New vision of Lithuanian Diplomacy: more business oriented
By S.Jakštonyt, Ambassador of Lithuania in Canada
Today Lithuania belongs to the largest world market – the European Union and Lithuania is reknown for its dynamic reforms and impressive rates of economic growth. In 2003 Lithuania’s GDP increased by 10.3 % and in 2004 – 2006 more than 7 % each year, with a growth forecast of about 7 % in 2008. According to World Bank’s report “Doing Business in 2007”, Lithuania ranks among the top twenty countries in terms of global business environment. Historically, the geographical location of Lithuania has determined its role as a transfer point in the economic relations between the West and the East. This role is now assuming primary importance and Lithuania is becoming an important regional center on the eastern coast of the Baltic Sea. Lithuania is a small country inbetween the huge markets in the East and in the West.
Lithuania is part of the Baltic Sea region, which is hosting major business clusters and it’s home for many leading companies. Therefore, Lithuania’s market – which is modern, attractive and dynamic – shouldn’t be seen as a small market of 3,4 million consumers, but as a gateway to the 500 million European market. As well as we might say that Lithuanian business community has particular expertise knowledge of 200 million market in the East. Although Lithuania and Canada are geographically distant, there is an immense potential to increase trade volumes, as well as explore a new investments possibilities. The trade turnover between our countries in 2006 was CAD 496 million. Lithuanian exports to Canada in 2006 reached CAD 464 million, and Canada’s export to Lithuania – CAD 32 million. Lithuania’s major exports to Canada include oil products, wood and articles of wood, furniture, paper, plastic products, home textile products. For example, Lithuanian beer producer “Svyturys” is exporting to Canada a beer “Extra” which is quite popular in Ontario and still missing market entry opportunities in Quebec as well as other provinces.
From Canada Lithuania imports lumber, machinery, sea products, pet food, just to name a few. We have seen some growth in exports in the past year. Every day the Embassy receives a number of inquiries from Canadian business people about imports from Lithuania. The main commodities that interest Canadian business people are wood and articles of wood, furniture, apparel and home textile, IT software, machinery. On the other hand, Lithuanian business people are mostly interest in machinery, electric equipment, fish and agricultural products. However, in Lithuania’s trade partners list of 2006, Canada takes only 2 per cents of total exports and less than one per cent of total imports. Canada’s exports to Lithuania are 16 times less in comparison with the Lithuanian export to Canada. Lithuania is open and welcomes foreign business to use the opportunity to expand their activities to the booming Lithuanian market and to join the conglomerate of many big corporate names, such as Microsoft, IBM, Philip Morris, HP, AON, Coca-Cola, Kraft Foods, Masterfoods, Siemens, Dalkia, Yazaki, SEB and many others, who operate already in Lithuania’s market.
There are few good reasons to invest in Lithuania. Located at the crossroads of Scandinavian, East European and West European markets, offering knowledge-economy business environment, one of the most qualified human resources in the EU, a wide range of investment incentives – free economic zones with tax benefits and one-stop-shop services, industrial parks with developed infrastructure, and the most diversified industry base among the Baltic States, Lithuania is a place for everyone seeking to expand their business activities. Foreign direct investments (FDI) are rising sharply, with more and more reinvestment. In the end of 2006 cumulative FDI in Lithuania amounted to EUR 7.2 bill. In comparison with the year 2005, cumulative FDI increased 33% in 2006. 70% of FDI came from the European Union LITHUANIA New vision of Lithuanian Diplomacy: more business oriented Ms.S.Jakštonyt has been working for the Ministry of Foreign Affairs since 1992. Prior to that she worked for the Ministry of Justice as well as the Government of Lithuania.
She held variuos positions at the Ministry of Foreign Affairs and was posted at the Lithuanian Embassy in Washington, D.C., and Lithuanian Mission to the EU, Brusells, Belgium . Before S. Jakštonyte‘s appointment to Canada she served as a Director of Legal and International Treaties Department at the Ministry of Foreign Affairs. In 1998-2002 she was a Lithaunian Representative at the United Nations Commission on International Trade Law (UNCITRAL) and 1997-2002 – a Member of Steering Committee for Human Rights, Council of Europe, Strasbourg. S.Jakštonyt has a Master‘s degree in law from Vilnius University and Diploma in diplomatic Studies from University of Oxford, UK. She has published several articles, including “Constitutional and International Documents concerning the International Legal Status of Lithuania“, “Baltic Yearbook of International Law“ ,Volume I, 2001. She has been decorated with Commandor Cross of the Order of Merit to Lithuania.
In 2006 the biggest foreign investors in Lithuania were Denmark with 16%, Sweden – 11%, Germany – 10%, Estonia – 7 %, and Finland – 7 % of total foreign direct investments in Lithuania. There are about 50 enterprises in Lithuania, which have Canadian capital, that comprises less than one percent from total amount of foreign direct investments. As one example of successful Lithuanian-Canadian business partnership I would like to mention LithuanianCanadian joint venture “Pajurio mediena” – the biggest sawmill in Lithuania. Production in 2006 reached 21 mln. EUR. The main customers of “Pajurio mediena” are companies from UK, USA, Japan, Belgium and Holland. A strong legal basis supports investors’ confidence in doing business in Lithuania. Lithuania is a member of the Multilateral Investment Guarantee Agency. The bilateral Agreement on Avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital is signed between Lithuania and Canada as well. The Lithuanian Development Agency (www.businesslithuania.com), a public organization under the Ministry of Economy, has been established to provide fast and efficient support for starting business in Lithuania.
Free Economic Zone provides with an excellent opportunity for companies looking to relocate or expand production, to establish centers of packing and distribution, and minimize logistic problems. Two Free Economic Zones has been established in Lithuania. Klaipeda FEZ is strategically located near the ice-free seaport on the Baltic sea, connecting West European ports of Kiel, Hamburg, Rotterdam, Antwerp, the airport, connecting number of European cities and the railway networks, reaching further to the East. The Kaunas FEZ is located at the intersection of the Via Baltica, the European priority transport corridor which connects Helsinki (Finland), St.Petersbourg ( Russia) and Warsaw ( Poland) . Located in the center of Lithuania Kaunas FEZ is connected to the most complete multi-modal transportation network in the region.
Free Economic Zones create an attractive environment for the expanding of business activities by offering a developed infrastructure, support services, tax incentives, reduced land and property taxes. Free Economic Zones has already attracted such companies as Philip Morris, Mars/Masterfood , Yazaki which took an advantage of the favorable conditions for business development. Today, development of infrastructure, technology and IT remains a priority in Lithuanian education and industry innovation strategy. There are over 100 scientific institutions carrying out R&D in Lithuania. Industrial R&D can be conducted by foreign firms with the cooperation of local scientific institutions, on a very cost-effective basis. Lithuanian biotechnological company “Fermentas” has research programs linked to the North America universities. Fermentas is a world leader in the discovery, manufacturing and marketing of quality molecular biologicals, and has a network of 70 distributors throughout the world.
The subsidiary enterprise “Fermentas Canada” carries out distribution activities through the North America. Tourism is an important component of Lithuania’s economy. Number of tourists in the country has increased considerably and the incomes from tourism industry accounts about for 5 % of GDP. Today we can say that Lithuania has become a tourist destination for everyone who is looking for historical sites, architectural diversity, world-class cultural events or simply to have fun. Rapidly growing health –SPA industry attracts people who are looking for wellness. Druskininkai, 210-year old spa town is famous for its rehabilitation spa therapy – mineral waters and therapeutic mud combined with modern technologies are the core of wellness services. Recently the Embassy has noticed the increased interest from the Canadian tourism operators. Unfortunately tourism from Lithuania to Canada is burden by the visa requirements for Lithuanian citizens to visit Canada. Lithuanian promotional tourism exhibition BUY LITHUANIA, which attracts tourism specialists and journalists from all over the world is held every autumn in capital city Vilnius. For detailed information do not hesitate to contact Lithuanian Embassy in Ottawa. Sources: Lithuanian Tourism Department, Lithuanian Development Agency, Lithuanian Statistics department Canada Statistic.
