Investments

The country’s well-being depends on how evenly well-being in all its regions is developed. If investments reach the outmost regions successfully, this is a sign that the regional policy is operating in the country.

Unfortunately, most likely Lithuania is still the most centralized state of the European Union, except Cyprus and Malta where centralization is greater. This shows that the regional policy finds it difficult to counter-balance pressure of the largest cities of the country when a wealthy center that has more possibilities is becoming even richer at the expense of the problem regions.

Therefore it is sought to solve this problem by creating industry parks in different regions of the country.

The area covers 600 hectares

Lithuania attracts investors not only to its free economic zones but also to the industry parks. When there were investors, there were not enough places in Lithuania for them to establish themselves. At present the industry parks began growing like mushrooms, but there is still a lack of investors who want to invest in the country.

At the present time nine industry parks and three private industry parks are being developed. The total area of the state-owned industry parks covers about 600 hectares, and that of private ones totals 95 hectares. Lithuania hopes to attract green field investments to these parks because the local authorities saw to it that utilities and the system of communications should be built and that a single operator should manage every park because this is of great significance to investors.

Investors are free to choose

Parks being built in Alytus, Panevėžys, Šiauliai, Akmenė, Kėdainiai, Radviliškis district, Marijampolė, Pagėgiai municipalities are of different size, however, they are less than 100 kilometers away from Vilnius International Airport.

The investor is free to choose, which district is more important to him from the point of view of logistics. For example, Pagėgiai Industry Park is 246 kilometers away from Vilnius Airport but the International Klaipėda Seaport is quite at hand – 88 kilometers only.

Meantime Kėdainiai Industry Park is as far as 50 kilometers away from the International Kaunas Airport in which cargo aircraft land. From this point of view Šiauliai Industry Park is especially attractive because the airport that is able to receive huge aircraft operates right there.

On the whole, the majority of these industry parks are close to the main roads. Thus the investor is sure to find exemplary communications there.

Conditions for investors have been improved

In 2009, infrastructure was built in Šiauliai and Kėdainiai industry parks. In 2010, intensive construction work was carried out in Alytus and Panevėžys. Kėdainiai has aroused interest of only one investor thus far. He is thinking of building a crematorium there. Another investor, having looked around in Kėdainiai, decided to establish himself in Kaunas free economic zone. Šiauliai Industry Park, which waited for investors for more than one and a half years, thus far has signed an agreement with two companies that expressed the desire to establish themselves there – Saldos prekyba and Lietmeta. “Negotiations are being conducted with other six companies”, said the Head of the Investment and Urban Development Division of Šiauliai Municipality Aistė Žalevičienė.

Conditions for potential investors have already been improved. The list of requirements has been reduced to two: LTL 4 million investments per hectare and five new jobs created.

Investments in the development of parks

During the first stage of the development of Šiauliai Industry Park, 16 plots of land have been prepared in the territory covering 53 hectares next to Šiauliai Airport. Almost LTL 36,3 million has been invested in infrastructure. As much as LTL 18,9 million has been received from the European Regional Development Fund, and the municipality, having taken a loan from a bank, added the remaining amount. Disregarding the years of economic stagnation and poor interest taken by the investors, the municipality started works of the second stage of the development. It is planned to prepare and offer as large as 165-hectare territory to the companies. Another LTL 70 million from the European Union Structural Funds, the state and municipal budget will be needed to build infrastructure. Intensive work is being carried out in Alytus. Infrastructure works gathered full speed in the territory of Alytus Industry Park that covers an area of 45 hectares in April 2010. Approximately 2.5 kilometer-long streets will cross the territory divided into 22 plots of land. Over LTL 19 million financial support from the European Union has been allocated to infrastructure of Alytus Industry Park. According to the Deputy Head of the Investment Division of Alytus City Municipality Ineta Dimšienė, recently there have been some companies that took serious interest in it. The meat processing company Viltlit intends to build a canned meat factory on a 1,65-hectare territory. The public enterprise Pietų Lietuvos verslo kooperacijos centras plans to equip a territory where it would demonstrate a modern houses creation cluster in the area covering 2,4 hectares.

Norwegians dominate in Panevėžys

Infrastructure is being built in Panevėžys Industry Park too. As much as LTL 17,5 million financial support from the European Union has been received for the project carried out by Panevėžys City Municipality. It is true, thus far, there has been no investors who want to invest in Panevėžys Industry Park. However, representatives of the local authorities think that everything will change after the park infrastructure has been built.

According to the Deputy Mayor of Panevėžys Gema Umbrasienė, the British investors took interest in the possibility to build an electricity production or air generators and turbines plant. They were interested in other industry parks of Lithuania too. “As far as we know, these investors continue looking for sources of financing”, said Gema Umbrasienė.

According to the Deputy Mayor, the managers of the corporations Siva and Sivatech that belong to the Ministry of Trade and Industry of Norway assess the prospects in Panevėžys Industry Park in the positive. The Norwegian companies are one of the largest investors in Panevėžys. Twelve Norwegian capital light industry and furniture manufacturing companies operate in that city. Gema Umbrasienė admitted that all large cities of Lithuania competed for investments. And the city, which offers the most attractive conditions, is going to win. The Panevėžys Council decided to give privileges of real estate and land taxes to the investors.

The crisis suspended the plans

Experts on investments think that stagnation in the manufacturing sector has had a negative impact on the industry parks too. Foreign enterprises have a surplus of industrial capacities. This is one of the reasons why it is difficult to attract investment projects to Lithuania at the present time. During the years of economic upswing investors often turned their attention to Lithuania. However, expensive plots of land that had no infrastructure at all did not attract them. The investors chose the neighbouring countries. Therefore some potential investors chose neighbouring Latvia. However, now that territories with built infrastructure appeared, Lithuania has become much more attractive to foreign investors.

Old industrial traditions

In what can the industry parks be attractive to investors and local communities? For example, Alytus, the sixth largest town in Lithuania and the largest town in southern Lithuania, has always been famous for its industry. Even today the dominant branches of industry are manufacture of machinery and equipment, sowing industry, production of food and beverages, wood processing.

Alytus, as an industrial centre, prospered most in the soviet times. Though industry of the region has declined, experience, knowledge and qualification of the inhabitants remained.

Alytus could interest those investors, which export their production to Belarus or Poland, further to the West. The distance from Alytus to the border is only 55-56 kilometres.

Investors in the industry parks will have no problems relating to the supply of work force, and tax privileges will enable them to plan their business more rationally.

Meantime local regions badly need investors not only to solve the problem of unemployment. According to the market experts, investments in such parks would create new services, and improve the investment climate of the region.

Part of the regional policy

Industry parks form a part of the regional policy. Lithuania, like the majority of European states, fights against centralization and devotes attention to a sustainable regional development. Unfortu-nately, at one time the standard of living in the capital city of Lithuania and the town of Tauragė situated in the western part of the country differed by as much as seven times.

At the present time free economic zones operate successfully near two largest Lithuanian cities – Kaunas and Klaipėda. However, only a very small part of investments goes to other regions.

Experts on the regional policy note that encouragement of investments in regions helps solve the problem of centralization, which is characteristic of Lithuania.