VILNIUS - The gleaming towers of Vilnius' new business district give the appearance of a confident and dynamic metropolis. And the refurbishment may be more than just skin-deep, heralding a new way of doing business in the country.
Arminta Saladziene personifies this different approach. With an office in the heart of the glass-and-steel Lithuanian Wall Street, the 35-year old president of NASDAQ OMX Vilnius and chairman of the Baltic Institute of Corporate Governance is trying to improve the ethical climate in her country's commercial life. With Lithuania placed 58 on Transparency International's Corruption Perceptions Index 's the worst ranking out of the three Baltic states 's Saladziene admits there is a problem in the interaction between business and the state in her Lithuania. There have also been plenty of scandals since independence illustrating that relations in the private sector are not always clean.
But Saladziene sees openness towards the world as part of the solution. "The value of foreign investment is not just in bringing money, know-how, technology or products - it's also about the culture of doing business," she said.
In this spirit, the institute has adapted a Scandinavian scheme for educating board members about the advantages of transparency. The first seminar will begin in Vilnius on Nov. 6, bringing in prominent Western speakers but also offering local material to enable board members to serve in any Baltic company.
The institute is a non-profit organization without external funding, so participation in the seminar costs a fairly steep 2,000 euros. But Saladziene is impressed by the enthusiastic response from all sorts of companies 's state and private, foreign and local, listed and unlisted. In fact, so many applied that the organizers could cherry pick the most prominent companies who can "spread the word and lead by example." Lithuania's prime minister will hand out certificates at the conclusion of the six-day event.
Saladziene said the response from Latvian and Estonian firms was more muted because the crisis makes them more focused on just surviving. But she hopes they will come around in the future and see that behaving ethically is also a matter of self-interest.
"Lending now is trickier, but transparent companies have a better chance of getting loans. And companies behave differently in a more competitive environment because they have to run faster," she argues.
The crisis is also an opportunity to restructure financial markets. During the boom years, cheap and easy bank loans were the primary source of funding for Baltic business. Although banks will always have their place, Saladziene thinks that now venture capital, private equity, corporate bond markets and other alternative sources of finance are being taken more seriously. She applauds proposals to further privatize state-owned companies, because "It would be appalling not to take this opportunity to bring more blood into the financial markets." At the same time, she stated that a number of private IPO's are also in the pipeline.
Changes in the regulatory environment are also helping. Lithuanian regulators have increased fines for insider trading and price manipulation to compliment the Vilnius exchange's online trading surveillance regime. On Nov. 30, NASDAQ OMX will switch to the fastest available trading platform in the world. The three Baltic exchanges are hoping to launch an integrated market in 2010, with a single entry point for investors, one alphabetical list and common clearing and trading rules.
Despite tentative signs of a recovery in Lithuania's economy, Saladziene admits that the macro-economic situation needs to improve to reap the full benefits of these reforms. A devaluation of the Latvian lats could have a psychological impact on Lithuania, for example. Lithuania's fiscal situation is also of concern, since its government has borrowed expensively on private markets to avoid IMF intervention.
But she is confident that the official vision of making the country a services hub for the Baltic sea region can work in the long-term. Such ambitious thinking has been helped by the ascent of young, Western educated advisors to senior government positions, bypassing what Saladziene describes as the "mud" of inefficient mid-level bureaucracy.
Saladziene attributes her own unabashedly Western way of thinking to her parents, who remained ardent Lithuanian patriots during the Soviet era and who have never shared the longing of many older generation Balts for the certainties of the Soviet era. And, she wants to pass this attitude on to young Lithuanians.
With the aim of "bringing up a generation that cares about personal finance," NASDAQ OMX has contributed a chapter on the workings of the stock market to a high school economics textbook and brings university students in to learn about the exchange. A goal proposed by the local Swedish Chamber of Commerce that Lithuania should aim to make the top 20 of the Transparency International index by 2020 is an example of where she wants her country to go.
With young leaders like Arminta Saladziene, that may be just the tip of the iceberg of what can be achieved.