LITHUANIA: Useful Info

The Baltic region is considered to be one of Europe’s fastest growing markets. Lithuania is the largest of the three republics. Though it is relatively small at a population of 3.5 million, its strengths include its geographic location, modern infrastructure, competitive living and operating costs, and a skilled workforce. It has embraced of a market economy which has performed quite well, with a GDP of 9% in 2003 and a projected growth rate of 6.5% to 7%. The government has also strived to create a positive business climate through financial discipline, currency stability and other business friendly policies.

Quick Facts

Population: 3.4 million (Source: UN, 2005)
Capital: Vilnius
Area: 65,300 sq km (25,212 sq miles)
Major languages Lithuanian, Russian
Monetary unit: 1 Lithuanian litas = 100 centas
Main exports: Textiles, clothing, fertilisers, industrial machinery
GNI per capita: US $5,740 (Source: World Bank, 2005)

Economic Background

The UK trades heavily with the Baltic States, particularly with Lithuania. UK exports reached £140.8million, and there are indicators that the number will rise over the years. An increasing number of small and medium sized companies have invested in the country.

The country has seen rapid growth, and recent developments show that it will become even more progressive over the next few years. As a member of the EU, Latvia is entitled to the assistance according to the less developed areas. In 2004-2006, the country is expected to receive approximately $2 billion for infrastructure projects.

Lithuania’s efforts to privatise its businesses offers an excellent investment opportunity. An estimated $450 million worth of State property will be sold from 2003 to 2005; plans to privatise Lithuanian Airlines and state monopolies such as Eastern Distribution Networks, Lithuanian Railways are also underway. Foreign investors are treated equitably in privatisation programs.

The Lithuanian heavy industry received a blow due to decreased demand from other countries in the former Soviet Union. The light industry, especially in textiles and clothing manufacture, and in timber, wood, construction industries, has slightly recovered since it was hit during the Russian economic crisis. These are the best prospects for capital goods. Other areas of opportunities lie in the energy and power generation industry, particularly the upgrade of plants that produce electricity and supply district heating.

The country’s focus on IT development has led to a demand for firms that can help create the infrastructure through software development, consulting, hardware sector equipment, supporting networks, and Internet applications. The government has made some headway in its fight against software piracy, bringing it down from 80% to 57% 2000.

Because of its EU membership, Lithuania is also under pressure to address environmental problems—creating opportunities for waste management firms and environmental service providers willing to enter joint ventures with local partners. These include chemical analysis in laboratories, site assessment, soil and groundwater remediation, environmental impact consulting and services related to hazardous waste management.

Lithuania’s legal, tax and customs systems have also improved dramatically, though corruption remains to be a problem. Many small and medium enterprises find the Lithuanian bureaucracy “abusive” because of bribery that is required. There also appears to be a bias towards big businesses.

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