WEBSITE EXCLUSIVE: Andris Laucins Q&A

Andris Laucins is chairman of the board of the Foreign Investors' Council in Latvia (FICIL) and board member of Ernst & Young Baltic. Here he talks about why current corruption cases could be good news for investors, how FICIL can try to influence government policy and why predictability is the key to attracting fresh investment.

Let's start with the obvious question - how bad is corruption in Latvia?

Well, if we are talking about recent cases that have been brought to the courts, this is very good news for the investment community. This is a major difference from what we saw a few years ago. Many people were speaking about corruption but we hadn't seen particular cases being brought by special institutions charged with fighting and preventing corruption.

Right now we see that the system is up and running and we have fairly serious cases being discovered. These people are now being named and involved in court cases. It probably creates a bit of negative publicity around the country and around the system but this shows that the system is working.

It was much, much worse before when no-one was speaking about it. We have to use this 'matching principle' that we should be worried when nothing is being discovered but be much more hopeful when we see that the system is working.

If anyone in the investment community in Latvia is concerned about corruption they should be strong enough to report it instead of spreading rumors. If you just spread rumors that everyone is corrupted you in a sense are just promoting it because both sides 's those giving bribes and those taking them 's will think 'Íf it is so well known that everyone is doing that, then why aren't I doing that?'

So what are the current priorities of the Foreign Investment Community?

We are involved in different special projects. For example we have a group working on suggestions for a public procurement law, which is very relevant for many of our members.

Other hot topics are competition law amendments, tax issues 's which are always near the top of our priority list 's transport issues and encouraging policies that have longer-term impact than just changing some short-term administrative acts.

 Do you feel that your voice is listened to and acted upon in government?

It's definitely listened to. We have direct access to cabinet ministers and we don't need any tricks or other mechanisms to make sure than people in government listed to us. If we need to speak with someone at the highest level there is no problem because these people know that we aren't coming just to push some lobby-type agenda.

But of course there is a time difference between when we come up with a suggestion and when it becomes tomorrow's 'to do' item for the current government.

There are definitely issues on which we would like a faster response time but on fundamental policy questions it is good that the government listens to our position.

Is structural change needed to government departments dealing with investment?Some investors complain that they can fall between the cracks in the current system.

One of the particular difficulties right now is that we would like to see some stability and predictability in the system related to construction and green field development projects.

There is a very clear position from the foreign investors'council that foreign investors are coming to Latvia because it is an EU country and are ready to accept the stongest social, environmental and other requirements that might be set up for any industrial development. They would be ready and willing to meet requirements that are not even today's requirements but tomorrow's requirements because in areas such as noise, pollution, and other things.

Since investors coming today are not opportunistic 's at least not the ones we are working with 's they would be interested to have a clear picture of what to expect when considering this planning and industrial development.

Investors want to have predictability in the way the system works. Here we see an obvious problem where, for example, a reputable investor member of ours has a site that has industrial zoning and they want to start the project but they are not even allowed to start testing their project against environmental rules because the system as it is right now is created in such a way that any individual or organization with motives can stop any activity.

If you have a little money and the motivation to stop it, you can stop anything. There is no predictability that would allow an investor to say: 'Here is a process and if you fulfil certain requirements then in a one year or two year cycle you will get to a predictable result.'

You're suggesting that Latvia can sell itself on much more than price 's that structural predictability is a benefit, not an obstacle. How do you react when people say that perhaps Estonia is a bit more predictable?

The biggest foreign investor in Latvia is Estonia. Individuals and organizations today have a really wide choice of services to use, on a global, European or regional level.

We are competing with the other Baltic countries, the Scandinavian region and the whole European region on what we can offer to the investment community in terms of particular services and sometimes this competition is much closer than we feel. Particularly post-Schengen people can really move around.

In terms of Latvia compared to other destinations, sometimes a weakness can become a strength. The fact that half the population is living in one city here is a weakness in some ways, but as one of the biggest cities on the Baltic Sea, I am certain that investors are looking to be located in the big cities. We have a multilingual workforce available that can speak Latvian, Russian, German, English and other languages, making it quite a unique setting for foreign investors in the area of service supply. Riga is a Hanseatic city that has always been at the crossroads of trade. It's a part of where we stand and who we are, but of course there are still things we can improve.