Wild capitalism with the privatization of the barbarian for a song or a beautiful word investment? At the moment, when virtually all of the strategic enterprises of Lithuania, Latvia and Estonia have long bought by foreign capital, the question of how effectively the small Baltic countries took advantage of its capabilities, there is the rather sharp. Governments in all three countries from the word “investment” tsepeneyut – is the most coveted words and the most eloquent indicator of the effectiveness of their work. That is why the word “investment” is perhaps the sounds in the mouths of leaders of the “Baltic sisters’ more often. However, the investor is an investor – are different. If an investor comes from the West – it is automatically considered to be a reliable partner who is not sorry to give the choicest branch. If from the East, it does not matter – this is Russia, to which authorities in the Baltic States are, to say the least, suspicious, or, for example, Kazakhstan – the investor is seen almost as a threat to national security. Perhaps one of the most telling examples in confirmation of these words – never ending story around a single in the Baltic refinery in Lithuania’s Mazeikiai. We will not remember the story of how the plant would not sell the Russian capital, and for the gift given to the American Williams, who has resold for very expensive plant to Yukos, you can recall the history of the last few years, when the factory after the collapse of Yukos, once again fell into the hands of the Government of Lithuania. At the time he claimed, and “Lukoil” and other Russian companies, but also Kazakh “KMG”. As a result, the Lithuanian government sold the plant a “strategic partner” of Poland – the company PKN Orlen, although they offered for the shares less than all, but they are neighbors, their own. As a result, the plant is now suffering losses, the Polish company has no partner is not, and the economic community rocked by endless squabbles with mutually accusations between the government and the leadership of PKN Orlen.

Correspondents BakuToday in Lithuania, Latvia and Estonia, the Baltic countries continue to compare the various categories. Today, 13 June, we publish material about the investment climate in the “Baltic Tigers”.

Lithuania To put loose money? The answer to this simple question is not easy to find. Starting a conversation about the investment policies and investment in Lithuania in Lithuania, after all start with the first.

Pension funds, real estate, stocks of large companies, jewelry, gold, luxury goods – here is the small circle where the Lithuanians invest surplus funds. And the main purpose of such investment for most investors (we are talking about approximately 80% of individuals) is not a profit-making, and saving money in their absolute value plus the hope of the natural growth of prices of the subject over time, such as ten years. The remaining 20% ​​of investors – it is mainly young people from 20 to 35 years, invested aggressively in stocks are often foreign companies, and it is to get a quick profit. In fact, they act as the players on the Stock Exchange, earning money on the back, not long term.

As a typical example I would like to recall the high demand for real estate in 2006 – 2008′s, when the market of primary housing apartments were bought at the stage of the design of apartment buildings. And on the secondary housing market, demand was so great that sell absolutely hopeless in terms of geography or the comfort of the apartment was not difficult. Separately, we note that in those years, the demand for property on the Baltic coast or in other traditional places of recreation – Druskininkai, Birstonas, Ignalina – reached on an unimaginable scale Lithuanian standards. The purchase of apartments and houses in these areas could only afford a really wealthy Lithuanian, because the cost per square meter was exactly two times lower than in Moscow and three times higher than the Spanish.

Incidentally, most futures lay it on the flow of aliens who, in the opinion of Lithuanian experts from home-grown real estate, was surely pour in the Baltics.

What ended this phase of the internal investment policy? Foreigners in Lithuania for some reason did not come.

On the balance of many citizens of Lithuania are from two to five properties. There are the champions – Kaunas family owns more than forty objects. Get rid of the property is difficult: the demand is stable, but prices dropped drastically. Purchased with the objective of the follow-profit real estate like a suitcase without a handle: to bear hard (constantly going up the content located on the balance of family housing at the expense of growth in prices for heating, electricity, utilities), and a pity to throw (as often for the sake of investment had to borrow from commercial banks that it is time to return – rather than what). Hence the huge number of lawsuits by banks to be insolvent lenders. Bailiffs, according to Minister of Justice of Lithuania Remigijus Shimashyusa “Overworked for decades to come just to bad debt.”

Not uncommon are cases of suicide, when, cornered despair, to voluntarily leave the life of not only ordinary debtors, but also successful entrepreneurs at first glance. Ad are no statistics, but in 2010, almost every month it became known about the next suicide because of financial problems.

If we talk about investing in fashion pension funds, most people treat them with skepticism. Although people involved in such projects, but a priori sure that the pension funds – another “divorce” from the state.

Lithuanians very reluctant to invest in antiques and luxury goods – an infusion of funds into this area affords only 2% of the population. Experts argue that the stereotype works: Lithuania has never been considered a rich edge of the present European culture and habits, always staying back yard first Polish-Lithuanian Commonwealth, then the Russian Empire, and now – the European Union.

Foreign investment in Lithuania – the second side of the coin. Considering how many foreign companies come and stuck in the Lithuanian market, we can say that the policy of attracting investments is quite successful. However, if you divide the number of investors in the 20 years of independence, the picture is not so optimistic.

The American company Kraft Foods, Philip Morris, Coca-Cola were the first who have chosen Lithuania as a business partner. Following came Thermo Fisher Scientific, Moog, Western Union, IBM, Computer Sciences Corporation, Cisco. It is hoped that an investor in the construction of the Visaginas nuclear power plant will also be a company with American capital. They can become Westinghouse Electric Company.

The banking sector are banks or the Scandinavian capital, or the Russian or mixed. For example, Bank Snoras – with a mixed Russian-Lithuanian capital. In the sixteen years of Snoras has become one of the largest banks in Lithuania. Winner of the most extensive and modern in the country’s territorial customer service network that includes 10 regional branches, over 230 regional offices and over 330 ATMs. Currently, the registered share capital is 411,922,567 litas. The capitalization of the bank, taking into account the current market value exceeding 0.5 billion litas.

At the moment, the chairman of the Supervisory Board and principal shareholder of an international financial group “Converse” Vladimir Antonov acquired 67.28% of the registered share capital of the bank Snoras. According to credit managers, it will benefit the financial growth and loyalty of the bank, will increase the activity of credit.

Total in 2003 in Lithuania, foreign investors realized 358 projects of foreign direct investment amounting to 8.09 billion euros, 48.3 thousand created jobs.

In the post-crisis period again began to increase investment. So in 2010, foreign direct investment in the Lithuanian economy grew by 15.6%. Foreign capital enterprises increased in 2009 to 0.87 billion euros in 2010 – at 1.01 billion in Lithuania in 2010, foreign investors launched 31 new investment projects. It is expected that as a result of these initiatives will create 3.4 thousand jobs. In 2009 it was launched 28 new investment projects with the creation of five thousand jobs.

According to fDiMarkets, to date most of the projects accounted for Vilnius. Among them – Barclays, Western Union, Cogent Communication. On two projects launched in Alytus (Coca-Cola, Graanul Invest) and Klaipeda (Heidelberg Cement, Fortum), one at a time – in Kaunas, Kedainiai, and New Akmenė.

Here are some interesting figures for comparison. The main investors in Lithuania in 2004 were distributed as follows: in the first place – Denmark (15.2% of all foreign direct investment, FDI), followed by Sweden (15%), third in Germany – 11.4%. Russia was the fourth by value investors – 8.4% of the total flow of direct investment in Lithuania. Further, Finland (7.8%) and Estonia (7.6%). The U.S. invested in Lithuania 6.5%. Surprising absence in this list the major investors neighbors Lithuania – Latvia and Poland: this situation can be partly explained by the strong in the EU, these countries’ interests to invest in the West.

Basis for economic cooperation between the Russian Federation and the Republic of Lithuania is the agreement on trade and economic relations from 1993 (adapted to EU norms in 2004). In the list of top investors in the Lithuanian economy, Russia is the third place (2005), followed by Denmark and Sweden, and every year its investment grow exponentially.

More than 95% of the Russian capital are directed in such sectors as manufacturing, electricity and gas supply, financial activities. Leaders in their fields are controlled by the Russian capital, “Lukoil-Baltic”, “Energiyos Realizatsiyos Centras” (“Inter RAO EES”), Kaunas CHP, “Lietuvos Dujos” (“Gazprom”), a plant fertilizer “Lifosa” (“Eurochem” ) manufacturer of metalware “Nemunas” (“Mechel”).

Russian investors, especially private ones, are interested in the real estate market in Lithuania, especially in cities with large Russian-speaking infrastructure (Vilnius, Klaipeda).

In 2010, the situation has not changed. The only difference is that the main investors are the border of Russia and Poland. With Russia in terms of direct investment came in first place. Followed by Denmark, Sweden and Germany. USA is not included in the top ten investors. After the sphere of production major investments come in the financial sector and trade.

The Russian capital is considering Lithuania as a springboard for the conquest of the EU market. Lithuania is familiar and easy to go from here to other EU countries. However, the success of Lithuania in the program to attract investment and be more convincing. For example, no foreign automaker has not chosen the country as a site for assembly of passenger cars. Virtually no “screwdriver” assembly in the instrument. This is in spite of the fact that the country has a surplus of highly skilled, relatively cheap labor. But there is no flexible taxation policies and benefits for foreign investors. That, in turn, makes the latter choice and Slovakia, Russia, Estonia or Poland for investment and location is where modern industries.

Lithuania difficult to compete with its neighbors in the EU and the rest of the world. Plus, not the most attractive tax environment for investors, high levels of bureaucracy and corruption, a certain political line, not always allowing major investment from countries that do not belong to the “Euro-Atlantic ‘direction.

Finally, the third side: the Lithuanian capital as invest in other countries? According to Department statistics, most of Lithuanian investments go to Latvia, Russia (in the first place – the Kaliningrad region). Lithuanian direct investment in the EU amounted to 2.5 billion litas (71.7%), in CIS countries – LTL 0.8 billion (22.1%).

The undisputed leader in foreign investment capital of Lithuania is trade – Lithuanian supermarket chain (the lead name Maxima) covered not only the territory of Latvia, Estonia, a little less, but it penetrated the western states over the EU. Lithuanian enterprises have invested mainly in wholesale and retail trade abroad LTL 1.1 billion (32% of all direct investment abroad), the processing industry – 0.7 billion litas (20.2%), in the sphere of real estate, renting and in another business – 0.7 billion litas (19.6%). A growing number of Lithuanian companies are investing abroad in trade, the sectors of real estate, rentals, as well as in other businesses.

Another type of investment rather than an official showcase and Lithuania, as the “shadow of Lithuania” – is its contribution to international crime. OPG “work” on the world market production and sale of narcotics and psychotropic drugs, make fake euros, invest in human trafficking, illegal trade in stolen vehicles, then departing in Russia and Central Asia.

According to Latvia Latvian officials, in 2011, foreign investment in the Latvian economy can exceed 140 million euros over five years – more than 1.42 billion euros. And most of the money, they believe, will put the Russian investors who are interested in obtaining a residence permit (permit) in the country. The Russians were in the lead on this indicator in the past year. Of the 145 applications for residence permit on the proportion of Russians had 107.

In March last year Latvian Saeima adopted amendments to the Law “On Immigration” (July 1, 2010 they entered into force) to allow a foreigner to apply for residence permit for a period not exceeding five years if a citizen of another state:

- Invested in capital company at least 35 500 euros, and for the financial year, a joint stock company has paid to the state and municipal budget in the form of taxes at least 28 400 euros;

- Acquired in Latvia, and he owns one or more real estate in Riga, Riga region or cities of national importance, the total amount of transactions that exceed 142,200 euros or 71,100 euros if the property is located outside these areas. In this case, the buyer is not necessarily to be debts to pay property taxes and all fees for transactions carried out via bank transfer;

- Introduced in a subordinated loan capital investment institutions in the country (in the form of subordinated loans or subordinated securities) in an amount not less than 284 400 euros, if the term of the transaction is not less than five years, and in accordance with the terms of the contribution it can not be terminated before the expiration of that period .

True, buying a property is not absolute guarantee that the owner will receive a residence permit. For example, recently refused to Latvia for a residence permit the former mayor of Moscow Yuri Luzhkov. At the end of December 2010 he applied for a residence permit based on an investment of 284.57 thousand euros in the capital of Latvia Rietumu Banka and possession of warehouse space in Jurmala. But at that time Minister of Internal Affairs Linda Murniece stated that the former mayor of Moscow “does not deserve” a residence permit because of his previous harsh statements against the state.

However, from the perspective of foreign investors to Latvia is a country unattractive for the following reasons:

- High tax rates (a tax burden on GDP at 32-33%, has risen to 40%);

- Instability of the tax law, almost every year we introduce new taxes, increased old (for example, VAT rose to 22%, the rate of personal income tax rose from 23% to 26%);

- High interest rates;

- Corruption;

- Bureaucracy (in a tiny country officials formally 85-86 thousand for their content goes, according to Dr. Alexander Gaponenko economy, up to 20% of the collected budgets). Plus a global crisis. As a result, last year’s investment in the economy of Latvia decreased by 3 times, the country experienced a serious outflow of capital.

All of these can be explained by the fact that in the ranking of global competitiveness (The Global Competitiveness Index) Latvia ranks only 70th place, while Lithuania – 47 place, and Estonia – 33.

Statistics show that the volume of non-financial investment at current prices in 2008 was 4 024.02 million euros in 2009 – 2 421.73 million euros in 2010 – a 902.52 million euro. That is, investments of investors in non-bank, not the financial sector shrinking.

The sum of accumulated foreign direct investment (financial and non financial) from year to year. Since the end of 2007 it amounted to 7 466 380 000 euros at the end of 2008 – 8 126.02 million euros at end-2009 – 8 072.52 million euros at the end of 2010 – 8.25009 billion euros. These figures reflect the fact that the foreign owners of the Latvian banking system and would be glad to leave the country, but can not. You can not give up assets in the form of real estate here and we have to maintain their “daughter” and affiliates.

That’s about it, according to economic experts Eugenia Zaitseva, said third indicator of affairs in the field of investment – the amount of investment received by Latvia for the year. During 2007, Latvia received foreign investment of 1 697.91 million euros in 2008 – 862.82 million euros in 2009 – 67.73 million euros in 2010 – 263.94 million euros. In general, these support activities of branches of Scandinavian banks in Latvia, because they themselves have not always. But this is a different story.

The situation with the investment climate in Latvia is currently a correspondent BakuToday commented on the president of the Institute for European Studies (Latvia), Doctor of Economics Alexander Gaponenko:

According to estimates by analysts of investment potential of Latvia, the pre-crisis period, a third of investment in the Latvian economy made up of domestic investment, while two thirds came from abroad. Of these, in turn, accounted for one third of the EU, while another third were private investments, but they were largely speculative in nature: something invested in real estate, something lying in the banks and so on. When the crisis broke out, private investment virtually ceased, the property ceased to invest significantly decreased and the amount of investment banking. EU investment is significantly reduced – Latvia as part of the EU should be involved in co-financing of European investment program (at a ratio of approximately 50 to 50). Latvia in this period is not allocated money for co-financing of European investments, and, accordingly, the flow of European infusions fell.

Overall, last year’s investment in the economy of Latvia decreased by three to four times. Now there is a net outflow of capital. The indicator accumulated foreign investments has rapidly decreased. Real estate can not take out, but the deposits of Latvia began to actively show, first of all, the Scandinavian banks. They have tightened standards, and its investment here they’ve done mostly because of the pension funds. Swedbank made speculation that, in general, is strictly prohibited by law – to make investments based on making money on these speculations, as a result of the bank, “flew” very much. And to come to the standards in those countries where these banks come from, now they accumulate and are pulling money out – it can clearly be seen in statistics. I think that this situation will continue for another two years.

In addition, foreign investors assess the economic situation in Latvia as an extremely negative. All statements by the Prime Minister Valdis Dombrovskis that Latvia out of the crisis, not true. The same Scandinavian pension funds do not allow Latvian government to devalue lats, because they understand that they would lose this much more themselves Latvians. Yes, and bureaucrats who receive a fixed cash income are afraid that in case of devaluation of their pay greatly reduced. So out of the crisis in Latvia has not yet been found and are likely to current ruling coalition it never will. It has no such problem on the agenda. And as always – the rescue of drowning in the hands of drowning.

Estonia

Talking about investments in the Estonian economy, not immediately recognize the specificity of this phenomenon: since Estonia does not have any big financial and credit resources, it has to involve them exclusively from abroad. As a result, Estonia has done everything to invest in the domestic economy as comfortable as possible for foreigners. Thus, there are very convenient channels of official investor relations, in which one can get satisfactory answers to any question, some of these bodies – they are electrified and are working remotely, without requiring personal presence. Estonia established a zero rate of taxation of investments, for investments opened almost all sectors of the economy and there is no barrier and prohibitive signs. It is clear that investments in strategic sectors of the economy – banking, infotehnologicheskuyu, transit and energy – are comprehensive control of security and agreed with its partners in NATO and the EU, but this control is carried out as polite, comfortable and well-validated for the form of communication and decision making.

Estonia even in the event of a negative decision can not stand dirty linen in public and otherwise extinguish any negative on this subject in the world media. Example: the recent conciliatory solution Ministry of Justice of Estonia with the biggest Baltic neftetranziterom by Vopak, the Dutch-based Russian capital. Years of debate about the placement of the new Tallinn Prison – near the oil terminal or not – was resolved in favor of transit. And although in this case, the dispute was not so much between Western investors and the Estonian state as between foreign investors and investments allocated for the construction of eurofunds prison, Estonia chose to end the controversy “razrulit.” Fortunately, that free places in prisons abound. To celebrate, Vopak (and maybe even on duty behind the scenes decisions taken?) Hastened to declare that invests in upgrading the oil terminal at least 25 million euros.

Estonia is interested in vital foreign investment, so its eagerness to work with an investor there is clear and understandable. As a result, 85% of the largest Estonian economy one way or another owned by foreign capital, which, as befits a caring owner, constantly updating their property, lubricates and groom. As a result, investments in such enterprises are made regularly, with a short break to seasonal crises.

The exact figure of foreign investment in Estonia’s economy can hardly be called – according to various estimates, the sum in the period from 1992 to 2010 amounted to no less than $ 25 billion. If by this kind of investment and also to understand the purchase of shares of Estonian enterprises to foreign capital in the stock market (buying companies), we must admit that this figure is much higher.

It is also noteworthy that the lion’s share of investment was a short historical period since 2004, when Estonia joined the European Union and finally Installed myself in a single evrohozyaystvo. However, investment by western corporations and foundations of the European Union there is a downside, which may result in a bitter hangover of the Estonian economy. Accustomed to a steady stream of millions of euro, Estonia is bound to experience once “break-up junkie,” deprived of another portion of the drug. Now in the state budget of Estonia in 2011 the share of income received by various EU funds, is as much as 17% – one in six euro! And this despite the fact that the revenue base of state during the crisis utterly narrowed, and the expenditure side uzhali to record levels.

It is no accident in December 2010 Auditor Estonia Mihkel Oviir, addressing the Parliament with an overview of the situation in the country, called him in advance to think about how the Estonian economy is going to survive the inevitable moment when the flow of Western investment dries up. Date in general is well known: first in January 2014 will expire ten years grace “transition period” to find Estonia in the European Union, the majority of EU funds will automatically be expelled from Estonia subsidy list, switch to the other “new members”. Although the Estonian government says that subsidies in Estonia under the “investment in the economy and society” continues, its volume is reduced considerably. Also important is that in the Estonian media publicized areas of economics, as information technology and vendor finance, investor sentiment changed as a frivolous lady, and in case of changing conditions in the global market, they can just fly away from Estonia, as the cranes in the autumn, to more advantageous places hibernation. During the economic crisis of care in Estonia such “symbolic” and long-term foreign investors like Coca-Cola Eesti, Shell became the only confirmed the well-known idea that capital is not the homeland and permanent attachment.

Estonian own investments in the domestic economy also looks very solid – up to 10% of GDP in the state budget. True, it is worth to remark: under the beautiful and fashionable word “investment” here basically to understand the mandatory state budget expenditures on social services, labor relations, and culture. Thus, most often under the “smart investments” or “investment in the future” is meant the modernization of education and vocational rehabilitation – renovation of schools and colleges, courses retraining the unemployed. The “green investments” hidden costs to repair public utilities and construction of wind farms. By “investment in energy independence” is hiding a program of renovation of houses, heating pipes, roof maintenance and replacement windows. The word “Investeering” (investment) – perhaps the favorite in the statements of the Estonian officials, their indulgence of all sorts of nasty questions like “Where’s the money?” and “When finally feel better?”.

Speaking about the specific types of investments to Estonia should be named and distributed to wealthy Russians in the past four years the method of so-called “investment in the Schengen area.” To obtain a permanent stay Schengen visa (and Estonia joined the Schengen zone in December 2007) for themselves and their family members need to become a Russian citizen member of the board was organized in the Estonian company or become an owner of land or housing estate. That is why in recent years has increased dramatically since the Russians at the expense of the number of transactions with nedvizhmostyu in north-eastern county of Ida-Viru County in Estonia. Moreover, brokers are no longer surprised why respectable appearance Russians buy homes abandoned decades ago, with broken windows or “dead-bedroom apartments” in the dying mining towns in the region.

In addition to all of the above, it can be “investment” for their own solid money to “please”. So, in due time the son of the former head of OAO RZD Rustam Aksenenko on instructions of the Ministry of Culture of Estonia, bought a half a million kroons archive famous scientist, University of Tartu Lotman … Lotman and his son … peredaril Estonian state. During this “gift” received Estonian citizenship Aksenenko with the wording “for special services.” Agree, what is not “strategic investment”?