Last year, foreign investors rated Latvia with the lowest rating so far

Last year’s study paid more attention to the administrative burden, highlighting it as a significant factor that hinders Latvia’s competitiveness and investment attraction.

Foreign investors point out that the administrative burden in Latvia is caused by a high level of bureaucracy, a lack of coordination between public sector institutions, the absence of measurable goals for those working in state and local government institutions, and complex regulatory framework. The administrative burden can be observed in almost all areas – construction, employment, justice system, tax administration and others. Investors point out that the administrative burden creates additional work, increases costs and creates a sense of uncertainty, discouraging further investments in Latvia.

The critical assessment of investors highlights the challenges that must be addressed by the state administration. They are related to the availability of labor and the development of human capital, modernization of the public sector, ensuring transparency and predictability, as well as promoting fair competition between state-owned companies and enterprises. Among other things, these problematic issues highlight the areas in which investors’ assessment has seen the least progress over the past year, demanding immediate action from policy makers.

In general, 67% of investors confirmed that they plan to continue investing in Latvia, which is one of the lowest indicators in the history of the study. Several investors have admitted that it has become easier to invest in other Baltic countries, both due to the size of the internal market and lower bureaucracy. On the other hand, those investors who have not yet decided expect a clear vision of the country’s development.

FICIL, in cooperation with the Riga School of Economics and the German-Baltic Chamber of Commerce, will organize a discussion “Investment environment in Latvia: solutions for investment attraction” on April 26 at 10 a.m., during which the results of the study will be presented. The discussion will be broadcast live on the FICIL “Youtube” channel and on the Latvian public media portal “lsm.lv/” in Latvian and “eng.lsm.lv/” in English.

The FICIL Foreign Investment Environment Index was created in 2015 by FICIL in cooperation with the Riga University of Economics. The main goal of the study is to promote evidence-based policy decisions that would promote a favorable investment climate in Latvia. This is the ninth investment climate report. Similar to previous years, this report is also based on interviews – situation analyzes with foreign investors.

From February to the beginning of March 2024, 66 managers of foreign companies in Latvia were interviewed, whose contribution to the Latvian economy is significant, making up 24% of the tax revenues paid by companies, 33% of the total profit and more than a quarter or 26% of the total workforce in foreign companies in Latvia.