RIGA - Around 20 new support programs could be launched this year for businesses, Economics Minister Janis Vitenbergs (National Alliance) said during an online webinar on Wednesday.
This year, various support mechanisms for businesses will be based on the available funding from the European Union Structural Funds and the EU Recovery and Resilience Facility.
The purpose of the support mechanisms will be to help businessmen develop production, purchase new equipment, increase energy efficiency of production facilities and help develop exports.
Support programs will also focus on promoting the use of "green energy" by businesses. In general, the main goal of all support programs will be to help companies implement large and ambitious projects, said Vitenbergs.
The Investment and Development Agency of Latvia (LIAA) today began accepting applications for a new large investment support program for business development projects worth not less than EUR 10 million.
Total funding available under the new program is EUR 99.565 million.
This program has been developed by the Economics Ministry in cooperation with LIAA and Development Finance Institution Altum. Medium-sized and large enterprises registered in Latvia with both local and foreign capital will be eligible to apply for the program and a loan with a capital discount. If the project reaches the planned goals after implementation, the company will be able to receive a capital discount in the amount of 30 percent of the eligible costs of the project.
"Export indicators continue to grow, yet a large part of export is comprised of wood, grain and other natural resources of Latvia. These resources should not serve the development of other countries, rather they should create added value here, to raise the wellbeing of our entrepreneurs and citizens. We have created a new program to stimulate Latvian enterprises to invest in the development of new products. Each such project will also stimulate the services and production of products for other companies, create new well-paid jobs and increase export and tax income," said Vitenbergs.
The aim of the program is to provide support for projects important for the development of the Latvian economy, which will help to reach strategic aims such as the re-industrialization of the economy to sectors with higher added value and doubling the amount of export by 2027.
By implementing the program, at least 800 new, well-paid jobs will be created, each project will bring a yearly increase of export of at least three EUR million per year and investments of EUR 250,000 in research and development each year.
Currently, in smart technology specialities such as bioeconomy, biomedicine, photonics, smart energetics and IT, strong ecosystems are formed, which to a large extent are based on large Latvian enterprises. These enterprises become customers for a large amount of small enterprises, invest in research and development, as well as collaborate with scientific institutions, creating a wide impact on agriculture. Until now, for large enterprises, state funding to carry out ambitious projects was not available, said LIAA Director Kaspars Rozkalns.
Support will be granted to projects implemented in the priority sectors of smart specialization (knowledge inclusive bioeconomy, biomedicine, medical technologies, pharmacy, photonics and smart materials, technologies and engineering systems, smart energetics and mobility, data and communication technologies). The projects also need to be coordinated with the EU goals and Latvia's liabilities regarding digital transformation and climate neutrality.
To receive the support, the investment projects must meet at least four of five criteria. The first criterion is that the monthly gross work salary for the staff employed as a result of the implementation of the investment project must not be less than the average gross monthly salary in the region in the previous year, to which the ratio of 1.3 has been applied (except for Riga, were the average gross salary for the staff must not be less than the monthly average salary amount in the national economy in the previous year, to which the ratio of 1.3 has been applied).
The second criterion stipulates that, as a result of the investment project, the amount of export of goods and services is at least EUR 3 million per year. The third criterion is that, as the implementation result of the investment project, for each EUR 250,000 of the general available capital discount, a new full-time job has been created, and at least 12 new full-time jobs have been created in total.
The fourth criterion is that the investment of the enterprise in research and development at the company level is at least EUR 250,000 per year. The fifth criterion stipulates that at least 20 percent of the planned investments are aimed towards investment in the use of green technologies in the process of product production and service provision and production of other products aimed at the reduction of the impact of climate change.
To receive a loan, the company must correspond to the status of a large or medium enterprise, the project has to correspond to the sectors eligible for support, the planned investments in the project must be at least in the amount of EUR 10 million, the implementation of the project cannot be started before the receipt of the funding, as well as the planned project must provide for investments to begin production or expand it.
The loan will be issued in the amount of the capital discount, and the amount of funding provided by other funders cannot be smaller than the ALTUM loan. The amount of the loan will be in the amount of at least 30 percent of the attributed costs of the investment project, depending on the place of project implementation and the size of the enterprise, the maximum amount of the loan will be EUR 10 million.
ALTUM loan interest rate will be equal to the interest rate of the other funder. If the project indicators are fulfilled, the capital discount will be applied in three parts for each year of the loan. If in the entire monitoring period the enterprise reaches the indicators shown, the capital discount will be 100 percent, which means all the principal loan amount will be cleared.