Investments

Though the present authorities promise to do everything to attract large investors to Lithuania, statistics shows that this will not be an easy task to do. During the first half-year of the past year, before the world economy was lead to stagnation and investors trusted the markets, foreign direct investments were on the decrease in Lithuania.

The situation is worse than in 2007
According to the data as of 1 October 2008, foreign direct investments in Lithuania totalled LTL 33,48 billion and were by as much as 5.7 percent smaller than those as of 1 January 2008 (LTL 35,50 billion). On average LTL 10 thousand foreign direct investments per person in the country (LTL 10,5 thousand as of 1 January 2008).

The Swedes have invested most – LTL 5,15 billion (15.4 per cent of total foreign direct investments), the Danes – LTL 3,75 billion (11.2 per cent), the Poles – LTL 3,65 billion (10.9 per cent), the Germans – LTL 3,13 billion (9.4 per cent), the Russians – LTL 2,44 billion (7.3 per cent), the Estonians – LTL 2,31 billion (6.9 per cent), the Latvians – LTL 1,93 billion (5.8 per cent), the Finns – LTL 1,78 billion (5.3 per cent), investors from the Netherlands invested LTL 1,55 billion (4.6 per cent).

The Swedes further remain leaders
According to statistics, Swedish investors further remain the largest ones in Lithuania. A similar tendency has been observed for several years already. However, what has determined the fact that the flow of investments started to decrease suddenly? Even the Swedish investors themselves, who trusted Lithuanian manufacturers, began to withdraw their investments. It is not because of the unfavourable tax environment or excessive bureaucracy. Last year, investments of the main purchaser of Lithuanian furniture – the Swedish concern “Ikea” – in Lithuania were suspended by the shortage of wood. The representatives of “Ikea” complained that apart from a shortage of wood problems also arose when buying wood from the state-owned forest enterprises because the number of suppliers is large, which makes the process more difficult.

The Swedish giant "Ikea", which trades in furniture all over the world, considered plans to build a furniture plant in Lithuania. Why did it not do that? The present Minister of Economy Dainius Kreivys, who intends to invite investors to Lithuania again, recently mentioned that last year Lithuania failed to attract the Scandinavian IKEA because the investors “asked for certain conditions” and the Government did not even consider the issue of meeting their conditions”.

Nonetheless, at the end of the past year the Swedish “Ikea”, which supports furniture industry with its orders, improved investment statistics considerately by acquiring the manufacturer of particle board and flat-pack furniture Private Company “Girių bizonas”. The value of the transaction has not been revealed, however, construction of “Girių bizonas” based in Kazlų rūda cost LTL 200 million, including LTL 45 million received as the EU assistance. According to unofficial data, “Ikea” invested in Lithuania’s furniture industry over LTL 250 million. In the opinion of some financial expects this transaction could account for 10 per cent of the last year’s flow of foreign direct investments.

The Germans have ousted the Russians
Danish investors have always been famous for their activity, especially in the sphere of telecommunications. Last year the Danes were the largest investors in some regions (in Šiauliai district their investments totalled almost EUR 30 million). By the way, according to investments, in 2007 Denmark was also in the second place. Hence, this shows the consistent policy of the Danish investors with respect to Lithuania. In 2007 the Poles were leaders on the map of the largest investors, however, last year they fell to the third place. After “PKN Orlen” acquired the Public Company Mažeikių nafta” in 2007, the Poles became the largest investors. Thus, one large transaction is enough to become the investor of the year in Lithuania.

Last year the German investors also strengthened their position in Lithuania by ousting Russia from the fourth place. Again, this leap could have been determined by a single extraordinary transaction. In August, the German Company “Deka Immobilien”, which represents Property Fund “WestInvest InterSelect”, acquired the trading and entertainment centre “Akropolis” based in the second largest city of Lithuania.

The amount of the transaction made with the German Company is not disclosed, however, without doubt, it is one of the largest trade transactions in Lithuania last year. If it were not for the economic crisis, most probably “Akropolis” situated in Vilnius and Klaipėda would have been sold too because their owners have such plans. Kaunas “Akropolis“ is the second investment of “Deka Immobilien” in Lithuania. In 2007 it purchased BIG trading centre in Vilnius. “DekaBank” group is the manager of the largest Property Fund in Germany.