Latvia Holds Potential Business Opportunities For Malaysian Firms
WEDNESDAY, JANUARY 15, 2014, KUALA LUMPUR: Latvia, which became the latest member of the Eurozone in 2014, is currently experiencing relatively strong economic growth and this will provide Malaysian companies with export opportunities in the coming years.
According to Malaysia External Trade Development Corporation (MATRADE) the country, which is one of the three Baltic States, has the potential of being the fastest growing economy in EU over the next few years. It is expected to post significant GDP growth of around 4.2 per cent in 2014 compared to the Eurozone’s 1.1 per cent. Unemployment in Latvia is set to be 10.3 per cent of the workforce in 2014, with the Eurozone average predicted to be 12.2 per cent.
The Latvian Financial Ministry has indicated that domestic consumption will determine the bulk of economic growth in 2014.
There will be opportunities for Malaysian companies interested in infrastructure projects in the Baltic state. One such project is the construction of the Rail Baltica project. The Rail Baltica project plans to create a rail line from Tallinn to Berlin in an effort to create faster connection times and boost local economies. Work on the ten-year old project is expected to begin this year. It is estimated that the project could cost up to Euro1 billion for Latvia and over Euro3 billion for the Baltic States in total. The cost of design work and operational study on the railroad section going through Latvia is expected to be about EUR1 million for 2014 and approximately EUR3.9 million in 2015.
There are also opportunities in other projects where there is allotment of European funding such as enhancement of energy efficiency in commercial buildings programmes in Latvia. The construction sector keeps growing largely due to public contracts and the EU funds projects. In 2012, construction volumes increased by 14.6 per cent, while in the third quarter of 2013 by 11.6 per cent. Increase in the sector is mainly determined by the increase in construction of residential buildings and civil engineering structures, as well as in port reconstruction. Even though construction volume is growing rapidly, it still drops behind the pre-crisis level notably.
There is also allocation of EUR118.5 million under the European Regional Development Fund (ERDF) ICT Project to install ‘The Middle Mile’, a broadband internet optical fibre network throughout Latvia which could be of interest to Malaysian companies.
MATRADE, which is Malaysia’s national trade promotion agency, highlighted that key sectors that could be of interest to Malaysian exporters is the educational sector especially those related to e-learning and usage of ICT tools as well as skills training.
Malaysian companies seeking to enter Latvia should form business alliances with European companies as preference is generally given to these firms, especially as EU funding is involved in many instances.
