Lithuania has has been ranked first in the EU for GDP per capita growth since 2000 (Eurostat), and with a GDP annual growth of 3.8 % in 2017 and 3.4% in 2018, the country successfully weathered the aftershocks of the financial crisis of 2008 and has been increasing GDP year-on-year. Lithuania is now in the top 14 nations in the latest Ease of Business Index and is justly taking its place as a regional hub for foreign direct investment. MCJ Lemagnen (MCJ) speaks to Mantas Katinas (MK), General Manager of Invest Lithuania.
MCJ: Can you give me a brief background about your location and the aims of your organisation?
MK: FDI in Lithuania has until now been focused on three strategic areas: global business services (GBS), manufacturing (with a heavy automotive accent), and fintech. These three sectors have recently been complemented by life sciences.
Invest Lithuania is focused on attracting strategic investment to these sectors. It provides free advice to global companies interested in doing business in Lithuania and introductions to experts on the ground. We liaise between potential investors and companies already thriving in the country to consolidate the existing network. Moreover, it also communicates between businesses and government institutions to improve infrastructure and legislation. When it comes to creating the right talent to allow companies to scale effectively, Invest Lithuania also helps build strong partnerships between business and education institutions.
MCJ: Which industry sectors, sub-sectors or activities would you say you have a particular expertise in?
MK: For starters, the GBS sector is one of Lithuania’s most pronounced success stories: from 2010 to 2017 alone, the sector increased nearly three-fold, from 25 to 70 centers. And the sector is not short on global players – Vilnius is home to Western Union’s biggest operation outside their headquarters, while in 2015 Nasdaq moved into the city’s sleek and awarding winning new K29 office building. Booking.com recently opened a sizeable operation and 2019 will see the arrival of Moody’s. Moreover, the country’s second largest city Kaunas has recently attracted a diverse group of companies including Centric, Geophy, NKT, OAG and AL-KO Tech that chose it for their GBS centers. In total, GBS offices in Vilnius and Kaunas employ more than 15,000 professionals. This number will surely grow in the near future.
In manufacturing, 2017 was a tipping point for us, with the arrival of large production facilities for automotive suppliers Continental and Hella, both of whom have set up in Kaunas Free Economic Zone. The country’s manufacturing sector, which is mainly focused in its regions and third city Klaipeda, covers a great many industries, but it has recently pivoted more toward automotive manufacturing. Panevezys is notable as the location for Schmitz Cargobull’s sizeable Lithuanian operations. Klaipeda is Lithuania’s port city, and a centre for manufacturing companies across a wide range of sectors including shipbuilding and offshore structure companies, with Hugaas and Advantec each with a large presence.
Klaipeda FEZ, the country’s largest Free Economic Zone, is home to Yazaki Wiring, the Japan-based leading provider of wiring harnesses for such automotive luminaries as Mercedes Benz.
MCJ: Fintech is a very fast growing sector worldwide – does Lithuania cater for fintech companies looking to start up or scale up?
MK: Lithuania began to focus on fintech several years ago. Led by the Bank of Lithuania, one of the most pro-fintech regulators in Europe, the country is aiming to become the EU’s number one fintech destination. Lithuania has implemented a number of progressive reforms, and with a growing community of over 170 fintech companies, we are already well on our way to becoming a regional hub. In July 2018, we became one of only three countries in Europe to have e-licensing which allows companies to register their fintech business in the EU from anywhere in the world. What’s more, in December the Board of the Bank of Lithuania granted Google an electronic money institution license.
MCJ: Do you have anything to offer life sciences companies?
MK: We are also now building a life sciences ecosystem. This sector already accounts for 1% of GDP, which is 6 times the EU average. Annual sector growth currently stands at 20% and the value added of the sector has quadrupled in the last seven years.
Lithuania has a proud modern tradition of supporting innovation in the life sciences field. In fact, Virginijus Šikšnys, one of the pioneers of CRISPR-Cas9 technology, is a Professor at Vilnius University, and recent receiver of the prestigious Kavli prize. Two major investments have been Thermofisher which has over 900 employees here and TEVA/Sicor Biotech, which employs over 200 in Vilnius. Lithuania has made the most rapid advancements in biotech over the past seven years, rising 19 places in the Scientific American Worldview global ranking for progress innovation potential, achieving a ranking of 16th place out of 54 countries in 2018. Lithuania is the highest ranked CEE country in this regard.
The government is committed to building a life sciences hub, and the country is a leader for investment in open R&D infrastructure, with EUR 400 million invested already and 600 million to be invested as part of its Smart Specialization Program. Focus is being placed on building a collaborative R&D community. Lithuania’s research community is built on collaboration between researchers, businesses and academic institutions. This exchange of expertise helps the country to conduct groundbreaking research and nurture new talent. Our five integrated business and science valleys provide some of the strongest support networks for life sciences in Europe.
MCJ: Can you give me some examples of Lithuania’s successful and most promising start-ups?
MK: Deeper is a rapidly growing tech company that develops revolutionary smart devices for outdoor activities. It created an entirely new product category, and successfully disrupted the fishing technology market, when it introduced the first ever castable wireless fish finder for anglers in 2013. Now Deeper sell their smart sonars in over 50 markets around the world. In its first 4 years, turnover grew by over 7,000%, leading Deeper to be named one of the fastest growing tech companies in Europe by Deloitte. It has received numerous international awards including a CES Innovation Award and a Digital Europe SME 2018 Award.
Trafi is a world-renowned journey planner app that was created in Lithuania. Now rolled out worldwide, and with a head office in London, the Lithuanian travel app was awarded Best Travel Planner for Public Transport during the 2016 Summer Olympics in Rio de Janeiro. Trafi is experiencing fast global growth: it recently launched in the five biggest cities of Taiwan and has begun its penetration into India. They are operating in Lithuania, Latvia, Estonia, Turkey, Brazil and Russia. Last year the start-up attracted a USD 6.5 million investment.
MCJ: We know from the recent MCJ Lemagnen study ‘FDI and the Rise of the Unicorns’ that executives in high tech companies need talent and that a skilled, well-educated workforce is vital for them. Can Lithuania meet this need?
MK: One of Lithuania’s biggest value propositions is its talented and largely unsaturated labour pool. Lithuania was ranked 1st globally in technological skills in the IMD World Competitiveness Yearbook in 2018 and was fourth in the EU for share of STEM Bachelors students (Eurostat 2016). The number of IT students is increasing and English is spoken very widely, with 85% proficiency amongst young professionals in the 2011 population census.
Lithuania has been quick to understand the importance of forging close links between business and education. That’s why in the last decade huge inroads have been made in creating courses that are tailor built to provide business with the kind of talents they need to scale effectively. So, for instance, financial information provider Bloomberg has been working closely with Kaunas University of Technology (KTU) since opening the first Bloomberg Financial Markets Lab in the Baltic States and Poland in 2015. Located in KTU’s Faculty of Economics and Business, the lab provides students with direct access to the company’s globally renowned Bloomberg Professional information and analytics platform, used by more than 320,000 business leaders and finance professionals worldwide.
MCJ: Do you have any specific programmes for companies that you would like to highlight?
MK: One of the latest programmes is Work in Lithuania – a one-stop-shop for attracting specialists to the country. Businesses coming to Lithuania are welcome to benefit from this free-of-charge platform in order to promote their vacancies. The programme targets several groups – Lithuanians abroad and foreigners.
Another notable initiative is the series of Welcome to Vilnius workshops organized by Go Vilnius – the city’s promotion agency. Welcome to Vilnius workshops are designed to facilitate the transition of foreigners coming to the city to pursue professional opportunities. In just a few hours, workshop participants will receive invaluable information to help them navigate bureaucracy, settle into day-to-day life, and ultimately, become a local.
Also, startup founders from third countries can benefit from a streamlined migration procedure in claiming a temporary residence permit. This is an initiative led by Enterprise Lithuania which is tailored to innovative startup founders.
‘Foreign Direct Investment and the Rise of the Unicorns’ Report
This report is produced by MCJ Lemagnen Associates Ltd and is independent of any government or economic development agency.
©MCJ Lemagnen Associates Ltd 2019