Www.investlithuania.com LITHUANIA: Sound in resources for businesses 2011.

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LITHUANIA:

Sound in resources for businesses 2011

Lithuania in the world

• Territory: 65,300 km2

• Common borders with: Latvia Belarus Poland Russia (Kaliningrad Region)

• Population: 3 million 84% of Lithuanians 7% Poles 6.5% Russians

• Capital and biggest city: Vilnius - population: 549,000

• State language: Lithuanian• State Government:

Democratic Republic• Religion:

80% of Roman Catholics, 5% Orthodox

•International business presence in the EU, •Scandinavian and Eastern markets

•Excellent infrastructure and communications network

•High operational quality at a competitive cost

•Financial support and fiscal incentives for businesses

•Non-financial support

Business opportunitieson the Lithuanian market

International businesspresence

• Member of the EU, NATO and Schengen area

• Crossroads of three huge markets

EU - 340 million

BSR - 110 million

CIS -250 million

Source: Lithuanian Department of Statistics, www.stat.gov.lt

Half of the Baltic States’ economy

Lithuanian economy at a glance

2005 2006 2007 2008 2009 2010 2011F

GDP, EUR bn 20.9 23.9 28.6 32.2 26.7 27.2 28.6

GDP growth (annual), % 7.8 7.8 9.8 2.8 -14.8 1.3 2.8

Annual inflation, % 2.7 3.8 5.8 11.1 4.2 1.1 1.8

FDI, EUR bn 4.7 6.9 8.4 10.3 9.2 - -

Exports, EUR bn 9.5 11.3 12.5 16.1 11.7 16.8 -

Imports, EUR bn 12.4 15.4 17.8 21.1 13.1 16.2 -

Unemployment, % 8.3 5.6 4.3 5.8 13.7 17.9 15.8

Sources: Lithuanian Department of Statistics, www.stat.gov.lt, Ministry of Finance, www.finmin.lt

GDP by economic sectors,2010

Source: Lithuanian Department of Statistics, www.stat.gov.lt

FDI in Lithuania, EUR bn

Source: Lithuanian Department of Statistics, www.stat.gov.lt

2.4 2.7 3.13.9 3.9

4.7

6.9

8.4

10.39.2

10.1

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Major countries investors,2010

Source: Lithuanian Department of Statistics, www.stat.gov.lt

FDI in Lithuania by economic sector, 2010

Source: Lithuanian Department of Statistics, www.stat.gov.lt

28.6%

12.9%

12.9%

12.6%

10.2%

8.6%

14.2%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Manufacturing

Information & Communications

Wholesale & Retail Trade

Financial Intermediation

Real Estate

Electricity, Gas & Water

Other

Multinationals feeling at home

Lithuania’s “gold and oil”

• One of the best-educated people in Central and Eastern Europe;

• 23 universities and 23 colleges with a total enrolment of 201,000 students; 35 science institutes

• Kaunas University of Technology – largest technical university in the Baltic States

• One of the most multilingual peoples in the EU – among five EU countries with the highest percentage of people speaking at least one foreign language (mostly English, Russian and Polish)

Sources: www.eurostat.com

Wages, 2011

Source: Lithuanian Statistics Department, www.stat.gov.lt

Wages EUR

Minimal hourly wages 1.40

Minimal monthly wages 232

Average monthly wages 600

Main business taxes

* 0% tax on dividends applies when an investor controls at least 10% of voting shares in the enterprise for the period of at least 12 months.

Tax %

Corporate profit tax 15

VAT 21

Dividends 0* to 15

Personal income tax 15 (+ 6% health insurance

contribution)

Social security tax for employer

31(+employee’s contribution of

3%)

• Opening a company:

• up to EUR 600 (documentation preparation,

• notary public services, registration)

• and up to 15 days

• Minimum authorized capital for:

• private companies – EUR 2.900

• public companies – EUR 43.450

Business set-up costs

Excellent infrastructureand communications network

• The European Union has recognized Lithuania as the prime transport centre in the region linking the EU with the East

• Crossroads of international transport routes – two EU- priority transport corridors

• International airports (located in Central,

Eastern and Western Lithuania) with direct routes to most European cities

• Northernmost and only ice-free seaport on the eastern shore of the Baltic Sea – Klaipėda State Seaport

•Transport hub, connecting sea, land and railway routes from East and West; main shipping lines to the ports of Western Europe, South-East Asia and the continent of America pass through the port

•Handling more goods than all the ports of Ireland combined; container handling capacity the greatest among the Baltic ports

•Handling roughly 7,000 ships and 30 m tonnes of cargo every year, accepting large tonnage vessels: dry-cargo vessels up to 80,000 DWT, tankers up to 150,000 DWT and cruise ships up to 270 meters length

Klaipėda State Seaport – major transport hub

Dense network of shipping lines

• Financial packages offered by the Government to cover wage and personnel training costs, purchase of equipment etc.

• Tax incentives for investments into new technologies and R&D

• Land and real estate tax relieves

• 0% taxation on dividends when an investor controls at least 10% of voting shares in the enterprise for the period of at least 12 months

• Tax “holidays” in 2 free economic zones

Financial support & fiscal incentives

• 2 free economic zones (FEZ):

• 0% corporate tax during the first 6 years and only 50% of corporate tax over the next 10 years

• 0% tax on dividends• 0% real estate tax

• 4 industrial parks (IP):

• Greenfield territory from 15 to 219 ha (corresponding to the investor requirements)

• All necessary physical infrastructure• Tax incentives

Ready-for-investmentlocations

5 valleys:

• Network of R&D centres in 3 largest cities• Specialization in different scientific reasearch areas• Great concentration of talent • Sufficient supply of new office space• Government’s support (EUR 400 M grants in 2010-2012)

Valleys for fusion of science and business

Incentives for new technologies and R&D

• Scientific research and experimental development (R&D) costs deducted 3 times from income for the tax period during which they were incurred, if the performed R&D works are related to the usual or intended activities of the entity that generate or will generate income or economic benefit

• Super-accelerated depreciation - acquisition price of fixed assets used in the R&D activities can be written-off within two years

• Investments into substantial technological improvements will entitle the companies to reduce the taxable profit down by 50%

INVEST LT+ program grants to cover expenses of your project in Lithuania

MAX POSSIBLE SUPPORT up to EUR 3,5 million

up to EUR 1,5 million up to EUR 2 million

Financial support available per FDI project in the field of services, R&D

or manufacturing

Construction, Infrastructure,Salary costs Personnel training costs

MANUFACTURING PROJECT

20-30 % of the total investment into assets;

SERVICES PROJECT 10-15 % of the gross salaries paid during 24-month period for each full-time position within 3 years;

R&D PROJECT 20-30% of the gross salaries paid during 24-month period for each full-time position within 3 years / or of the total investment into assets.

INVEST LT+ average support per project

• Agreements with the Government and Ministry of economy, when FDI exceeds EUR 6 M or EUR 1.5 M, respectively

• Government’s assistance for VIP FDI projects

• Tailor-made information packages, guidance through all the investment process (contact building, arranging visits and meetings, dealing with authorities, investment site selection etc.) as well as investment aftercare by Invest Lithuania

Non-financial support

• 25,9% of total FDI settles down in industry (EUR 2,5 bn as of Q1 2010)

• Industry+construction – 29% of of total FDI (25% country’s GDP)

Source: Lithuanian Department of Statistics, www.stat.gov.lt

Diversified industry

• Transport & logistics – excellent geographical location and infrastructure; prime transport centre in the region linking the EU with the East

• Energy – well developed infrastructure and international projects

• Shared services and business process outsourcing (BPO) – well-educated multilingual labour pool

• ICT – modern knowledge economy; companies leading among the Baltic States

• Biotech – World-class progress; production does not have equivalents in Central and Eastern Europe

• Plastics – with three huge plants leading in the region

• Lasers – globally acknowledged production and inventions

Attractive economy sectors (1)

• Metal processing, machinery & electric equipment – widely-acknowledged high-tech products

• Furniture & wood processing – one of the largest factories in Eastern Europe; among most important suppliers for IKEA

• Textile & apparel – one of the most specialised EU countries in the textile and clothing sector

• Food – internationally acknowledged production; widely demanded

• Real estate – largest market among the Baltic States with the great development potential

• Tourism – untouched ecological nature, well developed countryside tourism network, high demand for entertainment services

Attractive economy sectors (2)

Major opportunities: Transport and logistics (1)

Lithuania is the prime transport centre in the region linking the EU with the East (EU Transportation Commission)

• two transport corridors (I and IX B) and their branches (IA and IXD) (80 % of European freight is transported via international transport corridors crossing Lithuania)

• the northernmost ice-free seaport on the eastern cost of the Baltic sea – Klaipėda State Seaport: annual cargo turnover of 30 million

• the best road system in the region

• 4 international airports

• 3 international and regionally important public logistic centres under construction

Sources: www.stat.gov.lt; www.transp.lt; www.portofklaipeda.lt

Major opportunities: Transport and logistics (2)

• 13.5% of GDP

• 67% of services exported

• 3% of country’s FDI

• approx. 5.900 companies

• 64,000 employees

• 20.246 trucks

Sources: www.stat.gov.lt; www.transp.lt; www.portofklaipeda.lt

Major opportunities: Energy (1)

Well developed infrastructure and international projects

• the only oil refinery in the Baltic States, oil export and import terminal, oil products import-export terminal, natural gas supply system and central heating system

• nuclear, large combustion plants, co-generation plants, hydro and pump storage power plants

• planned electricity links with Western and Nordic markets, construction of a new nuclear power plant and construction of liquefied natural gas import terminal

Source: www.stat.gov.lt

Major opportunities: Energy (2)

• 3.86% of GDP

• 0.7% of exports

• 8.4% of country’s FDI

• 18.500 employees

Source: www.stat.gov.lt

Major opportunities: Shared services and business process outsourcing (BPO) (1)

Sources: www.stat.gov.lt; www.datamonitor.com; www.smm.lt; www.rrt.lt; World Economic Forum Global Competitiveness Report 2008-2009; GSM European Coverage 2007

Well-educated multilingual labour pool and leading ICT resources

• ~30% of population with higher education – one of the best-educated workforces in CEE

• ~90% of Lithuanians speak at least one foreign language:

• every second speaks two foreign languages, every third speaks English

• 23 universities and 23 colleges:

• more than 40,000 university and college graduates every year

• excellent ICT infrastructure:

• Highest fiber penetration (23%) in Europe (6th in the world)• World’s 2nd fastest upload Internet • Densest network of public Internet access points (875) in Europe• EU’s highest GSM penetration (147%)• Global leadership in the number of mobile telephone subscribers per 100 population

Major opportunities: Shared services and business process outsourcing (BPO) (2)

• 11 contact centres

• Approx. 2.500 employees

Sources: www.stat.gov.lt; www.datamonitor.com; www.smm.lt; www.rrt.lt; World Economic Forum Global Competitiveness Report 2008-2009; GSM European Coverage 2007

Major opportunities: ICT (1)

Modern knowledge economy• development of knowledge society is a national priority funded by the State

and the EU• 13 out of 20 largest IT companies in the Baltic States are based in Lithuania• 7 universities and 8 colleges with IT curriculums• excellent ICT infrastructure:

• Highest fiber penetration (23%) in Europe (6th in the world)• World’s 2nd fastest upload Internet• Densest network of public Internet access points (875) in Europe• EU’s highest GSM penetration (147%)• Global leadership in the number of mobile telephone subscribers per 100

population

Sources: www.stat.gov.lt; www.primeinvestment.lt; www.rrt.lt; World Economic Forum Global Competitiveness Report 2008-2009; GSM European Coverage 2007

Major opportunities: ICT (2)

• 2.1% of GDP

• 3.5% of total exports

• 13.7% of total FDI in the country

• ~ 2.000 companies

• 24.000 employees

Sources: www.stat.gov.lt; www.primeinvestment.lt; www.rrt.lt; World Economic Forum Global Competitiveness Report 2008-2009; GSM European Coverage 2007

World-class exemplary performance

• Lithuania – the biotech hub of CEE; products don’t have equivalents in CEE

• World-class research and inventions, e.g TevaGrastim® cancer treatment medicine, 30 % cheaper but as effective as existing medicine

• 15 biotech research centres

• 1st Baltic medical and pharmaceutical valley in the Baltic countries

• 16 institutions (including 5 major universities) train biotech specialists for science and business

Source: www.stat.gov.lt

Major opportunities: Biotech industry (1)

• Annual growth of ~22 %

• 0.1% of GDP

• 99% exported to 86 countries

• Over 1.000 employees

Source: www.stat.gov.lt

Major opportunities: Biotech industry (2)

Major opportunities: Plastics (1)

3 regional leaders are based in Lithuania

• worlds' best PET technologies

• flexibility and adaptability to market changes –pre-forms of various colours, weight and shape

• Lithuanian trademark NEOPET® is recognised as a premium-quality brand among European customers

• strict procedures of quality control and manufacturers’ orientation to international ISO standards

• highly educated specialists – 2 universities prepare specialists for plastics industry

Source: www.stat.gov.lt

Major opportunities: Plastics (2)

• 0.8% of GDP

• 58% of production exported

• 0.9% of total FDI in the country

• more than 360 companies

• ~10.000 employees

Source: www.stat.gov.lt

Globally acknowledged production and inventions

• Development of unique laser devices:

- 50 % of the world market for high-energy pico-second lasers

- Leadership in global production (80 %) of ultra-fast parametric light generators

• Global leadership in applying fundamental research into manufacture: 11 science centres and laser technology research centres carry out fundamental research

Source: www.stat.gov.lt

Major opportunities: Laser technologies (1)

• Annual growth of ~20 %

• Largest share in value added created on the national market

• Sales of almost EUR 30M; increase of 2.4 times in last 5 years

• ~80 % exported to nearly 60 countries

• ~450 employees

Source: www.stat.gov.lt

Major opportunities: Laser technologies (2)

Major opportunities: Metal processing, machinery and electric equipment (1)

Widely-acknowledged high-tech products

• flexibility to satisfy small and non-standard orders

• subcontracting for famous brands

• quality management system ISO 9001:2000

• high potential for research and development (R&D)

• biggest technical university in the Baltic countries - 17,000 students

• Baltic leaders in the sector operate in Lithuania

Sources: www.stat.gov.lt; www.ktu.lt

Major opportunities: Metal processing, machinery and electric equipment (2)

• 4.9% of GDP

• 64% of production exported

• 1.4% of country’s FDI

• ~1.000 companies

• 46,000 employees

Sources: www.stat.gov.lt; www.ktu.lt

Major opportunities: Furniture and wood processing (1)

Lithuania’s largest factories are among the most important suppliers for IKEA

• highly forested country, deep traditions in the wood processing industry

• production meets the highest quality requirements and design standards

• competitive prices

• good geographical location – short delivery terms

• flexibility to fulfil non- standard orders

• biggest office furniture factory (30,000 sq.m.) in the Baltic States

Source: www.stat.gov.lt

Major opportunities: Furniture and wood processing (2)

• 1.8% of GDP

• 55 of production exported

• 1.5% of country’s FDI

• more than 1,570 companies

• over 50,000 employees

Source: www.stat.gov.lt

Major opportunities: Textile and clothing (1)

One of the most specialised EU countries in the textile and clothing sector

• long-term traditions

• 2,500 new specialists are prepared annually

• flexibility and short delivery terms

• high quality and attractive design production meets European standards

Source: www.stat.gov.lt; www.latia.lt

Major opportunities: Textile and clothing (2)

• 1.8% of GDP

• 76% of production exported; 84% exported to EU

• 1.3 % of country’s FDI

• more than 1,000 companies

• 40,000 employees

Source: www.stat.gov.lt; www.latia.lt

Major opportunities: Food industry (1)

Internationaly acknowledged production

• deep manufacturing traditions

• favourable climate for agriculture

• well developed transport infrastructure

• favourable geographic location

• modern technologies

• Lithuanian beer was awarded at “European Beer Star Awards”, “World Beer Cup” and “World Beer Championship”

Sources: www.stat.gov.lt; www.litfood.lt

Major opportunities: Food industry (2)

• 3.6% of GDP

• 36% of production exported

• 4.2% of total FDI in the country

• dairy production makes 15% of food exports, 58% of dairy production exported to the EU

• over 57,000 employees• sector accounts for a major share of the added value (20.9

%) created by the Lithuanian manufacturing industry

Sources: www.stat.gov.lt; www.litfood.lt

Major opportunities: Real estate and construction (1)

Great development potential

• Lithuania - one of the EU leaders in the retail market growth (12.6%)

• among the most developed European countries in terms of shopping centres per capita (165 q.m.)

• modern A and B class offices across the country

• new retail projects across the country

• high potential for the development of economy accommodation and recreation (SPA) hotels as well as conference tourism facilities across all the country

Sources: www.stat.gov.lt; www.eurostat.com; www.colliers.lt; www.resolution.lt

Major opportunities: Real estate and construction (2)

• 17% of GDP (2010)

• 9.7% of country’s FDI

• over 244,000 employees

Sources: www.stat.gov.lt; www.eurostat.com; www.colliers.lt; www.resolution.lt

Major opportunities: Tourism (1)

Untouched ecological nature, well developed countryside tourism network, high demand for entertainment services

• unique costal area of almost 100 km

• rich natural resources (22,000 rivers and rivulets, about 3,000 lakes)

• 4 Lithuanian sights and 2 cultural traditions are on the UNESCO World Heritage Lists

• modern up-to date SPA resorts in an ecological environment (Druskininkai, Birstonas, Neringa ir Palanga)

• developed recreational infrastructure: 2 world-standard water amusement parks, 5 ice rinks, a number of theatre and cinema halls, multifunctional amusement centres

• well-known cruise lines regularly visit Klaipeda State Seaport

Sources: www.stat.gov.lt; www.tourism.lt, www.portofklaipeda.lt

Major opportunities: Tourism (2)

• 2.7% of GDP

• value added growth of 10%

• annual growth of approx. 8% of the accommodation of foreign tourists in the country

• 46.800 employees in the sector

Sources: www.stat.gov.lt; www.tourism.lt, www.portofklaipeda.lt

High quality of life

• Quality of life: one of the highest in the EU; higher than Sweden, Great Britain and Greece

• Among TOP 10 least expensive countries in Europe

• Almost 3.800 medical institutions, more than 13 thous. doctors, 400 doctors for 100,000 inhabitants

• 3.893 wireless Internet zones

Sources: International Living 2010 Quality of Life Index, Eurostat; Communications Regulatory Authority

Perfect place for vacation

• 4 UNESCO World Heritage sites

• Well-preserved nature, ecological tourism

• World-class entertainment and leisure services, international cultural festivals