For Growth on the Earth

In 2020, 31 new foreign investors have been attracted with a total investment of over 100 million euros

On Friday, 11 September, the 24th high-level meeting of the government of Latvia and Foreign Investors Council in Latvia (FICIL) took place, at which this year special emphasis was laid on such matters as strengthening justice, stability of the tax policy, the improvement and digitisation of the health care system. Also, the general economic situation was discussed along with preconditions for attracting new investments. “Our aim is to attract foreign direct investments in the amount of at least 400 million euro until 2023, therefore we wish to take all the necessary steps to provide a favourable environment for business development and to ensure that enterprises with foreign capital that already operate in Latvia would continue their development. Experience shows that investment environment largely depends on how good and comfortable in Latvia feel enterprises that already operate here,” indicates the Director of Investment and Development Agency of Latvia (IDAL) Kaspars Rozkalns. Throughout the eight months of 2020 IDAL has attracted 31 investment projects to Latvia, which will create the total of 1700 workplaces, but the total amount of investments will exceed 100 million euro. With regard to Covid-19 and the Belarusian crisis IDAL has consulted over 5000 customers. Reacting to the economic situation state aid instruments administered by IDAL have been reviewed and adjusted to present needs, for example, opportunities in the field of digitisation of enterprises and acquiring new export markets have been broadened.

To achieve the set goals and restore growth in the near future, investments in human capital, innovations and the infrastructure necessary for entrepreneurship must continue. In addition to the aforementioned, to stimulate development of the national economy investments must be made in public infrastructure, for which additional funds will be available from EU stabilisation programmes. State and EU investments will definitely be followed also by private investments.

“Meeting representatives of FICIL we wish to coordinate further steps to provide entrepreneurship environment that would attract enterprises. At the same time we invite enterprises to participate more actively in industries’ ecosystems, in which currently entrepreneurs, organisations of entrepreneurs, public authorities and universities are coming together to decide on things required to further faster growth of industries,” tells K. Rozkalns.

EU support has been achieved for Latvian farmers for period 2021-2027

The European Council adopted a decision on the EU multiannual budget for the next programming period, which also determines the amount of rural development funding and direct payments for Latvian farmers for period 2021-2027.

In the next programming period, Latvian farmers will see an increase in the EU funding in certain sectors, however, as the Minister of Agriculture Kaspars Gerhards notes: “..that regardless of the increased funding as compared with the previous programming period, unfortunately, Latvia will still remain among  the countries, receiving the lowest level of direct payments for agriculture.. “

The decision adopted by the European Council means that in the period 2021-2027, Latvia will receive EUR 3.347 billion under the Common Agricultural Policy (CAP), of which EUR 2.41 billion for direct payments and EUR 851 million for  rural development.  As well a support from the European Economic Recovery Plan (EERP) in the amount of 86 million euros is also earmarked for Latvian rural development. This means that the total funding for Latvia from CAP in the period 2021-2027 will increase by 661 million euros or 24.6% compared to the current period.

Read more  here

The Court of Justice of the European Union declares the norms of the Latvian “land law” as discriminatory

Situation description

On June 11, 2020 the Court of Justice of the European Union (the Court) has delivered a judgment in case C‑206/19 on the compliance of Article 28.1, Paragraph one, Clause 2 (f) of the Law “On Land Privatisation in Rural Areas” (the Law) with the provisions of the European Union law. The above-mentioned clause of the Law stipulates that the right of legal persons to acquire agricultural land in the territory of the Republic of Latvia is subject to the condition that the owner or owners representing more than half of the voting capital in the company and all persons entitled to represent the company, if they are nationals of other European Union Member States, citizens of states of the European Economic Area and the Swiss Confederation, have received the registration certificate of the Union citizen (have registered as residents of the Republic of Latvia) and a certificate regarding the proficiency of the national language at least at B2 level (to the extent that they are able to at least negotiate on domestic and professional issues).

The Court concluded in its judgment that the legislation at issue involves direct discrimination on grounds of nationality, restricts the freedom of establishment of nationals of other Member States and is precluding to Articles 9, 10 and 14 of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market.

Legal Consequences

Although the delivery of the judgment does not invalidate the restrictive provisions of the Law, the Court has in its case law formulated the obligation of national administrations and national courts to fully apply European Union law and protect the rights they confer on citizens (direct effect of European law), and that all provisions of national law which are contrary to provisions of European Union law, whether adopted before or after the provisions of European Union law, are inapplicable (principle of the supremacy of European Union law over national law).

Consequently, the local governments of the Republic of Latvia, when deciding on the issuance of a permit for the acquisition of agricultural land, should follow the findings of the Court stated in the judgement. In addition, amendments to the Law that will eliminate discriminatory requirements can be expected in the foreseeable future. However, this does not guarantee that other restrictions on nationals of other Member States will not be imposed. Until such amendments are made, the Judgment can serve as a legal remedy for a potential acquirer of agricultural land against the requirements set by local governments regarding the knowledge of Latvian language by the shareholders and representatives of the legal person and registration of their place of residence in the Republic of Latvia.

For more specific advisory, please contact SIA “AQ Law” by phone: +371-64107185 or e-mail: info@aqlaw.lv.

This year the single area payment will be available as an interest-free short-term loan

On Thursday, 14 May, the government supported the draft Cabinet regulation “State aid for short-term loans to agriculture to mitigate the negative impact of the spread of Covid-19” developed by the Ministry of Agriculture (MofA).  It provides for the single area payment advance to be granted to farmers as a short-term interest-free loan in order to mitigate the negative impact of the Covid-19 crisis.  In turn, cash flow will be stabilized, as well as economic viability and development will be ensured for primary agricultural product producers and farmers.  

The draft regulation provides that a short-term loan until 31 December 2020 will be granted to farmers as de minimis aid or as an agreed state aid according to a decision of the European Commission if the total amount of de minimis aid granted to a farmer in the last three fiscal years has reached 25 000 euros. 

The short-term loan will be calculated from the amount of the single area payment advance, taking into account the following conditions of the draft regulation:  

  • the minimum amount of the short-term loan – 700 euro; 
  • the aid rate is defined 40 euro per hectare applied for the single area payment; 
  • the maximum amount of the agreed short-term state aid loan – 100 000 euro. 

Farmers will be able to submit an application for a short-term loan to the Rural Support Service (RSS) from 20 May to 15 August 2020. 

Loan repayment:  The RSS will deduct the short-term loan amount paid-out from the advance payment amount calculated for the farmer or the calculated final payment for the areas approved for the single area payment in the current year. 

The planned number of the aid recipients is 15.2 thousand primary agricultural product producers with a total declared area of ​​1.5 million ha.  Total amount of short-term loans:  60 million euro not requiring additional funding from the state budget. 

Information source: Ministry of Agriculture, Rural Support Service 

Covid-19-affected businesses can apply for ALTUM support programs

As of March 25, businesses affected by the Covid-19 crisis can apply for the state-owned development finance institution ALTUM new support instruments, approved by the government – guarantees for bank loan holidays and current asset loans. 

Both support instruments have been developed in collaboration with the Ministry of Economics and approved by the European Commission. The guarantees for bank loan holidays will enable banks to postpone principal loan payments for up to two years, and the current asset loans will be granted on favorable terms to businesses whose operations have been substantially reduced. 

ALTUM Management Board Chairman Reinis Bērziņš: 
“We, ALTUM, together with the government and banks are ready to provide swift assistance to businesses to help them cope with the difficulties caused by the negative impact of Covid-19. The combined positive effect of the new financial instruments on the economy will exceed EUR 900 million. Thinking about clients’ conveniences and adapting to the new circumstances, we have set up a call center to remotely provide consultations about the two new ALTUM support programs for the Covid-19-affected businesses. Meanwhile, all other support instruments provided by ALTUM are also available to entrepreneurs, including financing to startups, financing to SMEs of various caliber, loans for buying agricultural land, services of the Land Fund and others.”  

The EUR 50 million* guarantee scheme for bank loan holidays will allow banks to restructure more than EUR 700 million worth of loans. Meanwhile, the current asset program will allow to provide EUR 200 million in loans to businesses who in the current situation experience shortages of working capital necessary for their daily operations. 

Important:

  • The guarantees for bank loan holidays and current asset loans are only meant for businesses affected by the Covid-19 crisis;
  • To receive ALTUM support, a company has to be viable in the long term and able to prove that the support will help it survive the crisis and successfully continue business operations;
  • Entrepreneurs have to inquire about the guarantees for loan holidays at their banks. Likewise, they have to consult their banks about the current asset loans. If the bank refuses the loan, entrepreneurs have to turn to ALTUM.

More information here.

Information source: ALTUM

Farms look to employ those who lost job due to the crisis

Many Latvian farms lacked the necessary amount of workers even before the Covid-19 novel coronavirus pandemic, and are turning to those newly unemployed due to the crisis to find new work hands, according to Latvian Agricultural Organization Cooperation Council (LOSP) Director General Guntis Vilnītis.

Usually this is the time when farms would rely on an influx of seasonal workers, but as one of the precautionary restrictive measures the government imposed to limit the spread of the coronavirus included closing national borders, this will no longer be an option. Berry season is almost upon us, and farms also need helping hands to take in vegetables in greenhouses. Farms will offer both permanent and seasonal work opportunities in various agriculture sectors. 

Many companies are closed during the Covid-19 outbreak, but others are seeing increased demand for services and products. These latter now tend to absorb part of the workforce that is seeing downtime. 

One example is the Karavela fish processing company, which has been importing workers as the company has had employee shortages for the past two years. Demand for jobs is high. The company hopes to fill 80 vacancies but is now receiving 300 to 400 calls a day from people seeking work. 

Elīna Novada, the head of the Svaigi.lv digital market, says increased demand for local products has made the company seek more employees. She says the company had to move to larger premises in response to growing demand – and did so within a day’s time. 

Information source: Latvian Public Broadcasting, Ministry of Agriculture 

The first multinational dairy cooperative in the Baltic region is founded

In late February, the multinational dairy cooperative of the Baltic states was officially founded under the full title “Piiratud Vastutusega Societas Cooperativa Europaea (SCE) E-Piim”, thus completing the merger process of a Latvian dairy cooperative “Piena ceļš” and an Estonian cooperative “E-piim”. The new cooperative “SCE E-Piim” unites approximately 150 milk producers in Estonia and 50 dairy farms in Latvia.

The objective of the newly established cooperative will be the development of a joint milk collection system and the processing of milk at the four production facilities of the cooperative – dairy production facility of joint-stock company “Jaunpils pienotava”  in Latvia and three production facilities of “E-piim” in Estonia. The new cooperative will implement a dairy processing facility construction project in Estonian town of Paide, where the work on the development and assessment of the project is under way. 

The new cooperative was registered in the enterprise register of Estonia on 27 February. The council of the company in the composition of 15 people with five members representing Latvia and ten members – Estonia, as well as the board of the company consisting of 3 people have been established. Jānis Bērtulsons, a former council member of “Piena ceļš” cooperative, as well as the former Chairman of the Board of the Estonian “E-piim” cooperative Jaanus Murakas and its Financial Director Merili Turjakas have been elected on the board. 

Mārtiņš Neibergs, a council member of “SCE E-Piim” and the former chairman of the council of “Piena ceļš”, emphasizes that despite the fact that one third of council and board members are representatives from Latvia and two thirds from Estonia, it is planned that the decision making process will be based on the unanimity principle. “There will be no place for Estonian or Latvian interests, since this is not an issue of national affinity, but a common objective – to become a dominant player in the milk market of the Baltic States. We are all in the same boat that is moving towards the common objective,” Neibergs says. 

Jānis Bērtulsons, the board member of “SCE E-piim” cooperative says that milk pricing policy of the new co-operative is absolutely fair towards large, as well as small milk producers – the base price is the same for all and it is paid for the actual quality of milk. 

“The new dairy processing facility in Paide with the capacity of 1,000 tonnes per day shall ensure even better direct access of milk producers in the Baltic region to export markets. We will also continue developing “Jaunpils pienotava” dairy facility, since it has a significant role in our plans of providing 25% of Baltic markets with products that have come from the production facilities of the co-operative. The benefit for the members will account not only to guaranteed sale of milk, but potential income from dividends generated by the profit of dairy production facilities. It will be similar to the way other dairy co-operatives of Europe operate,” Bērtulsons says. 

Information source: Latvian Rural Advisory and Training Centre, laukos.la.lv

Biologically valuable grasslands in Latvia

The environmental census implemented by the Nature Conservation Agency (NCA) resulted in the detection of biologically valuable grasslands in more than 5,000 land properties of Latvia, Ilze Reinika, the assistant of environmental census manager, said. 

NCA has forwarded informative letters to the owners of these properties. Reinika emphasized that the census did not include all grasslands of Latvia, but the historically known biologically valuable and sustainable grasslands that have not been ploughed and sown have been selected for the census. Thus, it could be expected that, pursuant to a careful selection, any of the surveyed grasslands could be identified as a biologically valuable grassland. Unfortunately to note, though, the data of all three seasons bear evidence that biologically valuable grasslands occur in less than one fifth of the grasslands surveyed during the environmental census, which covered approximately 230,000 hectares of grasslands. 

To promote the preservation of biologically diverse grasslands by maintaining the populations of wild plants, insects and birds, the owners and managers of biologically valuable grasslands may apply for the support payments of the Rural Support Service by assuming multiple-year liabilities, if the area of biologically valuable grasslands is at least one hectare. 

Information source: TVNET, LETA

Latvian government support measures for entrepreneurs and employees

On Thursday, March 19, the Cabinet of Ministers (CoM) ratified a special fixed-term draft law prepared by the Ministry of Finance on the measures for preventing and overcoming the national threat and the consequences thereof related to the spread of COVID-19. The purpose of the draft law is to set measures for preventing and overcoming the national threat and the consequences thereof, special support mechanisms, as well as crisis expenditure directly related to financing the containment of the spread of COVID-19. The regulation will take effect as of March 12, when the state of emergency has been declared in Latvia.

The Minister for Finance, Jānis Reirs, emphasises: “We have provided for particular measures for mitigating the consequences of crisis, in order to immediately and specifically support the enterprises and sectors most affected by the crisis and to provide support to all enterprises and their employees. The situation is developing and changing at a fast pace. Such circumstances do not allow for any procrastination; therefore we have provided for the possibility of urgently reacting and immediately supplementing the support possibilities, whenever necessary”.

More information here.

Along with the new law, Cabinet Regulation Nr.165 “Regulations Regarding the Employers Affected by the Crisis Caused by COVID-19 which are Eligible for the Allowance for Idle Time and Division of the Payment for Late Tax Payments in Instalments or Deferral Thereof for up to Three Years” was adopted on March 26 and entered into force on March 28.  

Within the meaning of this Regulation, allowance for idle time is an allowance which is disbursed if an employer which is affected by the crisis does not provide work to an employee or does not take the actions necessary for the acceptance of the fulfilment of employee’s obligations in the period of idle time due to the spread of COVID-19. The period of idle time is a limited time period lasting from 14 March 2020 until 14 May 2020, but for not longer than the validity period of the Cabinet decision on the emergency situation.

On Tuesday, March 31, the Cabinet of Ministers decided to extend the regulations – allowance for idle time will also be available to self-employed persons, recipients of royalties and those working in the micro-enterprise tax regime, whose economic activities have been affected by the crisis.

For current information please check official websites of ministries.

Information source: Ministry of Finance, Ministry of Economics

Photo source: Saeima.lv