Latvia's perspectives in an increasingly competitive world 

President Voronin^[1],

Madam Olofsson^[2],

Ambassador Wadhwa^[3],

Madam Falkengren^[4],

Excellencies,

Ladies and gentlemen,

I am very pleased and honoured to address this prominent audience of business leaders and key decision-makers from Europe, Asia and other parts of the world. The important issues being discussed here today at the Globe Forum, such as female leadership, energy use, climate change, modern technologies and sustainable development, are relevant to us all. I encourage the participants of this forum use of the valuable information that will be presented here to further the notions of social and corporate responsibility, which need to be strengthened if we are to make this world a better place for the future generations.

The participation of so many women leaders at the Globe Forum and at this opening panel testifies to the increasingly active role that women are playing in world affairs. In this respect, I am proud to note that according to Eurostat, Latvia currently has the highest proportion of female executives in the EU, at 44%, compared to 30% here in Sweden. The stereotype that women are not fit for positions of authority is one of the most resistant to change. I encourage women to break it by accepting responsibility whenever it is offered to them and by showing through their success that they are able to handle it.

Excellencies,

Ladies and gentlemen,

As you are aware, Latvia and her neighbouring countries in Central and Eastern European represent a booming and promising market for foreign investors. Our transition to a market economy and to democratic political systems began less than two decades ago, with the collapse of communist totalitarianism and the breakup of the former Soviet Union. This transition was difficult and painful at first, but it has proven to be immensely successful. Our accession to the European Union and to the NATO alliance has further strengthened our stability and provided a sound basis for our future development.

My own country, Latvia, now has the fastest growing economy in the European Union, with a GDP growth rate that reached almost 12% last year. Foreign direct investment has been a strong driving force behind our economic development. The volume of foreign direct investment in Latvia has doubled every 4 to 5 years and about 85% of these investments have been from the EU countries. With the help of foreign investment, we have been able to create a financial sector of regional importance, a growing high-tech industrial complex and a very promising logistics cluster. Latvia is gradually changing its profile from a mere exporter of raw materials, such as timber and base metals, to one that provides a diverse range of export products, including those with a high added value.

Excellencies,

Ladies and gentlemen,

Latvia's economy is growing so rapidly and at such a high rate that it now faces a prospect that few would have imagined a decade ago - overheating. We are, however, fully aware of this risk and are seriously addressing it. In order to stem inflation and to reduce our current account deficit, the Latvian government and central bank are committed to ensuring strict fiscal discipline. That includes cooling down Latvia's booming mortgage and real estate markets. We sincerely hope that the foreign banks which are successfully operating in Latvia will also act in a socially responsible manner and help us in these endeavours.

I am confident that the government's economic stabilization plan, together with more the restrained operating strategies that are now being implemented in Latvia's banking and real estate sectors, will enable Latvia's economy to continue growing in a sustainable manner, to maintain its macroeconomic stability, and to attain the higher levels of development enjoyed by Latvia's Western European neighbours.

Excellencies,

Ladies and gentlemen,

Since this global forum is focusing on opportunities presented by booming markets, I would like to outline some of the many advantages that Latvia's economy presents to foreign investors. Among the main factors behind investor's decisions to invest in Latvia are an advantageous geopolitical location, and cost advantages in knowledge-intensive and added value sectors. For Eastern investors, Latvia is a perfect springboard to the EU market in the West, while for Western investors Latvia can provide an ideal platform to the rapidly growing Russian and CIS markets in the East.

Latvia has served as a bridge between the East and the West since the early Middle Ages. It boasts an advanced transit infrastructure that includes three large, ice-free ports and a well-developed railway network that is fully interconnected with Russia. It is also suitable for high-capacity cargo transfers. Latvia has been developing modern and competitive industrial parks, as well as attractive technological business parks, logistics centers and special economic zones.

In a wider context, Latvia is working to serve as a key node along a promising trade corridor linking East Asia and Europe. With major bottlenecks and security concerns along the traditional East-West sea routes, land transit is growing rapidly between Europe and Asia. A new Silk Road is in the making, and Latvia is becoming one of its trade centres. By using the railway corridors that go through Latvia, Nordic exporters can cut their delivery times to East Asia threefold - from 45 to just 15 days - with comparatively small cost increases. Asian exporters can likewise optimize their deliveries to the Nordic countries through Latvia. In addition, there are still vast, underdeveloped areas for the construction of new terminals at Latvia's busy ports.

Excellencies,

Ladies and gentlemen,

Despite the fact that Latvia is not endowed with large quantities of valuable natural resources, we do have a world-class asset, which is our talented human capital. Latvia's labour force is well-educated and multilingual. We understand the business mentality of Russia and the CIS and can serve as an ideal gateway for Nordic businesses planning their expansion eastward. Nordic businesses are most welcome to set up back-offices in Latvia for their operations in these Eastern markets. By combining Nordic capital and technologies with Latvian know-how of operating in the Russian and CIS markets, we can indeed achieve spectacular results, as many successful examples already suggest.

I would also like to emphasize Latvia's ability to attract international high-tech companies, thanks to its highly educated work force and scientific potential. Latvia's ICT market is growing twice as quickly as the EU ICT market, indicating obvious opportunities for potential investors.

Outsourcing is also being successfully applied in various fields, including information technologies, legal services, recruitment and many others. Thanks to Latvia's attractive tax regime, with a low corporate income tax rate of only 15%, and its booming economy, Latvia has become especially attractive for Nordic outsourcers. There is practically no time difference between Latvia and her Scandinavian neighbours, and Latvia's business environment and culture is rapidly becoming increasingly westernized.

Excellencies,

Ladies and gentlemen,

Riga, the capital of Latvia, has recently become a centre for major international events. Last year it hosted the World Ice Hockey Championship and the NATO Summit of Heads of State and Government. The tourist industry, too, has seen spectacular growth in Riga.  As a UNESCO World Heritage Site, Riga is Northern Europe's capital of Art Nouveau architecture and is one of the most beautiful cities in the region.

In conclusion, I wish to reiterate that Latvia and its growing economy offer promising opportunities to those who are willing to take advantage of them. We welcome foreign investment, especially in the high-tech and high added value sectors, as well as in transportation and logistics. I hope that many of you will soon decide to do business in Latvia, and that your activities in my country will be crowned with success.

I also express the hope that women all over the world will continue to explore and enter roles that traditionally have been the exclusive domain of men and that they will contribute even more to the overall wealth of their countries.

And finally, I wish you all fruitful and productive discussions during the next few days at this important forum.

[1] Vladimir Voronin – President of the Republic of Moldova

[2] Maud Olofsson – Minister of Enterprises and Energy, Deputy Prime Minister of Sweden

[3] Deepa Gopalan Wadhwa – Ambassador of India to Sweden and Latvia

[4] Annika Falkengren, President and CEO, SEB