Latvia – nineteenth most favourable country for business in the world
This year, Latvia earned 19th place among 190 countries, leaving 171 economies behind. Among EU member states, Latvia is on 8th place, with Ireland, Lithuania, Finland, Estonia, Sweden, UK and Denmark ahead, according to World Bank’s Doing Business 2018 data.
Economy Ministry told BNN that changes in the rating can be explained with reforms that came into force when the rating data was being compiled. This year, Latvia has been very actively realizing reforms detailed in the business environment improvements action plan. Results of those reforms will be reflected in Doing Business 2019 and 2020. «Positions of different countries in the rating are determined in comparison with the best result or distance to frontier (DTF). Latvia’s result in comparison with the best one has changed by only 0.79 percentage points. Lithuania’s result has improved by 1.05 percentage points than before. Lithuania’s introduced mechanisms, which Latvia already have, include major reforms in the construction sector, electricity connections, protection of interests of minority shareholders and administration of tax payments. With that, Lithuania has moved from 21st to 16th place in the rating, whereas Latvia has dropped from 14th to 19th. Estonia’s result has worsened by 0.25 percentage points. The country remains on 12th spot in the rating,» the ministry explains.
The ministry also notes that respondents interviewed by the World Bank in Latvia mentioned they value business start-up opportunities in Latvia, in regards to which Latvia has improved from 22nd to 21st place; tax payment administration, in regards to which Latvia has improved from 15th to 13th place; and compliance with legal commitments, in regards to which Latvia has improved from 23rd to 20th place.
Latvia has suffered a decline in positions like construction permits, electricity connections and solvency.
Kristaps Soms, Economy Ministry’s business competitiveness department director says Construction Law in Latvia came into force in 2014, and since then nothing has changed. ‘This is why a drop in rating points to possibilities to improve work in different institutions that apply the law. This includes Riga Construction Office.’ «Changes in regards to electricity connections are likely associated with two developments: Sadales tīkls’ investments in the network, because the company had to plan more scheduled shut-downs thanks to expansion and improvements, and the introduction of new tariffs on 1 August 2016 for certain groups of residents. Among the people interviewed as part of the study were representatives of law firms, banks, and logistics companies. However, there were no major producers of electricity among respondents. As a result, for the second consecutive year, the number of new connections, which is one of the components of this criterion, does not fit Economy Ministry’s and Sadales tīkls’ data. In 2016, when data for this rating was collected, it was 57, not 107 days,» explains Soms.