COMMUNIQUÉ
THE 13TH HIGH COUNCIL MEETING BETWEEN THE GOVERNMENT OF LATVIA AND THE FOREIGN INVESTORS COUNCIL IN LATVIA
May 22, 2009
Preamble
1. We, the Government of Latvia and the Foreign Investors Council in Latvia (FICIL), have gathered for mutual consultation and dialog to discuss the Latvia's economic development and progress since our last meeting.
2. Today's High Council meeting was held in the Cabinet of Ministers and was jointly led by Latvia's Prime Minister, Valdis Dombrovskis, Honorary Co-Chairman of this meeting, and Hans Enocson, GE Nordic Region National Executive, and the Honorary Chairman of the Foreign Investors Council in Latvia.
Progress
3. We recognise and support efforts of the Government of Latvia to stabilize the macroeconomic situation, strengthen the financial sector and carry out structural reforms. After Latvia has been hardly hit by the current economic crises, EUR 7.5 billion EU and IMF-led stabilization program could help to stabilize Latvia's economy.
4. We support the program's objectives (i) to restore the long-term stability of the financial sector and correcting fiscal imbalances, which also includes substantial fiscal policy tightening to reduce financing needs (ii) to carry out important structural reforms and policy adjustments which would improve internal and external competitiveness and in perspective of eventually fulfilling the conditions necessary for the adoption of the euro
5. We believe the stabilization program will serve as the cornerstone of economy-wide transparent structural adjustments which are necessary in the current macroeconomic situation. As a short term plan we also generally endorse the activities contained in the Action Plan to Improve the Business Environment in Latvia for year 2009.
The Development Goals
6. We discussed the macroeconomic situation in Latvia and fully support the recent shift towards structural issues rather than a simple linear cut in budget expenditures. Our view is that the government need to improve its response to developments in the economy and a considerably more pro-active down-to-fundamentals revision of functions and activities is necessary. We agree that the government should take timely and adequate actions to ensure fulfilment of obligations it has assumed as conditions to obtain financing from external lenders.
7. We invited the government to improve coordination and concentrate available resources for economic researches and in a medium term facilitate establishment of an independent economic research capacity. Such qualitative, independent and appropriate ex ante and ex post research could be helpful in evaluating the Government policies and their effect on national economy and forecasting models could be a good tool for knowledgeable decision making and qualitative alternative voice to the different policy makers.
8. We discussed that the dual-system vocational education training (VET) could solve the problems with the quality of professional education in Latvia thus eliminating certain labour market faults. Labour market in general and employers in particular would gain access to highly qualified and motivated professionals who have acquired most up to date practical skills as demanded by industries. FICIL suggests studying and using the example of Germany and Switzerland for developing the Latvian model of dual system vocational training. FICIL also confirms readiness to provide any additional information and contacts it may have with regards to proposed educational concept, as well as to ensure involvement of its member companies in a Pilot program of the dual system VET in Latvia.
9. We discussed the need to continue improving the tax system in order to encourage the business activities during the economic slowdown and promote the recovery of Latvian economy. The FICIL recommends ensuring an effective tax system, which supports and encourages the business activities in Latvia and ensures consistent tax revenues to the state budget.
10. We invited government to initiate negotiations with Stockholm School of Economics, Sweden, (SSE), with the purpose to ensure SSE Riga's continued existence and continued contribution to the debate and awareness rising in the Latvian society on economic matters and creation of a sustainable knowledge based economy in Latvia.
Conclusion
11. We agreed that in the course of the next year will consider in more detail the recommendations described in the developed Position Papers on (i) Macroeconomic situation, (ii) National Economy competitiveness capacity (iii) Dual-system vocational education training (iv) Tax and tax administration and remain committed to improving the business environment and investment climate in the country by discussing specific as well as broader strategic suggestions and following up the progress of their implementation.
12. We recognize that further dialog is necessary and will organise the next meeting between the Government of Latvia and the Foreign Investors Council in Latvia in the spring of 2010.
Notes
On behalf of the Latvian government, the meeting was attended by the Prime Minister and Minister of Foreign Affairs, Minister of Economics, Minister of Finance, Minister of Education and Science, Minister of Culture, Minister of Regional Development and Local-governments, Minister of Environment, Minister of Agriculture.
On behalf of the Foreign Investors Council in Latvia, the meeting was attended by the senior managers of the following companies: British American Tobacco, Cemex, Dalkia Latvia, Ernst & Young Baltic, Fazer Group, GE Money, Indtec Baltic Coal, Knauf, Latvian Business Bank, Latvija Statoil, Linstow, Narvesen Baltija, Neste Latvija, NCH Advisors, DnB NORD Banka, PricewaterhouseCoopers, Rimi Baltic, Saint-Gobain, SEB banka, Stockholm School of Economics in Riga, Stora Enso, Swedbank Telia Sonera, VAE Riga, Volvo Truck Latvia, as well as the chairmen of nine foreign chambers of commerce in Latvia, representing Denmark, Finland, Germany, the Netherlands, Norway, Sweden, Switzerland, UK and USA.
