Lithuania’s economy is beginning to recover, albeit slowly, numbers have begun to show.

Recent quarter-on-quarter GDP results have shown 6 percent growth, the highest in the EU.

Government spending cuts in 2009-2010 are expected to further strengthen GDP expansion.

Although unemployment figures have shown no signs of improvement, Lithuania’s economy ministry has made courting foreign direct investment (FDI) a top priority.

However, the investment climate in Lithuania still needs some work: business people point out that red tape has not been eliminated, the tax system has not been stabilised and there is a lack of attractive offers for foreign investors.

Eliminating red tape a major issue
US Ambassador to Lithuania Anne E. Derse says American investors see plenty of advantages to the country:”What they think is a big plus – above all, the people. The work ethic of the people, the high education, both management and technical skills, multilingualism is a critical factor too.”

She added that investors eye Lithuania‘s strategic location and relatively good tax situation for business.

Ambassador Derse said investors see the elimination of red tape as a key concern in Lithuania.

“Businesses would like to see less red tape. It would be better if there were less permits to be applied, if we didn‘t need so many permissions,” she said.

Red tape becomes red carpet
The president of the American Chamber of Commerce, Rimtautas Vizgirda, believes the investment climate in Lithuania is improving, even if there are still some signs of corruption.

“Corruption is one of the biggest problems in Lithuania, and investors are aware of that – they read about it in press, hear it from their colleagues,” said Vizgirda.

However, he said the situation in Lithuania is looking up. “Red tape has been changed into a red carpet. But attracting investors is hard work. They won‘t come here just out of the blue.”

Vizgirda said graft has moved from higher to lower-level bureaucrats. “In some unofficial meetings you can hear about it. There‘s no secret,” he said.

“People are concerned that circumstances are equal for everyone on the same field,” said Vizgirda, adding that the government has been moving in the right direction to address the situation.

Investments must be “bought”
Andrius Francas, head of Lithuanian operations for Strategic Staffing Solutions, pointed out that it’s easiest to attract investors on the back of successful examples like Barclays bank.

Francas emphasized that investments have to be bought: “All countries do this. Governments establish special investment packages.”

“Investors go wherever there’s a better offer. They won‘t choose Lithuania because the beer here is cheap and the girls are beautiful.”

Francas has previously worked with Barclays, Computer Sciences Corporation and other major investors in Lithuania.

He said that the economy ministry is moving in the right direction to attract FDI: “The only that we’re missing now is talking about it in a positive light.”

Francas revealed that there are now several companies scoping out investments in the Baltics, and they are also eyeing Lithuania.

Ambassador Derse added that some high-tech, bio-tech, IT companies are showing a strong interest in investing in Lithuania.

Vizgirda mentioned plans for the spring: Lithuania‘s president Dalia Grybauskaite will be meeting President Barack Obama, and the ACC is organizing meetings for her with influential American and Lithuanian businessmen in the West.

Prime minister sees progress
Prime Minister Andrius Kubilius emphasized the latest positive developments, which will make it easier for investors to find their way to Lithuania.

“We have reformed the institutions that are now going to operate more effectively to attract FDI. Also, several very successful deals have been signed. We will continue moving in the same direction, especially, when all the needed instruments are already designed,” Kubilius told journalists after a meeting with members of the American Chamber of Commerce.

Kubilius said he was aware of the main issues surrounding direct investment: land-use planning, construction permits, and a list of other priorities. “We understand all of this very well, and the ‘Sunset Commission’ (established last year to reduce bureaucracy in Lithuania) is moving towards it step by step,” Kubilius said.

The removal of corruption, according to Kubilius, is a result of progressive and consistent actions by government.

“I rejoice when investors say that they feel our government is no worse than any other government. After a year in power, there have been no major corruption scandals,” the PM said.

Kubilius disagreed with claims that corruption is now most prevalent among the lower rungs of bureaucrats.

Alfa.lt/English