Government agrees on investor visa bill

  • 2010-03-10
  • By Kira Savchenko

RIGA - Latvia’s parliament passed the final version of the controversial immigration bill which gives foreign investors more options to get a temporary residence permit. It was approved by the opposition with support from the coalition’s People’s Party, in spite of objections raised by the Prime Minister’s New Era and the other members of the government. Businesspeople’s opinions are also divided.

Currently, a foreign employer has the right to ask for a temporary residence permit if he is a business executive. This regulation was enough to attract investors during Latvia’s economic overheating, leading to the real estate bubble bursting a couple of years ago, but when the global crisis hit the tiny Baltic state hard, lawmakers started to think about new solutions. The first version of the immigration bill turned out to be completely inappropriate for almost all the MPs, so the new regulations’ formulation took another six months.

Finally, three options were approved. A temporary residence permit will be available to businesspeople who make no less than 25,000 lats’ (35,700 euros) contribution to charter capital and create five new jobs. The condition of paying taxes of at least 10,000 lats per year also appears in this case. The second option includes buying real estate in a city, valued at 100,000 lats or more, or purchase in the country at a price of at least 50,000 lats. This person should never have had debts on real estate tax payments before. A residence permit will also be available to businesspeople who have invested up to 200,000 lats into subordinated capital of Latvian credit institutions for a period of no less than five years. These conditions apply to investments made after July 1.

“We suppose that about 500 investors each year could use these opportunities. We expect them to create about 2,500 new jobs and pay 5 million lats, or even 10 million, in taxes. Latvia desperately needs this law if we want to recover our economy,” said Vents Armand Krauklis, a People’s Party member and one of the bill’s draftspeople.
Opposition parties are sure that this bill is not just a new regulation, but a significant change in the way of thinking.
“Latvia’s immigration policy has always been very unfriendly to foreigners. Now the crisis forced nationalistic politicians to change their minds. This bill is a symbol, that at least somebody from the ruling coalition has understood the necessity of fresh blood here,” said Janis Urbanovich, head of the Harmony Center faction in the parliament.

New Era raised no objection on the immigration bill, except for the real estate option.
“We all remember very well about the real estate bubble. It is one of the reasons for today’s crisis, when people are unemployed and have great problems in paying back their loans. Prices are a little bit down now, but they will grow rapidly when hundreds of people from outside the European Union will start to buy cheap apartments in Riga. We cannot let it happen and that is why New Era is voting against the whole bill,” said MP Ainars Latkovskis.

The other coalition party, For Fatherland and Freedom/LNNK, was against the whole idea of investor visas.
“Dear colleagues, open your eyes, see the treason and betrayal. This bill is extremely dangerous for all true Latvians. It means a new era of occupation and colonization of our country. Just think about it, 25,000 lats is nothing for Russian businesspeople. They will arrive here immediately with their children, grandchildren, parents and grandparents. They will speak Russian here and ignore Latvian traditions and laws. We already cannot commemorate… legionnaires [Latvia SS Legion] have no right to come to the Monument of Freedom. While on May 8 and 9 [Victory Day] thousands of them [ethnic Russians] gather by their monument,” said Peteris Tabuns, a member of For Fatherland and Freedom/LNNK.

Foreign Investors’ Council in Latvia (FICIL) is rather skeptical about the bill. Those investors who wanted to come to the country had no difficulties to use the existing possibility, said executive director Girts Greiskalns.
“It seems that this decision is political. We hope that parties will not use the image of foreign investors in their election campaigns. What Latvia really needs to attract more businesspeople and to help local enterprises is a long-term tax policy, and also lowering the bureaucratic red tape.”
On the contrary, Girts Rungainis, of investment management company Prudentia, is sure that the bill will have a positive impact.

“I think that the new regulations are good enough. Of course, we should not expect thousands of investors, but it is quite realistic that hundreds could come each year. I am very glad that politicians start to realize that we will not have a good life here without foreign capital.”

President Valdis Zatlers has to approve the bill by the middle of March, however some members of the coalition’s Civic Union have already asked him to return it to the parliament for a re-vote.