FORWARD THINKING: Dr. Gunter Dunkel (left), chairman of FICIL's supervisory board, emphasized Latvia's need for a strong foreign-investment action plan during the High Council meeting in June, 2005.
RIGA - A few years ago, Latvia was labelled a new frontier for foreign investment. Today that glamorous title, although still accurate, is losing its novel ring. But as experts will tell you, this is actually a good thing. Since joining the EU in 2004, the Baltic state has seen a wave of wide-eyed investors set up shop in Riga. In two short years, the capital has become the Baltic hub of international business, with global firms and subsidiaries popping up in every market mentionable.
Yet the initial wave of Klondike-hungry businessmen has subsided, and today the market is both calmer and more stabilized.
"The rules of doing business in Latvia have become clearer," says the executive director of Latvia's Foreign Investors Council, Karlis Caunitis. "One can talk of increased transparency and a movement toward a level playing field."
The council last met to discuss the climate in June, 2005. During their discussion with leading members of the government, the High Council emphasized the need for a well-defined economic vision to facilitate foreign investment flows into Latvia. The main priority: building the nation's well developed IT sector.
The council agreed to develop a strong promotional campaign for technical and applied sciences and to provide strategic guidelines for schools and universities involved in this area.
That was in June. Nearly a year later, this vision has already become a reality.
Imprimatur Capital, a British technical investment business, was one of the first companies to get the ball rolling. The London-based firm, which works with universities to identify innovative technology and commercialize it at the international level, opened its Riga office in autumn 2005. The subsidiary covers the entire Baltic Sea area, including Sweden, Finland and St. Petersburg.
According to Baltic regional director Toby Moore, the area holds much promise for IT development.
"We're still in the early stage of development," he says. "It's too early to predict our success 's we still need some two years for that 's but we're planning to be here long-term, and so far the region has strong potential."
The firm currently has three subsidiaries: in Singapore, New Zealand and Latvia. In the Baltics, software development carries the most potential for international commercialization, says Moore.
"We have already developed relationships with local universities, focusing on five main sectors: optics/lasers, semi-conductors, software applications, mobile telephony and medical devices. So far, we've discovered a high level of innovative software."
Working with local scientists is easy, Moore adds, the challenge comes in commercializing this technology.
"Our main struggle is getting the people we work with to understand, 'What is commercialization?' It's about networking," he says. "We've got to develop this software on the international level 's in Japan. The local market is too small."
Although he says it's too early to determine Imprimatur Capital's success in Riga, Moore believes the opportunity is plentiful. And this is exactly what FICIL wants to hear.
"Over the last five years, Latvia has managed to re-orientate its economy from the export market mostly in Russia and CIS to those of the EU and other Western countries," Caunitis says. "The major challenge is to transfer the recently spectacular economic growth, mostly centered around Riga, to other regions of the country."
Although the inflow of foreign business has plateaud, as Imprimatur Capital illustrates, Latvia's market is only beginning to grow.
