Can a Soviet Port be Reborn?
The World of Baltic Advertising
The Port of Riga’s very expensive facelift– one billion dollars afloat.
Latvian advertising’s crusade for creative: Estonian sprinters vs. Latvian marathon men. Issue №2 | 2007
RigaNOW! Business Supplement
LATTELECOM’S MANAGEMENT BUY-OUT
THE DECADE’S
MEGADEAL How Latvian-American Nils Melngailis kept the nation’s biggest telecommunications company out of foreign hands. By JURIS KAŽA
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Excessive alcohol use is negative to your health! Cover.indd 2
2007.08.21. 13:29:28
Ingrīda Mičāne
Senior business editor Business editors Leisure editor
Jānis Puriņš Ilgonis Zaļais Bob Traut Jekaterina Streļcova
Contributing editor
Scott Diel
Juris Kaža Recent contributors Dorian Ziedonis Scott Diel Andris Strazds Copy editor
Dorian Ziedonis
Art director
Aleksandrs Golovins
Photographer
Oleg Zernov Target Studio Allan Smithie
Advertisement department Signe Albiņa adv@riganow.magazine.lv
The Insider, supplement to RigaNOW! Ganību dambis 24a, Rīga, LV 1005, Latvia Tel. (+371) 738 3499, Fax (+371) 738 3099 e-mail: insiderpr@riganow.magazine.lv All rights reserved. Reproduction in whole or in part is strictly prohibited. The Insider is a registered trademark of “SK Latvia”. Magazine registration number: 0003574031
Courage You’ll notice from the bar code on the cover that The Insider is now available in most major countries in Europe and beyond. Whether you’re reading in Uganda, France, or Venezuela, we hope you’ll find courage from this issue. The successful businesswoman J. K. Rowling (yes, we know she was first a writer) once said that “Anything’s possible if you’ve got enough nerve.” This issue celebrates that nerve. This issue celebrates courage. For example, the courage of Nils Melngailis to organize a management buy-out in order to keep Lattelecom flying the Latvian flag. In the Baltic region, where many major companies have sold their shares (and perhaps souls) to foreign concerns, Lattelecom remains Latvian. You may read about the courage of one developer to knock down old Soviet barracks and spend one billion euros to remodel the Port of Riga. That’s a rather large bet on the future of Latvia and isn’t to be taken lightly. Or there’s the courage of an Estonian bus company which is asking businessmen—who love their cars, and, let’s admit it, who love to be seen in their cars—to give up their automobiles in the name of personal productivity. That is no small bet, either. The Insider is a celebration of all that’s right about business in Latvia. That doesn’t mean we’re not critical—we strive for balance and insight in our stories. Our objective is to bring a three-dimensional, colorful glimpse of the Latvian business community to foreign readers who may not always have the possibilities for an indepth look themselves. In this issue and others, we introduce you to Latvians—and a few foreigners, too—who are setting the standards for others to follow. Good reading, Ingrīda Mičane Senior Business Editor
© SK Latvia Publishing House Reg. Nr. 50003574031 SK Latvia Publishing House is also publisher of:
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Contents
8
Contributors
8
14
4 News 8 Deal of Two Decades How Nils Melngailis Sold Lattelecom 14
Latvia for the Long Haul JC Cole on Investing in Latvia
20 The Business Bus A New Way to Travel the Baltic
22
22 A Port Reborn One Billion Euros in Investment 28 Marathon Man The Evolution of Latvian Advertising 32 Questionable Items What the Boss Doesn’t Know... 34 Gadgetry Fire your Personal Assistant? 36 Contacts The Insider’s Business Listings
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THE INSIDER
Juris Kaža is a Latvian-American journalist working for the Latvian news and multimedia agency LETA as an editor and blogger. Previously, he worked as a journalist for the Latvian business daily Dienas Bizness for 11 years. In a still earlier life, Juris lived and worked in Sweden for Radio Sweden and as a freelance business writer for a number of international publications, including the International Herald Tribune. His English-language blog can be found at www.latviantelecoms.blogspot.com.
Scott Diel is an American writer based in the Baltics. He first came to the Baltic region in 1992 and has lived and worked in Estonia, Latvia, Lithuania, Ukraine, and Belarus. His stories have appeared in the magazines Outside, Iconoclast, Sports Afield, and Gray’s Sporting Journal and other American magazines. His essay, “69° North, 33° East: Running from the Russians,” will be published in the fall edition of the literary journal, Agni. He was formerly editor-in-chief of the monthly, City Paper. Issue №2 | 2007
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NEWS
Physician, Heal Thyself The new Latvian president, physician Valdis Zatlers, has a chance to admit past mistakes and change, says the US publication Business Week. The magazine notes that if the president could overcome his “blistering nomination process” and the difficult beginning to his presidency, which has been shadowed by the scandal of unreported income (he was ultimately fined a mere 350 euros for his offense), his presidency has the potential to be much more inspiring than that of President Vaira Vīķe-Freiberga. Daunis Auers, the article’s author, noted that “...a determined focus on domestic affairs, particularly the long-standing problems with corruption, civil culture, and tolerance that were sidelined in the race to join the EU and NATO, will differentiate him from his predecessor’s diplomatic globetrotting.”
OMX on the Block
Borse Dubai, the United Arab Emirates stock exchange, issued a statement saying it wishes to purchase at least 25 percent of the OMX exchange. Borse Dubai representatives said they would carry on talks with the management and largest stockholders of OMX about further cooperation between the owners of the Nordic and Baltic stock exchanges. Borse Dubai has offered 24.47 euros per share, valuing the company at around three billion euros. This price beats the offer from Nasdaq, United States’ second largest stock exchange. A few months ago OMX and Nasdaq agreed on a merger worth 2.7 billion euros. On August 17, OMX froze trading of its shares on the Stockholm Exchange, waiting for news about a possible acquisition offer. The OMX group consists of the Copenhagen, Stockholm, Helsinki, Reykjavik, Vilnius, and Tallinn stock exchanges.
Iceland Invades the Baltics
Kaupthing Bank’s net profit was 986 million euros last year.
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Hreidar Már Sigurdsson, leader of Iceland’s biggest bank, Kaupthing Bank, has announced the bank is planning to expand abroad to Northern Germany, the Benelux countries, and the Baltics. In the recent past Kaupthing Bank has acquired the Danish bank FIH, as well as the British firm Singer & Friedlander. In August, Kaupthing announced it would purchase the Dutch bank, NIBC for three billion euros. Kaupthing Bank’s net profit was 986 million euros last year.
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facts NEWS & comments
Battle for the Skies Latvia’s Ministry of Transport has offered a discount system to attract more routes to Riga Airport. The ministry offered a fifty percent discount on airport services for carriers who would add new regular routes from Riga during the first two years of operation. The discounts are applicable only for new routes and not existing flights a carrier may currently offer. The ministry hopes the offer will draw new carriers to Riga and expand both direct and connecting flights.
Ecolines adds Warsaw, Sophia
Bus transport company Ecolines has added Warsaw and Sophia to its list of destinations. Ecolines operates routes to Lithuania, Estonia, Russia, Ukraine, Belgium, France, Netherlands, Great Britain, Poland, Germany, Switzerland, Austria, Slovakia and Bulgaria. The Ecolines trademark belongs to Latvian company Norma-A, though partner companies in Lithuania, Russia, Ukraine and Belgium have rights to use the brand.
Cheap Vodka Rules According to recent surveys, the most popular alcoholic product in Latvia is the inexpensive vodka, 3 Graudu Degvīns (Three-grain Vodka), and the most popular beer Aldara Pilzenes, also relatively inexpensive. The second most popular alcoholic beverage was the local champagne Rīgas šampanietis, followed by the gin-in-a-can Cēsu džins. The rest of the list may also be found in a can, Fizz, apple cider Lucky Dog, and Gin Green Lime. As Insider readers might have guessed, foreign businessmen did not take part in the survey.
Cheap, certainly. We don’t know about the taste.
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Business Cigs Drag Bottom of List
In the battle for hearts and lungs, Marlboro topped the list of the most popular tobacco products in Latvia. The only Latvian-made cigarette to make the list was Elita, in fifth place. In general, Latvian smokers seemed to more closely identify with cowboys than with businessmen: Partner, Wall Street, and Bond finished at the bottom of the list. 1. 2. 3. 4. 5.
Marlboro L&M Main Monte Carlo Elita
6. Winston 7. Red & White 8. Partner 9. Wall Street 10. Bond
Bank of Latvia’s New President?
The Central Bank of Latvia’s president Ilmārs Rimšēvičs’ term expires in December 2007, and the Saeima’s (Latvia’s parliament) ruling coalition party is not making forecasts as to whether he’ll keep his job. Rimšēvičs, 42, became the Chairman of the Board of the Bank of Latvia in 1992. Three years later, several Saeimas deputies accused Rimšēvičs of incompetence and pressured him to leave his position, but the bank’s then-president Einars Repše came to his defense. In December 2001, when Mr. Repše left the bank for political life, Rimšēvičs stepped into his shoes as president. The president of the bank of Latvia is elected by Saeima for six years, and can be re-elected for consecutive terms.
Latvia Takes Estonia’s Tourists?
The Estonian Statistics Bureau reported that 14,000 fewer tourists visited the country versus the same period a year ago. Estonian tourism experts believe Latvia has taken those tourists, given its superior air connections to Western Europe and larger investment in promoting itself to tourists. Estonian hotel owners also report a decrease in business. Director of hotel chain Tallink, Aivar Soerd, said that Tallinn hoteliers are increasing the number of available rooms, but are competing for a shrinking number of tourists. Anecdotal evidence also supports the tourists-gone-south theory, with more and more Finnish license plates being seen on the roads of Latvia. Though there is no longer cheap alcohol anywhere in the Baltic, the Finns seem to have tired of Tallinn and are turning their sights southward to Latvia and Lithuania.
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Illustration: Corbis
deals
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Latvia’s fixed network operator’s MBO will likely be the deal of this decade, lasting into the next decade as the new shareholders earn their stock options in a highly competitive regional and global market.
By Juris KaŽa
THE INSIDER
Nils Melngailis has served as Lattelecom’s CEO and Chairman of the Management Board since 2004. Prior to joining Lattelecom, he was an executive in IBM responsible for Business Intelligence in EMEA and on the management board of the Nordic Business Unit. He has held management positions and been a partner in Coopers & Lybrand and later in PricewaterhouseCoopers, including as a member of the Strategic Mergers and Acquisitions practice in London, managing partner of PwC in the Baltics and a member of the Central European management team. 10
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Photo: Olegs Zernovs (Target Studio)
C.V.
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deals
We
’ll leave it to others unborn to talk about the “deal of the century,” in, say, 2097, when the century is nearly over. But today, the LVL 290 million management and staff buy-out (MBO) of Lattelecom, Latvia’s dominant fixed network telecommunications operator, will probably stand as the deal of the decade. For TeliaSonera, currently the private stakeholder (49%) in Lattelecom, the MBO represents a setback in plans for taking a 100%, or at least significant majority share, in all fixed and mobile telecommunications in Latvia, Lithuania and Estonia where it already has holdings. The Swedish group has succeeded in Estonia and Lithuania, but was blocked by a clear “no” last year from the Latvian government, the 51% stakeholder in Lattelecom. Government officials cited fears of a “super–monopoly,” which, as far as call tariff increases go, has not materialized in any of the other Baltic neighbors. The Lattelecom MBO will also have a fair shot at being the deal of the 2010s, because it really won’t be fully executed until well into the next decade, when most of the shares in the currently 12-year-old Latvian telco will have vested to employees and managers in stride with the company’s financial performance. By then, Lattelecom will have been listed on regional stock exchanges, allowing at least retiring or departing employees and executives to cash in their accumulated shareholdings. Currently, Lattelecom ownership of 49% by TeliaSonera and 51% by the Latvian state is the same split among foreign investors and the government as in 1994, when the current company was formed with Cable & Wireless and Telecom Finland (later Sonera, now absorbed into TeliaSonera) both as stakeholders in Tilts Communications, a Danish registered holding company that bizarrely made Denmark the largest foreign investor in Latvia during the mid-1990s.
Will Lattelecom create some stockoption millionaires? Possibly, if CEO Nils Melngailis’ ambitions to grow revenues, expand into new operations, and acquire companies meet with success. Melngailis’ vision, since the LatvianAmerican took over as CEO in 2004, has been to move Lattelecom far beyond being “the phone company” to using the network operation, IT skills and administrative skills of a fixed line operator to make new businesses. These include providing outsourcing services to Latvian and foreign companies, implementing converged IT, telecoms and data transmission services for companies and building networks for others, including competitors. In 2005, Lattelecom launched two new subsidiaries, C1 (now Lattelecom BPO/Business Process Outsourcing) and network builder Citrus Solutions, and in 2006, it got the Latvian piece of MicroLink, the largest IT company in the Baltic States (the Estonian and Lithuanian pieces were picked up by TeliaSonera subsidiaries in the respective countries) and made it into the IT solutions company Lattelecom Technology. On the consumer side, Lattelecom has cut domestic calling tariffs as far as they will go. They’re free, providing you sign up for one of the Lattelecom’s home broadband (HomeDSL) deals that deliver speeds of up to 10 megabits per second (Mbps) to households. The company has, in effect, become a broadband and value-added services
The broadband strategy has been a relative success so far, with more than 100,000 DSL users out of a customer base of more than 600,000 fixed-line subscribers. This is a figure dwarfed by the statistic of both of the large mobile operators, Swedish-owned Tele2 with some 1.1 million customers, and Latvian Mobile Telephone (LMT) moving close to the 1 million mark, with LMT to be taken over 100% by TeliaSonera in a closely-related deal. All of this was done under Melngailis and with the consent of the Swedes, who, according to sources close to Lattelecom’s upper management, were considered excellent owners, though a bit slow and cautious on the decision making side. The pace of change in the telecommunications industry (effectively, the converged IT/telecoms business) is such that, as Melngailis put it in an informal interview last year “you are down to having to re-examine strategy on a quarterly basis.” But what about the current deal? Melngailis talked to The Insider in mid-August and cautiously sketched out how the MBO would be structured. He was cautious for two reasons – first, because the consortium to finance the deal was still being put together, and second, because financial market turbulence, caused by subprime lending worries in the US, was making some assumptions of financing costs more uncertain. As things look now, according to Melngailis, the consortium backing the MBO will consist of one private equity company that will buy into Lattelecom and hold its stake, effectively as a partner to the management and staff, and a consortium of a few banks financing the rest of the purchase (buying out, in effect, both TeliaSonera and the state). The first step, once a deal is signed (possibly on September 12) and closed (hopefully by year end), will be to equally distribute some stakeholdings in Lattelecom to all employees and management. A
Government officials cited fears of a super–monopoly. provider, with the main added value being up to 40 channels of internet television (IPTV) with such features as video on demand and time-shifting (record the evening news show, watch it in the wee hours and spool back to see what some politician mumbled yet again).
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With Russia, we have a language advantage and in all markets we can be more flexible than the big players. certain unspecified but modest amount of shares will also be available for purchase by employees and management. “Turbulence in the financial markets in recent weeks will affect the final conditions, so it is hard to say 12
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at present how the share distribution will look. One part will be granted to all employees, but that still has to be calculated. Every employee at Lattelecom, regardless of seniority or position, will receive a certain amount of
shares. All employees will then have the opportunity to buy shares in a limited amount,” Melngailis said. “In the future, the share disbursement to the management and employees will be according to the financial results, both on an individual and collective basis. Once real money has been paid for the company, there is little reason to give away shares,” he explained. The Lattelecom CEO agreed that, for example, if an employee’s profitsharing stake was LVL 1,000, the employee could choose to exercise options in that amount or take a cash payout. Middle and upper managers would be gradually shifted to get a significant part of their remuneration in stock options, “as it is in the US,” he said. Issue №2 | 2007
As the management and staff stake increases, and, more importantly, if Lattelecom boosts both revenues and profit, it is likely the company will be reorganized as a joint-stock corporation (currently it is a limited liability company, or SIA, in Latvian) and listed on the Riga and other regional Baltic/Nordic stock exchanges. The listing will also involve a new public share offering, most likely to raise funds to trim debt taken up to make acquisitions. “I don’t exclude listing Lattelecom on the stock exchange in a few years both to get new capital and give employee-management shareholders a way to cash in their shares. Maybe we will also list a subsidiary. We want to work for a few years on getting our revenues up now that we’ll have no restrictions [Lattelecom was wary of “competing” with the Swedes – JK], and the best time for a share issue and listing is when your revenues are rising fast. When you have a change of shareholders and strategy, like now, it is not the best time to go to the stock market. A listing won’t come sooner than in three to five years. Ideally we would want to consolidate some of our businesses on the Baltic/Scandinavian level and be a significantly larger company before we do that,” Melngailis said. Will the deal work? Svetlana Issaeva, a senior analyst and manager of the Communications, Media and Technology practice at Pyramid Research in London, cautioned that Lattelecom’s somewhat greater freedom of action and Svetlana Issaeva speed of decision-makSenior Analyst ing after an MBO would and manager of be offset to some extent Communications, Media and Technology by diminished econoat Pyramid Research. mies of scale (integration into the TeliaSonera group, with EUR 10 billion in revenues, would have put that kind of weight behind any Lattelecom procurement). Another factor to consider was the knowledge transfer and internal benchmarking that occurs in large
multinational telecommunications groups, Issaeva said. The analyst, with an extensive background in Central and Eastern European telecom analysis, said Lattelecom would have to move into the mobile market, probably by setting up a virtual operator so as to be able to offer a full spectrum of services. A major challenger, with increasing abilities to offer mobile and wireless/ mobile broadband, will be LMT, a 100%
entrusting the vital organs of a company or organization to a third party. That third party better have a global reputation, the manager said. Melngailis, however, thinks Lattelecom will find a sufficient niche in the European outsourcing market, estimated as high as several tens of billions of euros in the next few years: “Our results are good enough and there is room for us in the IT market, especially in Scandinavia, where the market
...Lattelecom’s somewhat greater freedom of action and speed of decision-making after an MBO would be offset to some extent by diminishing economies of scale... TeliaSonera subsidiary once the parallel deals are inked. In Sweden, the company has abolished fixed telephony internally, with all employees carrying mobile phones that answer to “fixed” numbers in TeliaSonera offices and jump to the public mobile network outside. Packaged with a flat rate or “included minutes” deal, a future LMT offering could match Lattelecom’s broadband/free domestic calls offer with a one-numbergoes-everywhere deal. A senior Scandinavian telecoms executive, who wished to remain anonymous, said that Lattelecom’s ambitions to provide outsourcing of IT services should be tempered by the fact that “trust in companies with a longer legacy and global brand, such as IBM or Hewlett Packard” could offset the lower prices and speed of service Lattelecom BPO or Lattelecom Technology hopes to offer. The executive stressed that the high-value outsourcing of core operations – data centers, mission-critical applications and the like – amounted to
is fragmented with the big companies looking to the US. With Russia, we have a language advantage and in all markets we can be more flexible than the big players. There is a place for us and, with time, we can form some kind of partnerships with the big IT companies and hardware makers.” What will be Lattelecom’s priorities when it finally sets sail on the rough IT/ telecom seas alone? “The first priority in the immediate future will be investment in the broadband network, where significant capital is still required. Broadband is the foundation of future earnings. We will see how to do that more quickly, what new technologies can be used. We will examine our WiMax strategy and how we can enter the GSM (mobile) market. Also we will expand the international outsourcing business aimed at the largest markets—Russia and Germany—that can be reached in a one-hour flight. Germany and Russia are two markets of such size that we have to be there,” Melngailis said. THE INSIDER
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Profiles
Latvia for the Long Haul American JC Cole has been investing in Latvia for fifteen years. We asked him for a raw look at Latvia’s past and present. His company, Architectural Investments, has been investing in real estate since 1993, mostly in Riga’s Old Town. His newest business, Scandinavian Buildings and Homes, builds prefabricated timber frame houses. 14
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“Labrīt” [Good morning]. The immigration officer looked at his watch and said, “Ne, labdien” [No, good day]. How has your Latvian progressed? Oh, my Latvian is terrible! Has it been an obstacle for you? Yes. My strength is more mathematics and other things. I say to my Latvian colleagues, would you rather have me build the economy or speak Latvian. They answer, “Both.”
Photo: Allan Smithie
You’ve been here 15 years and on the boards of many companies in town. I guess I must have been the first nonLatvian foreigner to invest in real estate. I had a competitive advantage: my own financing, an understanding of real estate, and a belief that it would develop. We are sitting in my first project. These seven apartments are the soul cash flow for St. John’s Church. This was my first deal. It was difficult to renovate, because at that time you couldn’t buy paint, tile, or electrical cable. You had to source everything from the West. If you made a mistake you had to wait awhile. Also, at that time, the port of Riga had its problems. There was some “internal sourcing” there from containers and things.
You came to Latvia in August of 1992. What was your first memory of the place? I met a Latvian-American alumna of my university in the states who talked me into coming to Latvia. I knew that Latvians were sensitive about the language. I told my mother I was moving to Latvia, and she said “That’s nice, dear, our neighbors are Latvian.” I took a Berlitz book and walked over to my neighbor and recorded some phrases. By the time I got off the plane I had my numbers and my greetings down in Latvian. My first experience was walking up to immigration and saying,
You’ve had quite a few development projects in those fifteen years, as well. The most famous is Jacob’s Barracks where I was a partner with Intersource. I found Jacob’s Barracks, brought it to Intersource, and became their Vice President of Real Estate Development. The last tenant of Jacob’s Barrack’s was the Russian Army. The building is about 200 years old. We came to the market with something like 8,200 square meters, which was the size of the entire market, at the time! We started in May 1995 and opened in December of 1996 and another section in April of 1997. Then Bank of Baltija happened [the bank failure], and there was only one way to go: finish the project. People were saying that life was over in Latvia. But one nice thing about that project was that Jacob’s Barracks is the entrance to Old Town and looked ugly.
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Renovating it almost gave hope that Riga would do just fine. It turned out to be one of the best projects in Old Town and still is basically a monument. At that time, Jacob’s Barracks was the biggest private foreign investment in the country’s history in real estate. Do you recall what was the return on that investment for you and your partners? We invested about five million dollars. More was probably then reinvested. I think the consistent rates of return were quite nice and leveraged up. Probably about 30 to 40 percent. Fifteen years ago an investor mentioned that given the market risk, he would demand at least 20 percent on his money to be interested in the Latvian market. Was that a reasonable example then? What return would you want on real estate today? Yes. Six or seven years ago, foreign money was looking for at least 20 percent rates of return. In today’s market it would have to be 15 percent or better, but that’s a leveraged return, meaning you’ll borrow at the bank at six or seven, but the seed capital will make 15 or better. What’s your opinion about all the anti-inflation measures the government has instituted? Will this affect the return an investor can get in the future? The basic foundation of the public’s wage changed by 35 percent in six months. The government had to react. Part of what they put in place can have an effect. Part of it not. Certainly, it slowed down the real estate market in Riga. With Riga specifically there are about five or six micro markets: Mezaparks, Jurmala, Centrs, Old Town, and the sleeping regions, the old Soviets. The last is for me the most complex. Prices are about 1,500 euros per square meter for a Soviet building. Surprisingly high. It should be replacement cost, or what we could come to the market new for. Would you choose a new building over a Soviet building, and I think yes. THE INSIDER
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Profiles What’s replacement cost now? Well, it changed so fast due to inflation, but I think it’s about 1,500 euros per square meter. What’s a price that would get you interested in an “Old Soviet” in case a reader has one to sell? I’m basically not interested in them. They have to be replaced. Some of them will last 30 years with good repair and maintenance, but to strategically
believe in the future of Latvia, investing in old Soviet apartment buildings would be a conflict of interest. Jacob’s Barracks will last another 200 years and add to Latvia’s development. A Soviet apartment is a temporary solution and only about the rate of return. There is no social benefit. I try to mix a social element, because investment alone is sometimes not enough to get you out of bed. A social cause and an investment.
But there has been re-design of Soviet housing villages in Poland and the Czech Republic which are in good taste. An apartment is a living unit. And every living unit of whatever sort is burdened with different levels of encumbrances. What are the encumbrances of a Soviet apartment building? It has no insulation. There is no relationship with your neighbor. The heating system is 40 years old and requires great repair. Maybe you have an alcoholic neighbor. Each has a cost. At what point to remove that encumbrance and what is it cost? There are so many encumbrances that it is not for me.
Who is “us”? The American Chamber of Commerce picked this up in 1997. Then, through the Foreign Investors Council (FICIL) we argued with the government for an even playing field. What is still needed is a residential building tax. There is no 16
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Photo: Allan Smithie
You have some vocal opinions about real estate tax law. What is the debate and what’s your position? There are two main real estate taxes here. One is the cadastral land tax. The second is the building tax. We have no qualms with the cadastral land tax. It had to grow relative to the market. But we have an argument with the building tax. There are two types of building, commercial and residential. There was no tax on residential, with the only tax on commercial based on its book value. And the book value is controlled by the firm’s accountant. In other words, I control the book value and therefore the taxable amount. Secondly, compare an old building renovated and a brand new building. The book value of the new building is two to three times higher than the renovated value of the old building, yet they have the same commercial value. So why is it that you’d have a new building that paid three times more taxes when the commercial value was the same? That was our argument. We said you must apply the tax based on commercial value. And that finally happened in 2007. It took us seven years to get that through parliament.
tax on residential apartments. I’m sure happy Latvian readers will love me for that suggestion. Fundamentally, in a western city, approximately 30 percent of the municipal budget is paid for by real estate taxes. Here in Latvia, it’s five percent if they’re lucky. If you look at all these multi-million-euro houses, there are no taxes except for the land tax. Fundamentally, we’re saying Latvia doesn’t have a balanced tax, and you’re going to pay a steep price for it. You already are. Your teachers are poorly paid and your roads are not repaired. The only other place to tax and get money is where? Businesses. But if Latvia taxes the businesses they’ll go to the sisters, Estonia, Lithuania, or maybe Poland. And so the country is caught. The Foreign Investors Council is an influential body? The government really listens to foreigners? The council is organized so that we bring credible issues and solutions which benefit both local and foreign investment. We don’t argue only for foreign investment. We bring issues which we believe will move the country forward. We’re not telling them what to do. We’re building a relationship with them.
Photo: Allan Smithie
Lobbying? Lobbying is different. It’s when you push the government for the benefit of your sector. When the tax reform went through, one of the taxes on one of my buildings went up 500 percent. We have to pay more, yes, but the tax base is healthier. It’s very much the same with the American Chamber of Commerce, pushing for reforms which benefit the economy in general. For a new foreign investor this is good news. It means the government listens? Yes. Out of 200 suggestions we’ve presented, the government has accepted something like 173. We’ve been through seven governments, maybe, so it means we have a functional organization that adds value to Latvia. We suggested a capital gains tax on real estate last year. Although I don’t
believe that 25 percent is a fair tax. I think it’s bad judgment on the part of the Latvian government. Capital gains should be gains on long-term investment. The US has 15 percent capital gains. It’s better to invest there. What’s the incentive for the average Latvian to invest long term? The government simply missed it. Say there’s a foreigner reading this who’s done some research and knows Latvia doesn’t always rank so high in the Transparency International indices. What advice would you give him? I’d say he’d have to do his due diligence like in any country and hire professionals who have good reputations. That’s one thing the Chamber [American Chamber of Commerce in Latvia] helps with. You can use the Chamber to be put in touch with good legal or real estate people you can talk with. Most of the people who got in trouble in the past five to ten years didn’t do their due diligence. They ignored it. I look at it this way. All countries are individual jungles, and the rules of the jungle have not been spelled out for us. As foreigners, we assume that the rules of this jungle are the same as Western Europe, and the rules are not. Similarly, though, the rules of New York City can be quite tough for Latvians going to New York. In this Latvian environment, what are the rules of the jungle? No one has ever written them down or explained them; Don’t touch this plant, stay away from that animal. You need a tour guide. One of the challenges is who is your tour guide; who is your local partner? And sometimes, he’s part of the jungle—one of the predators. Sometimes, he may not have the experience. The closer you get to Moscow, the deeper the jungle. As we know from our friends in Latvia, they complain about how difficult it is to do
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business in Moscow. But here, we’re on the fringe of the jungle. What are the sectors of opportunity now? I believe in real estate. If in the commercial rental market, the purchase price versus rental gives you cash flow, that’s one. There is regional development outside of Riga. And there is still a great need for housing, and nobody has been able to efficiently bring it to the mar-
To get Latvians together is very difficult. Only when something threatens their existence do they act together. ket. Latvia has one million living units, half of them in Soviet buildings, whose life-spans were thirty years and some have been repaired to give them another thirty years. But some of them must be replaced. That’s 500,000 living units to be replaced over thirty years. And Latvia has the lowest number of square meters of living space per person in Europe— 26 per person, whereas the European average is 43. That’s 40% growth to get to European levels, another 400,000 units. In the next thirty years you need 900,000 living units. Riga’s growing fine. The other areas are not. The two important factors are construction costs and the THE INSIDER
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profiles Have you just explained why land is so expensive? Perhaps. They’ll look at it and say my neighbor Juris got four lats, so I won’t sell for less. You have some secret techniques for making them surrender? When they stand on principle it’s hard to change their minds. They’re determined people. Sometimes it helps to mention how well the Estonians are doing. Latvians are not really happy with that.
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You have fifteen years in the market. Your opinion about Latvians as businessmen? All nationalities have their strengths and weaknesses. If you study American sales, you learn to profile your customers. And when it comes to certain things, Latvians have unusual tendencies. They are very complex. When it comes to negotiating they set a price and they don’t want to come off it. If they say five lats, then 4.99 is unacceptable to them. Russians are easier to negotiate with.
Our local readers will want to know this: You’re from New Jersey, but you’ve always worn a cowboy hat? Technically, I live on a horse farm in New Jersey—but then again that was English! Hunters and jumpers. Actually, my head got cold in the Latvian weather, so I started wearing a cowboy hat. Little by little I got an identity. And I’ve always worn cowboy boots, though not in New York. It’s like Mr. Ilves always wearing a bowtie. And that’s the truth! Issue №2 | 2007
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Photo: Allan Smithie
Who is your local partner? Sometimes, he’s part of the jungle — one of the predators.
salary range to afford a mortgage—you need to come in around 80,000 euros for a living unit. Somebody’s got to be able to get turnkey complete housing for 80,000-100,000 euros and that will be great value. That’s what I’m working on. I have a prefab housing company in Aizkrauklē. My goal is to get a basic house to a Latvian family in that price range.
Can you say Latvians are entrepreneurial like Americans? No, straightforward problem solving is not their strength. Latvians are very complex. I think they need to learn more about themselves. One thing which is disturbing to me—Americans are not the biggest investors here; we’re about fifth—but we had the first chamber of commerce. Americans come together for a common cause. We can get a group together to do a charity event for children in a couple of days. To get Latvians together is very difficult. Only when something threatens their existence do they act together. Americans coming together goes back to our ancestors having to help neighbors build their barns. Who built the Christmas Market here? Foreigners did it. That’s one of the challenges for Latvians. To unite and build the country. And that’s tough to do.
Photo: Allan Smithie
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travel
The
by Scott Diel
Business Bus
There has never been a comfortable way for businessmen to travel between the Baltic capitals. By car, you risk your life in countries where drivers attempt to replicate scenes from the film Ronin. The Eurolines busses are cramped and inconsistent in quality. Air travel can require more time spent in taxis, check-in, security, passport control, and baggage queues than in actual flight time. Hansabuss wants to change all that. Hansabuss’ businessline seats are generously large, and for a few euros extra, passengers may be seated at a table. Add a smiling stewardess, on-board WiFi, electrical outlets at your feet, coffee, salad and sandwich, and you’ve got the makings of the best business travel. “It’s like a club,” said one passenger, noting that everyone on board was using a laptop. “Beats the competition,” said an American passenger. “Eurolines is for double amputees who like to sit next to non-bathers.” It may beat the traditional bus, but that’s not who Eurolines is after. “Our target consumer is the guy who is now driving to 20
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Riga,” says Hansabuss’ Director of Sales Andres Puskar. “We calculate a round-trip in your own car will cost you roughly 1,000 kroons (64 euros), which includes gasoline plus wear and tear. In addition, you waste eight hours of time that you could be working.” Could they take on the airlines, too? Puskar says that’s unrealistic. Currently, the business bus offers 26 passenger seats, which, even if full, wouldn’t make much of a dent in the airlines’ business. While they are adding two busses in the spring (one which originates in Riga and journeys to Tallinn, a second between Riga and Vilnius), even three busses would not make them a serious competitor to the airlines. “But cars with business passengers,” says Puskar, “usually only carry one or two people on average. That is our market.” Haven’t heard of the business bus? It’s because it’s not yet being advertised. “Right now we’re testing the product,” says Puskar. “We’re making sure the WiFi works properly, that the departure times suit the market, and breaking in a brand-new bus. When we’re satisfied ourselves, then we’ll start advertising.” Until rail service once again reunites the Baltic capitals—which may be no time soon, according to the media—Hansabuss just may be the most civilized, if not most cost-effective (see table), way for businessmen to travel. The downside to the business bus is bad Baltic roads. Though the roads get better every year, they’ll still occasionally shake you like a cosmonaut during reentry to the earth’s atmosphere, especially in construction zones on the Latvian side, where working on your laptop can be likened to trying to type aboard a tossing boat. But the business bus is a very quiet boat, and perhaps the best mobile office a traveler will find. And far, far better than your car.
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Photo: Allan Smithie
Hansabuss wants you to give up your car
travel Tallinn
Narva
ESTONIA Parnu
Gulf of Riga e
LATVIA
Riga
Siauliai
European route E67, known as the Via Baltica I T H U AisNmostly IA between Warsaw andL Tallinn, two lanes with dreams of being a motorway. Cost Comparison Tallinn-Riga Return Trips Compared: Vilnius MeansRUSSIAN Approx. one-way Fare (Euros) of transport travel time FEDERATION Airfare (airBaltic)* Eurolines bus Rental Car (Hertz)** Private Car Hansa Businessline
1 hr 5 hrs 4 hrs 4 hrs 5 hrs
179 29 128 64 58
*Does not include early arrival at airport, check-in time, security check, luggage and passport control. For the sake of this exercise, prices determined by booking reservations with four days advance notice. **Price includes 45 liters of fuel burned in our test trip (at 0.92 EUR per liter), plus one-day Hertz economy car Olsztyn rental of 88 EUR per day (VW Passat). Photo: Allan Smithie
0
50
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Business Bus Departs Tallinn 06.10, Arrives Riga 11.15. Departs Riga 17.30, Arrives Tallinn 22.35 450-500 EEK / 22 LVL. Departure points: bus stations plus major hotels.
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By car, you risk your life where drivers attempt to replicate scenes from the movie Ronin. Minsk
B E L A R U S
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Real estate
A
by Ingrīda Mičane
visitor to the port territory today will see little but a classical post-Soviet industrial landscape. Behind metal gates are Soviet era warehouses, grain-elevators, a ragged yacht moorage, and a labyrinth of streets guarded by chained dogs. This is all about to change. The territory of the Riga port, in contrast with Western European countries, has always been an entity separate from the city’s everyday life—it has been closed completely to the Latvian public because it was a customs zone. In Soviet times, it was one of the biggest container terminals in the USSR, held the infrastructure for liquid gas export, and also contained the passenger terminal of Riga. The modern challenge is to make the port profitable and attractive for both Riga citizens and investors. The solution is in the beginnings of a grand project, which is unique in the Baltics for two reasons. First, the project’s scale in such a small region is almost staggering: one billion euros in investment. Second, the project’s long-term success is ensured by a concept which has eliminated the usual frictions between developers and investors. The leaders of the Riga Port City’s development project are the four parties involved in the master plan design: Latvia’s Jaunrīgas Attīstības Uzņēmums company, the Dutch architect Rem Koolhaas and the Office for Metropolitan Architecture (OMA/AMO), the British engineering firm Ove Arup & Partners Ltd., and the Dutch landscape architects Inside Outside. The entire concept is based on careful economic forecasts for the development of Riga and Latvia as a whole. Together, they will transform the 123-hectare territory which includes Andrejsala (Andrej island) and the export port on the right bank of the Daugava River.
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Real estate If things go as planned, the next ten to twenty years should see this port region turn into a small Shanghai, complete with bustling trade, water taxis, shops, hotels, and the ceaseless movement of residents and workers.
Andrejsala – Half of Old Riga The team will begin by developing Andrejsala’s 39 hectares—about the size of half of Old Riga—over the next few years. Step by step, Andrejsala will be turned into a multifunctional district of high-class architecture and an ecologically-sound environment. Many of the existing structures must be demolished, but objects of special interest
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and value will be preserved. The old grain elevator, for instance, will keep its exterior, yet its 6,000-square-meter interior will be removed, except for wooden structures of historic importance. In its new life, the grain elevator will house a hotel, museum and office space. The electric power station, built in 1896, will be turned into a museum of modern art. It was the idea of illustrator Rem Koolhaas to save the station’s exterior, enveloping it into a new building like an insect in amber. The two spectacular pipes will remain unchanged, and serve as a symbol of the times and one of the city’s reference points.
The project’s second stage will tackle the port’s export facilities and take place over the next 25 years. It may sound like a great deal of time, but the area to be developed is immense—almost 2.7 million square meters of space.
City Council Green Light
The project has been alive since 2001 when the vision was formed and detailed planning almost complete. While some might have expected the City of Riga to place obstacles in the path of the project team, the reality has been the opposite. The ideas of the Norwegian developers and architects
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were not cut short, and the opinions of the City Council were heard and incorporated.
Large project Trend
JAU
There is a trend in the growing number of grand-scale development projects attracting private capital. Though the Riga Port City’s development cost is one billion euros, an equal amount is aimed at the development of the Rumbula region (the Maskavas suburb east of Riga). A union of five construction companies has another 650 million euros budgeted for the development of the Lucavsala district. The Ezerparks project in MeŞaparks is
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Real estate estimated to cost around 800 millions euros. According to a SIA Zaķusala Estate spokesman, half a billion euros is the price to transform a large part of Zaķusala island (from Salu Bridge to the TV tower) and the territories near Skanstes street that belong to Merks construction company. Roughly the same amount is dedicated to the development of Ķīpsala island and Krasta street, which are gradually becoming the new business centers of Latvia’s capital. The districts of Ulmaņa Gatve and Lielirbes street, as well as Mūkusalas street and the airport region are also areas developers have their eyes on. Fresh projects in those regions include an already completed Hansabanka highrise headquarters, the Z torņi (Z towers) project started in Ķīpsala by the Vertikālā Pasaule company, the main office of Krājbanka, and a project by Rietumu Banka’s head office on Skanstes street. While all of these are private projects, the state government is also opting for grand construction, such as the much-disputed cultural objects “Trīs brāļi” (The Three Brothers), comprising a museum of modern art (investment not disclosed but rumored to be around 28.45 million euros of private capital), the Latvian National Library called The Castle of Light (165 million euros), and a concert hall (around 89 million euros). Dossier
Riga Port City
AS Port Pro is one of the biggest foreign investors in Latvia AS Port Pro, a Norwegian business concern, is currently one of the biggest foreign investors in the statutory capital of Latvian businesses. According to information from Lursoft and the Register of Enterprises of the Republic of Latvia, the aggregate amount of direct investment by AS Port Pro from January 1, 1991, until January 19, 2007, has been 34,142,003 euros. This year, AS Port Pro plans to invest up to 49.8 million euros in the statutory capital of Latvian companies. Investments in the capital of SIA Jaunrîgas Attîstîbas Uzòçmums in 2006 reached 13.51 million euros.
Developer – Jaunrîgas Attîstîbas Uzòçmums (100% of shares belong to Norwegian company AS Port Pro) Planners – Architectural Bureau Office for Metropolitan Architectur (Holland), Inženierkompânija Ove Arup & Partners Ltd (Holland) and landscape architecture company Inside Outside (Holland) Space – Total space 123 ha, with total construction of 2,7 million square meters Inhabitants – 65,000 permanent residents and 80,000 employees Investments – more than 1 billion euros in the first stage Deadlines – Andrejsala: 2020, Export Port: 2033
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How much? How much should one expect to spend, buying a residential or commercial space in Riga Port City? As Mr. Mâziòð, chairman of Jaurîgas Attîstîbas Uzòemums pointed out, this is a high quality building, situated in an excellent location, rather than just an exclusive building. Next to the complex there is a yacht moorage, a large park and historical center. The price is not low, yet it is not as astronomically high as the prices are in Riga’s historical center. The prices differ depending on the type of space desired– whether it is an object designed purely for public use, or an object for sale, or investment property. The developers are of course unwilling to predict the future value of the property, though the reader is welcome to draw comparisons from the existing market scenario.
Real Estate prices in Riga euros per m2 June 2007
6000 5000
Raitis Nespors
‘‘The Andrejsala project can be called the most ambitious of all planned public projects. Not only because it brought internationally recognized professionals, but also because the project developers want to create a new city environment. There is very little information about these projects – it is unclear, who will expand the projects, what are the terms and what kind of functions and volumes they will have after the project completion. But it is clear that in Latvia there is no one who can complete the project by himself. So it seems that there will be more partners in the project. And there is a risk that the new partners will bring new ideas to the project. Experience shows that in those situations the end-product differs from what it was at the start.’’
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Quiet center 60 50
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Re&Solution – An independent finance and real estate company offering valuation and consulting services.
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Office rental
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Images: Allan Smithie, JAU, ShutterStock
Opinion
2007.08.22. 16:08:40
Media
The evolution of Latvian advertising The Latvian advertising indust ry is only seventeen years old. But clients are already seeking the quality of Cannes. by Scott Diel
“Estonians are sprinters and they’re always one step ahead,” says Andris Blaka, a partner in the Baltic advertising holding company, AgeCom, and President of the Latvian Association of Advertising. “But they get bored quite easily. They don’t run marathons. Latvians are slower and more stable.” Ironic then, that those who the Latvians often refer to as gariyachi estonski parni—hot-blooded Estonian guys—gave birth fifteen years ago to the first panBaltic advertising network. Though, true to Blaka’s characterization, it was the Latvians who stuck it out for the long haul, and turned Estonian initiative into the largest going concern in Baltic advertising. Blaka himself first gained exposure to the advertising business in 1993, as 28
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a fresh graduate in business administration from a Latvian university. “I was one of the first to enter the ad business with a business education,” says Blaka. “The ad business in Latvia developed out of nowhere. In the beginning it was dominated by guys who were in film and show business—creatives, not business people. When graduating university I had a dilemma. Should I go to Arthur Andersen or should I go to Labvakar, an ad agency [the name means good evening, -ed.]? Somehow, there were nicer girls in advertising and more crazy people.” Blaka began by running the research department, and three months later he was asked to run an entire agency, a meteoric rise by today’s standards. (“It could probably only happen today in Uzbekistan,” he notes. “If someone
had the right education and language skills.”) But the growth of the industry matched Blaka’s personal advancement, and soon he was a partner with his fellow Balts in a regional advertising dynasty with holdings in all three Baltic states, plus Belarus and Ukraine. “AgeCom still may be the only group with Estonians, Latvians, and Lithuanians in the same boat. We started as a network of agencies where Estonians owned 50% of the Latvian and Lithuanian operations, local partners owning the rest.” The first agency was called Age, the name given at the last minute by an Estonian partner who has said he chose it because it was the first three letters of the English word “agency,” and also a Issue №2 | 2007
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pleasant-sounding name of an Estonian girl. “After Age,” says Blaka, “we started a second agency group called Media House. Then we added Bates Saatchi as a second creative agency. Then we added ViaMedia. The group started to grow.” Blaka credits the Estonians with bringing in the first client. “The first pan-baltic contract came through the Estonians. They had a Finnish client, and signed the deal to deliver services across the region. The Estonians have always been very opportunistic. Some of them are very good at selling things that don’t yet exist. But we delivered it.” But while the Estonians brought the initial contracts and initiative, the Latvians may have provided the stability the business needed to maintain
Latvia’s Golden Hammer: the first step on the road to Cannes.
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its growth. “Estonians soon want to change something or get rid of something. They lose interest and that’s bad for the long-term business. Sometimes you need to give them some friendly support.” It may be worth noting that Blaka’s observation rings true for the Estonian market as a whole. There are few major Estonian-owned companies left, the vast majority having been sold by their Estonian owners to foreigners—a criticism Estonians have leveled at themselves. “Estonians are very individualistic,” says Blaka. “They do well in individual sports. Latvians and Lithuanians are team players. We’re able to do things as an industry and can sometimes put industry priorities first.” This proved true in the battle for a better creative prodTHE INSIDER
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Media ate enough revenue in small uct. The Latvians were the markets to make them attracfirst in the region to create an advertising awards show, the tive. The glamorous client creative competitions which names and the international bring the spotlight to creative agency names soon become work and inspire copywriters a source of friction, the inand art directors to look toternationals demanding big ward more distant horizons, service but delivering small comparing their work to their money. “You play slave to peers internationally, rather London but aren’t compenthan focusing on local output. sated for it,” says Blaka. Latvia’s Golden Hammers But the pressure from inwere the first regional awards ternational agencies has not and were arguably the first been without its benefit. It real step in raising the creahas provided training and tive bar in the Baltics. work opportunities for Balts Soon Baltic advertising to go abroad. The networks agencies were after Golden have provided professional Drums in Slovenia, New Euexposure concerning every rope’s most famous advertisaspect of the business. And, ing festival. And now, seventheir rigorous standards teen years after the industry’s have forced Baltic agencies birth, Latvian agencies are to eliminate any fat from beginning to consider a victheir businesses and operate tory at Cannes—the world’s at international standards. most famous advertising “Everything has changed in festival—as a reality. So seventeen years,” says Blaka. far, only one in the Baltic ad “Procurement people come agency has managed to win in in to negotiate your contract, Cannes—a Silver Lion won One of Blaka’s favorites. This ad plays with the acronym DSL and you get strict commisto celebrate Latvia’s national holiday. by Trendmark/Universal Mcsion requirements sent down “Dievs Svçtî Latviju” are the first words of Latvia’s national Cann Lithuania—but this has from international networks. anthem (“God bless Latvia”). set the standard for the rest. You really need to deliver Latvian hopes may be creative ideas in order to ask pinned on Eriks Stendzenieks of the very local in that sense. In international for money.” agency Zoom. “He’s the best creative meetings, you’ll find that the big offices “In the old days you could have an director in Latvia,” says Blaka. “He are 100% owned by the networks and okay marketing plan, good client servknows how to win awards. Eriks has the small markets, Baltics, Middle East, ice, and something similar to a creative won individually probably more than are locally owned. Scandinavia is now idea, and you could charge pretty good the others combined. He charges 230 facing the same problem. None, repeat for that. Now, people have seen what’s euros per hour in a market where others none, of the networks are doing well coming out of Cannes and the expectaare charging 86 euros.” there. It’s just the local agencies that are tions are absolutely different.” Blaka Stendzenieks’ success—both crea- succeeding.” grins. The good old days may be over, tively and financially—calls to question This trend is also seen in the Bal- but he’s also keenly aware of the new the necessity and perceived advantage tic, Blaka says. “Procter & Gamble opportunities. What are the industry’s of the network agencies. entered the market, and the Estoni- weaknesses? What areas will the new Blaka admits that international net- ans brought Saatchi to service those players exploit? works often demand more than they clients. There were affiliation agree- “Digital and online is underdevelcan give in return. “In small markets, ments.” Some networks opted for the oped here,” he notes, “despite the fact management loses motivation to work other route, though, and owned local that media Internet spending grows for international networks. To keep the agencies outright. But they eventu- 100% each year. CRM and loyalty prolocals motivated, the networks have ally sold their shares. “DDB and Mc- grams are poor. There are other areas historically had to sell shares back to Cann were owned by international we can improve.” Mr. Blaka has a long the locals.” According to Blaka, the networks,” says Blaka. “But they sold list. But, then again, he’s in it for the dissame thing has happened in other small their shares back to Latvians.” Put tance. markets. “Switzerland has always been simply, network deals do not gener30
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Diversions
Questionable Items for your expense report
Of course you don’t need it, but that’s hardly the point. For prowling Riga in style, it’s helpful to have some of the items below, and to memorize one poetic Russian phrase: Denghi yest, uma ne nado. That’s Pushkin. Trust us.
Big bills Keep your millions safe and comfortable in a lustrous crocodile skin wallet for 1,612 euros, but if you carry your millions in cash, and don't want to be separated from it, even on the plane, Armorial offers a practical leather carpetbag you can take as hand luggage for 892 euros.
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Napoleon's drink of choice L'Esprit de Courvoisier is billed as the most expensive cognac in the world. Blended from rare and outstanding cognacs, the youngest dating from the 1930s, the oldest from 1803, L'Esprit de Courvoisier is bottled in individually numbered Lalique crystal decanters. It retails for around 4,140 euros and can be found at Vīna Sēta.
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Fast and furious A few words come to mind when the name Porsche is mentioned - classy, fast and expensive are just a few. Porsche Latvia is no exception; they offer a new black 911 4S with four wheel drive for a cool 106,000 euros (that includes tax), but if you don't have a drivers license ride in a stretch Lincoln Navigator limo for 115 euros an hour. That should get you on your way.
Up in smoke For your premium tobacco needs for your every day puff head to Zigmunds 42, the place to go for fine tobacco, handmade cigars, pipes and a selection of cognacs. While browsing the humidors you will surely find your vintage cigar. They also carry a line of Porsche pipes that are hand tooled and handle just as fine as the sports car.
Presidential sweets Live like a rock star and party it up at the Presidential Suite at the Radisson SAS Daugava Hotel, or if you are in a calmer mood, sit like these dignitaries -- former Chancellor of Germany Helmut Kohl, or President George W. Bush of the USA. Others that have stayed in this room, who we are sure tossed back the bubbles, were Joe Cocker, Deep Purple, and the boys from Texas ZZ Top, just to name a few. One night would put you between the sheets at 1,069 euros but the Champagne and royal service is free!
Bling-Bling Where a normal mobile phone contains around 30 separate parts, Vertu Signature comprises more than 400, many sourced from suppliers to the world's finest watchmakers, and 183 totally unique. The processes involved in developing the Signature Collection were so exacting they led to 20 new patent applications. It is in this pioneering attention to detail that Vertu epitomizes what is perhaps the very essence of luxury - the relentless pursuit of perfection, and a refusal to settle for less.
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Info Mobile Montre Kr. Barona 2 Tel: 724 0034 Wallets & Accessories Armorial Meistaru 8 (Old Town) Tel: 721 5025 Sports car Porsche Krasta 54 Tel: 709 6550 Cognac Vīna Sēta Kungu 2 Tel: 721 3267 Presidential suite Radisson SAS Daugava Kugu 24, Tel: 706 1111 THE INSIDER
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Gadgetry
Meet Nokia’s E90 Communicator Has Nokia’s E90 Communicator made your PA obsolete? Not quite yet. We tested the latest gadget from the wizards at Nokia and found that, while it can’t make coffee, it’s still our favorite pick of the month.
he design of the Nokia E90 is rather conservative: a matte metal body, a glossy buttons panel, and a sleek metal frame. Opening the telephone, you will get a convenient QWERTY type keyboard and a large 800x352 pixel screen. The telephone doesn’t easily fit in one hand (especially those of female users), but smart design and almost unlimited functions help overcome this inconvenience. The telephone is equipped with the Symbian 9.2 operation system which lets you attach the telephone directly to the printer, generate text and tables with the help of Quickword and Quicksheet, open .pdf files and work with ZIP archives. A built-in GPS system will ensure you don’t end up in Gulbene if your destination was Riga. And if 3G and Bluetooth are already a must, then WiFi support is something of an extra. For your life after five p.m., you can listen to music through the powerful speakers or headphones. And there’s a 3.2 MP camera to capture your co-workers and competitors in compromising situations. The E90 can’t yet replace your PA, though the Nokia engineers are probably working on it.
T
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Issue №2 | 2007
2007.08.22. 16:09:34
JOB
openings for talented business
journalists and sales managers. The Insider is expanding operations across the region and is looking for freelance writers and sales managers.
Send your CV to riganow@riganow.magazine.lv
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2007.08.22. 16:09:37
Contacts
Business listings Accountants and auditors
Audita Aģentūra - Accounting services, financial, internal, tax audit, sworn auditors, consultations, legal services. Brīvības 155 k.4 - 2.fl., D-1, Tel. 6736 2641 Deloitte Latvia - Bīskapa gāte 2, E-2, Tel: 67814160, Fax: 67223007 Ernst & Young Baltic - Kronvalda bulv. 3, B-2, Tel: 67043801, Fax: 67043802, e-mail: office@ey.lv Grosbuhs Invest - Audit, tax and financial consulting, business and financial projects. Elizabetes 45/47-405, C-2, Tel. 67226010, Fax: 67872744, info@gbi.lv Komercpadoms - Financial and tax consulting, financial audit. Antonijas iela 24-3, B-2, Tel: 67228257, Fax: 67228257, e-mail: martins@komercpadoms.lv KPMG Baltics - Balasta dambis 1a, A-3, Tel: 67038000, Fax: 67038002, email: kpmg@kpmg.lv Leinonen – Accounting and audit services. Vīlandes 3, B-2, Tel: 6732 3901, Fax: 67325603, e-mail: leinonen@leinonen.lv, www.leinonen.lv
mercial bank to acquire the quality management system’s certificate ISO 9001:2000. Palasta 1, F-2, Tel. 6709 2020, Fax: 6709 2855
Latvian Business bank – was founded in 1992, main shareholder is The Bank of Moscow. Antonijas 3, B-2, Tel: 67775888; Fax: 67775849 Nordea - Offers a full range of financial and banking services to corporate and private customers. Kaļķu 15, G-2, Tel: 67096096, Fax: 67224149 Parex Bank - Parex Bank is one of the oldest commercial banks in Latvia, which was established in 1992. Parex Bank offers a wide variety of retail and commercial banking services locally as well as to the international community through 10 representative offices. Smilšu 3, G-2, Tel: 67010000, Fax: 67010001 DnB Nord - In 1998 NORD/LB started its expansion in the Baltic States. Regionally, the bank is on its way toward a good position in retail as well as wholesale banking. Smilšu 6, G-2, Tel: 67015356, Fax: 67323449
PricewaterhouseCoopers - K.Valdemāra 19, C-2, Tel. 67094400, Fax: 67830055, e-mail: pwc.riga@ lv.pwc.com, www.pwc.lv
Rietumu Banka - One of the largest financial groups in the Baltics, offering banking services to private businesses and institutional investors. Brīvības 54, C-2, Tel: 67025555, Fax: 67025260
Sacco – Accountancy, consulting and law consultations. Pulkveža Brieža 8 1, B-2, Tel: 6750 5000, Fax: 6750 5001, e-mail: sacco@sacco.lv
Trasta Komercbanka - Specializes in consulting on investments and financial instruments in managing capital. Miesnieku 9, G-4, Tel: 67027777
Banks
SEB/Unibanka - Unibanka’s GDR was the first Latvian security released in international markets, and Unibanka is the first corporation in the Baltics with shares issued on the London Stock Exchange. Pils 23, F-2, Tel: 8008009, Fax: 67215336
AB.LV - Using state of the art technology to offer a wide range of financial services for domestic as well as international customers. Elizabetes 23, B2, Tel: 6777 5222, Fax: 6777 5200 Baltic International Bank - Was founded in 1993. From the very beginning the bank targeted large corporate clients and private individuals with significant account operations volumes. Kalēju 43, C-3, Tel: 67210172, Fax: 67216870 Hansabanka – Part of Svedbank, Hansabanka is the leading commercial bank in Latvia with many subsidiaries operating abroad. Kaļķu 26, G-2, Tel: 67444444, Fax: 67444400 Norvik banka – Former Lateko bank, developing with Icelandic capital input. E. Birznieka - Upīša 21, C-3, Tel: 67041122, Fax: 67041111
Sampo Banka - is one of the newest banks in Latvia. In 2004 the bank acquired local Maras Banka. Sampo Banka in Latvia represents Danske Gank Group. Cēsu 31/8, D-1, Tel: 6777 2676 HVB Bank - Was founded in December 1996 as Vereinsbank Riga and is a 100% subsidiary of Vereins und Westbank AG, Hamburg. Elizabetes 63, C-2, Tel: 6708 5500, Fax: 67085507
Consultants and lawyers Bordāns & Beļajevs – Brīvības 40 - 13, Rīga, Tel: 67210036
Latvijas banka (National Bank of Latvia) The Bank of Latvia is the central bank of the Republic of Latvia. Valdemāra 2a, B-2, Tel: 6702 2300, Fax: 67022420
Hough, Vilciņš, Seppälä & Palubinskas - Corporate, employment, financial, international, maritime, real estate and taxation law. Valdemāra 34-8, C-2, Tel: 6731 5396, Fax: 67315434, email: latlaw@apollo.lv
Latvijas Krājbanka - A/S Latvijas Krajbanka was founded in 1924 as Latvijas Pasta Krajkase, and now has become the first Latvian com-
Kļaviņš & Slaidiņš - Elizabetes 15, C-2, Tel: 67814848, Fax: 6781 4849, e-mail:advokati@klavinsslaidins.lv, www.klavinssladins.lv
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THE INSIDER
Loze, Grunte & Cers - Blaumaņa 22, C-2, Tel: 67830000, Fax: 6783 0001, e-mail: lgc@lg-c.lv, www.lg-c.lv Prudentia - Specializing in attracting investments, raising financing, retrieving funds, protecting assets, sustaining or raising company profit margins. Ausekļa 1, B-2, Tel: 721 2324, Fax: 721 4319, e-mail: prudentia@prudentia.lv, www.prudentia.lv
Rödl & Partner - Valdemāra 33, B2, Tel: 7334280, Fax: 7830327 Tel.: 673342 80, Fax: 733 46 20, email: riga@roedl.lv, www.roedl.lv Skudra & Udris Law Offices - Marijas iela 13 (Berga bazārs), C-3, Tel: 67812078, Fax: 67828171, e-mail: attorneys@su.lv, www.su.lv Sorainen Law Offices - The PanBaltic M&A and Business Law Firm. Kr.Valdemāra 21, C-2, Tel: 6736 5000, Fax: 67365001, e-mail: sorainen@sorainen.lv, www.sorainen.lv
Construction & Real estate companies Balsts – real estate agency. Audēju 8, B-3, Tel: 67212276, Fax: 67214164, email: info@balsts.lv, www.balsts.lv Colliers - full spectrum of real estate consultancy. Balasta dambis 1a, A-1, Tel: 67783333, Fax: 67783334, e-mail: colliers@colliers.lv, www.colliers.lv Constructus – is among the leading construction companies in Lithuania and Latvia. Jeruzalemes str. 2/4, D-4, Riga, LV-1010; Tel. 67096800, Fax: 67830455, e-mail: constructus@constructus.lv, www.constructus.eu Latio – all types of property transactions. Raina blvd. 11, B-3, Tel: 67032300, Fax: 67032302, e-mail: latio@latio.lv, www.latio.lv NP Properties – the largest industrial parks developer company in Latvia. Rupnīcu 4, Olaine, Tel: 67069800, Fax: 67069801, e-mail: npp@industrial-park.lv, www.industrial-park.lv Ober Haus – full range of real estate services. Smilšu iela 6, B-3, Tel: 67323342, Fax: 67322318, e-mail: latvia@ober-haus.com, www.ober-haus.lv Possessio – Running exclusive offices and residential lease and sale in Old Town and Riga, land plot operations. Smilšu street 18, B-3, Tel: 67211275, Fax: 67211276, email: girts@possessio.lv, www.possessio.lv Spire Baltic - In real estate business since 1998. Offers apartaments, offices, retail spaces rental, land sales. Kr. Barona 13/15, B-3, Tel: 67280000, Fax: 67282220, e-mail: info@spirebaltic.lv, www.spirebaltic.lv
International organizations
American Chamber of Commerce - Torņa 4, 2a-301,G-2, Tel./Fax: 67212204, e-mail: www.amcham.lv British Chamber of Commerce Kr.Valdemāra 21, Suite #605 , C-2, Tel: 6703 5216, Fax: 6703 5318, e-mail: info@bccl.lv, www.bccl.lv Canada - Latvia Business Association - Doma laukums 4, F-2, Tel: 6722 6315, www.clba.lv Danish Chamber of Commerce Marijas iela 13 (Berga Bazars), C-3, Tel: 67281627, Fax: 6 7281628, e-mail: dcc@dcc.lv, www.dcc.lv European Movement Latvia Vīlandes 3-11, B-2, Tel/Fax: 67326548, e-mail: info@eiropaskustiba.lv, www. eiropaskustiba.lv European Union Information Agency - Aspazijas blvd. 28, 2nd floor, B-3, Phone: 67212611, Fax: 6 7223063, e-mail:esia@esia.gov.lv, www.esia. gov.lv German-Baltic Chamber of Commerce - Vīlandes 1, Tel: 6732 0718; e-mail: info.lv@ahk-balt.org, www. ahk-balt.org Latvian Chamber of Commerce and Industry - K.Valdemara 35, C-2, Tel: 67225595, Fax: 67820092, e-mail: info@chamber.lv, www.chamber.lv Finpro (Finnish Trade Center) - Kronvalda bulvāris 10, B-2, Tel: 67216043, Fax: 67820340, e-mail: latvia@finpro.fi International Monetary Fund - Smilšu 1, room 465, F-2, Tel. 67212384, Fax: 67820269 Italian Trade Commission - Vilandes Iela 1, B-2, Tel: 781 4471, Fax: 6722 14 07, e-mail: riga.riga@ice.it, www.italtrade.com/latvija Latvian Investment and Development Agency - Pērses 2, C-2, Tel: 6703 9400, Fax: 6703 9401, e-mail: invest@ lda.gov.lv, www.liaa.gov.lv Swedish Chamber of Commerce Barona 13/15, C-2, Tel: 721 7501, Fax 782 8047, e-mail: coordinator@scc.lv, www.scc.lv United Nations House - Pils 21, F-2, Tel: 750 3600, Fax 750 3601, e-mail: registry@undp.riga.lv, www.undp.riga.lv.
Relocation & immigration services The Partners in Relocation Group Latvia’s only independent accredited EURARelocation&Immigrationcompany, Antonijas Street 22-4, Riga, LV 1010,. Latvia Tel: +371 67333 957, Fax: +371 67333 956, Mobile: +371 29181 658, e-mail: info@pirgroup.com, www.pirgroup.com
Issue №2 | 2007
2007.08.22. 16:18:51
Price: 2.3 mill. Euro
Stabu str. 19, Riga, tel: +371 67336081 e-mail: info@sirius.lv Cover.indd 3
2007.08.21. 13:29:38
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Over the years “Bordans&Belayevs” has acquired extensive experience in advising international clientele. Leading global organizations like Microsoft and NOKIA appreciated our perfect match - personalized approach together with cost effectiveness. Welcome!
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Address: Brivibas iela 40 - 13, Rīga, LV-1050, Latvia Phone: +371 7 210055 Fax: +317 7 210215 E-mail: office@bordans-belajevs.lv Cover.indd 4
2007.08.21. 13:29:45