In 1991, small businesses contributed 8 percent of all revenue turned over in Latvia's gross domestic growth. The trading figures of these companies have now risen to 50 percent of all economic turnover in Latvia.
"The economic turnover of small to medium sized businesses is an important facet for the government and its budget plans," said Kaspars Palpe, spokesman from the Economics Ministry.
The ministry is pleased that these figures have had solid participation from rural and larger towns in Latvia outside Riga. From the rural territories, the majority of business comes from timber, textile, food and pharmaceutical industries. In Riga the majority of small businesses are in construction, finance, retail and information technology.
There is considerable economic growth in the rural areas Madona, Preili and Jekabpils where the ministry has plans to help with development. The economic ministry has invited every regional council to discuss the pluses and minuses of their region so aid can be given to introduce and develop new industries in these regions.
The ministry is also aiding rural regions with quick acquisition of building permits, for example, and finding financial resources to start businesses.
"Eighty percent of all small and medium sized businesses have had no previous experience in setting up a new venture," said Palpe. "The economics ministry wants to aid these companies and help the process of developing projects for new companies."
Of all the small and medium sized businesses, 12.2 percent were factories, 6.6 percent construction, 4 percent hotels, restaurants and cafes, 4 percent transport, 1.3 percent financial institutions and 21 percent were other businesses.
The economics ministry has helped businesses with the allocation of $1.694 million to the development of small to medium business. The introduction of these finances has led to the proposal of 700 new projects in the past half year. The aid from the economics ministry is being distributed in five regional areas, nine towns and 70 districts.
"We have had very good responses from rural areas and this year the financial company Bovsia has already had 421 submissions for project proposals since Jan. 1," said Palpe.
Riga, with a majority of the 35,000 small to medium sized businesses registered in Latvia, accounts for 73.3 percent of all turnover.
The ministry is predicting that this year the registration of new companies will exceed last year's figures and create 4,500 jobs. Last year these companies paid $3.39 million to the tax department.
"The amount of taxes these businesses pay is of great importance for the government's revenue," said Palpe.
The small to medium businesses are very important in the introduction of new jobs to the economy. In 1999, these small businesses created over 1000 new jobs and 600 seasonal work positions. In the development of new companies, they were able to save approximately 1600 job positions.