Ventspils still keeps its leading economic role in Latvia due to one of the busiest ports in the Baltics as well as free economic zone that patronizes the local business

Statues of cows are everywhere in Ventspils. This cow traveler is one of the biggest ones stands at Ventspils port
Statues of cows are everywhere in Ventspils. This cow traveler is one of the biggest ones stands at Ventspils port

Ventspils is a small Latvian town located on the western cost of the country. Approaching to this place, you immediately see differences from the rest of Latvia. Wind turbines, numerous farms, colorful gardens are all around the place. In Ventspils you suddenly appear in the Western kind of city, where neatness of streets, abundance of parks and shops are backed by the growing economics that made this town the richest one in the country.

 

Until 2002, the town’s main income was transportation of Russian crude oil, which used to be sent to Rotterdam

Because of Latvian turn to the European Union, Russia took a political decision to close a pipeline called «Friendship» that provided the town with oil.

 

We slept too long on the pipe, we must not depend on Russian crude oil anymore, said Mr. Lembergs, mayor, who rules Ventspils since 1988,

In 2002 the local port exported 30 million tons of goods, 50% of which were crude oil. The city lost a half of the income, miraculously turning its doom into an opportunity for economic rise.

But what makes this town so successful? Different people tell different stories. Locals usually recall the mayor Mr. Lembergs, who is believed to bring prosperity to the town. Business people talk about the local port that lets them freely trade with foreign companies, while young students, who want to do startups, notice a deep assistance from the government organizations.

 

The current mayor, Mr. Lembergs decided to found a free economic zone that could attract foreign investors with generous exemptions.

The suggested package contains an income tax exemption at the rate of 5% instead of national 15%, free choice of emplacement and free construction of the building in accordance with blueprints of the company.

In this way, a new company can easily establish its business due to the minimal costs to settle down in the economic zone.

Since the establishment of the zone, the export of industrial products increased by 40 times.

The infrastructure is very important

Janis Vitolins, the chairman of Ventspils infrastructure affairs.
Janis Vitolins, the chairman of Ventspils infrastructure affairs.

The 1st Deputy Chairman of Ventspils City Council on Infrastructure Affairs, Jānis Vītoliņš says that «infrastructure is very important. We build all the communication lines at our own expense, rental payment for lands is scanty, just 2.50 euros for a square meter. We don’t look for any profit, what we want is to make new workplaces».

Philosophy of Ventspils government is to give as much freedom as possible and ensure a steady start for coming entrepreneurs.

As Mr. Vitolins says, «We meet every entrepreneur as our guest and immediately suggest the full package of assistance».

 

What are these companies that decided to settle their business in Ventspils free economic zone?

One of the stories of success comes from a Swiss company Bucher Municipal that established a manufacturing plant in 2005, bringing more than 15 million euros of investments.

The international producer of street sweepers relocated 3 assembling lines from Switzerland and England to Ventspils due to attractive exemptions and cheaper labor force. By that, the company completely removed manufacturing plants in Switzerland, saving there only engineering and sales departments.

As a manager of Bucher Municipal, Thomas Emmenegger says «Latvia and Ventspils have proved their competitiveness at the world level by the fact that for eleven years the Bucher Municipal has grown from three people to almost 300. The production in Ventspils is considered by the management of the enterprise as a potential for the future, and I think that there will be many impressive changes».

 One of the main products of Swiss company Bucher C201 presented at a business forum Kurzeme 2017
One of the main products of Swiss company Bucher C201 presented at a business forum Kurzeme 2017

Mr. Emmenegger notices that if the company continues to recruit the staff, there will be close cooperation with Ventspils technical college, since it’s hard to find qualified workers in the small town. Scarcity of workers is a common problem in Latvia, where people choose to immigrate to the western countries rather than lift the local economics up.

The lack of labor force and engineers in Ventspils is the main problem for many manufacturing facilities

Latvian company, ARBO windows, which is one of the biggest producers of windows in Baltics, also notices that the lack of labor force and engineers in the town is the main problem for many manufacturing facilities.

Director of ABRO Windows, Zane Krike.
Director of ABRO Windows, Zane Krike.

The director of the company, Zane Krike says that «It is an issue. It took really long time to get engineers, not only for our company, but also for others. We have spoken to take employees even from Ukraine. When you need these technical people and also stock people, it’s hard to find them».

Ms. Krike tells that young people are not interested to get engineering or any industrial degrees, since finances and IT are the most prestigious fields in colleges.

 

Ventspils College meets all European standards

The chairman of infrastructure affairs, Mr. Vitolins says that the situation is improving and that at least qualified industrial labour force ramps up.

«For 15 years, when I speak with potential foreign investors, our discussions begin and end with one question. Who is going to work in my factory? Preparation of specialists is a very important task, so we deeply intervened into the development of a technical college of our town, which was in a very bad condition just few years ago. We built a new college; 16 million of euros were invested. At the beginning we sent our specialists to Germany in order to show them what the modern technical college is about. After that when we made a technical project we sent it to the Hanover University for an expertise. Now, Ventspils College meets all European standards».

The chief shareholder of Latvian producer of electronic boards Hansa Matrix, Ilmar Osmanis also concerns about the issue. «The quality of engineer’s training is quite satisfactory; the only thing is that we need more engineers. So far, there are not enough of them and we are recruiting already from the student’s bench. Every year we can count on two or three ready-made engineers, but we would like five».

 

Latvian Chamber of Commerce and Industry suggests a mitigation of immigration rules

The readiness of the city to educate people is not enough, since the town, which population estimates 44 thousand dwellers, can’t be the manufacturing hearth of the whole country.

In order to solve the problem in the country, Latvian Chamber of Commerce and Industry suggests a mitigation of immigration rules and attraction of more people from less developed states.

«Because of a shortage of labor in certain sectors, it is necessary to amend the immigration law in order to quickly approve the list of professions, to which a simplified procedure can be applied», the president of the Chamber, Jānis Endziņš states in his interview to Latvian journalists, noticing that immigrants can get a good education in many towns.

 

Ventspils still keeps its leading economic role in Latvia

Being founded in the 13th century, this old town quickly turned into economic center that connected the Eastern Europe with the Western lands by means of developed shipyard infrastructure.

Producing warships and vessels, the port was a starting point for numerous colonizers, who went to such African states as Gambia and Tobago. However, besides purely political aims, Ventspils was also the main provider of metals, amber and wood for the Dutch ports.

Latvia: Population of Ventspils can’t keep up with the rushing economy

Nowadays, Ventspils still keeps its leading economic role in the country due to one of the busiest ports in the Baltics as well as internationally renowned free economic zone that patronizes the local business.

According to the business newspaper, The Financial Times, the town constantly occurs in the prestigious economic rankings. In a financial research «Top 10 of microcities of the future 2013», the town got the 7th place, outrunning 300 European cities. Just in 3 years, Ventspils received the 2nd place in the same ranking, being considered as one of the most attractive towns for foreign investments.

The volume of investments per inhabitant in Ventspils is 4 859 euros, which is 43% more than the average for Latvia.

Most of the investments come from Europe. Switzerland is the largest foreign investor in Ventspils. By 2016, this state invested 55.4 million euros in Ventspils enterprises (28% of total direct investments).

 

Latvia: Population of Ventspils can’t keep up with the rushing economy
Sergei Filatov, the Baltic Review author, studies journalism at a Dutch university «HU University of Applied Sciences Utrecht» and writes mostly about politics. The main idea of his projects is to tell that the Baltics is a region, where even small provincial towns rise and flourish in terms of economy and technologies.

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