Lithuania – Go for Business

2009

Lithuania in the world • Territory: 65,300 km2

• Common borders with: Latvia Belarus Poland Russia (Kaliningrad Region)• Population: 3.4 million (84% of Lithuanians, 7% Poles, 6.5% Russians )• Capital and biggest city: Vilnius (population: 542,000)• 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

• EU and Government support

• LDA assistance for businesses

Business opportunity on the Lithuanian market

International business presence

• Member of the EU, NATO and Schengen area

• Crossroads of three huge markets

Half of the Baltic States’ economy

Lithuanian economy at a glance

2005 2006 2007 20082009

(forecast)

GDP, EUR bn 20.9 23.9 28.4 32.3 -

GDP growth (annual), % 7.8 7.8 8.9 3.1 -15

Annual inflation, % 2.7 3.8 5.8 11.1 3.4

FDI, EUR bn 6.9 8.4 10.3 9.1 9.9

Exports, EUR bn 9.5 11.3 12.5 16.1 –

Exports growth, % 27.1 18.7 11.1 28.4 -26.6

Imports, EUR bn 12.4 15.4 17.8 21 –

Imports growth, % 25.5 23.5 15.4 18 -38.2

Unemployment, % 8.3 5.6 4.3 5.8 13.7

* exports/imports including services

GDP by economic sectors, 2009

FDI in Lithuania, EUR bn

0123456789

10

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 IIIQ

2.7 3.13.8 4

4.7

6.98.4

109.1

9.9

Major countries investors, 2009 IIIQ

0% 5% 10% 15% 20% 25% 30%

Russia

Finland

Poland

Latvia

Netherlands

Estonia

Denmark

Germany

Sweden

Other

6.8%

5.6%

10.0%

5.8%

6.3%

6.7%

10.5%

10.6%

12.2%

25.5%

FDI in Lithuania by economic sector, 2009 IIIQ

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Manufacturing

Real Estate

Financial Intermediation

Transport & Warehousing

Wholesale & Retail Trade

Electricity, Gas & Water

23.1%16.5%16.4%

14.6%13.7%

8.0%

Multinationals feeling at home

Lithuania’s foreign trade, EUR bn

Lithuanian export dynamics

5001,7

1221,2

353,29,4 693,6

EU

CIS

USA

CHINA

RUSSIA

7581,6

2774,8

347,8

21,9

1561,7

EU

CIS

USA

CHINA

RUSSIA

Y2004, EUR M Y2009, EUR M

Lithuania’s major exports destinations, 2009

Major importers to Lithuania, 2009

Lithuania’s exports by products, 2009, %

Lithuania’s imports by products, 2009, %

Main business taxes, 2009

* 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%)

Wages, 2009 4Q

Wages EUR

Minimal hourly wages 1.40

Minimal monthly wages 232

Average monthly wages 614

Overall tax burden, % of GDP*

* total amount of taxes and compulsory actual social security contributions as a percentage of GDP

Competitive operation costs

28.629.33030.131.0

39.940.5

44.244.6

48.949.1

0 10 20 30 40 50 60

RomaniaSlovak Rep.LITHUANIA

LatviaEstonia

EU27EA15

FranceBelgiumSweden

Denmark

Excellent infrastructure and 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 21 m tonnes of cargo every year, accepting large tonnage vessels: dry-cargo vessels up to 70,000 DWT, tankers up to 100,000 DWT and cruise ships up to 315 meters length

Klaipėda State Seaport – major transport hub

Dense network of shipping lines

Convenient industrial network

• Klaipėda FEZ: 412 ha greenfield territory

• Kaunas FEZ: 534 ha greenfield territory

• 9 industrial parks: greenfield territory from 15 to 219 ha

• 30% of total FDI settles down in industry (EUR 3 bn in 2008)

• Industry+construction – 35% of country’s GDP

Diversified industry

• Non-refundable support through EU Structural Funds until 2013 for such areas as trainings, R&D etc.

• Land or real estate tax relieves

• Incentives for R&D

EU and Government support

• approx. EUR 7 billion (approx. EUR 3 billion in 2004-2006)

1.4%

13.8%

39.1%

45.7%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Operational Programme of Technical Assistance

Operational Programme for the Development of Human Resources

Operational Programme for the Promotion of Cohesion

Operational Programme for Economic Growth

EU support for Lithuania in 2007-2013

(Next call will be announced in 2009 3rd quarter)

Support intensity: Large enterprises SMEs

Basic training – training of skills, which are not directly connected to the duties of employees, but can be easily applied in any enterprise, and also may lead to increased opportunities to become employed.

60% 80%

If employees undergoing the basic training come from socially unfriendly environment, the intensity of the support is by 10% bigger.

+10% +10%

Special training - theoretical and practical training of skills, which are directly connected to the duties and are special in their nature of application.

35% 45%

If employees undergoing the special training come from socially unfriendly environment, the intensity of the support is by 10% bigger.

+10% +10%

EU support for staff training

• 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; forthcoming Lithuanian events of international importance

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)

• container handling leader and the northernmost ice-free

seaport on the eastern cost of the Baltic sea – Klaipėda State

Seaport:annual cargo turnover of 20 million; i.e. also more than all ports of Ireland combined

• the best road system in the region

• 3 international airports

• 3 international and regionally important public logistic centres under construction

Major opportunities: Transport and logistics (2)

• 10.4% of GDP

• 67% of services exported

• 2% of country’s FDI

• approx. 3,600 companies

• 80,000 employees

• 33,000 trucks

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

Major opportunities: Energy (2)

• 3.6% of GDP

• 2.7% of exports

• 7.5% of country’s FDI

• over 23,000 employees

Major opportunities: Shared services and business process

outsourcing (BPO) (1)Well-educated multilingual labour pool

• ~40% 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

• 22 universities and 28 colleges:

• more than 30,000 university and college graduates every year

• excellent telecommunications infrastructure:

• 1st in the world by the number of mobile telephone subscribers per 100 population

• 1st in Europe by mobile network penetration

• broadest high-speed mobile broadband coverage in Europe

• densest network of public Internet access points (875 in total) in Europe

Major opportunities: Shared services and business process

outsourcing (BPO) (2)

• 40 – 50 contact centers with 2,400 employees

• Forecast for 2009 – 75 contact centres, 4,600 employees

Major opportunities: ICT (1)

Modern knowledge economy

• development of knowledge society is a national priority funded by the State and the EU

• the best telecommunications infrastructure in the region:• EDGE technology• 3G mobile communications infrastructure with data speeds of 3.6

Mbps• WiMax 4G mobile internet network

• 3,700 wireless Internet access points, almost 5 million active SIM cards

• with the mobile penetration of 149% Lithuania is the European leader

• 7 universities prepare 4,500 IT specialists every year

• 11 out of 20 largest IT companies in the Baltic States are based in Lithuania

Major opportunities: ICT (2)

• 3.8% of GDP

• 4.4% of total exports

• 9.5% of total FDI in the country

• more than 2,000 companies

• 37,000 employees

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

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

Major opportunities: biotech industry (1)

• Annual growth of ~22 %

• Total annual revenue over EUR 80M

• 80 % exported to 70 countries

• Over 1000 employees

Major opportunities: biotech industry (2)

Major opportunities: Plastics (1)

3 regional leaders are based 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

Major opportunities: Plastics (2)

• 1.4% of GDP

• 52% of production exported

• 1% of total FDI in the country

• more than 300 companies

• 10,200 employees

Globally acknowledged production and inventions

• Development of unique laser devices:

- 80 % of the world market for high-energy pico-second lasers

- Leadership in global production 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

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

• 86 % exported to nearly 100 countries

• ~450 employees

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

Major opportunities: Metal processing, machinery and

electric equipment (2)

• 4.9% of GDP

• 64% of production exported

• 2% of country’s FDI

• more than 1,600 companies

• 46,000 employees

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

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

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

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

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”

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

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

Major opportunities: Real estate and construction (2)

• 21% of GDP (2007)

• 9.7% of country’s FDI

• over 244,000 employees

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 are on the UNESCO World Heritage List

• 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

• large ships (315 m) of well-known cruise lines regularly visit Klaipeda State Seaport

Major opportunities: Tourism (2)

• 2.7% of GDP

• value added growth of more than 20%

• annual growth of approx. 10% of the accommodation of foreign tourists in the country

• 43,700 employees in the sector

Lithuanian market prospects

• From traditional to value-added

• From manufacturing to services and R&D

• From SME’s to global account

• From regional neighbours to Europe

Lithuania’s “gold and oil”

• One of the best-educated people in Central and Eastern Europe; the percentage of Lithuanian population with higher education is two times higher than the EU-15 average and is also the highest in the Baltic States

• 22 universities and 28 colleges with a total enrolment of 205,000 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)

Most popular professions

Most popular higher education programmes, 2007-2008

0% 5% 10% 15% 20% 25%

Other

Computing

Architecture and building

Arts

Humanities

Engineering

Social sciences

Law

Teacher training & education science

Business and administration

17%

4%

4%

4%

5%

8%

8%

9%

18%

23%

High quality of life

• 22 universities and 28 colleges (in all 5 biggest cities), more than 60,5 thous. education specialists

• More than 3,700 medical institutions, approx. 14 thous. doctors, 400 doctors for 100,000 inhabitants

• 3,700 wireless Internet zones, mobile communication penetration of 147% in 2008 IQ, almost 5 million active SIM cards

• 25,700 new cars registered in 2007, which is by 41% more than in 2006, and the most among the Baltic States

Perfect place for vacation

• 4 UNESCO World Heritage sites

• Well-preserved nature, ecological tourism

• World-class entertainment and leisure services,

international cultural festivals