Foreign investors risk banishment from Latvian market

Working its way through the Latvian government is a bill that, on the face of it, could prove highly discriminatory, and detrimental to foreign investment in the agricultural sector. Some see it as a way to keep foreign investors out of the country, in areas of land investment.

According to EU laws, new member countries, Latvia included, have to, by May 1, 2014, open up the land markets to all EU citizens. To get around this, a new law amendment creeping through Saeima would extend restrictions for investors – primarily foreign – from buying land in the country.

The amendments state that from now on, only persons registered with the State Revenue Service as “economic operators” will have the right to buy land parcels that are primarily agricultural land. The amendments to the Law on Land Privatization in Rural Areas were passed at a meeting of the state secretaries on Oct. 24, reports Nozare.lv.

Likewise, the buyer must have been involved in agricultural production in Latvia for at least three prior years and meet the requirements on single area payments. In addition, the person must be able to prove that the land he or she is purchasing will be used in agricultural production for three years or more.

The same applies to legal entities that wish to buy agricultural land plots. The rules go further, in instructing how the landowner is allowed to use the land. It says: such legal entities must employ persons with an education in agriculture, or persons who have been in agricultural production for at least three years and own more than 50 percent of the legal entity’s share capital.

The amendments do not concern persons who buy or sell land plots of five hectares or less in area, as well as the state-owned company Lauku attistibas fonds (Rural Development Fund).

In further madness with the bill, say investors, the bill also stipulates that if the land plot in question belongs to several persons, the other owners will have the right of first refusal, followed by tenants, neighbors, and persons who live within 50 kilometers of the given land plot.