while intoxicated: 1. 0.5-1.0 per mille – 100-150 LVL with possible confiscation of a driver’s licence up to 9 months; 2. 1-1.5 per mille – 200-350 LVL with confiscation of a driver’s licence for 9 months; 3. More than 1.5 per mille – 300-450 LVL with confiscation of a driver’s licence from 1- 3 years.

4.12 Weather and climate

Latvia has 4 distinct seasons: Winter (December, January, February), Spring (March, April, May), Summer (June, July, August) and Autumn (September, October, November); The average temperature in winter is -6.2 °C, in spring +10 °C, in summer +18 °C and in autumn +8.5 °C. Please note that the temperatures may be lower than -20 °C in winter and higher than +25 °C in summer; In terms of climate and weather conditions, Latvia is similar to Stockholm, the capital of Sweden.

4.13 Telephone numbers in case of emergency

Police 110; Fire and rescue service 112; Ambulance 113; Informative phone number 1188;

Picture from - http://artnouveauandriga.blogspot.com/2011/01/decorative- and-romantic-nationalistic.html

54 Mains Sources and links.

Chapter 1:

Bank of Latvia; http://www.bank.lv Ministry of Economics of Republic of Latvia, “Support programs”; www.em.gov.lv/em/2nd/?cat=30253&lng=lv Ministry of Transport of the Republic of Latvi; http://www.sam.gov.lv/satmin/content/?cat=112 Satiksmes ministrija, Rail Transport in Latvia; Lambert M Surhone, Mariam T Tennoe, Susan F Henssonow, Birzietis G. Pārvadājumi; Jelgava: LLU, 2008, http://www.latvija2030.lv/upload/telpiska_perspektiva.pdf Ministry of Wlefare of The Rebublic of Latvia ; www.lm.gov.lv Central Statistical Bureau of Latvia ; www.csb.lv Investment and Development Agency of Latvia(LIAA): Latvian Business Guide 2010; Biotechnologies, Chemicals and Pharmaceuticals; Industry profiles; Human resources; Taxation;Business ABC; State support programmes; Business incubators in ‘’ Latvia’s regions and Technologic parks’’; Financial Environment”; Transport and logistics European Commission; http://ec.europa.eu/index_en.htm “Latvijas Vēstneša” legislation forum, MK order No.54“Business Environment Action Plan for 2011”; www.likumi.lv/doc.php?id=225784 Lursoft; http://www.lursoft.lv/ Air Baltc; http://www.airbaltic.lv/public/korporativa_informacija.html Rail Baltica; http://rail-baltica.com/pub/ Latvijas Gāze; http://www.lg.lv/index.php?id=194&lang=lat Kurzeme Business incubator home page: http://www.kbi.lv/lat/left/23/inkubatori-latvija Baltic Export; http://balticexport.com/?article=arvalstu-investiciju-vide-latvija&lang=lv Latvian Investment Climate 2009 by Ina Dimireva;http://www.eubusiness.com/europe/latvia/invest Tax Rates Around the World 2012, Rates http://www.worldwide-tax.com Latvia foreign Investments incentives: http://www.worldwide- tax.com/latvia/lat_invest.asp Deloitte Wutholding Tax Rates 2011; http://www.deloitte.com/assets/Dcom- Global/Local%20Assets/Documents/Tax/dtt_withholding_tax_rates_2011.pdf

55 Chapter 2:

1 EUbusiness, Investment Climate in Latvia 2009 by Ina Dimireva [tiešsaite] Pieejams http://www.eubusiness.com/europe/latvia/invest 2 Law and technology resources for legal professionals ,Feature-Latvian Law Guide by Ilona Ceica and Ligita Vasermane [tiešsaite] Pieejams http://www.llrx.com/features/latvia.htm 3VIT Klima International Real Estate Consultant . How to buy property in Latvia [tiešaite] Pieejams http://www.klima.cz/Latvia.htm 4 Issues Relating To Foreign Investment.Latvia by Klavins & Sladins LAWIN. Lex Mundi Publication 5Global Property Guide [tiešsaite] Pieejams http://www.globalpropertyguide.com/Europe/Latvia/Buying-Guide 6Valsts akciju sabiedrība Privatizācijas Aģentura [tiešsaite] Pieejams http://www.pa.gov.lv/LPA/Lpa.php?ID=3.7 7 EUbusiness, Investment Climate in Latvia 2009 by Ina Dimireva [tiešsaite] Pieejams http://www.eubusiness.com/europe/latvia/invest 8 Human Rights. Law "On the Entry and Residence of Foreign Citizens and Stateless Persons in the Republic of Latvia" [tiešsaite] Pieejams http://www.humanrights.lv/doc/latlik/resperm.htm 9 EUraxes. Latvia [tiešsaite] Pieejams:http://www.euraxess.lv/en/lapa/92/Entry,_Visas,_Residence_and_Work_Permit s/ 10 Finanšu un Kapitāla Tirgus Komisija [tiešsaite] Pieejams http://www.fktk.lv/en/law/financial_instruments_market/laws 11 Eironline.European Industrial Relations observatory on-line. Labour Law examined [tiešsaite] Pieejams http://www.eurofound.europa.eu/eiro/2004/05/feature/lv0405103f.htm 12 Katzarov . Patent & Trademark Attorneys. Latvia [tiešsaite] Pieejams http://www.katzarov.com/trt-latvia.htm 13 World Intellectual Property Organization . Latvia [tiešsaite] Pieejams http://www.wipo.int/wipolex/en/details.jsp?id=2950 14 Legislation online. Latvia [tiešsaite] Pieejams http://legislationline.org/countries/country/19 15 Republic of Latvia Supreme Court [tiešsaite]

56 Pieejams http://www.at.gov.lv/en/about/operation/system/ 16 Latvijas Republikas Uzņēmumu Reģistrs [tiešsaite] Pieejams http://www.ur.gov.lv/?a=945&v=en 17Finanšu un Kapitāla Tirgus Komisija [tiešsaite] Pieejams http://www.fktk.lv/en/law/credit_institutions/laws/credit_institution_law 18 World Audit organization [tiešsaite] Pieejams http://www.worldaudit.org/corruption.htm 19Finanšu un Kapitāla Tirgus Komisija [tiešsaite] Pieejams http://www.fktk.lv/texts_files/AML%20Systems%20Latvia%202011.pdf

57 Chapter 3:

Report of the Ministry of Economics of the Republic of Latvia about the development of Latvia’s economy Treaty between the Government of the Republic of Latvia and the European Space Agency about cooperation in the space sector for peaceful purposes Governmental report on the project „Treaty between the Republic of Latvia and the European space agency” Informative report on the development of the Space technology sector and the creation of space related national policy

Homepage of INSEAD- The business school for the world. The Global innovation index 2011 - http://www.globalinnovationindex.org/gii/main/analysis/rankings.cfm#CGI.SCRIPT_NA ME# Homepage of news agency TVNET Article “Latvia has the fastest internet in the Baltic and Nordic states” http://www.tvnet.lv/tehnologijas/internets/386121- Homepage of Riga Biomaterial Innovation and Development Center - http://rbiac.rtu.lv/eng/ Homepage of Latvia Technology park - http://www.ltp.lv/pub/index.php?lang=eng Homepage of Ventspils High Technology park - http://www.vatp.lv/en/about-us Homepage of Latvian Information and Communication Technology Association - http://www.likta.lv/EN/About_us/Pages/about_us.aspx

Homepage of Ministry of economics of Republic of Latvia. Innovation Support Activities http://www.em.gov.lv/em/2nd/?lng=en&cat=30281 Homepage of Latvian Academy of Sciences - http://www.lza.lv/index.php?option=com_content&task=view&id=279&Itemid=123 Homepage of Baltic Scientific Instruments - http://www.bsi.lv/about_us_eng.html Homepage of SAF, Customized Microwave Solutions - https://www.saftehnika.com/company/about-us Homepage of Plazma and Ceramic Technologies - http://www.plazmaker.lv/index.php Homepage of High and Engineering Photonic Labs - http://www.heephotonic.eu/?1 Homepage of NEOMAT Nano Powders - http://www.neomat.lv/

58 Homepage of GEOSTAR - http://geostar.lv/main.php?m=1 Homepage of SIDRABE, Customized Vacuum Coating Systems - http://www.sidrabe.com/company Homepage of JZ Microphones - http://jzmic.com/eng/ Homepage of Dartz Armored cars - http://dartzkombat.com/en/ Homepage of Oscar eO ,Technical specifications - http://driveeo.com/

Pictures from – http://blog.travelpod.com/travel-photo/slice_n_dice/1/1283291516/art-nouveau-architecture.jpg/tpod.html, http://www.willgoto.com/pictures/pictures.asp?Picture_Id=21ce0299-5d28-45d7-bf98- 384cfc998c24&Language=1&Destination=308 http://daithaic.blogspot.com/2009/09/art-nouveau-district-riga-latvia.html http://friendinriga.blogspot.com/2011/04/wonders-of-art-nouveau.html http://www.fotopedia.com/items/dc0k3gvt5gp1g-zrnzkSjHc9A

59 Chapter 4: Latvia official homepage - www.latvia.lv Information service homepage – www.1188.lv Official homepage of Central Statistical Bureau - www.csb.gov.lv

THE BROCHURE WAS MADE BY:

Economic environment:

Ieva BRICE, Anna AKMENE, Margarita ZABOĻEJEVA-ZOTOVA, Madara GELSBERGA,

Laura DRELLE, Ilze KLIEVĒNA

Legal environment:

Alīna SMIRNOVA

Technological environment:

Reinhards MURAVSKIS, Jānis Matīss JOSTS, Igors SOROKINS, Artjoms JEVSTIGNEJEVS, Aleksejs POPJONOKS

Social issues:

Vadims ZENKEVIČS, Aleksandra FEDJAŅINA

Design:

Māra DŽERIŅA, Kaspars CELITĀNS

Supervision:

Dr.oec., prof.Baiba ŠAVRIŅA