Lithuanian Business Review. Northern Connection by Arnas Jozonis

LITHUANIAN BUSINESS REVIEW I N D E P E N D E N T J O U R N A L  N O T O N LY F O R B U S I N E S S P E O P L E  2 0 16 / 1 (2 )

NORTHERN CONNECTION Engineering Industry: We Are Fast to Grasp

Invest Lithuania: Fast Becoming Reality

30 Earth, Wind and Fire

Mice that Feed the Country

BRIDGES WITH THE NORDIC LAND CONSTRUCTION JOBS

Geographically tied in the east, west, and south with its neighboring countries, spiritually linked with their nations, Lithuania has always been aware of the land, stretching beyond the cold waters of the Baltic Sea – Terra Septentrionis, the Nordic Land. The pulse of this land may not have been as tangible to Lithuanians as to their neighbors, Estonians and Latvians, but it has been clearly felt. The Nordic power has always been there, in the strength and courage of the Vikings, and in the House of Vasa that brought Lutheranism to our land and the ensuing modernism. Nordic countries in Lithuania have always been looked upon as an example to follow in their rational approach to social, economic, and political issues. The Nordic dimension has especially manifested itself in the Lithuanian political and economic life during the past decades. The first countries to recognize the new Independence of Lithuania was Iceland and Denmark, followed by Norway, Sweden, and Finland. One cannot overestimate the input of the Northern institutions in the reforms, carried out within the first decade of our independence in approaching Western attitudes and standards. The first business investors of the twentieth century, the true Vikings of today, also came from the North. Today, unlike its entire existence, Lithuania feels an integral part of the Northern region of Europe. In the course of its entire history, Lithuania has never felt so Northern in her orientation and mentality. Lithuanian Foreign Minister Linas Linkevičius in his interview to the magazine describes this closeness with a graceful metaphor, saying: “Under the law of

SEWING OF SAMPLES ORDER AND PURCHASE PRODUCTION AND QUALITY CONTROL EXPORT & LOGISTICS

EDITOR-IN-CHIEF Valdas Kaminskas CO-EDITOR Arnas Jozonis FEATURES WRITTEN BY Valdas Kaminskas Mantas Katinas Virginija Majorovienė Rytas Staselis Lukas Vabalas

KLOTEKSA JSC Draugystės 15B, Kaunas 51228 +370 699 87233 info@kloteksa.lt, www.kloteksa.lt

BRAND IN SCANDINAVIA WHO TRUST US:

FILIPPA K

TRANSLATION Dalia Paslauskienė DESIGN Dana Šmitienė

communicating vessels, we are becoming a part of Northern culture”. “The contents of our cooperation has set a positive note: the investing activity of the region becomes more active, tourist flows grow, common strategic projects gain momentum, we have growing cooperation in energy, science, and innovations,” minister’s thoughts are backed by Prime Minister Algirdas Butkevičius. In this magazine issue, we are trying to focus on the current economic cooperation of Lithuania with Nordic countries and such aspects as foreign trade, direct investments, energy and tourism, relations among different business segments, enterprises, and businessmen. We are happy that the heads and specialists of related institutions, as well as diplomatic missions, have offered our magazine their thoughts and insights on Lithuania's cooperation with the Nordic countries. The magazine section on energy tells an ironic story by Rytas Staselis of how the arrogant conduct of Gazprom lost it more than half of the Lithuanian natural gas market in a blink of an eye, while Norwegian Statoil gained it (The End of the Gazprom Domination). As is customary with magazines, we also present people, their faces, and stories. If you enjoy reading not only about major interstate projects and cooperation, open the magazine towards its end and find two stories about women abroad: a Swede, Jannette Almstrom, who relocated to Vilnius, and a Lithuanian, Rūta Mataitytė, living with her family in Oslo. So, here you go, enjoy your reading! Valdas Kaminskas

ADVERTISING Rima Dagilytė, rima@businessreview.lt Gediminas Miškinis gediminas@businessreview.lt Ruta Balčiūnaitė ruta@businessreview.lt PHOTOS ELTA, Enterprise Lithuania, Invest Lithuania, Prime Minister's Office, Ministry of Foreign Affairs, Ministry of Energy, Ministry of Economy, Litgas, Visma Lietuva, Reda Mickevičiūtė

SALES AND DISTRIBUTION Arnas Jozonis arnas@businessreview.lt Tel. +370 687 54699 PUBLISHER VšĮ Leidybos Idėjų Centras Gedimino g. 47–317, LT-44242 Kaunas, Lithuania PRINTING-HOUSE UAB BALTO print Circulation 4000 units ISSN 2424-354X www.businessreview.lt

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EDITORIAL

COMMENTARY Inspired by Nordic Countries. An Interview with Prime Minister of the Republic of Lithuania The Principle of Communicating Vessels. An Interview with Minister of Foreign Affairs of the Republic of Lithuania ›8

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EXPORT Trade with the North: a Strategy of Win-Win Partnership Engineering Industry: We Are Fast to Grasp › 16

Swedes See Good Prospects in Lithuania › 33

Sweden – Lithuania › 36 Norway – Lithuania › 40 Denmark – Lithuania › 44 Finland – Lithuania › 48

Connecting to Scandinavian Lifeline › 56 Earth, Wind and Fire › 60

INVESTMENTS Invest in Lithuania: Fast Becoming Reality

AN OVERVIEW OF BILATERAL ECONOMIC COOPERATION

FOCUS ISSUE: ENERGY The End of Gazprom Domination

TOURISM: MEETING INDUSTRY Mice that Feed the Country

FACES Jeannette Almstrom: the Green Station Rūta Mataitytė: I Have to Fall in Love to Start Writing › 78

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COMMENTARY

Prime Minister Algirdas BUTKEVIČIUS shaking hands with Prime Minister of Norway Erna SOLBERG during his working visit in Norway on May 2016. The two Heads of Government have discussed development of bilateral relations, energy cooperation, regional security, Eastern Partnership policy developments, and migration issues (Adomas Mickevicius photo)

INSPIRED BY NORDIC COUNTRIES An Interview with Prime Minister of the Republic of Lithuania Algirdas BUTKEVIČIUS Mr. Prime Minister, what is the current situation with the Lithuanian economy and what solutions for its deve lopment are included in the agenda of the Government? To improve conditions for business and investment is one of the top priorities of our Government, therefore today I can proudly admit that our efforts and constant care for the progress have yielded perfect results that have been acknowledged by international organizations. The competitiveness survey of 2015-2016 of the World Economic Forum shows that Lithuania has improved its 4

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positions by five points and moved from the 41st to 36th place, the highest position ever. Such an improvement was determined by our decisions to reduce bureaucratic obstacles to business and revoke certain excess requirements for business newcomers. The “Doing Business” data show that Lithuania has moved up in the rating of 189 best world countries for business from the 21st to 20th. Comparing to other EU member states, Lithuania is in the 8th position. In 2015, by the average of foreign investment projects per million people, Lithuania was ahead of Central and East Europe countries by 2.43 times and was the leader of

the region. The growth of direct foreign investment flows and domestic material investments reflect the successful development of the economy. Despite the global tension and the decreasing economic growth, domestic material investments have been rapidly growing. Having in mind such future economic challenges as inadequate labor efficiency, the necessity of adapting skills to market demands, and the decrease of income inconsistency, we are trying to carry on our undertakings related to the new social model, the improvement of the quality of education services, and qualification mapping. OECD, the European Commission, IMF, and Lithuanian industrial and business associations welcome the endeavors of the Government to improve the flexibility of employer-employee relations. I am convinced that the draft package of laws on the new social model that has been submitted to the Seimas for consideration, will further improve our investment climate. Recently, we have given a lot of attention to export promotion and the search for new export markets, which has allowed to maintain our economic growth and curb the negative effects of the Russian economic decline. Our export to EU countries has grown by 5.5 percent. We see a bright future in our export as it becomes more consistent, diversified, and more orientated to stable markets, while the growth of Eurozone export under complicated outside conditions, is a serious indicator of the adequate Lithuanian competitiveness.

What is your position on the economic cooperation with Northern Europe: trade, investments, and strategical projects? To strengthen and develop economic ties with Nordic countries is the priority of our economic diplomacy. Today, we can be proud of the rich contents of our economic cooperation with the countries of Northern Europe, including the increase of investing activity of the region in Lithuania, the growth of tourist flows, the number of joint strategic projects, the expansion of cooperation in the fields of energy, science, and innovations. Nordic countries are also important to us in terms of the export of Lithuanian production. Norway and Sweden are on the list of target markets for Lithuanian export. The countries of Northern Europe are the largest investors in Lithuania in terms of the investment volume and the number of created jobs. During the last decade, investments from Nordic countries have more than doubled. Last year, their direct investments reached 5.1 billion euros, or 39 percent of the total foreign investments in Lithuania. I can say without a doubt that one of our top priorities is to attract reliable and strong investors from Nordic countries. I am happy to admit that tourists from Northern Europe find Lithuania more and more attractive as a tourist destination. Growing tourist flows not only add to the improvement of our social and cultural ties, but also yield a tangible economic profit.

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COMMENTARY

Our priority also includes the improvement of our cooperation with Nordic countries in the field of science and innovations. We are hoping for their active participation in “Life Science Baltics 2016, a forum of life sciences that will be held this coming September in Vilnius. Our foremost goal among strategic projects of the entire region is to build a joint power market, based on common interests of the region. Since 2012, Lithuania has launched the “Nord Pool” power market that has made it possible for us to enter the transparent Nordic power market, which holds the leading position in Europe. The interstate power connections with Sweden and Poland that were launched last year, have given the Baltic countries access to Scandinavian and West European power markets and increased our independence from electricity import from the East. Norway is our major partner in the field of natural gas and the resulting energy independence. The project of the Liquefied Natural Gas terminal in Klaipėda is the largest within the Lithuanian-Norwegian economic cooperation. Since the beginning of 2015, it has become an alternative gas supply not only for Lithuania but for all the three Baltic countries. The capacity of the terminal allows to satisfy over 90 percent of the entire yearly natural gas demand of the Baltic countries.

support, will connect the Baltic countries with Western European markets. In the future, those investments will bring dividends and guarantee a free flow of power resources in Europe. The connection of the Baltic countries to Poland and Finland will create a common market of almost 24 billion cubic meters with a number of different import sources – terminals and gas pipelines. The Baltic and Nordic countries are also working together on another major project – Rail Baltica. This project will ensure growth for both the Baltic and Nordic countries. Besides, the project will fulfil a longtime Finnish vision of having a European-gauge railway connection with continental Europe. On the other hand, if Finland joins the project, the Baltic countries will receive increased freight flows and a bigger Artic potential. Large freight flows, generated in the Arctic region, would boost the competitiveness of Rail Baltica and its further development. Its success largely depends on joint Baltic and Nordic efforts and smooth cooperation. I believe, both the Baltic and Nordic countries will reap the benefits. We would be interested in Swedish and Finnish participation in Viking, the fast container train project. A full-fledged participation of those countries could create favorable conditions for connecting Nordic countries with Central Asia and Caucasus.

What future projects, in your opinion, could use the joint efforts of the Baltic and Northern regions? One of the most important strategic projects of the Baltic countries is to synchronize our power systems with the continental European grid that would allow us to secure the reliability of power systems and the security of its supply. Here we need all available support from Nordic countries. The prospects of creating a joint gas market for the Baltic countries and Finland became reality with the arrival of the Liquified Natural Gas terminal in Lithuania. The joint Baltic gas market above all means a common gas trade system, pricing, market supervision, and the joint calibration of the system. The nearest future will offer us a competitive supply of gas and its more flexible competitiveness among other types of fuel. Another project, essentially important in creating a common gas market, is Balticconnector, a gas connection between Estonia and Finland. At present, the annual gas market of the three Baltic countries reaches roughly 4.5 billion cubic meters. With the Finnish participation, it would grow to 8.5 billion cubic meters. A bigger gas consumption could make the Baltic region considerably more attractive to major gas suppliers, increase its competitiveness, and reduce prices on gas to the benefit of gas consumers. Lithuania and Poland are working on another important infrastructural project. The Gas Interconnection PolandLithuania (GIPL), which has already secured European

One of the classical economic advantages of Lithuania was its tight ties with Russia and other Eastern markets. What could Lithuania offer foreign investors instead of this? Above all, I should mention our competitive labor power, which is skilled and relatively inexpensive, alongside our adequate transportation infrastructure and convenient geographical location, the ice-free port of Klaipėda, and local costs that are comparatively lower than elsewhere in Europe – those factors make Lithuania attractive to potential investors. We are attractive to our foreign partners for other reasons as well. We have reached a breakthrough in improving Lithuanian energy security and competitiveness with the arrival of the Liquified Natural Gas terminal and the launch of power connections with the EU members. Our economic attractiveness will be undoubtedly enhanced by our future membership in OECD. The growth of our attractiveness to foreign investors has been on many occasions proven by the assessment of the competitiveness of Lithuania. I have already mentioned our growth in the competitiveness index of the World Economic Forum. In the Forbes Best Countries for Business List, Lithuania has jumped by seven positions. We are number 17 in the world, leaving behind not only Poland, Estonia, and Latvia, but also such countries as the USA and Germany.

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Lithuania is one of the least expensive countries in Europe in labor power. On the other hand, foreign investors

Prime Minister Algirdas BUTKEVIČIUS meets with CEOs of Höegh LNG, Chairman of the Board Morten Høegh and President Sveinung Støhle.

are not happy with the flexibility of our labor laws. In what way would these aspects of the Lithuanian economy be affected by the new social model that is currently in progress, which is essentially very close to Scandinavian? We have to admit that the Labor Code that regulates labor relations in our country, has not changed for over a decade. Low assessment of Lithuania in various competitiveness reports, changes in the economic situation, employee and employer needs, the growth of international competitiveness in the hunt for skilled workers and investments have shown us that we have to make a breakthrough in this field and solve the essential problems of labor relations. We have introduced alterations to the Labor Code based on the best practice of foreign countries and our own social, economic, and political peculiarities. The draft includes the expansion of the variety and flexibility of labor contracts, more flexible regulations on work and leisure time, the decrease of administrative burden and excess restrictions, and socially just tax alterations that would create favorable conditions for the economic growth and investments. More modern regulations of labor relations would be beneficial not only for attracting investments to Lithuania, but also would create jobs and increase salaries, and would positively affect the overall budget income of our country.

Höegh LNG is the major owner and operator of Independence, a floating LNG storage and regasification vessel (Adomas Mickevicius photo)

You are the leader of the Social Democratic Party. How close and how different are the policies of Social Democrats in Lithuania and Nordic countries? Lithuania is very inspired by the level of welfare of Nordic countries and their experience in creating it. We are happy to have been able to cast aside planned economy a quarter of a century ago and become a free market. Today we have somebody to look up to, to draw knowledge from, and, above all, to be partners with. However, we also have to adapt to geopolitical challenges that very often determine our economic growth and the social welfare of our citizens. Therefore we should maintain flexibility and attractiveness to foreign investors, especially Nordic countries. One of our top priorities is the promotion of socially responsible business and the creation of social market economy and the model of economic equality in a society that would guarantee social and economic security for the entire population of the country. This is our priority.

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COMMENTARY

Lithuania, Ukrainian, and Swedish foreign ministers (from the right) Linas LINKEVIČIUS, Pavlo KLIMKIN, and Margot WALLSTRÖM sign a Memorandum on the Assistance to Educational Institutions in Eastern Ukraine. The document includes student exchanges, teachers’ skills quality improvement, and the improvement of the condition of studies in the schools of Eastern Ukraine

THE PRINCIPLE OF COMMUNICATING VESSELS WE ARE LUCKY TO HAVE BEEN ABLE TO JOIN SUCH A SUSTAINABLE AND WELL-MANAGED GEOPOLITICAL UNIT. WE CANNOT INSTANTLY ADOPT THE NEW MENTALITY, HOWEVER, THE PROCESS OF CHANGE HAS ALREADY BEGUN AS WE ARE GRADUALLY BECOMING PART OF NORTHERN CULTURE ON THE PRINCIPLE OF COMMUNICATING VESSELS, SAYS FOREIGN MINISTER LINAS LINKEVIČIUS ON THE RELATIONS OF LITHUANIA WITH NORDIC AND BALTIC REGIONS.

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The relations with our Eastern neighbors are rather tense and fluctuating, whereas our relations with Scandinavians and Finns are continuously friendly and productive. What factors, in your opinion, determine such peaceful and stable cooperation in Northern and Baltic regions? True, the region of Nordic and Baltic countries is one of the most stable regions in Europe and the world. Although the region is far from being homogenous, its countries prove to be able to discuss and find common decisions on many

matters. There are quite a few reasons determining this ability, including mentality, governmental traditions, fiscal discipline, and social responsibility. Nordic countries are unquestionable standard-bearers of such sustainability, meanwhile Baltic countries have much to learn from them. We are dealing with the aftermath of the recession basically having in mind the Nordic way of thinking, their rationality. We make our own decisions regarding the probable decisions of our Northern neighbors in a given situation. We are lucky to have been able to join such a sustainable and well-managed geopolitical unit. We cannot instantly adopt the new mentality, however, the process of assimilation has already started as we are gradually becoming part of Northern culture on the principle of communicating vessels. We see that in the spirit of rational cooperation even bilateral projects can be promising to the entire region. Let us take the Lithuanian-Norwegian project of the liquefied natural gas terminal in Klaipėda. When it was launched on the southern shore of the Baltic Sea, not only Lithuania could see the benefits it would bring to the entire region. It has been fully incorporated into the existing gas system, while still having much future potential for the integration into the gas transmission system that is being developed in Baltic and Visegrad countries. The same applies to the electricity cable between Sweden and Lithuania: it opens new possibilities for cooperation in the sphere of electricity not only in the

Baltic region, but – via the electricity bridge with Poland – in Visegrad countries as well. Such cooperation among countries and their ability to manage things within the region serve as an important factor for promoting the region in a wider geopolitical context. USA, for one, would gladly join the club through its Enhanced Partnership in Northern Europe; United Kingdom is also largely interested in the Nordic region; recently Japan expressed its wish for closer cooperation. This factor makes it possible for the NATO and EU symbiosis in the region: those processes are complementary to one another rather than destructive like elsewhere. And what about Russia, is there an ongoing dialogue with this country? There is no joint dialogue of Nordic and Baltic countries with Russia. Each country maintains bilateral relations with Russia, depending on their own situation and national interests. Lithuania wishes to take an active part in the Eastern Partnership program. Do Nordic capitals support those attempts? Some of Nordic countries take an active part in the Eastern Partnership program, others are not so active, however, the

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COMMENTARY

overall support of the program can be felt in the region for the reason that the initiative itself was born in the North of Europe. Let us not forget that Sweden was one of the initiators of the Eastern Partnership program, and is still its active supporter. Recently my colleague Swedish Foreign Minister Margot Wallström and I visited Eastern Partnership countries such as Ukraine and Moldova. In Eastern Ukraine, Lithuania together with Sweden launched a joint project with the goal of reestablishing the education infrastructure in the territories, liberated from the separatists. Recently, Denmark has expressed its interest in joining the program. One of the most relevant national matters is the construction of the Astravyets Nuclear Power Plant 50 kilometers away from the Lithuanian border in Belarus. Can the current thaw in the relations between Belarus and the EU in any way help resolve the issue of security? The construction of the Astravyets Nuclear Power Plant has been in progress since 2009, and we are much worried with the existing situation. There are a few unanswered questions: Why did Belarus choose the location for its Nuclear Power Plant in Astravyets, just 50 kilometers from Lithuania? What are the precautions against radiation? How would it influence the Neris River? In the best case scenario the construction could be terminated. If worst comes to worst, the Nuclear Power Plant should be guaranteed the highest international security standards. Nordic countries are also interested in the absence of such a source of nuclear threat right in their neighborhood. We raise the question of the Astravyets Nuclear Plant security everywhere and in all possible ways. In this context, we should see the thaw of relations between Minsk and Brussels as a positive development that could help resolve quite a number of issues, including security problems of the Astravyets Nuclear Power Plant. My understanding is that we all – Lithuania, Nordic countries, the EU, and Belarus itself – share the same interests in this respect. An unsecure nuclear unit 150 kilometers from Minsk can barely be in the national interests of Belarus, therefore, I think, it should be our common point of concern. What changes could be observed in the diplomatic service in the eleven years since Lithuania joined the EU? What transformations did horizontal bilateral relations undergo within Europe? Did they avoid centralized domination from Brussels? The first step of the diplomatic service of Independent Lithuania and its foremost task was to “introduce” and “present” the country in as many European capitals as possible. The present situation is considerably different – today 10

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European affairs are not always considered foreign affairs any more. Many governmental institutions of individual countries establish horizontal bilateral working contacts and direct relations without the mediation of diplomatic representations and with no regards to the diplomatic protocol. In that way, the focus of the diplomatic service transcends European boundaries and concentrates on third parties. But even here, one can find a lot of cooperation among EU countries. When performing our diplomatic mission of representing the interests of our country outside the EU, we cooperate with other EU member countries, as well as with the European External Action Service, which has its representation around the globe. Thus we get a better chance to protect the interests of our citizens in the countries where we do not have embassies, as well as have the opportunity to considerably cut our budget expenses. Despite the close cooperation on the EU basis, bilateral and regional relations serve as a significant instrument in European foreign policy in many aspects, including investment attraction, specialization of a country, and specific individual national interests. Like I said, the region of stability and sustainable development, based on the tight relations among Nordic and Baltic countries, instead of dividing it, has enriched Europe. Lithuania is actively involved in economic relations with its Northern neighbors. What place does Iceland take on the map of Lithuanian relations with Nordic countries? Historically, Iceland will always be important and dear to us, as it was the first country to officially recognize our independence on February 11, 1991. Every year we express our gratitude to the Icelanders for this deed by celebrating a symbolic “thanksgiving” on one of the central streets of Vilnius, named after Iceland. We are a member of NATO as well, therefore our attitude towards geopolitical security and our expectations towards the development of NATO very often coincide. On the other hand, who could have thought that with time Lithuanians would become the largest national minority in Iceland? However, it is a fact – at present, to the best of my knowledge, there are about 1,600 Lithuanians, living and working in Iceland. Therefore, today we cannot say that Iceland is a remote country to us either on political, cultural, and spiritual levels, or in terms of economy. For a long period of time, Lithuania, with its small domestic market, has been treated as a bridge or springboard for Western markets to reach the East, and vice versa. With the present geopolitical tension, the significance of this role has declined. Why does Lithuania interest foreign businesses now?

With Norwegian foreign minister Borge BRENDE at the NATO meeting in Antalya, Turkey

Neither bridge nor trampoline can last for long, as nobody lives on either of them. With time, we have integrated our economy into the West and have developed an entirely different economic specialization. For example, we have become a key player in the global laser market. Many people cannot easily believe that ten percent of the global industrial laser production has originated in Lithuania. Also, people are surprised to learn that we are the world leaders by the speed of Internet access. Let us take, for example, biotechnologies and life sciences – actually, we are very well-known in this sphere. Of all other cities, Vilnius has been chosen as the venue of the upcoming conference Life Science Baltics 2016 this September. I think that manufacturing and services based on new technologies represent the Lithuania of today much better than old “bridges” and “spring-boards”. What is your attitude towards emigration that is often seen in domestic political discourse as problem No. 1?

Our integration in Western structures manifests itself in different ways. Emigration is an unavoidable part of this process. Instead of being evil, emigration is a natural development. We had fought fiercely with the Soviet system for the freedom of individuals to travel and relocate. Young people nowadays choose to study and work abroad in a country of their choice and better opportunities. However, if we continue developing our country as we do now, I am sure that the principle of communicating vessels will be reversed, and we would soon be welcoming our emigrants, who would return to stay in and work for Lithuania. Lithuania is a fast advancing country. Let us take the half-completed process of our accession to the Organization for Economic Cooperation and Development – a club of the most successful countries of the world. I think, it is only a matter of time when we become a full-fledged member of the organization and be able to enjoy new rights and new opportunities. It is imperative that Lithuania follows the policy of openness and integration in the West and avoids domestic political interferences.

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EXPORT

TRADE WITH THE NORTH: A STRATEGY OF WIN-WIN PARTNERSHIP THE ECONOMICALLY DEVELOPED AND INSISTENTLY GROWING COUNTRIES OF NORTHERN EUROPE HAVE ALWAYS BEEN AND ARE OUR PROMISED LAND OF SORTS. LITHUANIAN EXPORT TO THIS REGION IS RESPONSIBLE FOR 11 PERCENT OF THE ENTIRE COUNTRY’S EXPORT AND IS STILL GROWING WITH EACH YEAR, BECAUSE LITHUANIANS HAVE BEEN RELENTLESSLY MASTERING TO DECIPHER THE SECRETS OF THE NORDIC SOUL AND TO ADAPT TO THEM.

The

state-owned Lithuanian Development Agency, Enterprise Lithuania, has placed Denmark, Norway, Sweden, and Finland on its analytical map of Nordic countries. The four countries with their markets and population are four times smaller than Germany. Despite its being relatively small, the market is rich and solvent: the GDP per capita of the Nordic countries is three times larger than that of Lithuania’s. It is no wonder that in 2015 the Nordic countries exceeded the giant Russia by the total amount of imported goods and services. The Scandinavian demand for Lithuanian produced goods is expected to rise in the upcoming years (2016 and 2017). The strongest growth in import is expected from Sweden, where the robust economic growth is projected to be driven by a strong growth in household consumption, investment, and increasing government consumption. The import demand will also rise from Denmark due to the continuing growth of household consumption during the estimated period. Developments in the import demand from Norway are not certain due to the slowdown of Norwegian economy but are likely to report positive growth rates due to a modest growth in household

consumption. Finland with the hold on the growth of its economy has been lagging behind in recent years. Only a moderate growth is expected in 2016 and 2017. Therefore, the estimated growth of the import demand can be only modest.

Total structure of Lithuanian goods export, 2015

Goods export to Nordic countries, millions of euros

Other countries 2 % East and South East Asia 2 %

WHAT IS BEING EXPORTED FROM LITHUANIA TO NORDIC COUNTRIES? Furniture is the predominant merchandise among the goods that Lithuania exports to Nordic markets. In the past decade from 2005 through 2015, this export category grew from 12.2 to 18.3 percent within the entire volume of Lithuanian export to Nordic countries. An international concern, IKEA is the main buyer of Lithuanian furniture. After the extremely successful year of 2015, Lithuanian furniture makers are estimated to move up in the list of IKEA suppliers from the fifth position to the fourth position and will leave behind the native Swedish suppliers. Other categories of export merchandise are food products, chemicals, and metal production. The volumes of exported oil products, clothing, and machinery parts have considerably decreased.

3000

EU (Nordic countries excluded) 53 %

Middle East and Africa 3 % North America 5 % Nordic countries 11 %

CIS countries 24 %

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2005 2006 2007 2008 2009 2010

2011 2012 2013 2014 2015

1130 1287 1435 1856 1366 1613 1829 1938 2160 2297 2467

Our success largely depends on how good we are at listening to the needs of our customers from the North and how well we make use of our cultural similarities and differences, says Rasa NARUŠAITYTĖ, project manager of Enterprise Lithuania

The service export to the North is dominated by transportation which is responsible for over half of service export, followed by travel and other business services. After the recession of 2009, the export of construction and IT services has been continuously growing. THE FAST PATH INTO THE NORDIC SOUL “Once we were talking to a Norwegian businessman who quite blandly said that it was us who were hungry and thirsty, and desperately wanting to sell, so it was us who were supposed to seek ways to learn more about Norwegians, rather than them trying to know us”, says Rasa Narušaitytė, the project manager of Enterprise Lithuania. “I think it was a very wise observation: our success largely depends on how good we are at listening to the needs of our customers from the North and how well we make use of our cultural similarities and differences”. How do we, Lithuanians, see Nordic people? Let us hear out the opinion of the Export Department experts of Enterprise Lithuania on business peculiarities on either coast of the Baltic Sea. Nordic businessmen do not tend to easily establish new contacts or bond with new partners. Those who want to enter their markets have to have patience and expect a lengthy and complex process. It is not an easy task to become a partner there, however, once you have established contacts, you will enjoy stability and long-term cooperation. “Although cultural differences tend to shrink, Lithuania is not yet recognized as a country with Scandinavian mentality; for our animated gestures we are accepted more like “Nordic Italians” who not always stick to their obligations, therefore cannot be completely trusted. Let us not forget that Lithuanian immigrants not always favorably represent their country either,” says Ms. Narušaitytė. “That, and the age difference: CEOs in Nordic countries usually are more mature people who do not always readily trust our “youngsters”. Sometimes

After the extremely successful year of 2015, Lithuanian furniture makers are estimated to move up in the list of IKEA suppliers and will leave behind the native Swedish suppliers

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EXPORT

Structural change of Lithuanian goods export to Nordic countries, 2005–2015 (structure, %) GOODS

Furniture

Renata NEDZINSKIENĖ, project manager of Enterprise Lithuania,

2005

2015

CHANGE IN STRUCTURE

12.2

18.3

6.1

Food

3.3

8.1

4.8

Chemicals

2.2

6.0

3.8

Metal production

4.6

8.3

3.7

Means of transportation and its parts

8.9

0.8

-8.1

maintains, that the best qualities of Lithuanian businesses are

Clothing

14.0

5.5

-8.5

fast reaction, capability to produce in small batches, flexibility,

Oil productions

12.6

1.8

-10.8

innovativeness, and fast logistics

Other goods

42.2

51.1

8.9

we act like immature adolescents who want everything now, today, at once, while Nordic people are more rational, more willing to measure and weigh”. Instead of being an exception to the rule, the high quality of goods and services in Nordic countries are a norm, as are the multilingual, respectful partnership, and trust. Prices should be based on rational calculations; businesses should know how to explain the surplus value. Neither should they rush to offer discounts as it might raise questions about transparency. Cards should be placed on the table upfront. Negotiations with Nordic partners should be conducted on the principle of win-win decisions, while trying to avoid both ungrounded criticism and praises. Impatience is unacceptable, pressure is unacceptable. If you say “no” you mean “no”, if you do not say “yes” you mean “no”. The best qualities of Lithuanian businesses are fast reaction, capability to produce in small batches, flexibility,

innovativeness, and fast logistics, all of which help avoid the long chain of supply and storage. Lithuanians are fast to cooperate and merge into clusters so as to be able to offer their clients the required assortment and volume of their goods. “This is the only way for us to cooperate with Scandinavian enterprises”, says project manager of Enterprise Lithuania Renata Nedzinskienė. Social responsibility is another important factor. “Let us say that labour in our textile industry is more costly than in Bangladesh. However, Nordic countries are fed up with Far East, they want to stop children labor exploitation, create favorable conditions for their employees, and establish civilized management. Therefore, we have observed that textile manufacturing has been relocated into a more socially acceptable environment”, says Ms. Nedzinskienė. Another important aspect is references of local businesses. One letter of recommendation sometimes might open otherwise closed doors. A construction company, Staticus, can serve as an example of such a success story: upon the recommendations of Swedbank following the company’s engagement in the construction of a building for the bank headquarters in Vilnius, it was accepted in the Swedish market as well as in the construction markets of other Nordic countries. In 2013, KG Construction, another Lithuanian company, started cooperation with Swedish partners, and now can boast of considerable results. The beginning, however, was not easy. According to the company’s Commercial Director Arnas Liseckas, in the beginning they had to renew one and the same commercial offer forty times, while the mileage of trips to Stockholm and back to Vilnius could 1.5 times circumnavigate the Earth. Having started with small projects, the company earned trust from their Swedish partners and now are responsible for all major contracts. The incentive for company Cozywood to undergo changes was BrandLab, a project initiated by Enterprise Lithuania. Having renovated its brand label, the company with its

Construction company, Staticus, was accepted in the Swedish market as well as in the markets of other Nordic countries after it received the recommendations of Swedbank following the company’s engagement in the construction of the bank headquarters in Vilnius

LITHUANIAN BUSINESS REVIEW / 2016

production of wooden cards and other souvenirs has completed a three-year negotiation with Finnish partners and now are ready to offer its production to Finnish customers. Recently, a delegation from COOP Trading visited Lithuania. COOP Trading belongs to Scandinavian trade chain COOP that owns over 4,000 retail stores in Denmark, Sweden, Norway, and Finland with over 13 million customers. COOP Trading is responsible for the development of the chain and its private labels. While visiting Lithuania, the COOP Trading experts responsible for opening new stores in Norway, Denmark, Sweden, and Finland, were interested in anything related to the process – from packaging to uniforms, to fish refrigeration, to illuminated sign boards. The visitors met with 16 Lithuanian enterprises engaged in packaging, textile, stainless steel products, and refrigerating equipment; also they visited four large factories. After the meetings with Lithuanian enterprises, the Scandinavian visitors underlined the importance of trust in foreign partners – this human trait might serve a determining factor in signing new contracts. The guests were fascinated by the high quality of production and professionalism of Lithuanian enterprises. The overall success of Lithuanian businesses in Nordic countries has many faces and many stories. Enterprise Lithuania can name quite a few. And that is for a reason:

many success stories have occurred with the participation and help of this public enterprise, responsible for the development of the production and services of Lithuanian origin.

Enterprise Lithuania

is a non-profit governmental organization under the Ministry of Economy of Lithuania. The mission of Enterprise Lithuania is to foster entrepreneurship and to facilitate export growth of Lithuanian companies. Enterprise Lithua nia is focusing its efforts and resources towards small and medium enterprises.

Social responsibility is another important factor why textile manufacturing owned by Nordic businessmen has been relocated into a more socially acceptable environment

2016 / LITHUANIAN BUSINESS REVIEW

EXPORT

The Lithuanian engineering sector is responsible for 23 percent of the yearly GDP of the country

ENGINEERING INDUSTRY:

WE ARE FAST TO GRASP FEW MIGHT KNOW THAT LITHUANIA HAS A HIGHLY DEVELOPED ENGINEERING INDUSTRY. THE COUNTRY HAS 2,000 ENGINEERING ENTERPRISES WITH 31,000 EMPLOYEES AND YEARLY SALES OF OVER 3 BILLION EUROS. THE LITHUANIAN ENGINEERING SECTOR IS RESPONSIBLE FOR 23 PERCENT OF THE YEARLY GDP OF THE COUNTRY. HOWEVER, THE PRODUCTION OF THIS INDUSTRY IS VIRTUALLY INVISIBLE TO LITHUANIAN PEOPLE BECAUSE OVER 70 PERCENT OF IT GOES ABROAD, MOSTLY TO NORTHERN EUROPE.

"Lithuanian engineering industry creates jobs in the country and serves as the propeller of entire economy”, says Tomas JASIKEVIČIUS, Chairman of Export and the Investment Committee of the Lithuanian Association of Engineering Industry

“Not

many people know that one might find the production of Lithuanian engineering enterprises in the sea port of Barcelona, the railway infrastructure in Paris, in Volvo trucks, IKEA stores, and many more places in the world. Even fewer would know that the major part of Lithuanian production goes for export via the North, i.e. via contracts with Scandinavian and Finnish companies”, says Tomas Jasikevičius, Chairman of Export and the Investment Committee of the Lithuanian Association of Engineering Industry (LINPRA), in his interview to the Lithuania Business Review. 16

LITHUANIAN BUSINESS REVIEW / 2016

What circumstances made Northern Europe the major export market of Lithuanian engineering industry? Before the geopolitical situation is Europe started aggravating, a considerable part of our production was sold in the Eastern market. However, recently we have started paying more attention to Western Europe with its two major centers of engineering industry – Germany and Northern Europe.

Germany, the flagship of engineering industry, has a vast and well-developed market, however it is taken care of mostly by the neighboring Poland and other Central European countries. Geographically and culturally, Northern Europe is closer to us. Historically, this has been the reason of cooperation between our engineering enterprises and contractors from this region. Our companies started exporting to Scandinavia around 1998–2000. That was also a period when joint foreign capital engineering companies started mushrooming in Lithuania; the first investors came from Sweden and Denmark. Lithuanians started their export to Sweden with the production, manufactured from Swedish designs, for a relatively low price that was 3.5 times lower, compared to today’s prices. Later, they moved to a higher level of assembling and shipping their production to customers. Arginta, for one, produces and assembles in Lithuania its production, designated for concern ABB. At present, we supply virtually all of major Swedish enterprises with our production. For example, Artilux NMF, a company in Šiauliai, designs and supplies lights, assembled in IKEA. Our companies have booths at Elmia Subcontractor, the biggest engineering expo in Scandinavia that is annually held in Jönköping, Sweden. What is the development of our relations with the busi nessmen of other Northern countries? Earlier, our industry “suffered” from Norwegians who, before 2015, would lure to Norway our manpower, i.e. highest skilled operators, welders, and metal workers. Now that prices on oil have dropped down and oil companies have reduced the number of contracts with engineering enterprises, Norwegians, in their attempt to reduce costs, do not need that much manpower anymore. We are happy that Norwegians have more frequently started seeking cooperation in Lithuania. Similarly, the actual cooperation with Finns started only several years ago, when labor prices in Estonia went up and their resources were exhausted. At present, Finns take much interest in Lithuanian enterprises. So far, they have acquired a few companies, including Robiga, a metal treatment company in Vilnius. At present, Lithuanian engineering enterprises are starting a new peculiar tendency to migrate among different contractors from Northern countries, so to say, to change hands.

Lithuanians started their export to Sweden with the production, manufactured from Swedish designs, for a relatively

low price that was 3.5 times lower, compared to today’s prices.

In what way does engineering industry stand out among the neighboring Baltic and Eastern European countries? Lithuanian engineering industry creates jobs in the country and serves as the propeller of entire economy. If we compared Lithuania with Latvia and Estonia, we should underline that our capacities are considerably higher. Actually, Lithuanian engineering industry equals to Estonian and Latvian engineering industries combined. That puts us in the leading position of the entire Baltic region. Comparing to Estonia, we have both larger capacities and lower prices. Latvia is still very much influenced by Russian capital, which is a turn off for Northern investors. Meanwhile, Poland has much more resources, comparing to us. Therefore Poles have much better conditions for mass production. I do not think that Lithuania would ever be chosen for mass conveyor production; it will probably go to Poland, leaving Lithuania as a niche for the manufacture of high technology production in small batches or as its prototype. This is our niche and always will be.

During the period of 2007–2013 the EU funds were purposefully invested in modernization of the Lithuanian engineering industry

In addition, I would say that the responsibility level of our businessmen is much higher, because we are not a big country and our enterprises are relatively small, therefore we value customers as our risks to lose a major contract are higher. Meanwhile, Poland is big, Polish companies have more freedom to choose, more alternatives to replace a lost contract with another one. We also stand out in terms of advanced technologies. LINPRA pays much attention to the development of science and business enterprises and scientific innovations, therefore the Association receives Scandinavian business delegations on a monthly basis. They are shown around Lithuania and visit local enterprises which they much admire for their technical level that was reached in the period of 2007–2013 with the help of EU funds, which were purposefully invested

2016 / LITHUANIAN BUSINESS REVIEW

EXPORT

The number of technical university graduates in Lithuania equals to that of Sweden

in modernization. A unique situation was created when the technical level of Lithuanian enterprises reached and, in some cases, even surpassed the level of Scandinavian enterprises. On the other hand, the possibilities of Lithuanian engineering industry have not yet been exhausted and it still has potential to grow. Many of the enterprises, privatized in the end of last century, have not yet undergone modernization processes and can still function in the market only due to cheap labor and low investment costs. The efficiency of those enterprises is 3 to 4 times lower than the European average. They have a very clear future: either they go bankrupt or do modernization. Lithuania also stands out by the number of young engineers. I would like only to say that the number of university graduates in Lithuania equals to that of Sweden which is three times bigger. Naturally, not all graduates get to work in the field of their specialty, however, the number of potential specialists in Lithuania is much higher. And yet, the demand of specialists in the enterprises of engineering industry is not fully satisfied as this sphere in Lithuania has been steadily growing for the whole past decade. This mostly is the reason why Northern businessmen choose Lithuania for not only production but also for construction processes, i.e. they move engineering offices to Lithuania as well. That means, Lithuania has an adequate quantitative and qualitative baggage for this intellectual function to perform. What do you think of the image of “relaxed Scandinavians” that prevails in Lithuania? Do cultural differences com plicate cooperation? Actually, Scandinavians think very fast. However, in decision-making they tend to discuss it out and achieve consensus. I would say that 90 percent of decisions are made by joint agreements. Besides, they take their time while analyzing potential partners and their activities: they check 18

LITHUANIAN BUSINESS REVIEW / 2016

their backgrounds, the style of cooperation, and future prospects. In that respect, we act as a counterbalance to their lengthy process of analysis and coordination, especially with the interference of trade unions that are very active in Northern countries, because our enterprises are smaller and more mobile and their owners adopt decisions much faster. We are fast to grasp, understand, master new tasks, new solutions, and we are capable of adapting to ever changing requirements. Employees in Lithuania have not yet reached the Scandinavian level of comfort, the personnel of engineering companies are still very young, our salaries are more correlated to the achieved results – people have incentives to work harder and they do so. Northerners would very rarely give up leisure for work, while in Lithuania working overtime is a common practice. We work long hours or, if designers do not meet deadlines, we can work on weekends. The most important thing for us is to fulfil obligations on time. Can we say that both parties, in a relatively short time, have started to understand each other and, maybe, have become friends? Yes, for almost two decades tens of Lithuanian enterprises have been exporting to Northern countries. Those companies are truly well-known there, they are trusted, and their managers are personally known as well. Some of the enterprises do not need references – you just say who you work with and give the telephone number of the partner. Especially close relations have been established between Swedish engineering associations and their Lithuanian counterpart. LINPRA with its 84 members is an active partner of Technikföretagen, the Association of Swedish Engineering Industries. We do not just actively cooperate with the association, we are also moving towards cooperation with smaller specialized clusters. Thank you for the interview.

BUSSINESS

CREATED BY NATURE, PERFECTED BY SCIENCE BIOK laboratorija is a Lithuanian manufacturer with a yearly turnover of six million euros. The word “laboratory” in the name of the enterprise in not accidental. It defines the identity of the enterprise, its scientific basis, and its history. BIOK laboratorija was founded in 1988 by experienced scientists who had believed that scientific progress could be used for the development of natural cosmetics. Its first product – facial cream Margarita – introduced at the end of the nineties, became the most popular product of facial care cosmetics in Lithuania. The enterprise, with the experience of over twenty-five years in the cosmetics business, has employed in its laboratory a wide range of specialists in biology and chemistry, as well as beauticians for the development of new products. Therefore, BIOK laboratorija may offer its customers exceptionally natural production of high quality for the money it costs. The newest products of the enterprise, such as the dental care line Ecodenta and skin care line Dermatology, have been acknowledged by numerous awards for innovation. The laboratory is also used for experimental purposes, which is integral with the philosophy of an enterprise, engaged

LITHUANIAN BUSINESS REVIEW / 2016

in experimenting. Four years ago, BIOK laboratorija launched a unique product – black colored, carbon enriched bleaching toothpaste. Unconventional toothpaste does not go unnoticed at international fairs. “Why black?” or “How is it different?” Those are the questions that instantly strike a conversation that serves the promotion of our other products, – says Vaidotas Krencius, the CEO of the enterprise. At present, the Lithuanian population still favors white toothpaste more; however, in trinti neighboring Latvia and Estonia the black toothpaste has become a true star on the shelves of hygiene and cosmetics in local pharmacies. BIOK laboratorija is the first cosmetics manufacturer in Lithuania that has adopted the principles of good manufacturing practice (GMP). As proof, in 2012, the enterprise was recognized with the EN ISO 22716:2007 certificate. The production is based on the LEAN system that encourages constant development and quality improvement. At present, BIOK laboratorija manages the following brand names: Margarita, Rasa, Aras, Ecodenta, and BIOK Dermatology with over 200 products that include facial and body creams, shampoos, bath gels, deodorants, and mouth care products. The enterprise exports its production to Latvia, Estonia, Germany, Ukraine, Great Britain, and other countries. Lithuanian toothpaste Ecodenta can be found at German Douglas e-shop and British chain of organic stores Hollad & Barrett. BIOK laboratorija takes an active part in international expos in the search of new commercial partners, while promoting the wide assortment of its high quality products that can be fast delivered to its customers in small batches.

BUSSINESS

INDIVIDUAL DESIGN SOLUTIONS FOR HOME Wisewood is an innovative company, established in 2010, which in 2015 founded Wisewood AS, a subsidiary branch in Norway. We produce household items, perform construction works from scratch, including heating, wiring, ventilation, and plumbing. We also deliver doors, window frames, furniture, as well as custom-made home furnishing items. We work in cooperation with specialists from different spheres from interior designers to technical engineers, therefore we can offer a wide variety of services. Our goal is to create a comfortable and warm home, catering to the taste and needs of our customers. No matter, modern or classical, elegant and dainty or sturdy and solid, the home interior of our creation will always meet the expectations of our customers. Our forte is custom-made projects and the ability to perform with precision and diligence. Every single projects is unique and deserves special treatment.

EMIRA

More than the Wardrobe of your Lifestyle JSC EMIRA IS ONE OF THE FIRST COPMANIES TO START DESIGNING AND PRODUCING SLIDING DOORS AND SLIDING PARTITIONS SYSTEMS IN LITHUANIA AND LATVIA. THE COMPANY IS WELL KNOWN NOT ONLY AS A MANUFACTURER OF STATIONARY AND SLIDING PARTITIONS, BUT ALSO AS A MANUFACTURER OF CUPBOARDS, WARDROBES, AND HALLWAY FURNITURE AS WELL AS OTHER STANDARD AND CUSTOM FURNITURE.

ompany JSC EMIRA has been expanding its market for over 20 years, and has accumulated a lot of experience in production and customer service. Vladislavas Tiaškevičius, the company’s owner, has paid considerable attention to the professional development and skill improvement of his employees. The skilled designers of the company and their advice help to find technical and design solutions. Our production is used by the President of the Republic of Lithuania, foreign embassies in Vilnius, and other private persons and legal entities. Our customers are our incentive to continuously improve technologies and search for new design solutions, and to make the production of EMIRA not only comfortable but innovative as well. In close cooperation with architects, constructors, and other partners, we try to implement all of our ideas into actual products that could be found in our showrooms.

JSC EMIRA 22

Šiltnamių str. 28, Vilnius, LT-04130, Lithuania

LITHUANIAN BUSINESS REVIEW / 2016

Our manufacturing facilities occupy a territory of more than 2,000 sq. m. with the most advanced German machinery and certified production materials: glass, laminated sawdust panels, leather, acoustic material, high quality KOMANDOR profiles, etc.

+370 614 32286

emira@emira.lt

www.emira.lt 2016 / LITHUANIAN BUSINESS REVIEW

BUSSINESS

THE LINE OF TURNING STRAW INTO GRANULES SINCE OLD TIMES, CENTRAL LITHUANIA HAS ALWAYS BEEN CONSIDERED A LAND OF FERTILE SOIL AND HARD-WORKING FARMERS. THE HEART OF THE REGION, KĖDAINIAI DISTRICT, STANDS OUT WITH ITS HIGHLY PROSPEROUS FARMING AND WELL-DEVELOPED AGRICULTURE AND AGRO-INDUSTRY. EVERYTHING THAT THIS FERTILE SOIL YIELDS, IS CAREFULLY HARVESTED AND PROCESSED UNTIL, AS WE PUT IT, THE LAST STRAW. SO LET US TALK ABOUT STRAW HARVESTED FROM THE GRAIN, GROWN ON KĖDAINIAI SOIL.

“We are the only straw processing factory that has

SIMPEKSA: MAKING PEOPLE HAPPY

established continuous cooperation with local equestrian centers”,

MINDAUGAS KASPARAVIČIUS, THE OWNER OF SIMPEKSA AND A THATCHER, TELLS A STORY OF REED ROOFS AND THE UNIQUE CRAFT THAT REQUIRES EXCEPTIONAL SKILLS AND EXPERIENCE.

R I E T D E K K E R S

says Mr. Tadas BOBINAS,

For

centuries, straw was used as litter for domestic animals. During the recent decades, husbandry has been more frequently switching to granules that are dust free and that absorb moisture four times their own weight. Granules are perfect for the elimination of ammonia odor. A very important factor is the compactness of granules, which is essential for storing and transporting. In 2013, having assessed the obvious advantages of granules, a few smart and entrepreneurial residents of Kėdainiai established Granulių Linija, an enterprise that started buying straw from farmers and processing it into granules. “Granules can be used as litter or biofuel, the difference being in the type of straw: for litter we use wheat, triticale or raps, while for biofuel we take barley”, says Tadas Bobinas, the director of the enterprise. It did not take long for Granulių Linija to firmly enter the market and become one of the ten best manufacturers of granules. With each year, it becomes better established

+370 670 54940

www.granuliulinija.lt

info@granuliulinija.lt

the director of Granulių Linija

in the market. During the three active years, the enterprise has doubled its volume: the amount of straw, purchased in Kėdainiai district, has grown from two to five thousand tons per season, the volume of manufactured products has increased from 50 to 100 tons per week, while the turnover has doubled from 20,000 to 40,000 euros per month. “We are the only straw processing factory that has established continuous cooperation with local equestrian centers. We receive contracts form Lithuanian enterprises that use granules as environmentally friendly biofuel for industrial granule boilers. The enterprise is also doing well in the sphere of export. It goes to Germany, Holland, Belgium, Italy, England, Poland”, says Mr. Bobinas. The entire Granulių Linija production is laboratory tested and certified.

Why reeds as roof covering? Where did you get this business idea and how? For the first time, I touched a reed roof in 2004 in Lithuania. It was unplanned and uncalled for, but apparently that was my destiny. After a half year’s training in Lithuania, I left for Holland to thatch reed roofs. There I understood that during those six months of training I only scratched the surface of the craft. In Holland I had exceptional luck to work with true masters of reed roofing who had worked in the business for over 25 years. They had learned the trade form their parents, who had, in turn, mastered it form their parents. Thus I learned the secrets of a few generations that usually are not so willingly revealed to strangers. In Holland, I worked with reed roofing for three years and understood that I liked what I was doing, actually I fell in love with it. Also I realized that I had mastered the craft, while my thatched roofs where admired even by my Dutch teachers. I thought, maybe I could find people in Lithuania who would want nice quality reed roofs. Thus, in April 2007, I started my business, Simpeksa. How has the business grown in the nine active years? Skillful specialists of reed roofing are not easily found in Lithuania, therefore we train new craftsmen and teach them all the secrets of the trade; and that is a lengthy process. Naturally, not all can master this craft that requires meticulousness and devotion. First of all, you should master the technique of thatching. Without that skill, you will never be able to achieve quality, nice shape, or longevity.

The basis of our growth is our quality. We have a team of experienced, skilled thatchers that have mastered the subtleties of the craft. Their performance will leave anybody fascinated with quality and beauty. We are proud to be the leaders in our field in Lithuania. Where do you still find people, who prefer this seemingly unpractical covering for their roofs? A reed roof gives a building a natural touch, while adding extra beauty to its appearance. Reed roofs blend into surroundings and give a rustic look to a modern urban environment. Reeds alter the exterior of a house in a way that other roof coverings could hardly succeed, or not at all. A reed roof evokes nostalgia; it spells uniqueness and environmental protection. A reed roof is always exceptional: you will almost never find two identical roofs. It makes your home cozy and boosts the value of your property. How do you search for projects abroad and how do you perform? Do you have partners in foreign countries? It was not difficult to find foreign partners, because even prior to establishing our enterprise we had customers, who knew our products and trusted us. As they say, the best ad is a happy customer. And we do make our customers happy. We have permanent clients in Holland and Germany that we have been cooperating with for many years, and with some of them even since the beginning of our enterprise. In the future, we have plans to expand our production geographically and include the promising Nordic markets.

Dariaus ir Girėno Street 19–1, Gargždai, Klaipėda district, LT-96172 Lithuania 24

SimpeksA

LITHUANIAN BUSINESS REVIEW / 2016

+370600 75557

mindaugas@simpeksa.lt

2016 / LITHUANIAN BUSINESS REVIEW

BUSSINESS

METAL GULIVERS FROM KAUNAS

VOLCANIC VISIONS OF BLACKSMITH LINAS “W

hen you have acquired skills and set your imagination free, you can make anything out of metal: you can breathe in the life of nature elements into the material, make it wave like the ocean, or dance like grass, and shift like sand. When you have skills, you never suffer, just feel the joy of creation and take pride in the craft of Vulcan”, says Linas Leščiauskas, one of the most prominent blacksmiths in Lithuania. Born in 1973, Linas Leščiauskas spent his childhood at his grandfather’s smithy in a small town of Luokė. There he played with iron toys and tried his hand in forging. Therefore, it was no accident that after graduating from the high school, he chose to study metal processing. In 1997 while being a student, he opened a smithy in the village of Klemiškė near Klaipėda, where he currently works.

Klausmylių 6–1, Klemiškės 1, Klaipėda district, LT-91291 +370 682 11115 linokalve@gmail.com linoexclusive@gmail.com www.linoexclusive.com www.linokalve.lt 26

LITHUANIAN BUSINESS REVIEW / 2016

From 1999, Linas has been participating in various blacksmith conventions abroad to get more experience and knowledge. In 2005, his works were published in “Metal Design International”. In the same year, Linas initiated the blacksmith union and became its leader. His homestead became home to Lithuanian blacksmiths’ creative art camps. Later they turned into International Blacksmith plain-air “Four Winds”, annually held in Klaipėda. Linas’s smithy produces a wide range of exterior and interior units, including metal staircases and railings, staircase structures, metal fences and gates, gazebos and winter gardens, covered patios, fireplaces, balconies, awnings, candelabras, furniture, and metal décor elements. His works are admired for the feeling of plasticity, expressiveness, and high quality. Sculptures made by Linas show exceptional creativity combined with their functional and ideological approach. Many of his metal sculptures have been serving as decorative details for architectural solutions and landscapes, adding finishing touches to the opening spaces.

INDUSTRIAL METAL STRUCTURES (PMK), ACTIVE IN LITHUANIA'S SECOND LARGEST CITY KAUNAS SINCE 2010, SPECIALIZES IN MANUFACTURING AND PROCESSING INDUSTRIAL METAL STRUCTURES. THOSE METAL STRUCTURES ARE USED FOR THE CONSTRUCTION OF INDUSTRIAL, PUBLIC AND OTHER BUILDINGS, IN RAILWAY INFRASTRUCTURES, HYDRO-ENGINEERING STRUCTURES, SHIP REPAIR WORKS, THE OIL PROCESSING SECTOR, AND MANY OTHER FIELDS.

uring a relatively short time, PMK has considerably increased its turnover, the number of employees, and its production capacity. Above all, the enterprise has built itself a name of a reliable partner that always fulfills obligations and guarantees uncompromising quality. Naturally, the portfolio of the enterprise includes multiple contracts from Lithuania, Germany, Austria, and other foreign countries. For many years in cooperation with Energosa, PMK has been producing metal construction for the Scandinavian market. Therefore, a number of well-known constructions in Norway, Sweden, and other Scandinavian countries in part possess Lithuanian spirit. The enterprise has manufactured metal structures for such units as Stockholm Tele2 Arena in Sweden, Kaihus 1 (a shopping mall in Oslo, Aker Brygge area), Høvik (a railway station in Norway), Norwegian Radium Hospital (Oslo, Norway), ISI waste treatment center in Skui (Norway), Sapa Heat Transfer (Sweden), a Statoil administration building in Oslo (Norway), Scania production lines (Sweden), suspension bridge Koppen (Norway), and many more. The advantage of PMK against its competitors shows itself when a contractor is looking for a manufacturer in Lithuania, capable of assembling and processing large metal constructions. The PMK production and processing workshop is situated in the premises of 6,000 square meters that can accommodate constructions with dimensions of 110 x 16 x 8 meters and weight of up to 25 tons. PMK has also supplied its production to the most popular attractions in Lithuania. The columns, with the combined weight of 106 tons, of the Anykščiai tree-top path have been built in the PMK workshop. The Labanoras Forrest observation tower, of 36 meters in height and 60 tons in wight, was also built there. “Our production capacity allows us to build custom-made items that other producers refuse to”, says director Andrius Gilys. “Our forte is bridges and their structures. We have accumulated experience in this filed while working with Scandinavian countries”.

PMK has supplied structures to one of the most popular attractions in Lithuania - the Labanoras Forrest Observation Tower (36 meters in height and 60 tons in weight)

The PMK manufactured metal structures connecting buildings of the Norwegian Radium Hospital, Oslo, Norway

Industrial metal structures

2016 / LITHUANIAN BUSINESS REVIEW

NOJUS JSC WAS ESTABLISHED IN 1991. THE COMPANY SUCCESSFULLY EXPANDS ITS ACTIVITY IN LITHUANIA FOR MORE THAN 20 YEARS, REPRESENTS THE BIGGEST PRODUCERS OF SEEDS AND FLOWER BULBS IN EAST EUROPE. OUR COMPANY IS ONE OF THE TOP LEADERS IN THE MARKET OF SEEDS AND FLOWER BULBS INTENDED FOR AMATEURS IN BALTIC STATES.

Main activity areas: wholesale of vegetable, flower, herb, grass seeds and fodder beet seeds, spring and autumn flower bulbs, onion sets. More than 20 years of experience, constant modernization and increase of production capacity helped us to become a leader in the market of seeds and flower bulbs. Our goal is to produce excellent quality products and meet customer’s requirements for a competitive price as well as to ensure the production shipping on time. We collaborate with the companies from Holland, Germany, Poland, USA and other countries, and import their products. Our assortment consists not only of reliable, tried and trusted species; we also replenish our assortment with new varieties of seeds and flower bulbs each season. We strive to offer new, fashionable plants each season. We can pack seeds and flower bulbs on your special request, select the assortment appropriate to your market, and make special packages for you. We pack all the products into branded packages. We can deliver the production with trading stands. We collaborate with the biggest trading networks and specialized garden equipment supermarkets in Lithuania, Latvia and Estonia. The company collaborates with large foreign garden equipment and plant growing companies. We pay particular attention to the quality of the products being sold. The quality of each batch is certified by the certificates issued by State Seed and Grain Service that meet the EU requirements. We buy our products only from reliable partners who present the certificates to their products. The quality of all bulb flowers is tested by FBQMFH (Flower Bulbs Quality Mark Foundation Holland). nojus@nojus.lt www.nojus.lt +370 620 40 108

HIGH QUALITY PLASTIC PARTS STIGMA JSC is open-minded, innovated and modern and today is one of the leading companies for plastic and rubber injection molding in Lithuania and Baltic states. • • • • • • • • •

Over 25 years of experience Over 25 IM machines Clamping force 60 – 1630 T 2K molding; 3K molding; nitrogen gas assisted molding Various complexity assemblies Experienced professional staff Customers – a well-known companies and brands Certificates: EN ISO 9001:2008; EN ISO 14001:2004; ISO TS 16949:2009 For more information please visit www.stigma.lt

Contact info: J.Janonio str. 30b, Panevėžys, LT-3510, Lithuania. Phone: +370 45 508555. Fax: +370 45 508554 E-mail: info@stigma.lt, www.stigma.lt

INVESTMENTS

FAST BECOMING REALITY MANTAS KATINAS, THE HEAD OF THE AGENCY INVEST LITHUANIA, TELLS A STORY OF HOW AN AMBITIOUS VISION TO ESTABLISH A NORTH EUROPEAN INVESTMENT CENTRE IS FAST BECOMING A REALITY. WHENEVER I AM PREPARING TO INTRODUCE LITHUANIA TO POTENTIAL INVESTORS, I ALWAYS LIKE TO REMIND MYSELF OF OUR STORY. IT IS A STORY WHICH WE ARE CONTINUOUSLY DEVELOPING AND REWRITING, THE TALE OF A COUNTRY WHICH SET ITSELF THE GOAL OF BECOMING THE REGION’S TOP INVESTMENT ATTRACTION CENTRE. AND IT IS A STORY WHICH IS COMING TRUE EVERY DAY, AS WE MOVE TOWARDS THAT TARGET STEP BY STEP.

we look back to the year 2010, the results on the investment ‘scoreboard’ were humble. Yet it was in this year that Lithuania’s leaders announced their decision to make Lithuania the business centre for services in the Nordic and Baltic region.Many wrote this declaration off as impossible straightaway, confining it to the landfill of empty political slogans. Foreign investors listened with scepticism. Yet in the face of these doubts, political leaders stated their determination to make this goal a reality. It took us 5 years to start believing that this vision might be coming true, and to persuade foreign businesses that this was the case. Yet we can safely say that 2015 was the year when this dream started to become a reality. Last year, Lithuania attracted a record number of foreign investment projects, creating over 2,600 jobs. Those results represented a 50 per cent rise on 2014, which had previously been the best in the history of Invest Lithuania. Even more notable was the fivefold increase in CAPEX, up from €30 million in 2014 to €144 million last year. Foreign investment in Lithuania has achieved lift off. We have had five years in a row of solid growth. The best known regional and global companies have set up offices in Lithuania; the likes of Nasdaq, Uber, Oppenhejm & Jansson, Game Insight, 30

LITHUANIAN BUSINESS REVIEW / 2016

AIG, Revel Systems, Danske Bank, Intermedix and many others. Lithuania’s impressive growth and development is now recognised on the international stage; the country is currently ranked 20th in the World Bank’s Doing Business Index, and Forbes places it 17th globally as a business location. We have registered the strongest GDP growth in the EU over the last 14 years. And regular headlines in global publications like Bloomberg and Deutsche Welle sing Lithuania’s praises; a recent article in Forbes declared it “more attractive than the US and Germany” for business (Forbes, November 2015). NORDIC CO-AUTHORS Today we can state with confidence that, within its dynamic investment environment, Lithuania boasts of two especially well-developed and internationally competitive clusters: IT and next generation digital business and service centres. Both of these clusters continue to attract ambitious new projects and globally-recognised brands, further enhancing the major progress made in these sectors over the last 5 years. Going forward, those international level clusters will play a key role in attracting new investors, especially as Lithuania’s competitiveness in terms of salary levels becomes less pronounced. Nordic countries remain important co-authors of the Lithuanian success story. From 2010 to 2015, investors from Nordic countries implemented 82 projects in Lithuania, creating high-level positions for around 6300 people. This figure accounts for a third of all

Nordic countries remain important co-authors of the Lithuanian success story. From 2010 to 2015, investors from Nordic countries implemented 82 projects in Lithuania, creating high-level positions for around 6300 people

foreign investment in this period, and includes big-name companies like Lindorff, PKC Group and Visma, plus many dynamic and innovative small investors. DIFFERENT FUTURES FOR LITHUANIA Looking forward, it’s possible to envisage several different development scenarios for the country. A moderate scenario would be Lithuania establishing itself on the second tier of investment destinations globally, with investment returning to average levels. In this situation, we would pin all our hopes on local enterprises growing and becoming more efficient. The trouble with this approach is that it requires a lot of time in order to achieve a good level of development. Neither Sweden nor Denmark managed to become rich countries in 30 years. On the other hand, the more ambitious path to economic growth means focusing on both “engines” of development: improving efficiency internally whilst also ensuring a continuous flow of foreign investments. This model enabled Ireland to catch up with the most advanced economies in 20 to 30 years. I believe Lithuania is ready for this approach, indeed it is already on its way.

A FOCUS ON EDUCATION AND TALENTS One of the main factors limiting Lithuania in following this latter direction is the number of talented specialists available who are attractive to international companies. Talent is the essential value we have to offer, without which all the other benefits of doing business in Lithuania are only side dishes to the main course. For this reason, both the individual strategies of universities and education policy at a national level must be directed towards training engineering, IT and biotechnology specialists. I would be bold enough to claim that this fact is already understood in Lithuania. Recently, the Ministry of Education and Science suggested considerably increasing state financing for IT education. If this suggestion is followed through, the country’s labour market would become even more attractive to those digital businesses which already show so much interest in Lithuania. Another way to ensure that Lithuania has the number of specialists it needs is to attract foreign talents to Lithuania, and to ‘re-attract’ Lithuanians currently living abroad. From international corporations to prestigious educational institutions, Lithuanian experts are making their presence felt around the world. Many are skilled not only in specific research fields or technologies, but also have experience in international business. Neither Google, nor Facebook would have been able to set up their offices in Europe without Lithuanian, Polish or Czech talents. One of the success stories that highlights this phenomenon most clearly is the case of Lithuanian high-tech firm Brolis Semiconductors. Creating and developing exceptional products for the global market, the company is run by two brothers who graduated from prestigious universities in Sweden and Germany.In its labs in Lithuania, the company has developed a state of the art laser which won them the prize of Innovation of the Year at this year’s CS Industry Awards. In addition to attracting individual talents, Lithuania also is witnessing a continuous influx of successful companies and start-ups from abroad. The GameDev sector is an excellent example of this trend, with globally-oriented companies like JetCat Games, Charlie Oscar and Flazm all successfully

In addition to attracting individual talents, Lithuania also is witnessing a continuous influx of successful companies and start-ups from abroad. The Norwegian Visma came to Lithuania in 2011 by establishing the company’s programming services division Visma Lietuva which now employs over 240 specialists

2016 / LITHUANIAN BUSINESS REVIEW

INVESTMENTS

Nordic FDI in Lithuania (2010–2015) FDI projects SWEDEN

NORWAY

2010

2011

DENMARK

FINLAND

TOTAL (SE, NO, DK, FI)

TOTAL IN LITHUANIA

NORDIC COUNTRIES' SHARE OF TOTAL

28 %

35 %

2012

52 %

2013

25 %

2014

37 %

31 %

241

34 %

FINLAND

TOTAL (SE, NO, DK, FI)

TOTAL IN LITHUANIA

NORDIC COUNTRIES' SHARE OF TOTAL

2015 Grand Total

AN OPINION POLL OF SWEDISH COMPANIES IN LITHUANIA, ESTONIA AND LATVIA SHOWS THAT SWEDES PLAN TO INCREASE THEIR INVESTMENTS OVER THE NEXT THREE YEARS. IN THE OPINION OF THE SWEDES, THE HIGHEST EXPECTATIONS FOR 2018 ARE RELATED TO LITHUANIA.

Jobs created by FDI projects SWEDEN

SWEDES SEE GOOD PROSPECTS IN LITHUANIA

NORWAY

DENMARK

2010

157

123

361

2 118

17 %

2011

265

353

156

798

2 214

36 %

The

survey was initiated and carried out last year in Business Sweden, the Swedish Embassies in Vilnius, Riga and Tallinn, the law firm SORAINEN, Handelsbanken and the Investment and Development Agencyof Latvia (LIAA). The respondents assessed tax systems, legislation, the political environment, the impact of corruption on business, quality of life, profitability of the market, infrastructure, reliability of mass media and other factors in the three Baltic countries. “The Baltic countries are seen as a favorable region for business expansion, regardless of the geopolitical tension in

2012

161

300

570

361

1 392

2 206

63 %

2013

110

344

490

2 097

23 %

2014

226

442

560

489

1 717

2 959

58 %

2015

534

214

809

1 557

3 362

46 %

1 453

1 734

2 120

1 008

6 315

14 956

42 %

DENMARK

FINLAND

NORWAY

SWEDEN

GRAND TOTAL

You can find employees

Manufacturing

the easiest in Lithuania

Shared Services Centre

out of all Baltic countries.

The ratio of wages to

productivity is the best here,

Grand Total

FDI projects by sector and country in 2010–2015 ROW LABELS

Business Services IT Development

Logistics, Distribution & Transportation

Energy Generation

says Lukas DANIELEVIČIUS,

Head of the Swedish Trade

and Invest Council in Lithuania

Sales, Marketing & Support Other

Grand Total

Source: Invest Lithuania

launching their first games developed in Lithuania since moving here from various locations in the CEE region. The latest arrivals in this sector include Promwad, a regional pioneer in the Internet of Things, and Game Show, an e-sports operator with a global network of fans. So much has already been achieved, but it is also clear that this is just a start for investment development in Lithuania. 32

LITHUANIAN BUSINESS REVIEW / 2016

As a small, agile and dynamic economy, we have a unique opportunity to add even more momentum to these trends, outpacing our competitors in development. That’s because there is no doubt that in the future, the most successful economies will be not the biggest ones, but the ones that can change and adapt the fastest.

Europe. A qualified workforce, competitive operating costs, favorable tax systems and geographical proximity to Sweden are only a few of the most appreciated aspects in the Baltic states,” says Lukas Danielevičius, head of the Swedish Trade and Invest Council in Lithuania–Business Sweden. According to Mr Danielevičius the Baltic countries are attractive because of the balance between good wages and productivity as well as positive expectations for economic growth. In addition, Lithuania’s attractiveness to Swedish business people is increased by the considerably improved air links. The survey also shows that the trend of Swedish investments is gratifying. In 2012, 45 % of respondents claimed to have new investment plans and in 2015 the number was 52 %. Intentions to invest in the Baltic region in 2018 were positively regarded by 63 % of respondents. The majority of respondents claimed that they were developing a profitable business in Lithuania, Estonia and Latvia. The fact that they generated good profits or moderate profits in the Baltic countries was supported by 78 % of respondents this year. Three years ago this number was 71 %. A total of 92 % of respondents thought that they would generate profits in the region in 2018. MOST OPTIMISTIC FORECASTS FOR LITHUANIA Lithuania, Estonia and Latvia were evaluated similarly in many aspects. Managers of Swedish companies who participated in the survey three years ago and this year regarded quality of life and attractiveness to develop business in the Baltic countries equally well. Mr Danielevičius states that the highest expectations for 2018 are linked to Lithuania. Altogether 86 % of the heads of Swedish companies think that the best place for business in the Baltic region in 2018 will be Lithuania; 79 % of respondents think Estonia will be the best place to develop business in three years with 77 % saying this of Latvia. THE WAGES TO PRODUCTIVITY RATIO STILL LOW On the other hand, managers of Swedish companies hold the view that it is not easy to find employees in the Baltic countries although possible. “You can find employees the easiest in Lithuania out of all Baltic countries. The ratio of wages to productivity is the best here,” Mr. Danielevičius said. “Of the respondents, 56 % said that compared with high productivity, wages in Lithuania are still low; 41 % of respondents said that this ratio is optimal.” In 2015, respondents also mentioned several other factors which make Lithuania, Latvia and Estonia attractive for business – the perfect image of Swedish companies, simplicity in establishing a company, profitability of the market, and excellent infrastructure of mobile connections and telecommunications.

2016 / LITHUANIAN BUSINESS REVIEW

BUSSINESS

AN OVERVIEW OF BILATERAL ECONOMIC COOPERATION

PROVALDA

Entrust complex management of construction projects to us and you will not only save your time, but your money as well ”OUR JOB IS TO VIEW THE CONSTRUCTION PROCESS THROUGH THE LENS OF OUR CUSTOMERS”, SAYS KĘSTUTIS JOZONIS, THE CEO OF PROVALDA, AN ENTERPRISE OF CONSTRUCTION PROJECT MANAGEMENT AND TECHNICAL SUPERVISION. THE ENTERPRISE HAS BEEN FOLLOWING THIS MOTTO FOR OVER A DECADE, THUS ENHANCING ITS PORTFOLIO OF CONTRACTS.

The

activities of Provalda include the representation of customer interests in construction projects from the acquisition of land to the delivery of the keys. Under the authorization of its customers, the company performs the design works and technical supervision of construction projects, as well as guarantees unobstructed management of the design and construction works. Founded in 2004, the enterprise was orientated towards the volume of construction works and needs of customers in Lithuania at that time. “Our decision to provide specialized services of project management and technical supervision of a construction unit proved to be right at the time. The market was growing drastically, and the surplus value that we were

For more information, contact us: 34

info@provalda.lt

LITHUANIAN BUSINESS REVIEW / 2016

offering our customers hit the right key. They did not have to search or maintain their own resources and competencies in such a knowledge and experience demanding sphere as construction”, says Mr. Jozonis. Customers are freed from the necessity to understand the stages of construction works, to maintain supervision and control over the works; therefore, they save a lot of their time and remain focused on their core business. Provalda performs a constant monitoring of the construction market prices; therefore, they can offer their customers the best prices. Provalda is not related to any of the executors or contractors of the project. And finally, the right choice of design solutions and construction ways allows to avoid problems while submitting the construction works to the governmental institutions for approval according to the Lithuanian legal requirements. Today, twelve years after the beginning of the company's activities, the entire Lithuanian map could be dotted with the successful design and construction projects under the supervision and management of Provalda – the construction of administrative and public buildings, dwelling houses, schools, and solar and wind power plants. One of the biggest projects, managed by Provalda, from choosing the land plot to the final stages of construction works, was a block of dwelling houses in Kaunas, the second largest city in Lithuania. The company’s highly skilled staff of certified professionals in their specialized fields includes: • Technical supervision project managers • Project managers of specialized construction works technical supervision • Project manager for heritage protection works • Project manager of a construction unit • Price estimation project manager • Project manager of architectural structures • Project supervision manager The entire Provalda personnel has university degrees and extensive experience; they constantly improve their skills at various trainings and seminars. Those competencies and inner resources guarantee the enterprise a strong position in the construction sector. “A few enterprises in Lithuania are capable of offering such a complex spectrum of construction management and supervision services, like Provalda”, says the CEO on the success story of the company. Provalda closely watches the prospects of foreign investors in Lithuania and their plans of developing empty land plots. The company is ready to share information and experience in choosing a land plot for construction and guarantees the completion and supervision of construction works in the highest quality.

www.provalda.lt

Draugystės g. 17, Kaunas

LT-NORDIC: IN COUPLES The Special LITHUANIAN BUSINESS REVIEW Project LET US PRESENT A SPECIAL LITHUANIAN BUSINESS REVIEW PROJECT, LT-NORDIC: IN COUPLES. THIS SIXTEEN-PAGE SECTION OF THE MAGAZINE INCLUDES FOUR OVERVIEWS ON THE RELATIONS OF LITHUANIA WITH THE GREAT FOUR OF THE NORTH: SWEDEN, NORWAY, DENMARK, AND FINLAND.

The

data, collected by Lithuanian and Nordic statistics institutions and the Eurostat, offer information on recent developments in bilateral trade, business investments, tourist flows, and emigration. Bilateral economic cooperation was commented by Lithuanian ambassadors, residing in Nordic capitals: Eitvydas BAJARŪNAS (Stockholm), Izolda BRIČKOVSKIENĖ (Oslo), Vytautas PINKUS (Copenhagen), and Arūnas JIEVALTAS (Helsinki). Nordic ambassadors to Lithuania were also kind to offer their respective commentaries: Cecilia RUTHSTRÖMRUIN (Sweden), Dag Malmer HALVORSEN (Norway), Dan E. FREDERIKSEN (Denmark), and Harri MÄKI-REINIKKA (Finland). We thank the Excellences for their involvement in this exciting project. Data was collected and processed specially for this magazine project by Vilnius University student Lukas Vabalas. 2016 / LITHUANIAN BUSINESS REVIEW

AN OVERVIEW OF BILATERAL ECONOMIC COOPERATION

Lithuania

Table 1. Export to Sweden (structure, %) 2010

20.1

30.4

Plastics

7.1

7.4

Chemicals

5.1

6.4

Electrical and electronic equipment

6.3

6.2

Metal works

4.0

5.7

Timber and woodworks

9.1

4.1

Clothing

3.8

3.4

Inudstrial equipment

2.8

3.4

Tobacco

5.9

2.9

Means of transportation

2.5

2.7

Other goods

33.3

27.3

TRADE (2010–2015)

100 %

2010

2015

Table 2. Import from Sweden (structure, %)

Seafood

12.72

15.56

Electrical and electronic equipment

8.49

14.23

Industrial equipment

12.89

9.75

Means of transportation

9.31

9.18

Paper

9.61

5.59

Plastics

5.85

5.02

Metal works

2.67

3.49

Dyes

2.21

2.33

Pharmaceuticals

1.41

2.04

Base metals

2.63

1.41

Other goods

32.20

31.41

100 %

Graph 1. Swedish investments in Lithuania 2010–2015 3,500.00

During the last six years in bilateral trade, LithuanianSwedish import and export have been steadily growing. From 2010 till 2015, Lithuanian export to Sweden grew by 60 percent, or otherwise from 565.8 million euros to 912.4 million euros, while export grew by 70 percent, or from 579.4 million euros to 986.9 million euros. Lithuanian export is dominated by furniture, plastic, electric appliances, and electronics (Table 1). During the six years furniture export has grown drastically, basically focusing on furniture supply to IKEA. Not only the absolute value grew from 114 million euros to 277 million euros, but also its part in the overall structure of export increased from 20 to 30 percent. Swedish import to Lithuania could be described by a larger diversification and continuity (Table 2). In 2015, it was mostly dominated by seafood (15 percent), electrical appliances and electronics (14 percent), industrial equipment (10 percent). Of those categories, only electrical appliances and electronics did considerably grow (from 8.5 to 14 percent).

FOREIGN INVESTMENTS (2010–2015)

40.00

2010

2011

2012

2013

2014

2015

893.77

1118.40

2401.04

2886.19

3202.71

3284.94

893.12

1521.09

2518.00

2829.43

3166.92

3186.18

965.69

2160.62

2462.40

2956.88

3216.24

3221.06

1020.73

2266.98

2581.03

2931.93

2837.47

3182.20

LITHUANIAN BUSINESS REVIEW / 2016

volume in 2011: In comparison to 2010, the number of trips of Lithuanian tourists to Sweden grew by six percent, while the number of Swedish tourists to Lithuania increased by ten percent. In 2011, Lithuanians spent overnight in Sweden five percent more often than in 2010, while Swedes stayed overnight in Lithuania by nine percent more, comparing to 2010. Later, tourist flows became optimal (Graph 3). Comparing the average of trips, Sweden shares second and third positions with Norway (an average of 45.3 thousand trips per year), however, by the number of overnight stays, Sweden is the “champion of the league”: in a year, a total of 220 thousand overnight stays are spent in Lithuania. For Lithuanians, Sweden is number two destination after Norway: Lithuanians travel approximately 44 thousand times to Sweden and spend there an average of 458 thousand nights yearly. Obviously, Lithuanians tend to stay longer in Sweden, than Swedes in Lithuania: while the numbers of trips remain close, the overnight stays of Lithuanians in Sweden two times exceed the overnight stays of Swedes in Lithuania. By the average number of trips during the period, Swedes share number 2–3 positions with Norwegians (in 2014, Swedish tourists spent in Lithuania an average of 22 million euros, or otherwise, an average Swede spent 462 euros in Lithuania.

0.00

2010

2011

2012

2013

2014

0.91

2.01

1.97

2.25

2015 0.07

1.00

1.94

1.98

2.62

1.69

27.11

2.64

2.66

2.29

2.14

2.77

29.44

2.11

1.87

1.62

2.34

1.79

29.97

Graph 3. Tourist flows 2010–2014 60

0 2010

2011

2012

2013

2014

35.3

46.21

54.93

52.22

40.54

16.87

27.01

23.35

20.51

23.21

33.7

55.7

45.6

44.5

46.9

37.3

50.5

44.1

41.4

46.3

Swedish overnight stays in Lithuania / 10 thousands Lithuanian overnight stays in Sweden / 10 thousands Swedish trips to Lithuania / thousand

Sweden is the leader among investors to Lithuania. In 2015, the total amount of accumulated Swedish direct foreign investments reached a record of 3.2 billion euros (Graph 1), which made almost a quarter of all Lithuanian accumulated direct foreign investments.During the last six years, Swedes mostly invested in manufacture with 13 projects, and shared service centers with six projects. Lithuanian investments in Sweden could be described by the notions of “babyhood” or “first steps”. For long years, the total amount of accumulated direct foreign investments lingered around 2 million euros, and only by the end of 2015 did Lithuanian businesses take a more active part in investing, which led to a total of 30 million euros by the end of the year (Graph 2).

0.00

Graph 2. Lithuanian investments in Sweden 2010–2015

2015

Furniture

Sweden

TOURISM (2010–2014) During the period of 2010–2014, Lithuanian-Swedish tourism graphs underwent both growth and some sort of stabilization. For example, bilateral tourism flows grew in

MIGRATION (2010–2015)

Lithuanian trips to Sweden / thousand

According to Statistics Sweden, almost six times more Lithuanians emigrate to Sweden that Swedes immigrate to Lithuania. During the period of 2010–2015, 7477 citizens of Lithuania emigrated to Sweden, while only 1293 Swedes immigrated to Lithuania (Graph 4). In recent years, the flow of Lithuanian emigrants to Sweden tend to decrease, although inconspicuously. That tendency is more obvious in women: the number of women who emigrate to Sweden dropped down from 598 in 2012 to 443 in 2015. On the contrary, the number of Swedes who immigrate to Lithuania grows, albeit slowly. Noteworthy to mention is the fact that both migration destinations are dominated by male migrants and the ratio is almost identical: they are responsible for 57 percent of all emigrants to Sweden and 58 percent of immigrants to Lithuania.  Sources: Statistics Lithuania, Invest Lithuania, Bank of Lithuania and Statistics Sweden Data processed and compiled for publication by Lukas Vabalas

Graph 4. Migration Lithuania – Sweden 2010–2015 90

2010

2011

2012

2013

2014

2015

598

616

594

476

466

443

763

715

737

616

699

754

119

106

118

130

145

156

169

Lithuanian female

Swedish female

Lithuanian male

Swedish male

2016 / LITHUANIAN BUSINESS REVIEW

WHAT DO AMBASSADORS SAY? Eitvydas BAJARŪNAS

he current condition of Lithuanian and Swedish economic relations and their development is exceptionally positive. Not only practical reasons have determined this tendency. Each Nordic and Baltic country takes an active part in shaping the regional policy and developing cooperation between Nordic and Baltic countries. Along with simple practicality, other factors also prevail, such as common security, political and emotional cooperation. We should remember that Nordic countries were the first to offer support– through municipalities, non-governmental organizations, and private contacts – to the Baltic States after they regained their independence. On the other hand, we can clearly see the attempt of the President of the Republic of Lithuania and its Government to strengthen Lithuania’s cooperation with Nordic countries. This is not a goal for the sake of a goal. It is based on a rather clear understanding: Nordic countries are closest to us not only in terms of geography, but also in terms of economy, culture, and history. The favorable context of the Nordic-Baltic cooperation guarantees the unceasing interest in investing in Lithuania. To us, it spells new jobs, the development of welfare, and the domination of a transparent and advanced model of economy, based on high standards. Not accidentally Sweden in Lithuania is considered to be a priority export market, the most welcome investor, and the most desirable country for economic activities. It is Sweden that Lithuanian institutions draw experience from, it is Swedish capital that has imported to Lithuania a new understanding of labour relations and ethics, the roles of man and woman in labour processes – all these issues are especially relevant in Sweden. We can still learn many things from Swedes. Having created the most competitive and innovative economies, Nordic countries are true havens of economic and fiscal stability in modern day Europe. Therefore, I would say that Lithuania naturally desires to be part of this region of stable growth and innovative thought. We can only be happy that statistically Sweden has been the largest investor in Lithuania so far. However, the

LITHUANIAN BUSINESS REVIEW / 2016

AN OVERVIEW OF BILATERAL ECONOMIC COOPERATION

volume of investments into production still has potential. Investment-wise, we should especially focus on small and medium enterprises. While Estonia, for one, has an average of 700 active Swedish enterprise, Lithuania can only boast of 170. Thus, although we can be truly proud of our achievements with Sweden, we still have to try harder to fight for investments. We have quite satisfactory developments in the sphere of export as well. In three years since 2012, Lithuanian export to Sweden was steadily growing by more than twenty percent, by ten percent in 2014 alone. An exception was the year 2015, when we had a decrease by 1.8 percent mostly due to the reduced export of tobacco and raw materials, especially timber. Furniture is responsible for almost 30 percent of the entire export volume. In the nearest future Lithuania is to become the fourth largest furniture supplier of IKEA. It is a phenomenal achievement to a country with the size of Lithuania. But then again, there is a potential for export growth. Let us take Estonia again: while Lithuania exports to Sweden merchandise for almost one billion euros, Estonia’s export reaches 2.2 billion euros. Estonia exports to Sweden four to five time more per capita than Lithuania. And we know the reasons: Estonian businessmen have established Sweden as a “domestic market” and consequently pays more attention to it. The potential of Lithuanian and Swedish economic relations has not yet been exhausted partially due to the inadequate familiarity of Swedish entrepreneurs with Lithuania as well as formerly poor means of communication. In 2012, direct flights to Lithuania were performed only by Ryanair three times a week. At present, air communication between Lithuania and Sweden has been much improved due to the joint efforts of the State Tourism Department, the Invest Lithuania agency, and the Embassy of Sweden in Lithuania. In 2015, flights to Lithuania were performed by SAS, Norwegian, and Wizzair companies, later joined by AirBaltic. Communication between the two countries would be much improved by opening a ferry line between Stockholm and Klaipėda. Recently, the State Tourism Department has been paying extra attention to Swedish markets. Embassy events and trips of journalists to Lithuania have considerably contributed to the growth of tourist flows from Sweden. Another potential of Lithuanian-Swedish cooperation that has not been exhausted yet is transportation. With the active

Cecilia RUTHSTRÖM-RUIN

or a number of years Sweden is by far the largest investor in the Baltic States. Depending on the quarter, Swedish FDI is around 25 % of total FDI inLithuania (this corresponds to 3.2 billion EUR). Swedish companies are the largest investors in banking and telco sectors in Lithuania. A lot of Swedish companies consider the Baltic States as part of their local market. If compared to the other Baltic States it is important to highlight the again that there is a lot of unutilised potential. Sweden has invested more than 4 billion EUR in Estonia – 30 % more than in Lithuania. It can also be clearly seen from the number of Swedish companies operating in each country: close to 1000 in Estonia, 400 in Latvia and approximately 150 in Lithuania. As a lot of major Swedish companies are already operating in the Lithuanian market, it is very likely that the new FDI from Sweden will come from small and medium enterprises. Swedish companies are willing to invest where the competition is transparent and the rules are clear. As Lithuania competes for investment with other countries it is important to have the conditions on par or better than the neighbours. For example, looking at the volume of Swedish investment in the forestry sector in Latvia and Lithuania a conclusion could

be made that competition and regulations in this sector in Lithuania do not match those in Latvia or Sweden. From Swedish perspective, the Lithuanian market may seem small but it is very attractive country for sourcing activities due to closeness of the country, optimal quality for competitive price and positive experience of other Swedish companies (e.g. IKEA). Another positive trend is that bilateral trade is increasing every year. From 2010 to 2014 export and import to Sweden has increased by 61 % and 70 % respectively. It still has a lot of unfulfilled potential as currently on 4 % of Lithuanian exports go to Sweden and only 4 % of imports come from there. So, the dynamics is definitely positive, although it could develop faster than it is now. Business Sweden also feels an increased interest from Lithuanian companies, especially from construction, engineering, IT sectors which are looking for potential partners in Sweden. New push in the bilateral economic cooperation (as well as trade) is the start of operations of the NordBalt cable. During the State Visit to Lithuania by the Swedish King and Queen last year, it was clearly demonstrated that Swedish business sees great potential for increased activities here in Lithuania. As many as thirty top level Swedish business leaders participated in the business delegation which accompanied the King and Queen. The size and composition of the business delegation was in itself a demonstration of the strong interest. They returned to Sweden with generally very positive impressions and we currently note many questions and expressions of interest from actors in Sweden who wish to further explore opportunities here. 

development of global trade exchanges and trade ties between the EU and China and in the Black Sea region, Lithuania along with Sweden have to make use of the existing situation to guarantee the transit of trade flows via our region. Similarly, our goal is to encourage Swedish manufacturers and exporters to make bigger use of the Viking and Sun projects, as well as other Lithuanian transportation opportunities. The growing volumes of Lithuanian construction companies in Sweden also require more efficient transportation solutions. The energy sector is another good example of the mutual benefit of Lithuanian-Swedish cooperation. Historically, Nordics, of all other countries, have understood the

importance of independence for the Baltic countries from the domination of one particular country. Having started as a geopolitical project, Lithuanian-Swedish electricity connection NordBalt has initially assumed a major role in the energy market of Lithuania. In the beginning of this year, electricity, having reached us via NordBalt, essentially reduced the usual prices of the Nord Pool Spot trade system in Lithuania. Besides, if we take into consideration the ongoing discussions in Sweden on the growing costs of nuclear power and the transition to renewable energy, the LithuanianSwedish dialogue on energy in the nearest future should become more active. 

2016 / LITHUANIAN BUSINESS REVIEW

AN OVERVIEW OF BILATERAL ECONOMIC COOPERATION

Lithuania

Table 1. Export to Norway (structure, %) 2010

18.08

29.04

Metal works

5.89

9.97

Timber and woodwork

9.40

9.63

Plastics

3.68

6.83

Electrical and electronic equipment

4.26

4.56

Industrial equipment

4.04

4.10

Knitwear

6.53

3.67

Nonwoven fabrics

2.42

2.81

Glass

0.30

2.29

Food waste, fodder

2.11

2.28

Other goods

43.29

24.80

TRADE (2010–2015)

100 %

2010

2015

Mineral fuel and its products

0.00

59.35

Seafood

24.98

16.53

Industrial equipment

9.50

5.02

Nonwoven fabrics

6.37

2.35

Means of transportation

1.15

1.86

Electrical and electronic equipment

6.64

1.47

Pharmaceuticals

0.00

1.31

Plastics

3.00

1.25

Knitwear

7.47

1.17

Minerals

5.06

1.11

Other goods

35.84

8.59

100 %

During the six years of bilateral trade between Lithuania and Sweden, the volume of export and import has been steadily growing. From 2012 to 2015, Lithuanian export to Norway increased by 66 percent, or from 360 million to 598 million euros, while the import grew – mostly due to the import of fuel – by as many as 360 percent, or from 59.7 million to 275.2 million euros. Lithuanian export mostly includes furniture, woodwork, and metalwork (Table 1). During the six years, furniture export has undergone the biggest growth, with its absolute value growing from 65 million to 174 million euros. Its ratio in the overall export structure has grown from 18 percent to 29 percent. Norwegian import to Lithuania mostly includes seafood (25 percent from the overall export volume) and industrial equipment (9.5 percent from overall export). Although during the six years seafood import has grown three times and the import of industrial equipment has increased 2.5 times, the two categories in 2015 yielded their leading positions to fuel import . It grew in value from zero to 163 million euros, and its ratio in the overall import structure increased from zero to 60 percent (Table 2).

FOREIGN INVESTMENTS Norway is the fourth largest investor in Lithuania (860 million euros by the end of 2015), which makes 6.5 percent of the overall foreign direct investments accumulated in Lithuania (Graph 1). During the last six years, Norwegians have mostly invested in manufacturing (12 projects), shared service centers (four projects), and IT (two projects). Lithuanian investments accumulated in Norway barely reached 0.7 million euros by the end of 2015 (Graph 2).

Graph 1. Norwegian investments in Lithuania 2010–2015 1,000.00

0.00

2010

2011

2012

2013

2014

2015

378.84

316.66

700.64

706.54

772.98

828.08

381.91

585.49

716.08

748.27

793.17

849.55

378.01

656.82

729.31

768.68

801.37

857.83

315.85

730.61

713.22

765.82

809.62

859.91

40.00

TOURISM (2010-2014) 0.00

Table 2. Import from Norway (structure, %)

Graph 2. Lithuanian investments in Norway 2010–2015

2015

Furniture

Norway

LITHUANIAN BUSINESS REVIEW / 2016

During the period of 2010–2014, the flow of Norwegian tourists to Lithuania and the flow of Lithuanians to Norway drastically grew (Graph 3): the number of Lithuanian trips to Norway grew by more than twice, or 105 percent, while Norwegian tourism to Lithuania increased by 115 percent. By the average number of trips during the period, Norwegians shared second and third places with Swedes (approximately 45.3 thousand trips per year). By the number of overnight stays Norway was third among Nordic countries – Norwegians spent an average of 188 thousand nights in Lithuania. Lithuanians find Norway an absolute number one destination among Nordic countries: each year, Lithuanians perform an average of 60 thousand trips to Norway with 681 thousand overnight stays. Three times more Lithuanians stay overnight in Norway than vice versa. In 2014, Norwegians spent a record amount of 27 million euros in Lithuania. Norwegians were also the most generous tourists, having spent an average of 494 euros on a single trip.

Sources: Statistics Lithuania, Invest Lithuania, Bank of Lithuania, Statistics Norway and Eurostat Data processed and compiled for publication by Lukas Vabalas

2011

2012

2013

2014

2015

0.67

-0.07

0.35

2.40

1.10

30.62

0.71

0.08

2.29

0.96

1.13

3.30

0.71

0.92

3.33

0.90

1.07

2.66

0.48

-1.73

0.24

-0.18

0.71

Graph 3. Tourist flows 2010–2014 100

0 2010

MIGRATION According to Statistics Norway, Norway is number one destination for northbound Lithuanian emigrants. In the period of 2010-2015, Lithuania lost 33671 citizens to Norway, while receiving 3172 Norwegian immigrants (Graph 4). Those figures show that ten times more Lithuanians immigrated to Norway than Norwegians came to Lithuania. However, in the period of 2011-2015, the Lithuanian emigration flow has decreased by more than half. On the other hand, the flow of Norwegian immigrants, although not significant in absolute figures, has grown almost four times in the past six years. Statistics Norway does not give gender related information, however the Eurostat data of 2010–2013 showed that the twoway flow was dominated by male migration. 61 percent left for Norway and 67 percent arrived in Lithuania. 2011 was a record year for male emigration to Norway: 4752 Lithuanian men left the country for Norway, which made 64 percent of the entire emigration to Norway and was responsible for the migration peak of 2011. 

2010 30.17

2011

2012

2013

2014

8.01

16.21

19.99

21.5

28.07

57.23

48.93

81.76

74.65

77.79

25.5

43.5

51.6

54.8

41.4

45.2

59.2

69.3

84.7

Norwegian overnight stays in Lithuania / 10 thousands Lithuanian overnight stays in Norway / 10 thousands Norwegian trips to Lithuania / thousand Lithuanian trips to Norway / thousand

Graph 4. Migration Lithuania – Norway 2010–2015 90

2010

2011

2012

2013

2014

2015

6482

7629

6516

5463

4354

3227

263

365

395

480

719

950

Lithuanians Norwegians

2016 / LITHUANIAN BUSINESS REVIEW

WHAT DO AMBASSADORS SAY? Dag Malmer HALVORSEN

ithuania and Norway are linked by common cultural, historical, political, and economic ties. And they share an interest in the provision of stability, security and welfare in the Baltic Sea region and beyond. Norway is among the leading nations in the global energy industry and Lithuania's strategic partner in the Klaipėda LNG terminal project, the centerpiece of the country's energy independence strategy. Norwegian companies, such as Höegh LNG and Statoil, have created a new phase in the cooperation between the countries.Lithuania's gas trade company Litgas signed a revised LNG supply contract with Norway’s Statoil last month and Statoil became the major provider of gas to Lithuania. I would like to highlight that Lithuanian terminal has ambitions to become a regional hub. For the first time in the country’s history, Lithuania is not only importing gas, but also supplying it. Moreover, Lithuania's policy has to be responsive to changing conditions in the energy market. The terminal alone, without regional cooperation, is not a sufficient condition of energy security in the Baltics. The current situation shows Lithuania is becoming an active market developer in the Baltics. Trade between Norway and Lithuania has increased significantly in the recent years, moreover Norway remains

LITHUANIAN BUSINESS REVIEW / 2016

AN OVERVIEW OF BILATERAL ECONOMIC COOPERATION

one of the largest investors in Lithuania. Norway’s accumulated FDI in Lithuania reached 850 million Euro at the end of June 2015, since 2010 accumulated FDI increased 8 times. Currently there are about 230 Norwegian companies, engaged in services, manufacturing and property management. Norwegian businesses and industries are prominent in the country, examples being ambitious property development by Schage, modern manufacturers like Advantec, Jotron, Kitron, Stansefabrikken, competent service providers like Storebrand (now Cognizant Technology Solutions), Norian Accounting (now Opus Capita Accounting). Important is the engagement of Norwegian businesses in Lithuania’s strategic gas sector. Norway’s trade with Lithuania continues to grow. Norway imports twice as many goods from Lithuania than we export into Lithuania. Lithuania’s export to Norway has grown 5.5 times since 2002: from 111 million EUR to 609 million EUR in 2014 (645 million Eur in 2015). As you see, the dynamics are very positive. Also Norway Grants and EEA Grants are important for our bilateral relations with Lithuania. Lithuania is strengthened through participation of Norwegian partners in programs and projects. Norwegian and Lithuanian institutional partnerships, the embassy’s activities and initiatives under the national bilateral fund are very important parts of the cooperation.In the first program period (2004–2009), more than 80 projects were funded, reflecting joined Lithuanian and Norwegian priorities. The projects were concentrated in the area of health and childcare, which included renovation of 13 children homes, cancer research, renovation of cultural heritage, which is a field that has been and continues to be  prioritized by Lithuania.

Izolda Bričkovskienė

candinavian countries are very important to Lithuania both as export markets and economic partners that attract direct foreign investments and tourist flows to Lithuania. Sweden and Norway help secure our energy independence. Norway has made a considerable input in the construction of our liquefied natural gas terminal and the process of gas supply. By the volume of investments, each year Norway becomes more and more important as an economic partner of Lithuania: currently, it holds the fourth position by the volume of direct investments. Norwegian enterprises make use of the advantages of Lithuanian economy and the proximity of the country. They develop the already existing projects and try to find ways for the implementation of new ideas. Such cooperation is beneficial to both our countries – Norwegian enterprises become more efficient and competitive in the international market, while Lithuania creates new jobs, makes investments, and launches new technologies.

 In the period 2009–2014, the Grants amounted to 84 million Eur. The key priorities during this period were justice sector reform, civil society development, greening of industry and others. The Embassy‘s activities focus on

In 2015, Lithuanian export to Norway was almost 600 million euros, which made Norway the 14th export partner of our country. Construction, furniture, engineering enterprises have found corresponding partners in Norway. The differences between prices on services and salaries in Norway and Lithuania give perfect business conditions to enterprises, located in Lithuania. Oil and gas industries are very important to Norwegian economy, therefore it has acutely suffered from the global decline of oil and gas prices. However, unlike Russia, the state oil fund of Norway has accumulated the reserve of 860 billion US dollars. Thus the country has a stable financial background for the development of its economy and welfare. This factor influenced the growth of GDP in Norway in 2015 by 1.6 percent. The country’s Central Bank has estimated the growth of GDP in 2016 and 2017 by 1.25 and 1.0 percent respectively. I think that today’s challenges of Norwegian economy open extra chances for our business in searching new opportunities and helping Norwegian enterprises to reduce production costs, as well as in trying to maintain competitiveness and profitability. Therefore, this is the perfect time to search for new business opportunities in Norway and try to establish ourselves in its market. 

highlighting the Norwegian contribution to strengthening values of good governance and human rights, including equal opportunities, and the bilateral cooperation in the justice sector. 

2016 / LITHUANIAN BUSINESS REVIEW

AN OVERVIEW OF BILATERAL ECONOMIC COOPERATION

Lithuania

Table 1. Export to Denmark (structure, %) 2010

12.12

16.41

Timber and woodworks

14.23

9.70

Industrial equipment

3.22

6.51

Plastics

5.31

5.84

Pelts

2.18

5.49

Yarns and fabrics

4.60

5.30

Mineral fuel and its products

1.31

4.66

Metal works

6.37

4.18

Electrical and electronic equipment

4.11

3.59

Fertilizers

2.82

3.45

Other goods

43.74

34.86

100 %

TRADE (2010–2015)

100 %

2015

Industrial equipment

18.49

24.36

Means of transportation

10.30

9.69

Chemicals

6.27

6.80

Plastics

2.96

4.98

Electrical and electronic equipment

4.05

4.31

Meat

4.22

2.98

Optics and measuring tools

2.04

2.94

Yarns and fabrics

3.32

2.88

Coffee, tea, spices

6.15

2.31

Seafood

1.24

2.04

Other goods

40.95

36.71

100 %

80.00

TOURISM (2010–2014) 0.00

Table 2. Import from Denmark (structure, %) 2010

Graph 2. Lithuanian investments in Denmark 2010–2015

2015

Furniture

Denmark

In the sphere of bilateral trade between Lithuania and Denmark during the past six years, both export and import were continuously growing. From 2010 to 2015, Lithuanian export to Denmark grew by 28 percent, or from 470 million euros to 601 million euros. The import increased by 42 percent, or from 303 million euros to 430 million euros. The export of Lithuania to Denmark mostly includes furniture, woodwork, and industrial equipment (Table 1). During the past six years, furniture export considerably grew from 57 million euros to 98.6 million euros, or from 12.1 to 16.4 percent in the overall structure of export. Danish import in Lithuania is dominated by industrial equipment, means of transportation, and chemicals (Table 2). During the past six years, the import of industrial equipment has drastically grown from 56 million euros to 105 million euros, or from 18.5 percent to 24.4 percent within the overall structure of import.

FOREIGN INVESTMENTS (2010–2015)

In terms of inbound tourism to Lithuania, Denmark is in the fourth position among the Nordic countries. It is responsible of an average of 28.3 thousand trips and 128 thousand overnight stays yearly. During the period from 2010–2014, the increase of trips to Lithuania and overnight stays in the country was relatively insignificant (Graph 3). Denmark, as a travel destination for Lithuanians, holds the third position after Sweden and Norway: yearly, Lithuanians perform an average of 33.4 thousand trips with 385 thousand overnight stays. The statistics of Lithuanian tourism are more dynamic: the outbound flow of tourists to Denmark was especially high in 2012–2013, later it stabilized. Lithuanians obviously tend to stay in Denmark longer than Danes in Lithuania: the ratio of overnight stays in 3:1. In 2014, Danish tourists spent 14.4 million euros in Lithuania, which means that an average Danish tourist spent 477 euros in Lithuania.

2010

2011

2012

2013

2014

2015

56.46

58.21

26.66

21.35

22.02

6.38

56.46

55.32

27.54

29.91

23.09

4.18

56.46

55.62

27.18

32.90

29.18

5.31

61.14

55.08

27.06

27.96

6.39

1.96

Graph 3. Tourist flows 2010–2014 70

MIGRATION (2010–2015)

2010

2011

2012

2013

2014

7.62

11.28

12.14

16.8

16.06

21.78

24.29

52.74

56.18

37.61

24.8

27.8

29.2

29.4

30.1

20.4

20.7

40.7

45.6

39.4

Danish overnight stays in Lithuania / 10 thousands

100 %

Graph 1. Danish investments in Lithuania 2010–2015 1,500.00

The fact that Denmark, with its 1.1 billion euro investments in Lithuania, was No.1 foreign investor in the country, now is just hhistory. During the past six years the volume of its investments has decreased almost by half (Graph 1). By the end of 2015, Denmark, with its 511 million euros, dropped down to the 9th position among the largest investors, amounting to 3.9 percent of the entire volume of direct foreign investments accumulated in Lithuania During the period of 2010–2015, Danish businesses mostly invested in shared service centers with eight projects, production with six projects, and the IT sector with two projects. Some time ago, the investments of Lithuanian businesses in Denmark were also the largest among the Nordic countries. In 2010, they reached 61 million euros (Graph 2). However, with time Danish direct investments in Lithuania shrunk to barely two million euros by the end of 2015.

According to Statistics Denmark, the ratio of Lithuanian emigration to Denmark and Danish immigration to Lithuania is 3:1. During the period of 2010–2015, 11912 residents emigrated from Lithuania to Denmark, while only 4250 Danish citizens immigrated to Lithuania (Graph 4). Migration flows in both directions tend to grow. The volume of Lithuanian male immigration in Denmark considerably increased in 2014. The two-way migration is dominated by male immigrants that are responsible for 58 percent of emigration to Denmark and 62 percent of immigration to Lithuania. 

Lithuanian overnight stays in Denmark / 10 thousands Danish trips to Lithuania / thousand Lithuanian trips to Denmark / thousand

Graph 4. Migration Lithuania – Denmark 2010–2015 1600

0.00

2010

2011

2012

2013

2014

2015

839

875

880

759

852

809

2010

2011

2012

2013

2014

2015

1060

1041

1112

1039

1336

1310

1 125.60

1 130.76

427.55

691.19

499.73

505.74

209

218

250

248

364

343

1 042.07

515.14

449.77

659.03

517.04

520.47

266

328

438

450

597

539

1 081.52

509.84

510.86

683.19

546.19

548.24

1 121.65

459.00

497.10

680.62

568.73

510.72

LITHUANIAN BUSINESS REVIEW / 2016

Sources: Statistics Lithuania, Invest Lithuania Bank of Lithuania, Statistics Denmark Data processed and compiled for publication by Lukas Vabalas

Lithuanian female

Danish female

Lithuanian male

Danish male

2016 / LITHUANIAN BUSINESS REVIEW

WHAT DO AMBASSADORS SAY? Dan E. FREDERIKSEN

conomic relations between Denmark and Lithuania have been active and dynamic since the restoration of Lithuania’s independence. Denmark was one of the first countries to re-establish diplomatic relation with Lithuania. It should be noted that Denmark actively supported and promoted Lithuania’s membership in the European Union and NATO. Right after the restoration of Lithuania’s independence Denmark engaged actively in assisting Lithuanian authorities in the economic and administrative preparations for the EU membership. Banks and telecommunication companies from Denmark also joined those efforts. This early and continuous partnership between Lithuania and Denmark give Danish companies a good foundation for successful activities in Lithuania and Lithuanian companies in Denmark. Secondly, Denmark also early on engaged directly in Lithuanian defence reforms and modernisation of armed forces, carried out prior to the membership in NATO. Today Denmark has a well-established defence partnership with Lithuania, which is based not only on the past but also on the current security challenges. Denmark’s participation in policing Lithuanian air space is just one example. The strong defence partnership was recently underlined with the signing of a Memorandum of Understanding between the Ministry of National Defence of the Republic of Lithuania and the Ministry of Defence of the Kingdom of Denmark concerning Cooperation in the Field of Defence and Security Relations. The strong business relations come from the strong political partnership between our countries. For many years, we were by far the biggest investor in Lithuania and a solid partner in trade. According to the Statistics Denmark information export from Lithuania to Denmark amounted to 518.5 million EUR while import from Denmark was 395.5 million EUR in 2015. Moreover, Lithuania is considered as an attractive destination for Danish companies when looking for trade partners.

LITHUANIAN BUSINESS REVIEW / 2016

AN OVERVIEW OF BILATERAL ECONOMIC COOPERATION

There are more than 200 Danish capital companies and subsidiaries operating in Lithuania. Many of them are frontrunners in their business area. Lithuanians definitely know such names as Carlsberg, Danfoss, DFDS, Grundfos, Danske Bank, COWI, or DSV, just to mention a few. It should be noted that Danish solutions within energy, environmental and construction sectors are especially recognised by Lithuanian partners. Transportation of goods, food processing and services are other areas, where we see big bilateral interest coming from both Denmark and Lithuania. Recent developments in Lithuania within the infrastructure as well as efforts to increase energy efficiency and energy independency will definitely lead to an enhanced cooperation in these sectors as well. The energy sector is especially important for Denmark and the Danish Embassy in Lithuania prioritises sustainable energy and environmental projects. We know that housing renovation is one of the main priorities of the Lithuanian Government. Renovation works which, have started in autumn 2013, have a huge potential for energy savings, and we are happy to see that many Danish consulting-engineering companies provide services and know-how to Lithuanian counterparts. Denmark has a big potential for sharing the knowledge of how to maximise the outcome of implementing smart systems in buildings through innovative architecture, construction, technology, management and user-behaviour. It should be noted that our co-operation also reflects the Lithuanian state priorities and directions of EU assistance to Lithuania. Energy and energy saving are not the only areas, where we see a huge potential for our cooperation. I believe that a lot of cooperation will be within planned infrastructure development projects, the modernization of health or education systems. It should be noted that many Danish companies recognize the highly skilled Lithuanian labour force. They invest and establish affiliated companies in Lithuania thus contributing to job creation, increase in productivity and costs saving. We have several examples of such cooperation. Danske bank and COWI are just a few to mention. Danske Bank has opened a new center of excellence, where they provide international administration services for the whole region. COWI Group, which is already one of the biggest engineeringconsulting companies in Lithuania, has recently opened a new IT and graphic design service centre. Both countries  benefit from this.

Vytautas PINKUS

ithuania and Denmark have been successfully building robust political and close economic relations since the very beginning of the restoration of Lithuania’s independence.In the 1990s, Danish companies were pioneers amongst western countries to enter the Lithuanian market. The active Danish engagement has opened doors for business from other Nordic and European countries. After a booming start, cooperation between the two countries continues to flourish and has potential for further development. Bilateral trade continues to grow. In 2015, the trade turnover exceeded EUR 1 billion. Lithuania mainly exports furniture, textiles, shipbuilding related goods and services, petroleum oils. In recent years the export of services has become more dynamic and is developing faster than the export of goods. Denmark has been one of the leading foreign investors in Lithuania. Noteworthy to say that Danish investments are widely spread in different regions of the country and are present in many sectors of Lithuanian economy: building and construction; pharmaceuticals, food and agriculture; metal, plastic and electronics; ship building; telecommunications; textile; transport and logistics; wood and furniture. Particularly well known Danish investors are: Carlsberg, COWI, Danfoss, Danske Bank, DSV, Grundfos, and others.

 In general, successful co-operation is based on the synergy of bilateral business initiatives, such as high quality, experience and know–how combined with skilled employees and trust. We have many examples, where this synergy has resulted in big economic growth and job creation for Danish or Lithuanian economies. And this is not only about the economic growth. It is also about the improvement of living conditions. Therefore, if Danish solutions or technologies can result in better living conditions for the Lithuanian society – we are happy to be a

Although Danish investments prevail in the production area, there is a move to the services sector as well. The development of Danske Bank activities is the best example. The Bank has been operating in Lithuania since 2000 and expanded heavily in 2012, establishing the Danske Bank Group’s Service Centre that provides administrative support, IT, and other services to all the Group’s branches. Until now, the Centre is expanding enormously, creating new jobs for highly qualified specialists, and serves a good example of the prospects Lithuania has to offer. With the positive build-up of economical relations between our countries, one should mention that there still is untapped potential, including cooperation in tourism. Danes are surpassed by their neighbours from Norway, Finland, and Sweden, who are coming to enjoy the beauty of Lithuania and high quality services. I would like to use this opportunity to express my gratitude to business communities in both countries for their contribution in expanding our cooperation. The Danish Chamber of Commerce in Lithuania plays a vibrant role in promoting business ties and looking for new areas of cooperation. Moreover, collaboration between business associations finds new quality. The partnership agreement signed between the Danish and Lithuanian Confederations of Industrialists in 2015, has been paving the way of mutual support to further enhance trade and economic cooperation. Today there is a contact between an impressive range of individuals and institutions in almost every sector of our two societies. I am confident that our bilateral economic relations will continue to expand and grow stronger in years ahead. 

part of this cooperation. If Lithuanian achievements within high-tech or biotechnologies can lead to better solutions for Danish companies – we are happy to see this development. A broader cooperation means stronger economies and happier people. I believe that good business relations between Denmark and Lithuania will remain playing an important role in the future developments of both countries. There are practically no limits to the number of areas where these relations can be executed. 

2016 / LITHUANIAN BUSINESS REVIEW

AN OVERVIEW OF BILATERAL ECONOMIC COOPERATION

Lithuania

Table 1. Export to Finland (structure, %) 2010

11.98

11.84

Metal works

4.19

11.01

Electrical and electronic equipment

3.71

8.71

Tobacco

15.41

8.00

Furniture

5.73

Pelts

3.66

5.59

Industrial equipment

3.20

5.16

Flour

3.74

3.85

Timber and woodworks

3.97

3.27

Clothing

5.74

2.51

Other goods

38.68

34.33

100 %

2010

2015

Mineral fuel and its products

2.64

20.18

Industrial equipment

16.18

19.43

Electrical and electronic equipment

24.57

10.33

Means of transportation

6.48

8.16

Paper

8.68

5.84

Fertilizers

2.66

4.00

Plastic and its products

4.45

3.17

Base metals

3.59

2.48

Optics and measuring tools

2.43

2.31

Timber and woodworks

2.03

2.23

Other goods

26.31

21.86

100 %

15.00

TRADE (2010–2015)

TOURISM (2010–2014) 0.00

Table 2. Import from Finland (structure, %)

Graph 2. Lithuanian investments in Finland 2010–2015

2015

Plastics

Finland

100 %

Graph 1. Finnish investments in Lithuania 2010–2015 800.00

Data on Lithuanian-Finnish trade during the period of 2005–2015 have shown a continuous growth. During the six years, Lithuanian export to Finland has grown by 61 percent, which makes the increase from 218 million to 356 million euros, while import has grown by 55 percent, or from 316.5 million to 579.4 million euros. Lithuania’s export to Finland mostly includes plastic, metalwork, electrical appliances and electronics (Table 1). During the six years, the export of the latter group has considerably increased in volume. Its ratio in the overall export structure has more than doubled from four to nine percent, while the absolute value increased almost four times from eight million to 31 million euros. The metalwork export has also undergone a similar growth from nine million to 39 million euros. Finnish export to Lithuania (Table 2) is dominated by industrial equipment (19 percent), electronic devices (ten percent), and fuel products (20 percent). During the period of six years, Finnish fuel export to Lithuania has drastically increased from eight million to 116 million euros.

FOREIGN INVESTMENTS (2010–2015)

Two-way tourism between the countries during 2010–2014 proved that the yearly flow of Finns to Lithuania exceeded the flow of Lithuanians to Finland by an average of three times (Graph 3). By the average of the period, Finnish visitors to Lithuania have been obvious leaders among Nordic countries with an average of 64 thousand trips. By the number of overnight stays per year, which is 220 thousand, Finnish tourists are in a close second place after Swedes. However, Lithuanian tourists least favor Finland as a destination country among other Nordic countries: yearly, they visit Finland 21 thousand times with 122 thousand overnight stays. That way, Finns twice exceed Lithuanians by overnight stays in their respective host countries. However, Lithuanians tend to stay longer in Finland during a single trip than Finns in Lithuania. The dynamics of statistical graphs show that the number of Lithuanian visitors to Finland continuously grows, and vice versa – the number of Finns visiting Lithuania slowly decreases. In 2014, Finnish tourists spent 20 million euros in Lithuania, which means that an average Finn spent 370 euros in the country.

2010

2011

2012

2013

2014

1.71

1.70

5.41

2.72

10.83

2015 1.97

1.75

1.71

5.45

2.82

2.62

2.05

1.72

1.78

6.07

2.88

3.26

2.15

1.67

1.82

6.04

13.90

1.86

2.16

Graph 3. Tourist flows 2010–2014 80

0 2010

2011

2012

2013

2014

17,07

19,73

19,62

18,75

35,56

13,8

14,65

8,56

9,03

14,74

65,7

69,8

68,2

54,2

23,7

21,5

14,8

18,1

26,3

Finnish overnight stays in Lithuania / 10 thousands Lithuanian overnight stays in Finland / 10 thousands Finnish trips to Lithuania / thousand Lithuanian trips to Finland / thousand

Finland is the seventh largest investor in Lithuania with 546 million euros invested by the end of 2015, which makes four percent of the overall direct foreign investments accumulated in Lithuania (Graph 1). During 2010–2015, Finland mostly invested in manufacture (five projects), business services (four projects), and energy (two projects). Lithuanian investments accumulated in Finland have always been insignificant. At the end of 2013, the total was 14 million euros, however, by the end of 2015, it dropped down to 2.2 million euros (Graph 2).

MIGRATION (2010–2014) According to Statistic Finland during the period of 2010– 2014, almost five times more Lithuanians emigrated to Finland than vice versa. In absolute figures, the Lithuanian-Finnish migration flows are lowest in Nordic countries. From 2010 through 2014, 766 Lithuanian citizens left their country for Finland, while 168 Finnish citizens immigrated to Lithuania. Although low in its volume, two-way migration is constantly growing (Graph 4). 

Graph 4. Migration Lithuania – Finland 2010–2014 100

0.00

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

2015

490.77

454.44

496.87

592.45

619.40

520.49

465.44

541.71

504.91

605.42

611.91

518.54

475.22

498.34

465.16

627.27

660.08

558.06

409.75

509.07

468.62

576.84

658.74

546.23

LITHUANIAN BUSINESS REVIEW / 2016

Sources: Statistics Lithuania, Invest Lithuania, Bank of Lithuania and Statistics Finland Data processed and compiled for publication by Lukas Vabalas

Lithuanian female

Finnish female

Lithuanian male

Finnish male

2016 / LITHUANIAN BUSINESS REVIEW

WHAT DO AMBASSADORS SAY? Arūnas JIEVALTAS

hen talking about bilateral economic relations between Lithuania and Finland, we should emphasize that Finland has been actively involved in the transformation of Lithuania’s economy since the beginning of the nineties. Finland’s business experience and its active position in Lithuania has contributed in creating competitive and strong fundamentals of Lithuania’s economy today. In this regard, the perfect example could be the privatization of Lietuvos Telekomas by Finnish Sonera Oy in 1998, which was followed by major reforms of Lithuania’s telecom sector and its steep rise to the global competitiveness standards. Lithuanian and Finnish bilateral trade is not that significant in terms of volumes – Finland is only the 18th largest Lithuania’s export destination. However, the latest Lithuania’s export to Finland dynamics are promising. Since the beginning of Lithuania’s membership in the European Union, absolute volumes of Lithuanian export to Finland have increased five times and in the past few years we could see an annual export increase ranging from around 10 to 20 per cent. An increasing number of Lithuanian goods can also be seen in Finnish stores, which means recognition of our products and their quality. This is particularly important due to the peculiarities of the Finnish market in general because it is quite difficult to

LITHUANIAN BUSINESS REVIEW / 2016

AN OVERVIEW OF BILATERAL ECONOMIC COOPERATION

make initial steps and find the right partners, hence foreign companies must put in a lot of effort to enter the Finnish market. However, all the efforts are guaranteed to pay off later on, because business relations with Finnish partners are based on reliability and trust. It can be stated that more and more Lithuanian companies are earning the trust of Finnish companies and the latter are also more interested in trade opportunities with Lithuania. Finns, just like businessmen from other Nordic countries, refer to the Baltic States as a domestic market. I wish that Lithuanian business increases their presence and investments in Finland as well as equally refer to the Finland’s market as domestic. It would serve as an impulse for further LithuanianFinnish economic cooperation and new opportunities. Finland’s investments play an important role in Lithuanian economy and in some industries, I would say, they are dominant. Currently, Finland is Lithuania’s seventh largest foreign investor. Although accumulated direct investments of Finland in Lithuania accounted for just 5 percent of all accumulated FDIs in 2014, they generated the largest amount, at 20 per cent, of Lithuania’s new jobs, created by foreign direct investments. Finnish companies altogether in Lithuania, employ more than 10,000 people. Finnish FDIs in Lithuania also bring new technology. In this regard, we should distinguish investments by Fortum Oyj. With help from this leading Nordic energy company, we are building modern waste-to-energy combined heat and power plants and modernizing the heat supply chain in Lithuania’s biggest cities. An agreement, signed between Kaunas University of Technology and Aalto University in Helsinki a few years ago, opened up new opportunities for cooperation in the field of

Harri MÄKI-REINIKKA

inland considers Lithuania as a very close country in its neighborhood. We don’t have political problems, our countries are partners in the EU and the Baltic Sea Region. Tourism is increasing between our countries, people are more aware of each other. Prospects for our common future are promising. Especially connections like Rail Baltica, Via Baltica and several direct flights between Helsinki and Vilnius are giving us all a new perspective, and a view of what the future will be like. Finland is among the top investors in Lithuania, in a country ranking list in the 6th or 7th position. Finnish companies together are providing more jobs for Lithuanians than any other company group from other countries.More than 12 500 jobs were created in Lithuania by Finnish companies alone. Our trade has increased a lot by 2015. Three years ago the increase was around 60 % and after that 38 %. Now

innovation and entrepreneurship. We already have some great start-up success stories which, I hope, will inspire the new generation of scientists and entrepreneurs from both Lithuania and Finland to further develop our economic relations.

our bilateral trade is still increasing, but modestly, less than 8 %. The potential is still big in imports and exports of many sectors. Both sides are working hard to find more opportunities for our companies. We wish to see progress in all areas, but especially in cleantech issues. For example there is a significant potential in Lithuanian water sector for Finnish water technology providers. Also I think, Finland and Lithuania could share more experiences between themselves concerning women entrepreneurs. A number of good practice examples can be provided from Finland. While there are increasingly more policies supporting female entrepreneurship, women’s entrepreneurship and business creativity remain an untapped resource for jobs and economic growth – especially in Lithuania. The Embassy of Finland in Vilnius wants to empower and support female entrepreneurship in Lithuania. A number of challenges, – from difficult reconciliation of business and family, limited access to business networks, lack of funding opportunities, and mentorship, – make entrepreneurship for women less attractive and often too far to reach. Finland holds the Presidency of the Nordic Council of Ministers during 2016 and in that context the gender equality sector is important. 

I strongly believe that cooperation based relations between Lithuania and Finland will contribute to the economic prosperity of our countries and the entire region. 

2016 / LITHUANIAN BUSINESS REVIEW

ENERGY

THE END OF GAZPROM DOMINATION Rytas STASELIS

THE LICENSED LITHUANIAN GAS SUPPLIERS WELCOMED YEAR 2016 BY PUTTING EVERYTHING AT RISK. THE GAS SUPPLY CONTRACTS WITH RUSSIAN CONCERN GAZPROM WERE OVER; MEANWHILE, NEITHER SUPPLIERS NOR BUYERS WERE EAGER TO SIGN NEW CONTRACTS DUE TO PLUMMETING PRICES ON OIL AND GAS. SUCH WAS THE BEGINNING OF THE END OF GAZPROM DOMINATION IN LITHUANIA.

The turning-point: for the first time in history, Gazprom is not the largest gas supplier to Lithuania

LITHUANIAN BUSINESS REVIEW / 2016

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ENERGY

When Gazprom raised the prices of natural gas, Lithuanian gas importers concluded negotiations with Statoil and signed the contract in three weeks

mid-December 2015, the Lithuanian gas market worth of 2 billion cubic meters of gas had only 840 million cubic meters guaranteed by supply contracts. Those included a five-year Litgas contract with Statoil for 540 cubic meters and the remainder of about 300 million cubic meters from the expired long-term contract of Lietuvos Dujų Tiekimas–the Lithuanian gas supply enterprise – with Gazprom. Fertilizer concern Achema, the largest natural gas consumer, had no contracts with suppliers in its portfolio, therefore, instead of purchasing gas from Russian Gazprom, in November and December, the enterprise bought it from other Lithuanian wholesalers. Such a level of contract-protected gas supply was extremely low even in the shrinking Lithuanian gas market. Also, indetermination was enhanced by a complicated negotiation with an alternative supplier, Norwegian Statoil, which started operating in the end of 2014 through Independence, a liquefied natural gas terminal docked in Klaipėda sea port. The contract with Statoil, signed in 2014, was not very favorable to Lithuania as it was signed in the time of an overall decrease of liquefied natural gas supply in the global market. “At that time, it took us a lot of effort even to make Statoil talk to us”, says Dominykas Tučkus, the Litgas director general who conducted the negotiations. “In half a year, the market was overflown with liquefied natural gas supply offers, but unfortunately we had to turn them down as the contract with Statoil was already in effect”.

HOW GAZPROM LOST ITS MARKET Mikhail Korchemkin from East European Gas Analysis criticizes the arrogance of Gazprom towards the Baltic States: “They say that the Baltic market is small, but it is obviously solvent, with its customers paying more than in Germany, not to speak of the post-soviet states”. 54

LITHUANIAN BUSINESS REVIEW / 2016

Independence – a LNG vessel rented form Norwegian Hoegh – is the most important factor causing the end of the Gazprom

These words are backed by Mikhail Krutikhin, a partner of Rusenergy. “If in the end of 2015 Gazprom would have offered Lithuanian buyers medium-term contracts on selling gas for what they were selling to their customers in Germany, the Russian gas company would have maintained its upper hand in the market”, says Mikhail Krutikhin. But Gazprom did the opposite. Firstly, it procrastinated negotiations with Lithuanian enterprises. Later, in the end of that autumn, Gazprom announced a special tender only for the Baltic wholesalers, although in December it was cancelled for unknown reasons. Finally, they announced that the terms of the contracts that had expired in 2015, would be valid for the first quarter of 2016. Moreover, at Christmas, Lithuanian enterprises received from Gazprom supplementary protocols with new pricings. According to Lithuanian wholesalers, the new pricings raised the price on Gazprom gas, but, made it less dependable on the decreasing oil price. Such actions of the Russian gas export monopoly were caused by the underestimation of the market. That, and the most important factor of LNG terminal Independence. Russian plans, however, went sour. From January 1 Gazprom raised the prices of natural gas, and it took Lithuanian gas importers just 21 days to conclude negotiations with Statoil The Lithuanian gas supply company, Lietuvos Dujų Tiekimas, purchased 300 million cubic meters, while Achema purchased 500 million cubic meters of gas. For the first time in history, the market, ruled by Gazprom in one of the Baltic countries, shrunk by more than half. And it only survived on a condition that Lithuanians would be offered competitive prices on gas. Dalius Misiūnas, the director general and chairman of the board of joint-stock company Lietuvos Energija, is convinced that, if Gazprom tries to sell gas for the price they established after last Christmas, they do not stand a chance to sell in Lithuania at all.

domination in Lithuania, and, with time, in the Baltic countries

INDEPENDENCE HAS WITHSTOOD CRITICISM

“Of course, today we make use of the favorable conditions of the market that offers us many opportunities to acquire gas by immediate transactions and comparatively cheaper. On the other hand, most gas importers do not have longterm obligations with other suppliers, which is not usual in the gas trading business”, says Mr. Tučkus. Mr. Tučkus also says that in the future the situation in the market might change, therefore he does not attach too much importance to the fact that today Gazprom is not the largest gas supplier to Lithuania. “The most important thing is that we are able to choose from more than one offer – not just the one that was sent to us after last Christmas. Now we have choices”, says Mr. Tučkus. Besides, he emphasized the obvious difference between the modes of cooperation with Gazprom and Statoil. And that is not in the favor of the Russian company.

Independence – a LNG vessel rented form Norwegian Hoegh–and the overall LNG terminal project had been criticized for about five years, unlike any other project. Lithuanian politicians would say that it was too large, and its lease was unbearably expensive. The EU was unhappy with the project which would give Lithuania an alternative for gas supply away from the regional LNG terminal, designed by Brussels for the three Baltic States, but not yet implemented. However, the most severe criticism of the project came from Russia and its governmental propaganda as if suspecting that Independence meant the end of the Gazprom domination in Lithuania, and, with time, in the Baltic A GLANCE AT THE NEIGHBORS countries. However, it had no effect. Even the conservative Achema, counting decades “The most important thing is Now Lithuanian gas companies are of cooperation with Gazprom, decided to that we are able to choose from enjoying the opportunity to sell gas to the purchase half of the gas it consumed from more than one offer”, says other Baltic countries at the world market Dominykas TUČKUS, Gazprom rivals. prices instead of Gazprom’s. Already last Dominykas Tučkus, a board member the Litgas director general year, Estonian buyers purchased gas at of joint-stock company Lietuvos Energija, Get Baltic stock-exchange. The volumes underlines that the costs of Lithuanian are not big yet. Hopefully, Latvia, with its importers have been reduced due to favorable conditions in monopoly on gas trading, transportation, and distribution the global LNG market. On the other hand, they have shown ending in 2017, will open a gas market of 1.1 billion cubic their ability to cooperate, to coordinate their interests, and meters, available for open and civilized competition. unanimously to negotiate with Statoil. Today, due to this very ability, Statoil tankers flow in gas purchased not by a single Lithuanian customer, but by all three combined. 2016 / LITHUANIAN BUSINESS REVIEW

ENERGY

Connecting to SCANDINAVIAN LIFELINE Rytas STASELIS

AS SOON AS ENGINEERS STEPPED ASIDE FROM NORDBALT INSTALLATIONS – A POWER LINE CONNECTING SWEDEN AND LITHUANIA – AND TOOK POSITION AS OBSERVERS AT THE CONTROL PANEL OF LITGRID, THE PRICE OF ELECTRICITY IN LITHUANIA DROPPED DOWN BY 14 PERCENT JUST IN ONE WEEK FROM FEBRUARY 18. IN THEIR REPORT, REPRESENTATIVES FROM LITGRID – THE LITHUANIAN ELECTRICITY TRANSMISSION OPERATOR – STATED THAT THIS YEAR’S PRICES IN THE LITHUANIAN MARKET WERE REDUCED BY 33 PERCENT COMPARING TO THE LAST YEAR’S PRICES.

In December 2015, the heads of Lithuania and neighbouring countries took part in a ceremony to mark the symbolic connection of power interconnections LitPol Link and NordBalt. From the left: Swedish Minister of Energy Ibrahim BAYLAN, Estonian Prime Minister Taavi RÕIVAS, Lithuanian President Dalia GRYBAUSKAITĖ, Lithuanian Prime Minister Algirdas BUTKEVIČIUS, Latvian Prime Minister Laimdota STRAUJUMA, EU Commissioner Vytenis Povilas ANDRIUKAITIS, Lithuanian Minister of Energy Rokas MASIULIS

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ENERGY

President Dalia GRYBAUSKAITĖ and King King of Sweden Carl XVI GUSTAF visiting the NordBalt transformer substation in Klaipėda Mr. VIRBICKAS, the Litgrid CEO, has no doubts about the pilot launch of NordBalt being one of the most probable factors of decreased prices

aivis Virbickas, the Litgrid CEO, asks not to jump to conclusions about the factors that have determined the decline of electricity prices. That might have been affected by large volumes of water deposits in Latvia that are used to rotate hydro-plant turbines, and the relatively warm February. However, Mr. Virbickas has no doubts about the pilot launch of NordBalt being one of the most probable factors of decreased prices. CHEAPER THAN NUCLEAR For Lithuania, with its 80 percent of electricity import, every available opportunity to connect to cheaper markets is of great importance. Last year, a megawatt/hour of the NordPool trade system in Swedish zone IV cost half of the Lithuanian price 22.90 and 41.92 euros accordingly. Robertas Dargis, president of the Lithuanian Industrialists Confederation, has stated on this occasion that high electricity prices make it harder for Lithuanian companies to compete on the global market. The Lithuanian Energy Ministry has underlined that since 2013 by connecting to electricity transmission system NordBalt – the electricity trading system of Northern countries – prices have dropped to record-breaking lows.

Average Electricity Prices in Lithuanian Market in euro/MWh 2009

2010

2011

2012

2013

2014

2015

2016*

37.50

44.90

46.30

44.90

45.50

46.00

47.90

29.65

* February 2016 average From NordPool Spot

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The data of the National Commission for Energy Control and Prices – an independent regulatory institution for the supervision of energy prices in the market – have shown that in the stock-exchange such low electricity prices have not been heard of for even longer. If Sweden, with its 50 percent of electricity import in the Lithuanian market will maintain an average of 30 euro/MWh, one could say that such low prices were not available in Lithuania even back then, when it operated the Ignalina Nuclear Power Plant. Its last functioning reactor was shut down on January 1, 2010. In 2009, the last year when the turbines of the Ignalina Nuclear Power Plant still rotated, electricity purchase prices on the average reached 37.54 euro/MWh. As soon as the power plant was shut down, electricity prices in the market grew by 16.5 percent from 37.54 euro/MWh to 44.9 euro/ MWh. At that time it was not the worst case scenario: some market analysts had predicted a raise in prices by 50 or even 100 percent. However, that did not happened, because, alongside the closure of the nuclear plant, BaltPool – an electricity trading stock-exchange – was created in Lithuania to compensate the loss of electricity supply and to create dynamics and competitiveness in the market. And thus, in February of 2016 due to the connection to NordBalt, the average electricity price dropped down to 29.65 euro/MWh. SWEDISH MARKET Mikael Odenberg, the chairman of Svenska Kraftnat, the Swedish partner of the NordBalt project, says that Sweden was among those who insisted on the closure of

the nuclear plant in Lithuania. “We had moral obligations and responsibilities to integrate the Baltic countries into the European power system”, says Mr. Odenberg when answering the question of how Sweden managed to reduce the skepticism of Swedish electricity producers towards the idea of electricity transmission to Lithuania. The talks on this matter were very complicated. Swedish energy producers were very doubtful about the idea from the very beginning. Lithuanian and Latvian politicians could not decide which country the electricity cable should start from. However, Scandinavian politicians and energy specialists were the ones who managed to arrive at a compromise: the cable was renamed from the initial SwedLit to NordBalt, a decision was made to start the cable from Lithuanian shores, and Latvia got the opportunity to use European funds for the expansion of its interior electricity transmission. BENEFICIAL FOR BUSINESS Energy Minister Rokas Masiulis says that the Swedish-Polish electricity interconnection proved the prediction on the price decrease was right, “As predicted, t wo new internationa l electricit y interconnections have put Lithuanian electricity market prices between Swedish and Polish prices that are a little lower and a little higher than Lithuanian respectively”. Does business count benefits? “Obviously, new electricity interconnections have

secured electricity supply and stability in the region; however, their most important effect is the considerable economic benefit to all electricity users”, says Robertas Dargis, the leader of Lithuanian industrialists. Industry takes up an average of 70 percent of electricity consumed in Lithuania. In 2014, the average consumption of electricity by industry and business reached 790 million euros. All industrial consumers buy electricity in the market; therefore, they are the first to experience the benefit of the new cables. Cheaper electricity gave breathing space to some of the biggest energy consuming enterprises. “The present choices have increased competitiveness in the energy supply system, therefore it is only natural that prices have gone down”, says Mr. Dargis. Mr. Virbickas, the Litgrid CEO, believes that in order for Lithuania to completely integrate into the Northern electricity trading and transmission systems, it has to start considering NordBalt-2 interconnection. For higher supply reliability and for bigger flows – if the Lithuanian economy expects to equal its electricity prices to Swedish ones. Meanwhile, Lithuanian electricity “New electricity interconnections producers say that they have poor chances have secured electricity supply and to compete with the cheap electricity from stability in the region; however, Scandinavia. “However, we do not despair their most important effect is the and look forward to the future, to the considerable economic benefit to times when, in three to five years, Sweden all electricity users”, says will start shutting down its first nuclear Robertas DARGIS, the leader of reactors”, says Dalius Misiūnas, the head of Lithuanian industrialists the joint-stock company Lietuvos Energija. 2016 / LITHUANIAN BUSINESS REVIEW

ENERGY

IN SHORT TIME, LITHUANIA HAS REACHED AND EXCEEDED THE REQUIREMENTS SET BY THE EUROPEAN COMMISSION TO PRODUCE NO LESS THAN ONE FIFTH OF ENERGY SUPPLIES FROM RENEWABLE RESOURCES. THE LITHUANIAN BUSINESS REVIEW AND MARTYNAS NAGEVIČIUS, PRESIDENT OF THE LITHUANIAN CONFEDERATION OF RENEWABLE RESOURCES, ARE TAKING THE MAGAZINE’S READERS ON A SHORT TOUR THROUGH THIS FAST DEVELOPING SECTOR OF LITHUANIAN ENERGY AND ECONOMY. Lithuanians have learned not only to install biofuel burners, but also to manufacture them and export. Enterprises under LITBIOMA,

Earth, Wind, and Fire According to the EU directives, Lithuania should be producing 23 percent of the energy of all types from renewable resources before 2020, however, this figure has been already reached and overcome, says Martynas NAGEVIČIUS, President of the Lithuanian Confederation of Renewable Resources

LITHUANIAN BUSINESS REVIEW / 2016

the Lithuanian Biomass Energy Association, manufacture reliable and efficient equipment with the optimal price and quality ratio

we based our knowledge on the contemporary notion of renewable energy, we could say that Lithuania has inherited nothing from the soviet times except the Kaunas Hydro-power Plant and timber that was used by mostly country people to heat their houses and cook meals. The first pilot project was launched in 1994 with the help of the Danish Government: a biofuel boiler was installed in Molėtai that ran on sawdust and wood shavings. 60 PERCENT OF URBAN HEATING COME FROM BIOFUEL With time, Lithuania was facing more urgent problems related to high prices on oil and gas. To use gas for heating was increasingly expensive. High gas prices served as an incentive to introduce biofuel burners with the help of European financial support. Unlike the majority of countries in the world, Lithuania has a highly developed system of centralized heating. The country possesses a relatively large amount of biofuel that can be used without the harmful effect on nature. Lithuania is a country of moderately cold climate, local economy is dominated by the service sphere, and heavy industry is actually non-existent. Therefore, Lithuanian economy consumes twice as much thermal energy than electricity. Those circumstances preconditioned increasing investments into the cogeneration of biofuel. A considerable leap occurred in 2006, when in Vilnius a 60 MW biofuel cogeneration power plant was launched, which is the most powerful power plant in Lithuania so far. With independent suppliers of thermal energy joining urban heat networks, biofuel burners became even more popular. The introduction of biofuel stations in Lithuania has started a very important though previously non-existent

biofuel processing industry with the yearly turnover of 150 million euros and still growing. “In a short time, the biofuel production has considerably accelerated its pace: the growing supply comes from the growing demand, and demand comes from supply and competitiveness. Jus take a look at the clean clearings in Lithuanian forests after the greater part of waste has been removed and recycled without the violation of green forest protection requirements. In other other words, everything that earlier used to be left to rot and decay now is being recycled. Another important thing is that the money circulates in Lithuania, unlike earlier, when most of it would go abroad”, says Mr. Nagevičius. Advancement in the sphere of heat production involves important political changes for Lithuania in the increased independence from Russian and other imported gas. Lithuanians have learned not only to install biofuel burners, but also to manufacture and export them abroad. Enterprises under the Energy Production Equipment Section of LITBIOMA, the Lithuanian Biomass Energy Association, manufacture reliable and efficient equipment with the optimal price and quality ratio. Some of manufacturers, like Axis Industries, export their boilers to the Northern market. “We can truly be proud of the prompt transition to the consumption of local fuel in Lithuanian towns and cities. At present, over 60 percent of the entire volume of centralized heat in Lithuanian towns and cities is produced from biofuel. I hope that in the nearest future, Lithuania will start using biofuel for the production of over 80 percent of centralized heat”, says Mr. Nagevičius. Meanwhile, such an advanced country of solar and wind energy like Germany uses almost entirely natural gas for urban heating.

2016 / LITHUANIAN BUSINESS REVIEW

ENERGY

auctions. Auctions would be won by enterprises that would offer the lowest electricity supply tariff. At the latest auction, the winner made an offer of 0.056 euro/kWh for the supply of electricity. That price was close to the wholesale market price. “Recent calculations have shown that if the density of wind turbines in Lithuania equaled to the number of wind turbines in Germany, they would produce twice as much of electricity than we are capable to consume at present. The problem is, Lithuania has already reached the legal quota of 500 MW for the production of wind energy, therefore at present we are negotiating for changes”, says Mr. Nagevičius. Although, due to low population density we have perfect conditions for constructing wind turbines on the land, the development of wind energy in the Lithuanian economic zone of the Baltic Sea is strategically prospective as well. According to Mr. Nagevičius, although the development of wind energy in the sea is more costly in terms of investments, it would yield more kilowatts per hour of energy that would be more efficiently used. The next decade in Lithuania should start an era of marine energy.

Calculations show that if the density of wind turbines in Lithuania equaled to the number of wind turbines in Germany, they would produce twice as much electricity than Lithuania is capable to consume

WIND LARGER THAN ANY QUOTA With the introduction of the so-called Public Interest Service (PIS) in 2004 in Lithuania, principles, quota, and prices were established on buying electricity, produced from renewable energy sources. The system laid a basis for the development of renewable energy as an industry. First investments went to wind energy. The first investor into a small wind turbine with a modest capacity of 630 kW was – funny as it may seem now – the Finance and Administrative Service of the Kaišiadorys Archdiocese of the Roman Catholic Church. Despite its small capacity, wind turbine Enercon E-44 has shown the advantages of wind energy. Estimations have been made that during a decade, the wind turbine has produced 16 GWh of electricity and saved almost 1.5 million cubic meters of natural gas. Had it been burned, would have released 9,600 tons of carbon dioxide into the atmosphere. For twelve years, the electricity of the first wind turbines has been purchased for the fixed price of 0.09 euro/kWh. Now, however, it should start selling its production for market prices, established by the electricity stock-exchange. Later, permissions to construct wind turbines were issued via 62

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THE UNLIMITED POTENTIAL OF WATER In the last decade of the 20th century, the development of small hydro energy was begun, when businesses started buying dams and installing small hydro power plants. The large scale development of this industry is limited by the strict requirements of environmental protection and a ban on damming rivers, as well as by the competitiveness of other power industries. Therefore, Lithuania makes use of only five percent of its hydro power potential. At present, there are 82 small hydro plants, and two hydro power plants of medium capacity (Kaunas Hydro Power Plant with 100 MW and Kruonis Pumped Storage Plant with 800 MW). The small hydro power plants produce an average of 68 million kWh of electricity. The annual capacity of Kaunas Hydro Power Plant is 330 million kWh. SOLAR ENERGY: REGULATIONS DO NOT KEEP UP WITH TECHNOLOGIES The development of solar power plants started around 2011–2012. In this process, Lithuania faced a curious phenomenon when law-making and governmental institutions in Lithuania could not keep up with advanced technologies. Since the governmental policy on solar energy was shaped when solar batteries still were relatively costly, the State, in accordance with the EU directives, established a low quota for buying energy produced in solar power plants, just 10 MW. Such a volume could be easily called experimental. Also, a relatively high fixed price for solar electricity – 0.45 euro/kWh – was supposed to guarantee that within 12 years the project would pay dividends.

Solar energy in Lithuania has initiated photovoltaic production, which is a very promising branch of export

However, prices on the technology plummeted so fast that when the rules of the game were set, it turned out that the prices of photovoltaic batteries were so low that the 12-year dividend expectancy period was reduced to 3–4 years. Then suddenly, the industry started booming: quite a number of people were eager to invest into such an attractive business. Instantly, the 10 megawatts were replaced with 70 megawatts, and applicants for the permission to produce solar energy flooded the institutions. Having realized that, instead of the experimental volume, it might have to buy a considerable amount of electricity at abnormally high prices, the government put the process on hold. At present, considering the investment costs, solar power plant electricity might be bought for 0.15 euro/kWh, and still an adequate margin would be guaranteed for its suppliers. However, this story have left an imprint – many people in Lithuania still consider solar energy to be very expensive. They think that electricity consumers are being overcharged. “Thus, solar energy has been constrained, although, I hope,

The development of solar power plants faced a curious phenomenon

very temporarily. To stop the process is unfeasible as the Sun shines upon us despite governments. Prices on technologies go down despite governments as well”, says Mr. Nagevičius. Solar energy in Lithuania has initiated photovoltaic production, which is a very promising branch of export. When Lithuanian manufactures were joined under the Association of Photovoltaic Technologies and Business, they were able to compete with the manufacturers of Far East and export their production to this region of inexpensive technologies. FUTURE PROSPECTS In short, Lithuania produces more energy from renewable resources than from fossil fuel. Renewable energy is responsible for 15 percent of the entire electricity consumption, including import. On a broader scale, according to the EU directives, Lithuania should be producing 23 percent of the energy of all types from renewable resources before 2020. However, this figure has been already reached and overcome. We see obvious progress here. Martynas Nagevičius is convinced that renewable energy is the future of Lithuania. Foreign experts maintain this belief. According to the European Commission survey of 2014, Lithuania, Latvia, and Estonia were recognized as the best EU countries for the development of renewable energy. The study maintained that electricity, produced from renewable resources in Lithuania, can exceed the demand three times. On the overall scale of energy, it could exceed the demand by 1.5 times. The study also had it estimated that the development of renewable energy and the related growth of surplus value in the country could boost the largest growth of GDP, compared to other EU countries.

when institutions could not keep up with advanced technologies

2016 / LITHUANIAN BUSINESS REVIEW

BUSSINESS

SAXLUND FURNACES FOR VARIOUS TYPES OF FUEL Highly efficient Saxlund furnaces are adapted to different types of fuel and fuel mixtures, while fuel humidity may amount up to 60 percent. Furnaces are characterized by low emissions of NOx, CO and solid particles. The Swedish technology is offered to customers because of its high-efficiency, applicability to multi-purpose objects, stability and reliability. Saxlund’s grate system and fuel feeder is patented. Fuel supply is driven by hydrauliccylinders; the supply of fuel is distributed throughout the entire width of the grate. It is also noteworthy that when one side of the patented desing grate bar wears away, the grate bar can be reversed and its service life can be thus prolonged. The inside of the furnace is covered with heat-resistant insulating material and sprayed concrete lining; the furnace may be used in combination with various types of boilers: hot water, steam, thermal oil. Moreover, dust pollution is prevented by using wet ash removal.

Gislaved Energiring

BIOFUEL BOILER PLANTS OF

AXIS TECHNOLOGIES IN SWEDEN AXIS TECHNOLOGIES, A MEMBER OF AXIS INDUSTRIES GROUP OF COMPANIES, EXPANDS ITS ACTIVITIES IN SWEDEN AND CURRENTLY IMPLEMENTS THE THIRD PROJECT IN THIS COUNTRY WITHIN THE LAST FEW YEARS.HAVING SIGNED THE CONTRACT WITH DISTRICT HEATING COMPANY SÄVSJÖ ENERGI, LITHUANIANS ARE BUILDING 8 MW BIOFUEL BOILER HOUSE IN SÄVSJÖ.

“We

won by far the biggest project in the Western countries, having surpassed eight competitors from the Scandinavian countries. We are now able to compete with the strongest Western companies and ready to export our products and services to the most advanced markets,” says Giedrius Vaitkevičius, CEO of Axis Technologies. The construction of the boiler house that started in January 2016, should be finished by March 2017. This is the third project of Axis Technologies which has been contracted in Sweden lately. A 12 MW biofuel water heating plant for wood processing company Hilmer Andersson was commissioned in Sweden, Åmotfors, several months ago.Axis Technologies provided biofuel furnace, a boiler and electrostatic filter for this boiler plant. 64

LITHUANIAN BUSINESS REVIEW / 2016

Axis Technologies will soon finish another project in Gislaved. Lithuanians are installing flue gascondenser in 5 MW biofuel heating plant, which will increase the capacity of the heating plant by 25 percent without the use of additional fuel. It will also make heat production more efficient and will save costs to the plant operator Gislaved Energiring. According to Mr. Vaitkevičius, Axis Technologies managed to join the league of biofuel energy experts a decade ago when the company started cooperating with the Swedish company Saxlund. Later Axis Technologies acquired a licence for biomass furnaces from this Swedish company. “We won by far the biggest project in the Western countries, having surpassed eight competitors from the Scandinavian countries.

Hilmer Andersson

MAJOR PROJECTS OF AXIS TECHNOLOGIES FULFILLED IN SWEDEN CUSTOMER

FUEL

LOCATION

YEAR

DESCRIPTION

Sävsjö Energi AB

Wood chips

Sävsjö, Sweden

2017

Customer: district heating provider Scope: turnkey heating plant technology hermal power: 8 MW Combustion technology: grate furnace, producer Axis Industries AB Fuel handling: Axis Industries AB Condensing economizer: Axis Industries AB Control system: Axis Industries AB Boiler: Danstoker Electrostatic filter: Scheuch Value for the customer: Lower cost price of heating production due to high efficiency of the system

Gislaved Energiring AB

Wood chips

Gislaved, Sweden

2016

Customer: district heating provider Scope: turnkey flue gascondenser Thermal power: 5 MW Condensing economizer: Axis Industries AB Control system: Axis Industries AB Value for the customer: Lower cost price of heating production due to high efficiency of the system

Hilmer Andersson AB

Wood chips

Åmotfors, Sweden

2015

Customer: sawmill Scope: hot water plant technology Thermal power: 12 MW Combustion technology: Axis Industries AB Fuel handling: Axis Industries AB Control system: Axis Industries AB Electrostatic filter: Axis Industries AB Value for the customer: • Reliable source of heating • Low environmental pollution • Competitive cost price of thermal energy

We are now able to compete with the strongest Western companies and ready to export our products and services to the most advanced markets.” CEO of Axis Technologies Giedrius VAITKEVIČIUS

Axis Technologies is a company that belongs to Axis Industries group, which produces technological equipment for biofuel boiler plants and power stations. Axis Industries group has implemented more than 200 biofuel projects in Lithuania, Sweden, Latvia, Estonia, Poland, Russia and Belarus. The company provides comprehensive services: conducts technical expertise and consulting of the objects, designs, supplies, installs, runs and supervises technologies for boiler plants and power stations, and provides services of equipment automation and technical maintenance.

www.axis.lt

2016 / LITHUANIAN BUSINESS REVIEW

TOURISM

MICE THAT FEED THE COUNTRY WITH EACH YEAR, LITHUANIA BECOMES MORE ATTRACTIVE AS A DESTINATION FOR THE MEETING INDUSTRY. IT GAINS LEADING POSITIONS IN THE BALTIC REGION IN HOLDING INTERNATIONAL MEGA EVENTS. LITHUANIA, AS A DESTINATION FOR MAJOR CONFERENCES HAS BEEN APPRECIATED BY OSCE, NATO, UNESCO, AND OTHER INTERNATIONAL ORGANIZATIONS. IT IS VILNIUS THAT HOSTS CONVENE – A TRADITIONAL ANNUAL SUMMIT OF THE MEETING INDUSTRY OF THE BALTIC REGION. EVEN THAT IS ALMOST NOTHING COMPARED TO WHAT VILNIUS WILL OFFER TO TIP THE SCALES OF INTERNATIONAL TOURISM AFTER 2018, WHEN IT RECEIVES A NEW AND IMPRESSIVE COMPLEX OF THE CONGRESS PALACE AND HOTELS IN THE VERY HEART OF THE CITY.

LITHUANIAN BUSINESS REVIEW / 2016

TOURISM

are sitting in a small but cozy office of the Director of the Vilnius Tourism Information Center. We begin our discussion with the stubborn Lithuanian language. “The term ‘Conference Tourism’ that prevails in Lithuanian is not precisely correct, because it does not reflect the entire range of activities of the industry”, says Jolanta Beniulienė, Director of the Center. “The rest of the world uses another term – meeting industry – that more precisely shows its scope and complexity. Even better the entire essence is represented in acronym MICE: Meetings, Incentives, Conferences and Exhibitions”.

A MOUSE THAT BRINGS MILLIONS It turns out that mice are useful animals worthy to be bred at home, because it brings back to its den valuable stuff, says the Director. Firstly, we should be speaking of economic benefits. As a rule, meeting industry contractors are financially potent international organizations and enterprises with generous budgets for organizing events. Moreover, they are in abundance. According to the data of the International Congress and Convention Association (ICCA), annually there are around 10 thousand conferences of international associations alone held globally. The world meeting industry

is responsible for one fifth of the entire tourism market and is worth 110–120 billion euros. In addition, international events are attended by people with higher income who, unlike budget tourists, can afford more expensive services and attractions. Corporate incentives, when a corporation, as a reward, takes its employees on a trip abroad with minimal attention to business and maximum to entertainment, are among the most profitable. The Ministry of Economy, the main policy-maker of tourism in the country, sees business tourism as a priority for developing tourism. “Meeting industry further provides immense benefits to the broader economy as it generates on average a higher spending level, reduces seasonality, contributes to the regeneration of destinations, spreads knowledge, and enhances innovation and creativity”, says Rasa Noreikėnė, Deputy Minister of Economy. The Ministry provided our magazine with the following figures: on average, a business tourist stays in Lithuania for 2.5 days and spends approximately 300 euros. In 2014, our country received 257 million euros from foreign tourists and one-day visitors, who came to Lithuania on business or professional matters, which made 6.3 percent more than in 2013, and 43.6 percent more than in 2010. In 2014, the income from business trips was responsible for 23.7 percent of the entire income from inbound tourism. Major international conferences, exhibitions, and conventions of any kind give small countries like Lithuania non-financial surplus value as well. “Often those events offer presentations of and discussions on new ideas of science and technologies, innovations in environmental protection, new managerial solutions, and know-how. Such chances for experts and professionals to share experience and advice on the solution of different issues cannot be overestimated”, says Ms. Beniulienė.

NOT IN THE MIDDLE OF NOWHERE ANY MORE According to ICCA data, most of world international conferences are held in European countries (approximately 66 percent) with the leading positions held by Western Europe: France, Germany, Great Britain, the Netherlands, Italy, and Spain. The Czech Republic and Hungary, followed by Poland, recently started adopting leading positions. European cities also dominate the ten top list of cities. What about Lithuania? Can Vilnius be named a center of regional meeting industry? “Earlier, some nine or ten years ago, when I started working in tourism, Lithuania indeed was Our strategic goal is to become a gateway to the MICE market of the Baltic region, and CONVENE is our chosen mode of leadership, says Ms. BENIULIENĖ, Director of Vilnius Tourism Information Center

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Europe ranking Number of meetings per city RANK

CITY

MEETINGS

Paris

214

Vienna

202

Madrid

200

Berlin

193

Barcelona

182

London

166

Amsterdam

133

Istanbul

130

Prague

118

Brussels

112

Lisbon

109

Copenhagen

105

Budapest

Rome

Stockholm

Helsinki

Lithuania is becoming a more preferable meeting industry

Dublin

destination and its position in the Baltic Sea region is continuously

Munich

growing, says Deputy Minister of Economy Rasa NOREIKIENĖ

Athens

Edinburgh

perceived as something in the middle of nowhere. That became obvious at exhibitions abroad, where people would wonder where that Lithuania was, and even tourism professionals would ask very generic questions about the country and its basic facts”, says Ms. Beniulienė. “Now, the situation is far from what it used to be. Now, we professionally discuss specific issues, provide working information, and talk about hotels, dates, venues, logistics, and prices.” Deputy Minister of Economy Rasa Noreikienė thinks that Lithuania is becoming a more preferable destination for the meeting industry and that its position in the international market of business events in the Baltic Sea region is growing. Vilnius as a venue for mega events is preferred by OSCE, NATO, UNESCO and other international organizations. As Ms. Noreikienė puts it, the biggest development potential belongs to major cities such as Vilnius, Kaunas, and Klaipėda. However the industry can benefit from the infrastructure of our resort towns as well. Druskininkai, Birštonas, Palanga, and Neringa are known for their modern conference centers and hotels, as well as spas and other wellness facilities, where work and recreation can be easily combined. The ICCA annual ratings of over 200 European cities show that in 2013, Vilnius was in the 25th place by the number of the events of international associations, while in 2014 it was in the 28th place by the number of events. In this rating list. Vilnius beats such popular European cities as Milan,

Zurich

Warsaw

Milan

Porto

Tallinn

Oslo

Belgrade

Vilnius

Göteborg

Geneva

Cracow

Marseille-Aix

Riga

Hamburg

Glasgow

Florence

Zagreb

Bucharest

Ljubljana

Moscow

Lyon

Reykjavik

Rotterdam

St. Petersburg

Reference: ICCA

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Žydrė Gavelienė, President of the National Tourism Business Association I think that Lithuania is a perfect place for foreign operators to hold international events. Especially when it applies to Northern companies within the sphere of MICE. Why Northern? Because we have perfect communication with Scandinavia and Finland, we have perfect conditions for events with 50 to 500 people, we can offer a truly good ratio of service quality and price. Participants of CONVENE in Vilnius experience first-hand how professional, hospitable, and helpful our tourism experts are. After 2018, when the new Congress Center will open in a strategically perfect location in Vilnius, our capacity to host large international events will grow manifold.

Tourism CEOs will convene in Vilnius

Manchester, and Frankfurt. In March 2016, the Corporate Rewards of UK declared Vilnius No. 1 destination for incentive events. Influential US business magazine Successful Meetings published a list of most attractive destinations.

CONVENE – CHECKED DATES IN THE SCHEDULES OF PROFESSIONALS If we come back to the question of whether Lithuania and Vilnius are known in the world, MICE specialists, of all the people, surely need not to be told where they are, because Vilnius has become the venue of their annual meetings and part of their professional schedules, says Ms. Beniulienė. CONVENE – that is the name of an annual expo held in Vilnius – is a fair of contacts for MICE business representatives from the Baltic region. In the beginning of a year, usually in February, CONVENE assembles from 500 to 700 business professionals, potential foreign clients that take interest in the possibilities of hosting international events in Lithuania and the Baltic region. Foreign customers are introduced to hotels, travel agencies, unusual venues, conference offices and centers with their products and services, as well as a variety of specialized service providers from the Baltic countries Our strategic goal is to become a gateway to the MICE market of the Baltic region, and CONVENE is our chosen mode of leadership, says Ms. Beniulienė.

together and discuss issues high on the agenda of the European tourism sector. The event this time will take place in a vital time for Europe, since the sector is This year, Lithuania will host another major surrounded by multiple challenges. The recent terrorist attacks, the ongoing refugee convention of tourism professionals. In May 24–26, Vilnius will be home to the 60th sitting crisis, the fight against Climate Change and of the European Committee of the United the jobless recovery, are issues that can only Nations Tourism Organization and seminar World Tourism Organization be addressed with a firm and coordinated Secretary General Taleb RIFAI Fluctuating Business Models: the Collapse of response. Moreover, the impact of technology and Minister of Economy the Old and New Possibilities. At the sitting, in our economies, in consumer behaviour Evaldas GUSTAS sign an and in business models, which influence us discussions will include the most important agreement on organizing a issues of European tourism and the world globally, can only be fully understood and high-level United Nations tendencies of tourism development. The maximized through coordinated approaches. event in Lithuania European regional sitting will be participated Therefore, the technical seminar with very by high-level officials from the World interesting sector participation will provide Tourism Organization and the CEOs of national tourism an opportunity to look at how these new business models administrations and tourism business from 42 countries. are changing the tourism landscape and how the sector is UNWTO’s Secretary-General, Mr. Taleb Rifai, explains: responding.” “The meeting always represents an excellent occasion Lithuania has been a member of UNWTO since 2003 and for Ministers, high-level officials of the national tourism an active participant of the Organization’s programme and administrations and private sector stakeholders to come its activities.

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In 2018, a new Congress Center will be opened in Vilnius. Conveniently located just ten minutes away from downtown Vilnius, the Congress Center will have ten halls to accommodate the audience of 3000–4000 people

This February, the fourth CONVENE was a record breaker with the number of participants (981 participants, which makes 22 percent more comparing to 2015), foreign visitors, and scheduled meetings. It attracted 170 foreign clients, interested in holding events in the region. Over 90 companies from Lithuania, Latvia, Estonia, Poland, Sweden, Denmark, Finland, and Russia introduced their services to prospective customers. The contact fair held almost 3,600 bilateral conventions. Next year, during the CONVENE fair of February 8–9, MICE business professionals will be traditionally greeted with the Lithuanian Sveiki atvykę!– Welcome!

2018 AND AFTER However, all this is next to nothing compared to what Vilnius will be able to throw on the scales of the international tourism market after 2018. The opening of a new congress center in Vilnius is scheduled for 2018. An extensive development of the Vilnius Concert and Sports Palace and its surrounding territory is due to begin in 2018 with four new hotels, including such international brand names as Hilton, Marriot, and Accor. Conveniently located just ten minutes away from downtown Vilnius, the Congress Center will have ten halls to accommodate an audience of 3000–4000 people. According to Ms. Naujokienė, even now, the infrastructure of the future Congress Center has been taken care of: the construction of hotels, restaurants, and other public venues is in progress. Within a couple of years, the accommodation capacity of our capital should increase by 1,200 rooms.

Participants about Convene’2016 Martin Ellis, Team Umbrella, UK I arrived with interest, and left with information, knowledge, contacts, and a hunger for more... plus some great ideas for clients. Convene is exactly what a show should be.

Dr. Lambertus HARTMANN, Delft University of Technology, Netherlands CONVENE provides a wonderful opportunity to network and learn about the possibilities of organizing events in Lithuania. It sets a great example by organizing this meeting perfectly.

Steen MOLLER, Business Events Denmark, Denmark We all agree that we are co m ing back. Quality of the meetin gs w as good, very intense and compact schedule, very well organized and very nice people backing this up. You found a niche in the market well done.

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The GREEN STATION Virginija MAJOROVIENĖ

A LOVER OF NATURAL MATERIALS, SWEDE JEANNETTE ALMSTROM HAS BEEN USING MOTHER NATURE’S GIFTS IN HER WORKS THAT PROMOTE LITHUANIA IN 28 COUNTRIES FIFTEEN YEARS. HER ENVIRONMENT FRIENDLY CREATIONS AND PHILOSOPHY HELP SAVE OUR NATURE.

Ms. Jeannette, what was your road to Lithuania? My business started with wool panties/diapers that were knit and given to me as a present from my neighbor after the birth of my second child. She told me that wool contained a great amount of lanolin that absorbed moisture, radiated warmth, and controlled urine odor, therefore my baby would be dry and warm without getting allergic. Before the invention of plastics, all babies wore panties like that. I myself have three children and a background in textile designer. I thought, let my colleagues make dresses, while I do something more useful with myself. Therefore I got a degree in nursing and combined the three spheres – mother, designer, and nurse – into one. I named my enterprise Lana Care. When I decided to start doing business, everybody thought that Jeannette went mad. Twenty years ago few were familiar with the idea of ecology. I was trying to prove that my chosen path was right, that I was doing the best I could. The most important thing for me is that those panties breathe, they are light in weight, do not cause allergies, they are designed to adapt to baby’s movements and sensations with outside seams so that they do not restrict the baby’s body. I have designed and patented extra soft, reusable bra liners for nursing mothers. So far, they are unique in the world. They can be used in postsurgical situations for faster healing and protection from cold. In the beginning, I manufactured in small amounts; however, later people got interested in what I was doing and the manufacturing process gained momentum. The maintenance of business in Denmark alone is very costly. Friends of mine who had a knitting company suggested that I relocate my business to Lithuania, where production costs were considerably lower. I called the Danish embassy 74

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A Short Profile Born in Vaxholm, a city in the Stockholm Archipelago in the northern part of the Baltic Sea.

When you relocate to another country, above all,

you have to be in concord with yourself

Studies. “After finishing high school I left for America; one and a half years passed and I returned back to study at Stockholm Sewing School; later, I left for Denmark, where I studied at Copenhagen School of Design and Technology; I returned to Sweden to get married; studied at the Textile Design Institute; later graduated from Medical school”. Most Important Business Decisions. For 30 years J. Almstrom has lived in Denmark where she founded her company, Lana Care, in 1991; in 2003 she transferred her business to Lithuania and for twelve years was managing it by proxy; in 2007 she established another company, Ceiba; in 2012 she relocated to Vilnius. Credo. “You should cherish your life as if every day is one of your last days”. Values. “My biggest assets are my children. My business is another child of mine”. The bigges t challenge. “In Lithuania, the biggest challenge is the language” The recipe for success. “The recipe for success in business is the result of long-term prospects. You have to know what you want to achieve. Money alone is not the goal, it does not guarantee success. Money is an instrument, a means for the long-term prospects to achieve.

Photo by Reda Mickevičiūtė

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in Lithuania and asked what I should do. In that way, fifteen years ago I arrived in your country to accept an offer. I like it here very much. For twelve years I had been commuting between Denmark and Lithuania, flying back and forth. Three years ago I was thinking: my children have grown and become independent, to manage a business by proxy is not easy, so why don’t I move to Vilnius? And again, that was the best decision. How did you come up with the idea to be ecological? While working in hospital I tended to children with skin conditions as well as with damaged lungs and bronchi. Eczema, dermatitis, and allergies are related to what children are wearing. Fabric affects skin, the skin absorbs chemicals that have been used in the manufacturing process. Synthetics do not suite baby skin, while ecological fabrics let skin breathe. Now people have started thinking of what they eat and wear. They have started switching to organic products. Our production goes for export to 28 countries worldwide, including the USA, Japan, and Scandinavia. We intend to start exporting to China. Our products are expensive because they are made of the best quality material. We have acquired all the world recognized eco-certificates and strictly follow quality requirements. During our twenty active years we have never received any complaints about the quality of our production. Where do you bring the merino wool from? From Patagonia in South America. I buy it from a German importer of this soft and beautiful wool. Germans are very strict with the processes of certification and ecology. They monitor the location of sheep breeding. They do not allow fertilizers, pesticides, any chemicals while shearing sheep and processing wool. Every wool shipment is laboratory tested. How did you discover kapok? It all started with an idea of mine: I wanted to design a natural alternative to synthetic diapers. When I learned about kapok trees (Ceiba in Latin) that grow in tropical forests and bear fruit of fiber similar to natural wool, I travelled to Indonesia. I saw a great amount of trees, a hundred meters in height with the diameter of three meters. Those giants had fruit in the shape of an unfolding box, covered from inside with white, shiny, and soft fuzz similar to cotton. I learned that the fuzz, made of celluloses and lignin, was called silk for the poor. The kapok membrane is made of wax that protects from insects and small organisms, therefore the tree does not have to be treated with chemicals. Dust mites do not favor kapok either for the substances present in the wax, therefore its fiber is highly recommend to allergic people. Kapok is eight times lighter than cotton (it is the lightest naturally existing fiber made of 80 percent of air, thin 76

LITHUANIAN BUSINESS REVIEW / 2016

cotton shell, and many pores) and does not absorb moisture. I was wondering how to use kapok instead of plastic. In cooperation with various experts we produced an alternative to plastics. We founded an enterprise, received funding from the Danish government, and started manufacturing wonderful diapers, which are, naturally, rather expensive. Again, I started wondering how to produce bed linens out of kapok. I established contacts with the Šiauliai fabric manufacturing enterprise, and soon we started producing unique bed linens with hypo-allergic kapok filling. Why have the local people not thought of using such a wonderful material? The synthetics industry has seen to it that we all have cheap clothing, while ignoring the gifts of Mother Nature. In Indonesia, where kapok trees grow, people do not know how to use kapok. I have been in that country twice. First time, I travelled to the jungle where I met common people, very nice and friendly by the way. Five years ago, I met with ministers and other officials. Because kapok is an important fabric in the political aspect as well. The harvesting is mostly done by women; one tree can yield fruit for 300 years. Kapok harvesting creates jobs for women. Instead of moving to big cities to work as servants or prostitutes, they collect kapok pods with the help of special sticks. The seeds are pressed into oil, the cake is used as fodder, and the pods go as fuel. The story of kapok is very special. Let us come back to the beginnings. What were your ac complishments in Lithuania fifteen years ago? At that time we had a shortage of many things; were you not scared of the unwritten laws of savage business? Lithuania was not a member of the EU back then. I had to move the entire production including machinery and industrial equipment. For me, as a single woman, it was hard to remove all these assets from Denmark, to do customs paperwork, and to bring it to Lithuania, which was even harder. Tell us about your business management by proxy. I was managing my enterprise from Denmark, often flying back and forth. One day I took a close-up look at the situation and decided that the management and business structure had to be changed. When I came here, I started managing my business in the Scandinavian way and created a different working environment. Until then, every employee would perform their tasks mechanically and leave home. I told myself: “This is it, this has to change”. I changed the system of activities. Now my staff performs not only their work, they can take up other duties. Everybody, by becoming multifunctional, can better understand the essence of the enterprise. We sit down and talk about the processes, I inform

my staff on contracts, prospective customers, the overall activity of the enterprise, and the current situation. The new ambience of the enterprise makes my staff feel valued and responsible not only for the direct jobs they do, but for the entire enterprise. Is it true that a good manager is the one who is able to delegate authority without being engaged themselves? I, personally, also work. A good manager has to understand all processes. I have performed all the jobs of my enterprise. I know every process, and I know what the final product should look like. I stay in contact with every employee, everybody knows me, and they are free to address me with any question they like. I will always help them solve any problem. Do you not feel lonely in Vilnius? Everybody needs friends. In Lithuania, I meet new people and make friends through the Danish Chamber of Commerce, Swedish Chamber of Commerce, embassy events, business meetings, and cultural events. I am an active member of the Scandinavian community in Vilnius. But you know what: when you relocate to another country, above all you have to be in concord with yourself.

What kind of manager are you: strict or lenient? I can be strict, and sometimes under certain circumstances, I am strict. When you give your employees more liberties, you give them more responsibilities as well. I have dismissed a few people; however, I always give them a second chance. Three missed opportunities to improve spell the end. If I see that people abuse my kindness and the freedom I have given them, I can be very harsh. Otherwise people would think that negligence can be tolerated. How do you reward yourself for good job? I feel pleasure when I achieve my goals. That is the best praise and reward. When I want to “pamper” myself, I go to a bookstore and buy five kilos of good books. I am an avid reader, therefore there is never enough books for me. When I lived in Denmark, I used to jog. Having moved to Vilnius, I used to go to a gym for a while. Now my plans include yoga. Recently, I have not had time for a lengthy vacation, so now I am planning to take my youngest daughter, Liza, to Greece. I visit my children separately so that we can talk with each other to our hearts content. This article was made in cooperation with the magazine

EKO - friendly offset printing house Great speed and excellent quality for high printing volumes Please scan the QR code for more information or visit the website www.print.lrytas.lt

FACES

we went on vacation to Norway. There was no other alternative for poor students to explore a foreign country.

Photo by Reda Mickevičiūtė

I have to FALL IN LOVE to start writing Virginija MAJOROVIENĖ

A WRITER, INTERPRETER AND TRANSLATOR, RŪTA MATAITYTĖ (43) HAS ALREADY PRESENTED READERS WITH HER FOURTH NOVEL, HER NAME IS MAGIJA (2016). DOES A MOTHER OF FOUR, WHO HAS FOR TWENTY YEARS LIVED WITH HER FAMILY IN NORWAY, REVEAL DETAILS OF HER LIFE IN THE STORIES SHE TELLS THE READERS?

Most of your life-time you have been studying: first at Vilnius University you studied the Lithuanian language and literature, then at Oslo University you studied Norwegian philology, still later you graduated from the Oslo School of Architecture and Design, and in 2010 you completed training as a translator in Oslo. Are you that thirsty for knowledge or were you forced to study by certain circumstances? 78

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When I was choosing where to study, I never thought of what job I would find and how much money I would make. In my life, I have always done what I liked. My childhood dream was to become a medical doctor or an artist. When I was a senior in high school, I did nothing but paint. I intended to study arts. My teacher said to me: “You are talented, but this year you will fail. You have to be better prepared”. Then I switched to languages and got interested in a program of the Scandinavian department at Vilnius University. After my second year, I visited Norway and later entered Oslo University. When I started studying Norwegian, I understood that I would never learn it sitting in Lithuania. For the first time we arrived in Norway in the summer of 1993. Back then, little was known about that country. My husband had saved three-month’s stipend money which he converted into Norwegian currency, and with 300 krones off

How was it to adapt to new a environment and assimilate to a foreign country? Does the story of the translator from your novel Gunda reflect your own experience? When I started my studies in Oslo, I intended to return within a year, so I did not even try to adapt. Everything there seemed to be beautiful and perfect. But when my husband and I decided to stay for longer and make our home there, we discovered things that we did not like or that we missed. The period of hardship started. We were homesick, I felt like I was drifting away from my country. Novel Gunda (2015) is not an autobiography; no story, told there, has ever happened to me; however, every story contains a part of my soul. For example, when Gunda returns home, she feels alienated. After two years of studies I returned home, and I also felt this alienation. It was immensely difficult. Another example: I fly back to Vilnius and feel miserable; in a week I get adjusted, but when I return to Oslo, my sufferings renew and I have to try again to shed that longing and sadness. Recently I have been visiting Vilnius more often, therefore I do not experience noticeable alienation. On the other hand, I am used to the changing environment; I have discovered my identity, which is neither typically Lithuania nor Norwegian, but rather my own individual. What does your husband do in Norway? Vidmantas accompanied me everywhere, including Norway; we wanted to be together always, even though it caused inconveniences in logistics.. I studied Norwegian philology, and my husband read my entire literature program. That way he learned the language. Vidmantas studied at Kaunas Institute of Physical Culture, later he worked as a teacher. In the beginning, he had no permission to be employed in Norway, but later he received it and took up a teacher’s job at a school in Oslo; later, he studied for a couple of years in the Norwegian School of Sports Sciences. From the very beginning, he has been doing well and he likes what he does. How conveniently did you settle down in the foreign country? To settle down was not an easy experience. The period of hardship in Norway was long. For ten years, I had been studying with no exceptional rights or money. We could hardly make both ends meet. In the beginning we stayed in a one-room hostel apartment, later we moved into a two-room apartment. When we were expecting our twins, we moved into a family apartment. Finally, after four years in Norway, we managed to get something of our own, but then our two other children were born, and again our housing became

too small for the six of us. We lived without being sure if we would ever afford a larger property for the incredibly high prices in the capital and its suburbs. When we got full-time jobs, we started saving and bought a small town-house. By Norwegian standards, the property is too small for a family of six, but I am happy with it. Sometimes I make jokes about a small house that needs less cleaning. We like the location and our friendly neighborhood. Do your children speak Lithuanian? Did you take care of your children yourself, or did you have a nanny? The children were taken care of just by my husband and me. We had no grannies, aunts, or nannies. When the twins were born, Vidmantas was working on his master’s thesis. I remember when in the evenings he would cradle one baby on his left arm while writing his paper with the right hand. Next morning I would go to the library to type his paper in the computer: that was my only chance to run away from my duties as a mother at least for an hour. All our children went to day-care from one year of age. There they learned perfect Norwegian and found friends. At home we speak Lithuanian, but our children go to Norwegian school. They understand everything what is said in Lithuanian, but sometimes have difficulties in saying more complicated things, therefore it takes exceptional efforts to maintain our language at home. Not all four are equally interested in the language. We do not want to push them, instead we help them in any way we can. We are very happy that one of our girls willingly takes private Lithuanian lessons. Sometimes the children ask who they are – Lithuanians or Norwegians. I think, this question is relevant to many immigrant families. In order to answer this question, one should go deeper into the essence of the national spirit. You work as an interpreter from Norwegian to Lithuanian in courts. Having read your novel, one starts understanding how dangerous and intense is your job. What courtroom stories have ever caused you the greatest shock? Usually I work in courtrooms, but often I am asked to do translations for the police, hospitals, social insurance offices, and schools. Sometimes I have private clients. Before I started working as an interpreter in the governmental sector, I underwent training in translating and interpreting, where we were very well instructed how this job could affect you personally, how to distance yourself from what you say, how not to judge or side with the client. You are not supposed to love or hate, you are just supposed to help communicate. That is the essence of the job. In the beginning I was doubtful, but later everything turned out to be great. No matter how difficult the case is, if it does not last too long, it does not affect me. Another thing is with

2016 / LITHUANIAN BUSINESS REVIEW

FACES

prolonged cases that absorb me to the point that I cannot forget the developments even after the case is closed. Very often I find myself thinking: “I am so happy that I am not a judge, who has to make decisions on who is wrong and right.” Do you ever feel uncomfortable being a compatriot of a criminal? I do not think in such terms, nor do Norwegians. I look on the bright side of life. At my work, I have to communicate mostly with lawyers. They do not judge their clients, they see people who need services from a specialist. My position is exactly the same: no matter what crime has been committed, the person is, above all, a human being. Lithuanians, in my opinion, have an inferiority complex. “There was an article about us in the magazine, what a shame. It makes us all criminals”. But that is not true. Lithuanians in Norway are normal people, only a small part of them come there with obscure intentions, unfortunately, this part is more obvious. Yes, some Norwegians talk about us as great cons, but the majority of them, if you asked, would admit that Lithuanians are hard-working people. You work full-time, at home you have to take care of your four children… When do you find time to write? At night, most often, when the family is sleeping. Sometimes I can write while riding on the bus or in a coffee shop; if you ask my colleagues, they will say that I write during short breaks in the courtroom; when the inspiration comes, I can write anywhere, although I prefer silence and peace. If I get started, I have to be sure that nobody and nothing will interfere. When I was working on my first book, I would talk out loud with my characters. What does the process of creation mean to you? Before I start writing I have to fall in love, not necessarily with a living person: it could be pain and loss, or an adventure and idea, the most important thing is to feel passion. The plot is always fictitious, but feelings are true. I feel through emotions together with my characters. My life is most of the time too monotonous; if I describe it, nobody will read, therefore I have to invent stories and augment them on the basis of my own experiences. The idea of my first novel, A Dream of Snow (2013), had been brewing for a long time. At that time I suffered quite a number of difficulties in my life and my imagination created an alternative story, which was sitting inside of me for a long time, when one day I felt an urge to write it down. I could not understand what was driving me; I had to draw my final graduation blueprint in architecture, but instead I started writing a novel, putting in jeopardy my diploma. It was like an obsession. By the way, I wrote my first book in Norwegian; however, later I understood that I would never be 80

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able to express my thoughts in Norwegian like in my native language. Therefore I rewrote the entire novel in Lithuanian. My second novel, Letters (2013), is an intimate novel about two people who live separately, but maintain a strong spiritual connection. That story was written with extra passion. My last, most recently published novel tells a story of a lonely father and his daughter, and is permeated with nostalgic love for a lost woman. I would very much like this book to reach out to the male audience, unlike my other novels with women as main characters. Alongside novels, I also foster other ideas: I am writing a film scenario based on one of my novels, while another book will be the basis of a future play. At a presentation in Oslo, we acted out a scene from my scenario that inspired me to explore this field of arts. From time to time, I consider having my books translated into Norwegian. However, all those undertakings do not develop as fast as I would like because of the lack of my own competences, money, time, and people, who would share my passion. As we all know, creative projects are not too profitable. Do you miss Vilnius? Yes, very much. I will miss Vilnius for the rest of my life. When I return here, I spend one day only with my city, nobody can interfere: to be alone in Vilnius is equally important to me as to meet my friends. I am a pure urban dweller: I grew up in Vilnius downtown, spent my childhood on the Tauro hill, played hide-and-seek around the Music Academy and the KGB building, used to meet with friends in the Lenin Square, and sometimes in winters, I would hide from cold in the Cathedral. Later I moved to another capital, Oslo. Vilnius is my city, I know every street and lane here, while Oslo yet feels to me untamed, although I have lived here for many years. Do you have any intentions to return home? I have a very vivid imagination, so sometimes I do fancy my return, which, however, makes me think that I would not be able to live here, nor would I know where to start. It looks like an impossible yearning. Besides, my children were in Norway and it has been their home. During those years, my husband and I have firmly settled down in Norway, so it would be unfair to rip everything apart, although deep in my heart I have this yearning which, probably, will never leave me. I maintain ties with my motherland in other ways, through books, my works; the children will be free to take from their lives whatever they choose. This article was made in cooperation with the magazine