PENSION INSURANCE DELAYED: The system of mandatory contributions to private cumulative pension funds should start to function in Lithuania in 2003, much later than the previous government had planned. The Lithuanian Cabinet of Ministers approved a revised plan outlining the pension system reform in the years 2001-2002 last week. Potential investors should be informed about the terms and conditions for setting up private cumulative pension funds by mid-2001, said Audrone Morkuniene, deputy social security and labor minister. The reform provides for a gradual transition to a three-tier pension system. The first two tiers will be mandatory contributions to the state-run social insurance fund Sodra and private pension funds, and the third will be voluntary additional contributions to private pension funds.
COMPUTERS TO AVOID VAT: Latvia's People's Party Chairman Andris Skele, speaking at the party's conference on Feb. 3, suggested to exempt computers from the value added tax. "Exemption of computers from VAT for two, three, four years is one of the methods of how, with state instruments, to promote growth and competitiveness levels," Skele said. Latvia needs an environment in which it is more tempting to acquire education, work and earnings than request assistance and live at the cost of the state. "The state should create circumstances in which it is easier to earn a lat than to receive a lat as an allowance," said Skele.
FUEL PRICES FALL IN ESTONIA: The price of oil on world markets has been moving up through daily fluctuations in January, but in Estonia the retail prices of motor fuels have dropped by 0.50 kroons ($0.029 ) to 0.90 kroons. Estonian motor fuel retailers have attributed the fall in prices to market competition and favorable import prices.
STATE FOR SALE: Lithuania raised 864 million litas ($216 million) from privatization in 2000, selling 694 companies, portfolios and other entities, the State Property Fund said last week. The largest transactions included the sale of a 25 percent stake in Lithuania's monopoly fixed-line telephone operator Lietuvos Telekomas, 81 percent of shares in the oil exploration company Geonafta, a 68 percent stake in the wool company Drobe, 87 percent of shares in the hotel Naujasis Vilnius and a 59 percent stake in the development bank Vystymo Bankas, the smallest state-owned bank. Investors invested 163.6 million litas in companies sold at public auctions. Sixteen entities were sold to foreign investors in 2000. Last year the SPF announced the sale of 1,736 entities, with a balance value of assets or the nominal share value amounting to 1.41 billion litas.
FOOD TO STAY CHEAP? Estonian Agriculture Minister Ivari Padar said that Estonia's integration into the European Union won't bring along a price shock. "The European standards that have been over-emphasized in public have sparked quite unfounded fears of food prices rising several times here. Yet producer prices in Estonia are already some 75 percent to 100 percent of producer prices in the EU," Padar said on Jan. 31, at a meeting with Lennart Meri, the country's president. Protests followed the requirement that shop assistants in food stores must have the possibility of washing their hands with soap and water, which is in fact a long-standing custom in Estonia, Padar observed. Meri pointed out that each member of the government has the duty to translate the mysterious Euro standards into a language that would be easily understood by the public at large.
KLAIPEDOS NAFTA EMISSION FAILS: Lithuania's Klaipedos Nafta, the operator of the Klaipeda-based oil product terminal, failed to sell more than 50 percent of its new share issue worth 80 million litas. Over four and a half months, Klaipedos Nafta managed to sell 47.9 percent of the newly issued shares, of which just 14,000 litas were paid in cash. The new shares were subscribed to by two existing shareholders of Klaipedos Nafta. The state-owned holding company Naftos Terminalas and Klaipedos Nafta's largest shareholder, acquired 38.3 million litas' worth of shares through capitalization of its loans to the company. Another 14,000 litas' worth of shares went to Topselis, a minority shareholder. During the second stage of placement, which began in late October, the new shares were offered to the public for their nominal value of 100 litas a share, but no buyers emerged.
PORTS TO SPEAK ON FEZ: Ventspils, Riga and Liepaja ports have to define a joint position concerning appropriate amendments to the legislation needed to raise competitiveness of the free economic zones, the Latvian ports council decided Jan. 31. The ports council was considering the question of ports competitiveness in the context of Latvia's and neighboring countries' tax systems. A representative of the consulting company Eirokonsultants said that Latvia's free economic zones tax regime currently is unable to compete because it has different aims than European Union countries. In this context Estonia was cited as an example where profits reinvested into development are not subject to taxes since 2000, which is stimulating cargo growth at ports.
NORWEGIANS TO DISTRIBUTE VW-AUDI: Stasys Brundza, a well-known Lithuanian motor racer and businessman, has sold his Volkswagen-Audi distribution business to the Norway-based Moller Group. The Moller Group already has two companies in Lithuania: Moller Real Estate and Moller Invest. Pal Syversen, the group's executive vice president, said their investment in Lithuania should reach around $25 million by the end of 2001.
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