AHK warns: Latvia’s reputation worsens in investors’ eyes

In the evaluation of the business environment, Latvia was given 14 points among in a competition with twenty one countries. Latvia received the highest score for the quality of domestic deliveries, labour costs, payment discipline and higher education system.
Latvia’s weak points, on the other hand, include insufficient corruption combating measures, according to results of a study performed by German-Baltic Chamber of Commerce.

Latvia’s score in thirteen criteria out of twenty has become worse than it was a year ago. Investors are especially sceptical about Latvia’s tax system and corruption-combating system. Productivity and state procurements are also given low scores.

Interviewed businessmen are optimistic the most about three factors – state support, vocational education system and availability of specialists. Similar to a year prior, academic higher education and payment discipline remain good.

Such results are from interviews of 78 businesses present in Latvia. A total of 1,698 businessmen took part in the study. Business location-wise, Latvia is put on 6th place among 21 countries. This is one spot higher than the score given to Latvia by local businessmen.

«It is a signal for us to wake up,» says Florian Schroeder CEO of German-Baltic Chamber of Commerce. «Looking at results, Latvia’s result has worsened in 13 criteria, especially in regards to the tax system, corruption combating and productivity. Latvia is not allowed to drop further. Latvia still has a good reputation. Still, there are reasons to believe things will not stay the same if nothing is done to improve aforementioned criteria. It is especially important to keep in mind that Latvia’s score should not be considered positive when compared to Estonia and Lithuania. The government can still use its remaining time to oppose corruption in the banking sector and other national economic fields.»

According to study results, 83% of businessmen are satisfied with the economic situation in Latvia (23% consider it good; 60% consider it satisfactory). 47% of businessmen consider the situation better than it was last year. Only 12% of businessmen expect the situation to get worse.

62% of businessmen predict an increase of turnover. 43% of respondents plan to take on more employees in 2018. 48% of respondents plan to perform more investments in Latvia this year. Only 7% of businessmen plan to reduce investments.

The new tax reform in Latvia is largely considered negative. Only 14% of all respondents are satisfied with it (44% are dissatisfied).

Businessmen expect labour costs to increase 11%.

Most respondents also consider crypto-currency a negative thing. 54% of respondents consider them risky and questionable. Only 7% consider Bitcoin a viable option for the future.

Study results show that two out of three companies would pick Latvia again for investments.


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