BQ Baltic Winter 2014

www.bqlive.co.uk

ISSUE FIVE: WINTER 2014

THE MONEYCHANGERS Lithuania takes the Euro plunge ESTONIA CALLING The queen of Telecom HOT PROPERTY Sotheby’s Baltic dream homes OF MICE AND MEN Business tourism special

RAINMAKER How Skype’s Jaan Tallinn turned medicine man ISSUE FIVE: WINTER 2014: BALTIC EDITION

BUSINESS: ISSN 2054-3093

NEWS:

COMMERCE:

FASHION:

INTERVIEWS:

TRAVEL:

EVENTS:

BALDESSARINI NO TRENDS. NO CONVENTIONS. MASCULINE. CONFIDENT. CLASSY. Baldessarini is a fashion brand with substance. It is a contemporary collection for discerning men with nothing to prove. It is for masculine, confident and classy men who are easygoing, positive, spirited, adventurous and always good for a surprise. They are intense men with a certain level of maturity, experience and introspection – characteristics that inspire and eloquently embody our slogan: separates the men from the boys. The Baldessarini man doesn't act the part. He has arrived. He's relaxed and self-assured.

Personalities like this have always been a fascination. Some have led enigmatic lives and become legends, and some of them have written fashion history in the process: Cary Grant, the Duke of Windsor, Al Capone or even the most famous film actor in France Jean-Paul Belmondo. And though these figures are all so different, they all have one thing in common: charisma and personality. That is why they were the inspiration for the new fall/winter collection 2014/2015, which recalls a classic elegance using modern styles all under the slogan NEW GENTLEMAN. The collection redefines the term "dandy" to represent a man who, like everything else in his life, knows exactly what he wants in his clothing. Perfection down to the finest detail is simply essential to his worldview.

The brand BALDESSARINI shows how classic, casual and denim can all be intertwined in an exciting dialog of styles. All pieces harmonize with one another and allow customers to freely express their individuality. This further underscores another characteristic of the Baldessarini man. He doesn't let himself be limited, instead he takes what he likes and adapts it to his own personal attitude toward life.

Aušros vartų 1, Vilnius Tērbatas iela 6/8, Rīga

WELCOME

BUSINESS QUARTER: WINTER 14: ISSUE FIVE Welcome to the first birthday edition of BQ Baltic. After a year’s acquaintance, we hope that you are enjoying the first pan-Baltic English-language business news and feature magazine as much as our team enjoys showcasing the region’s extraordinarily rich business talent.

To mark the anniversary of our launch, we’re proud to present a rare interview with Jaan Tallinn, the Estonian physics whizz who helped invent the technological basis behind the Baltic states’ best-known business (though Tallinn himself modestly notes that “about five countries” claim to be the birthplace of Skype).

Most readers will have their own stories about how this and other voice-over-internet services have transformed their business or personal lives. The power – and economic impact – of such distance-obliteration is hard to take in, long after it has become a fact of daily life. If anyone is capable of calculating the possibilities, and the downsides of this communications revolution Jaan Tallinn is probably that person. Our article shows how his capacity for thinking a few chess moves ahead has involved him in some of the biggest questions that human beings are capable of contemplating.

By the time many of you will be reading this, 2015 will already be upon us, and with it a couple of major milestones for the Baltic states. The most enduring is, of course, likely to be Lithuania’s becoming the last of the three nations to give up its own currency and join the Eurozone, with all of the emotional as well as economic implications.

In his interview with us, on page 46, Lithuania’s Finance Minister Mr Šadžius presents this momentous decision effectively as a “no-brainer” in a country that has plenty of reasons to align itself as closely as possible with the pan-European ideal.

Nevertheless even the Euro’s most optimistic cheerleaders are likely to feel a slight tinge of regret at the passing of the Litas, first established in 1922 to replace the Germanimposed of the First World War era, and re-introduced in 1993. It has, after all, been a

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symbol of sorts of the country’s post-Soviet progress as an independent nation. But times change, and Lithuania’s membership of the common currency appears to complete the process of formal integration that started with accession and NATO membership in 2004.

That integration process gets another boost as Latvia takes hold of the controls in Brussels in its role as President of the Council of the EU, a first real chance to impose the country’s unique political and economic personality on the rest of the continent.

Anyone who has spent any time in Brussels will attest that the EU works in mysterious ways, through a network of complex rules and overlapping long-term strategies. The former are often circumvented when circumstances make them inconvenient for one or more of the members, and the latter are often ripped up when contingencies occur, as they often do in a club of 28 members of all different shapes and sizes. The least that the Latvian presidency can hope for is no unpleasant surprises in 2015. BQ Baltic can afford to be more ambitious and hope for a happy and prosperous 2015 for all our readers.

Colin Donald

CONTACTS CORMACK CONSULTANCY GROUP e: kate@bq-baltic.com t: + 371 2607 6436 EDITORIAL Colin Donald e: colin@bq-baltic.com DESIGN & PRODUCTION room501 e: studio@room501.co.uk PHOTOGRAPHY Chris Auld e: chris@chrisauldphotography.com Vygintas Skaraitis e: skaraitis@gmail.com Birgit Püve e: birgitpyve@gmail.com ADVERTISING Estonia: Nordicom e: advertising@nordicom.ee t: +372 5666 7770 Latvia: Anna e: anna@bq-baltic.com t: +371 299 18829 Lithuania: Kestutis e: kestutis@bq-baltic.com t: +370 618 66251 DISTRIBUTION AND SUBSCRIPTIONS Kate Kolbina e: kate@bq-baltic.com t: + 371 260 76436 All contents copyright © 2014 Cormack Consultancy Group.

All rights reserved. While every effort is made to ensure accuracy, no responsibility can be accepted for inaccuracies, howsoever caused. No liability can be accepted for illustrations, photographs, artwork or advertising materials while in transmission or with the publisher or their agents. All company profiles are paid for advertising. All information is correct at time of going to print, December 2014.

room501 Publishing Ltd is part of BE Group, the UK’s market leading business improvement specialists. www.be-group.co.uk

THE LIFE AND SOUL OF BUSINESS

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BALTIC EDITION BQ Magazine is also available in the UK. www.bq-magazine.co.uk

CONTE BUSINESS QUARTER: WINTER 14

HARNESSING THE DIGITAL REVOLUTION

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Features 24 RAINMAKER Skype’s co-founder is turning his attention to healthcare

30 PERFECT PARTNERS A recent merger promises to transform communications in Estonia

36 CONFERENCE CALL What more can be done to attract business events to Baltic cities?

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46 MONEYCHANGERS The risks and rewards of taking the Euro plunge in Lithuania

50 ALL IN THE DETAIL The unique business venture exploiting the data explosion

64 HOT PROPERTY Former doctor offers intensive care for house buyers and sellers

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ON THE BRINK OF A NEW DAWN

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TENTS BALTIC EDITION

LITTLE DETAILS MAKE A BIG DIFFERENCE

Regulars

58 TRAVEL Mason Pearson visits the birthplace of a legend in the art world

70 FASHION Josh Sims discovers what makes the world’s most expensive wellies special

10 ON THE RECORD Latvia offers homegrown solutions for Europe

14 NEWS Who’s doing what, where, when and why in business in the Baltics

22 AS I SEE IT How can we ensure our education system is working efficiently?

76 EQUIPMENT

50 INTENSIVE CARE FOR HOUSE HUNTERS

Skano furniture has survived tough times by focusing on timeless quality

80 REAR VIEW Charles Cormack reflects on BQ Baltic’s eventful first year

82 EVENTS Essential dates in the business calendar

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ON THE RECORD

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>> Riga plans to lead by example in Brussels Latvian PM Laimdota Straujuma preparing to take the reins in the EU Council

Showtime for Latvia’s leaders as the central Baltic state prepares to take the 6 month Presidency of the EU Council for the first time, setting the continent’s growth programme.

By Colin Donald Latvia’s presidency of the EU Council will draw on the nation’s recovery from the 2008 crisis and its leadership in digital connectivity to demonstrate the “credibility” to lead EU development, the country’s top European official has said.

Ilze Ruse, director of the European Department at the Latvian Ministry of Foreign Affairs spoke to BQ Baltic in the midst of intensive preparations for Latvia’s first turn in the sixmonthly rotating Presidency of the Council of the European Union, which begins on 1 January, 2015. Led by the government of PM Laimdota Straujuma, Latvia’s debut presidency, like those of other small EU countries will be administered from Brussels. It faces an extra challenge as it coincides with the fledgling new European Commission. With storm clouds of deflation, currency weakness and recession still hanging over the 28-member bloc, Ruse also stressed that Latvia, along with the other Baltic states, was well positioned to lead on the ‘Digital Europe’ programme that, with

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‘Competitive Europe’ and ‘Engaged Europe’, constituted the main themes of the EU’s core work programme.

“Latvia having the fastest internet speeds in Europe makes our leadership on this priority credible. In EU terms the focus will be the development of a true digital single market, to ensure there is a trust between service providers and consumers, and we will also work on questions of data protection, fibre security strategy, and the issues in barriers to country-to-country trade.”

Ruse, 53, who previously worked on preparations for Latvia’s 2004 accession to the EU and has worked in various Latvian overseas missions before assuming her current role two years ago, told BQ that Riga’s approach to promoting the EU’s overarching jobs and growth agenda would be: “Based on our own experience of the economic crisis and how we got growth back, through economic policy reform.”

She added: “I think that for a Presidency to be

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>> New logo is a symbol of energy and growth The new logo for the Latvian presidency

by Latvian graphic designer Gunars Lusis is intended to resemble a “grinding stone”, the ancient means of milling cereal crops into foodstuffs.The official description says: “Made from stone, it can endure centuries of motion and still sustain productivity.

The circular shape of the grinding stone suggests unity and wholeness – the commonly held ideals and values upon which the European project is built.”

“The dynamic movement of the rotating grinding stone brings about energy and growth with which Europe meets new challenges.”Ilze Ruse added: “It’s a nice design, even if people think it looks like a CD! It’s a symbol of growth and of how improving the state of your own household needs a lot of work and innovative thinking.

What we want to promote in Europe during the presidency is to think differently and to work hard, and take a long term perspective.”

successful it has to be credible, and has to deal with issues where the country has competence and expertise, and where it has a chance of delivery. The digital agenda and the IT sector is a strength of ours, as is the services sector.

Therefore the commission’s work on the EU Services Directive is another field where Latvia has potential to contribute, given the strength of our skills and labour and capability in providing services”.

The Latvian Government has assigned 1,140 officials in Riga, Brussels and in its various foreign missions to work on preparations for its first six months in the presidential chair.

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Ruse said that Latvian officials have received “excellent” training in negotiation and administration skills from the European Institute of Public Administration. The country has also received “great support” from Lithuania, its neighbour and fellow 2004-accession state, which successfully held its own first presidency from JanuaryJune 2014. Ruse said: “During our presidency there will be a mid-term review of the EU2020 strategy. We will prioritise the completion of the single market, also including the [furtherance] of the four freedoms of the Treaty of Rome: freedom of movement, services, capital, and further market liberalisation.

“Another element we will be promoting is the competitiveness of EU industry, how to achieve it, through mainstreaming of competitiveness, reducing our energy dependence, dependence and improving the climate for investment and innovation.” The reform process is being implemented through the European Semester [the annual cycle of macro-economic, budgetary and structural policy co-ordination].

We think this is a credible approach.”

On top of the pan-European priorities, Latvia will also use its presidency to promote Baltic regional concerns as laid out in the 2009 Baltic Sea Strategy, the first of the EU’s regional development programmes. Latvia, whose foreign affairs priorities are rooted in Baltic and Nordic co-operation, will “prepare particularly on how we will focus priorities so the whole [Baltic Sea] region is also visible”.

Work on this strand of the EU presidency will culminate in the VI Baltic Strategy Forum summit in Riga in June 2015, titled the ‘E-Quality’ summit, which Ilze Ruse said would focus on the use of digital tools to promote health.“This will be a stakeholders forum, featuring high level speakers from academia and business as well as policymakers. There will be about 600 participants in a one and a half day event, including panels, seminars, a networking village, and the presentation of various projects. Arranged in co-operation with the European Commission, it will showcase what is being done in the region.” Latvia’s priorities for directing the EU’s external relations programme under the ‘Engaged Europe’ strand include work to support the furtherance of negotiations

ON THE RECORD

Ilze Ruse

The experience of every EU presidency points out that you have to be prepared for the unexpected event – for example, the Ebola crisis with the United States be carried out by the new High Representative for foreign affairs, the Italian Federica Mogherini, around the Transatlantic Trade and Investment partnership (TTIP), and the Eastern Partnership an element deserving attention”.

It was the Vilnius Eastern Partnership Summit in November 2013, where Ukraine spurned an opportunity for closer integration with the EU, that sparked off the protests in Kiev and the subsequent fall of PM Viktor Yanokuvych, the Russian annexation of Crimea, incursions into Eastern Ukraine and low-intensity warfare

on the EU’s doorstep. The crisis has led to still-unresolved tensions in Baltic-Russian relations, presenting the most serious threat on regional peace in a generation. Asked about the Latvian presidency’s likely preparedness to respond to major new developments, Ilze Ruse said: “The experience of every EU presidency points out that you have to be prepared for the unexpected event – for example, the Ebola crisis. You have to be prepared for any issue, and in terms of professional preparation we have done what we can, so let’s see!”

“We are not alone, we are supported by the European Council, the EU secretariat, and the office of the High Representative – it’s a matter of team work.”

She added: “To put it simply, if we carry out the presidency in a professional way, with each member of our team doing a professional job of their daily work in the EU Council, we will leave [the impression that] that the Latvian way of doing things is pragmatic, professional, and that we can deliver the agenda we have planned”.

“It’s not an easy time to start our first presidency as it’s the start of the new legislative Council of the EU, with a new Commission just starting it will put Latvia on the map if we deliver on these priority issues.”

The new executive in Brussels, headed by the former prime minister of Luxembourg, JeanClaude Juncker, contains several prominent Baltic states figures, including former Latvian PM Valdis Dombrovskis as vice president and commissioner for the euro and social dialogue.

Other leading Baltic states figures with senior positions in the new EU include the former Estonian prime minister Andrus Ansip, vice president and commissioner for the digital single market, and Vytenis Andriukaitis, a former Lithuanian health minister, as commissioner for health and food safety. n

>> Events 9 January 2015 - Opening event of the European Year for Development 2015 27 - 28 April 2015 - Asia-Europe (ASEM) Meeting of Ministers of Education 3 - 4 May 2015 - World Press Freedom Day 2015 21 - 22 May 2015 - Eastern Partnership Summit 15 - 16 June 2015 - VI Annual Forum of the EU Strategy for the Baltic Sea Region 17 - 18 June 2015 - Digital Agenda Assembly

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ON THE RECORD

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>> Baltic state is now a rapidly growing regional financial centre After facing bankruptcy Latvia is enjoying a remarkable recovery, writes Alexander Welscher The Latvian banking industry contains untapped potential and has promising growth prospects as a financial services exporter and transit hub between Russia and other former Soviet republics and the West, despite the ongoing Russia-Ukraine conflict.

These were some of the conclusions of the 20th Baltic Financial Forum, held in Riga in September. Moderated by the Economist’s senior editor and distinguished Baltic-watcher Edward Lucas, the main session of the BFF brought together local and international financial experts to discuss the further development of Latvia as a financial centre.

The forum’s two other sessions included discussions about growth opportunities for companies and business technologies, as well as topical issues in financial management and accountancy. Since Latvia gained independence in 1991, the financial sector has undergone considerable transformation, and has been gradually increasing its significance for the Latvian national economy and Consolidating Riga’s position as the premier financial capital of the Baltic States. Today the sector contributes substantially to economic growth and accounts for 3.3% of Latvia’s GDP, as Andris Liepinš, deputy state secretary of the Latvian Ministry of Economics pointed out.

Although this figure is lower than the EUaverage of nearly 5%, the financial industry is the only sector in Latvia showing higher levels of employment than in the pre-crisis period, currently engaging about 22,000 people, he said.

Latvia faced massive economic problems in 2008 after its real-estate bubble burst amid the global financial crisis and the then largest indigenous bank, Parex Banka, had to be bailed out by the government, dragging the whole state to the verge of bankruptcy.

The decision to save Parex from collapse led

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to €7.5 billion bailout by the International Monetary Fund and the EU. Following an austerity-spurred recovery, the country now boasts one of the EU’s highest growth rates.

Its deficit and debt levels are also among the lowest in the bloc, allowing it to join the euro area back at the beginning of 2014.

After waning due to the crisis, the banking sector is now thriving again. The export of financial services enjoyed double-digit growth in 2013 and increased by nearly 12%, Liepinš noted. To prove the sustainability of Latvia´s journey from the post-crash casualty ward to a growing euro area member with a stable recovered banking sector, he indicated that the quality of the loan portfolio is improving, the deposits are increasing, the liquidity ratios are historically high and the capitalization of banks is very strong.

“The only thing in this rosy picture which we wish to have is for the credit expansion to also be stronger,” the government representative added. Further elaborating on the contribution of the banking sector to the Latvian economy was Ilona Gulchak, Chairperson of the Board of Baltic International Bank and Member of the Council of the Association of Commercial Banks of Latvia. While taxes paid by the financial services industry comprise 4.4 % of the total Government finances, the indirect contribution made by banking businesses to the economy is calculated to be around 10% of GDP. “These are significant numbers but I can ensure you if we are developing in a wise manner, these can be enhanced and increased“, she argued.

For this to happen, “the financial institutions in Latvia should seize every opportunity to retain the capital which has been attracted to Latvia in order to be invested here, to stay here and to work for the best of the economy”, Ms Gulchak pointed out. Having gained “great

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experience” of working with international clients, the banking sector could further capitalise on it by creating “the environment where business process outsourcing companies and shared services centres can be placed in Latvia.” To advance the enterprising and financial climate in Latvia, Ms Gulchak suggested a review and reduction of the tax rate for reinvested profits.

A similar view was also voiced by Andris Liepinš: “For Latvia it is important to create a platform for developing a business angels network”, he said, adding that the Latvian Guarantee Agency already initiated the setting up of such a network. Business angels are an important source of financing for start-ups and for early stage financing, the government representative argued and indicated that in Western Europe business angels financing is by volume already larger than private equity venture capital funding. Stephen Young, Senior Partner of the audit company KPMG in the Baltics and Belarus, stressed the leading role of Latvia as regional financial hub which attracts 72% of the international deposits flowing through the Baltics. He still sees further potential opportunities in the foreign-client, which directly contributes between 0.7% and 1% to the Latvian GDP, according to a recent KPMG study. As Young outlined, Latvia enjoys several key competitive advantages for the country to continue growing as a popular foreign-client banking destination. First of all, it has a “history in serving these clients” due to its geographical proximity to Europe and CIS countries, in combination with the understanding and knowledge of language and culture. Other benefits include the EU membership, settled legislation and the strict bank regulation, he said.

Speaking from a transnational banking perspective rather than that of local lender, Dagmar Linder, Managing Director for Central and Eastern Europe at Deutsche Bank, also gave an optimistic outlook for the

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ON THE RECORD

The forum gathered various industry specialists and government representatives. From top left, clockwise: Ilona Gulchak, chairperson of the board at Baltic International Bank, Edward Lucas, international editor of the Economist. Stephen Young senior partner of KPMG, Dagmar Linder, Deutsche Bank representative, Edward Lucas, Andris Liepins, and Anna Dravniece, senior officials from the Latvian Ministry of Finance, FCMC chairman Kristaps Zakulis, BIB’s Ilona Gulchak and Deutsche’s Dagmar Linder.

development of the regional banking sector and Riga as a financial hub.

Although the Baltic countries currently are more sensitive to risks caused by the RussianUkrainian crisis, in general the region has high growth prospects and is still developing compared with Western European markets.

“In Eastern Europe the banking market remains interesting – it will be the growth market for banking here in Europe”, Linder said. According to her, the ratio of bank assets to GDP in Eastern Europe stands at 85% and is still rather low compared with the euro area average of 260% and far below the levels of popular Western financial hubs like Luxemburg. In attracting foreign-client deposits the Baltic States benefit from their “natural advantage” – their closeness to the neighbouring countries beyond the EU border.

As the person whose office is responsible for regulating and supervising the financial

institutions in Latvia, Kristaps Zakulis, chairman of the Financial and Capital Market Commission, assured that strong vigilance will be maintained. “We still apply appropriate measures depending on the risks inherited in those business models”, he said, referring to both banks that are focussing on the local market and the ones that are specialising in financial services to foreign-clients. This will not change, Zakulis emphasised, following the advent of the Single Supervisory Mechanism (SSM) in November 2014, and the three largest banks in Latvia in terms of assets will now be directly monitored by the Eurozone’s single banking supervisor. Anna Dravniece, Director of financial market policy department at the Latvian Ministry of Finance, stressed the importance of macroeconomic stability, an emphasis which led to the Latvian government this spring approving a Financial Sector Development Plan that stipulates

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measures focusing on both development and competitiveness of the financial sector, as well as preventive measures ensuring its stability. And on the EU level the answers for the lesson learned from Parex and other bank failures can, according to her, be found in the EU’s new arsenal of measures against future financial crises: Single Supervisory Mechanism, Single Resolution Mechanism, Banking Recovery and Resolution. Directive. However, ultimately the responsibility for handling the risks and preventing imbalances rests with the bank, as the panellists were pointing out.

“It is important to manage risks that you have in your portfolio – to manage the market risk, the liquidity risk, the credit risk, and probably the contagion risk not to create these bubbles and spill-overs,“ said Ilona Gulchak.

“We should think sustainably both in terms of banking and in terms of developing the businesses here.” n

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NEWS

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Latvia fairs badly in child poverty rankings, business school launches class for high-flyers, Lithuanian airline wins legal dispute over contract termination, Alumni celebrate university’s 20th anniversary >> SEB named best Baltic bank Swedish group SEB has been named as the best private bank in the Baltics and Sweden in the 2014 Global Private Banking Award 2014, run by the magazines The Banker and Professional Wealth Management (PWM).

Reet Raidur, SEB’s head of private banking, said: “The fact that SEB received the prestigious Banker award in all Baltic States is a symbolic event in challenging times. For us, it mainly signifies SEB’s ability to ensure good quality of private banking service at all times, and that it is not a coincidence or a result of good conditions.

We have done continuous and effective work in all three Baltic States and it is fantastic that our strong service proposal, aspired team work and non-intrusive relationships with clients brought us the best possible result.” PWM and The Banker magazines are a part of Financial Times Group. Its annual awards attract more than 170 applications from 60 countries, being assessed by a jury consisting of financial industry experts from North America, Asia and Europe. Their decision is based on the annual research conducted by Scorpio Partnership, quality of client service in the private banking area and information submitted by financial institutions.

>> Lithuania’s competitiveness rising Lithuania has continued its climb up the Global Competitiveness Index, now ranking in 41st place. The largest of the Baltic countries has edged ahead of neighbouring Poland, and ranked better than Latvia, Italy, Turkey and Bulgaria. Lithuania has improved in nine of the 12 criteria measured by the index, and has made the most progress in improving its macroeconomic environment, moving up from 58th to 42nd position for this factor.

Lithuania achieved very high rankings in a range of areas, including labour costs and productivity ratio (12th place), female

>> Birthday bash for SSE Riga One of Europe’s premier business universities celebrated its 20th birthday in November, in the company of over 1,800 alumni. The Stockholm School of Economics in Riga (SSE Riga) was founded in 1994 as the first overseas outpost of the privately-owned Stockholm School of Economics (founded 1909) with the support of the Swedish government and the Latvian Ministry of Education. The mission of SSE Riga has been to provide state-of-the-art education in business and economics, contributing to the economic and social development of the region, with particular emphasis on Latvia, Estonia, and Lithuania.

The celebratory events were spread across two days, culminating on the evening of 8 November with a party attended by over a thousand wellwishers. The previous day various gatherings took place at the celebrated art deco tenement building at Riga’s Strelnieku street 4a. Successful alumni in attendance included Kerli Gabrilovica, a board member of Lattelecom and Tadas Langaitis, co-founder of Webmedia, now Nortal.

Several notable alumni talked about their own experiences, on topics ranging from the challenges of managing a €€200 million telecom company, to the changes in world-view brought about by serious illness.

The formalities were followed by a spectacular light show projected onto the facade of the university building, one of the most elaborate and best-preserved in the UNESCO-designated Historic Centre of Riga World Heritage site. SSE Riga alumni are now dispersed to 53 countries worldwide and are employed in a wide range of industries from finance and banking to energy and utilities. According to the Financial Times Ranking of Top European Business Schools in 2013, SSE Riga as part of SSE group is the number one business school in the Baltic/Nordic region.

SSE’s position in the European ranking in 2013 was 21st out of 75 European schools.

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workforce (13th), import in GDP structure (17th), export in GDP structure (17th), citizens with secondary education (18th), network of local suppliers (20th), railroad infrastructure (22nd), local competitiveness (22nd), citizens with higher education (22nd), mobile penetration (22nd), quality of STEM studies (23rd), R&D and business partnerships (27th), and quality of R&D (28th).

“The Global Competitiveness Index is an important and reliable way of evaluating Lithuania’s competitive advantages, and comparing conditions for doing business to those in other countries,” Arvydas Arnašius, director general of Invest Lithuania said.

“Lithuania is successfully climbing up the Index. However, it is important both to put effort into further improvement, and to avoid complacency regarding our results.”

NEWS

>> Elko’s Chinese connection Latvian IT wholesalers Elko have signed a deal with leading networking and Chinese cloud computing company Opzoon to distribute Opzoon Channel and OEM goods in Russia.

Under the terms of the agreement, Elko Group, one of Latvia’s largest companies, has gained exclusive distribution rights for Opzoon’s manufactured ethernet switches. Elko will also distribute Opzoon’s security solutions along with “converged infrastructure”, a pre-configured and optimised bundle of computing, storage, network, virtualization, and unified platform management technologies. Elko will also provide warranty support via a Russian-speaking call centre and will hold spare parts in Moscow. Chris Cho, Opzoon’s vice president of sales, said: “With Opzoon’s IT expertise and Elko’s superior channel coverage, we believe we can bring customers more reliable experiences and services.” Aleksandrs Orlovs, Elko’s director of distribution said: “Opzoon ethernet switches are a significant addition to our existing networking product portfolio and gives an opportunity for our partners to [work with] a new ethernet manufacturer with a strong focus on R&D. Founded in 2009, Opzoon is headquartered in Beijing, with R&D offices in Tianjin, Shanghai, Beijing and Boston. As well as 19 branches in China it has four overseas offices in USA, UK, Taiwan and Hong Kong. The company invests over 20% of sales revenue in R&D. Elko Group, founded in 1993, is one of the largest IT product wholesalers in Eastern Europe.

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NEWS

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>> Latvia fairs badly in child poverty table Latvia scored poorly in a new UNICEF study which showed it was second only to Greece in the amount of children living in poverty, with 36% of children living below the poverty line. The study showed Greece and Iceland have seen the biggest percentage increases in child poverty since 2008, followed by Latvia, Croatia and Ireland. Lithuania was the 8th worst performer in the survey, and Estonia in mid-table at 21 out of the 41 countries considered. The proportion of children living in poverty in the UK has increased from 24% to 25.6%. Eighteen of the 41 countries in the study have seen falls in child poverty, topped

by Chile which has seen a reduction from 31.4% to 22.8%. Norway has the lowest

child poverty rate, at 5.3% (down from 9.6% in 2008), and Greece has the highest, at 40.5% (up from 23% in 2008). Latvia and Spain also have child poverty rates above 36%. In the US, the rate is 32%.“In the past five years, rising numbers of children and their families have experienced difficulty in satisfying their most basic material and educational needs,” says the report.

Rising numbers of children have difficulty satisfying their basic needs

Olegs Fils and Ernests Bernis

>> Latvia’s top earners A study carried out by journalist Lato Lapsa, in co-operation with the business magazine Kapitals, and the register of enterprises Lursoft, found that Latvia’s most profitable entrepreneurs last year were the owners of ABLV Bank Olegs Fils and Ernests Bernis. Both Fils and Bernis reported incomes of €18.7 million. Rietumu Bank shareholder Leonids Esterkins was third on the list at €17.7m, followed by Internet solutions company MikroTik’s co-owner Arnis Riekstins, who reported €11.8m. In joint fourth place is another Rietumu Bank shareholder, Arkadijs Suharenko, also at €11.8m.

>> BMI’s influential new class Jüri Raidla

>> Entrepreneurial lawyer honoured Jüri Raidla, founder of legal practice Raidla Lejins & Norcous OÜ has won Estonia’s Ernst & Young Baltic Entrepreneur of the Year 2014 award, while the Award for Lifetime Achievement was granted to the chief executive and majority owner of Merinvest Enn Meri.

President Toomas Hendrik Ilves announced the winners at a gala event for entrepreneurs in Swissotel in Tallinn in November, with the Entrepreneur’s Award for Lifetime Achievement handed over by the Minister of Foreign Trade and Entrepreneurship Anne Sulling.

Other Entrepreneur of the Year title candidates were Aleksandr Maljugin from LTHBaas AS, Galina Nikitina from IDEAB-Projekt Eesti AS, Heiti and Marti Hääl from Alexela Group OÜ, Jüri Raidla from law office Raidla Lejins & Norcous OÜ, Veiko Pak from Kadarbiku Talu OÜ. The awards were being held for the seventh time.

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Leading regional business school BMI of Vilnius has began its 16th Executive MBA class in November, with classes comprised of managers of companies worth a combined total of €3.2 billion.

BMI director general Jaunius Pusvaškis told BQ Baltic: “Members of the new class come from Lithuania, Belarus, Latvia and Spain. With an average age of 34, they manage companies with 15,000 employees, total annual revenues of €3.2 bn with €387 million profit. They have an average 11 years of experience and combined social networks reaching 11,800 managers. The 18-month programme will bring them into the family of more than 600 BMI graduates who already successfully lead businesses in 30 countries,” Among the numerous industries represented in this year’s group, executives from ITT, finance and trade have the biggest presence,

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followed by construction, logistics and manufacturing, giving, according to the school‘s spokesman, “a sense of where the dynamism is in the economy“.

BMI has been ranked among the world’s 18 most innovative business schools, according to European CEO magazine.

Eduniversal ranks the flagship BMI International Executive MBA as top in the Baltic region and sixth in Eastern Europe.

BMI is ranked among the world’s most innovative business schools

>> Omniva seeks asset sales Estonia’s state-owned postal company Omniva, formerly Eesti Post, has announced plans to sell the majority of its post office buildings. It intends to either enter into lease

NEWS

agreements with new owners or find new outlets. Omniva’s spokesman said the move was designed to achieve “more flexibility to find rooms to suit our needs and thereby improve the working conditions of our employees.”

The company has recently put real estate up for sale throughout Estonia, to focus more on its core business rather than managing its estate. At the time of the announcement, Omniva owned 48 properties in Estonia, 39 of which were put up for sale.

While most of the buildings are used as post offices, they also have tenants who are offering services on space belonging to Omniva.

“Thus Omniva has become a sort of real estate services company that needs to communicate with tenants on a daily basis and has obligations to them,” said the spokesman.

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BUSINESS QUARTER | WINTER 14

NEWS

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>> New tie-ups

>> Air Lituanica wins arbitration Fledgling airline Air Lituanica has won an arbitration case against the Estonian company Estonian Air, which is being forced to pay LTL 3.3m (€955,000) to the Lithuanian carrier.

The Arbitration Institute of the Stockholm Chamber of Commerce of Sweden has passed the judgment in the dispute between the two airlines on the issue of a unilateral termination of commercial co-operation contract.

Air Lituanica initiated arbitration proceedings in December 2013 against Estonian Air as the contract termination the previous month meant that the Estonian airline still owed the Lithuanians the income collected from past passengers and paid deposits for future flights.

A spokesman for Air Lituanica said: “The decision to refer to the Stockholm Arbitration was taken after Estonian Air failed to repay the accumulated debt to Air Lituanica immediately after the termination of the contract, as stated in the terms and conditions.”

Separately, Air Lituanica has signed an interline agreement with two leading global airlines – Air France and KLM Royal Dutch Airlines – increasing the ease with which travellers from Vilnius International Airport can reach European, North and South American and African destinations from Amsterdam and Paris. Passengers will be able to buy a single ticket for their flight with connecting flights from Amsterdam Schiphol or Paris Charles de Gaulle Airports.

Passengers will be issued Air France or KLM Royal Dutch Airlines ticket. Tickets will be available for purchase in almost all electronic ticket search engines and travel agencies.

The airline, which was launched in May 2013, previously announced direct flights from Vilnius to London, Edinburgh and Gothenburg during the Christmas season.

According to the representatives of the airline, additional flights are designed to help Lithuanians living and working abroad to reconnect with their families.

The flights will help Lithuanians working abroad to stay connected

>> Electronics factory brings jobs

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Schneider Electric, the US-based energy giant, is to invest about €10m into the construction of a new Lexel factory in Latvia, a company spokeswoman in the Baltics Santa Rutka has announced. The Lexel factory (official name Lexel Fabrika) specialises in manufacturing electric-mechanical and electronic devices, including lighting control systems, thermostats, motion detectors, smoke detectors and light switches. The company has operated in Latvia since 1993, and currently offers workplaces for 180 employees. Lexel Fabrika turnover in 2013 was €38.2m, placing Lexel Fabrika among Latvia’s top-earning companies. The majority of Lexel Fabrika products are exported to Scandinavia and Germany, supplying other Schneider Electric factories with components.

The construction of the new factory is scheduled for completion in 2015.

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COMPANY PROFILE

Whisky & Cigars Sipping fine whiskies and smoking choice cigars may seem politically incorrect these days, but what is wrong with the pursuit of hedonistic pleasure? To initiates, this is about enjoying some of nature’s finest gifts; an indulgence in natural products turned by artisanal ingenuity into something special Enjoyment of fine whiskies and cigars requires the right conditions; most of all a place which nurtures and appreciates them, providing patrons with the range and discerning choice in an atmosphere where they can be relished. The place to head to is La Casa del Habano in Tallinn and Riga where you will be greeted with warm hospitality, a great atmosphere, and a wide variety of whiskies and Cuban cigars. For those who want a wider choice of cigars, they can contact the official importer and distributor for Davidoff, Arturo Fuente, Padron and Oliva, who also owns the franchise of La Casa del Habano in Tallinn and Riga.

They offer a fantastic selection of the best cigars man has to offer. Mahesh Ramnani, the proprietor, has an affection for Cuban cigars combined with a tremendous insight and knowledge into the cigar industry. When asked about his favourites, he will say that it really depends on your mood and the time you are able to set aside to smoke them.

The La Casa del Habano specials are always a treat, as they are made with a specific blend in a size exclusive to the La Casa del Habano franchise, and variants are only produced for two years.

On New World Cigars Mahesh holds dear the Arturo Fuente brand with cigars to satisfy any palette. Padron cigars are exquisite with a unique character enjoyed by gourmands and aficionados from all over the world whilst the Oliva cigars are renowned for their value based on a price-to-quality aspect. When discussing Davidoff cigars, Mahesh explains the history of Zino Davidoff and his immense contribution to modern day cigars. Zino was all about quality,

From modern Scotch malt bottlings by Compass Box to Amrut, an award winning whisky from India, the list is growing as Whisky aficionados are expanding their horizons and finding some delicious drams from non-traditional sources and did not compromise whatsoever. Along with the importation of cigars, Rasa Trading Company imports a large range of whiskies carrying over a 100, ranging from stalwart Scotch companies such as Gordon & Macphail and Douglas Laing, along with those from famous distilleries such as Oban, Talisker, Lagavulin, and The Macallan, amongst many others. They also carry the finest products of international distilleries such as Kavalan in Taiwan, whose single malt is the winner of the Best Asian whisky category in Jim Murray’s Whisky Bible 2015 edition. On discussing the intricacies

of whisky and cigars, enjoyed in combination with each other or as individual products, Mahesh explains that the taste and character range of whiskies is tremendous. From modern Scotch malt bottlings by Compass Box to Amrut, an award winning whisky from India, the list is growing as Whisky aficionados are expanding their horizons and finding some delicious drams from nontraditional sources. You can also select from their entire range at their Oak & Leaf shops, located in the Tallinn Airport and at Kollane 4 in the district of Kadriorg.

LA CASA DEL HABANO IN TALLINN: A: Tallinn Old Town, Dunkri 2. T: +372 6445647. W: www.havanas.ee LA CASA DEL HABANO IN RIGA: A: Jeruzalemes 10 (Entrance at Dzirnavu) T: +371 673 38787 W: www.havanas.lv RASA TRADING COMPANY: A: Kollane 4, Tallinn 10147 T: +3726014650 W: www.rasatrading.ee Oak & Leaf – www.oakandleaf.com

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NEWS

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LCCI to visit Burma in November 2015

>> LCCI issues trade missions invitation The Latvian Chamber of Commerce and Industry (LCCI) has issued an invitation to European companies from outside the country to join Latvian trade missions to Latin America, Asia, and Central Asia in order to find potential new business partners.

Trade missions scheduled for 2015 include trips to Kazakhstan (April), Chile, Peru and Brazil (May), China (June), The United Arab Emirates (October), Turkey (October), India (November), Burma (November), and South Korea (November).

During the trade missions, LCCI’s partners in the respective countries will describe the local business environment, identify the most important business organisations (such as chambers, associations) and provide essential information for doing business in the country in question. Additionally, each company will be offered individually organised meetings with up to five potential partners.

European companies interested in the trade missions are advised to apply at least three months prior to the visit. For more information please contact Ieva Stumpe, Head of the Foreign Affairs Division at the Latvian Chamber of Commerce and Industry.

>> Liepins to calm RIA turbulence Andris Liepins, Deputy State Secretary of the Economy Ministry of Latvia, has been nominated as new chief executive of Riga International Airport. Liepins, who also serves as chairman of the council at the national airline AirBaltic, was one of the founders of the Latvia’s Way political party, but lost his seat in 1995.

The appointment follows the resignation of four board members at Riga International Airport – Aldis Murnieks, Olita Augustovska, Andis Damlics, and Raimonds Rozkalns.

They wrote resignation letters following “long-term disagreements on several management processes in the company” as well as disagreements about the future direction of the Baltic States’ largest and

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best-connected airport. Of the five original members, only Ilona Lice remains in her job.

The Transport Ministry, which holds the government’s shares in the airport, is said to have decided to accept the said resignation letters following a mutual agreement.

Riga International Airport last year achieved a €47.3 million turnover and profit of €601,365, serving a total of 4.79 million passengers.

New appointment at airport follows resignation of four board members

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LEARNING TO GROW Justina Treigyte argues for a new school of thought in secondary education to boost Baltic GDP Shortcomings in a secondary school system can have an adverse ripple effect, pervading the higher education system and beyond that, into the economic life of the nation. The job of the Baltic States’ educational establishment is not just to think about the kind of schooling that children receive, but how we might reshape the entire system for the greater good of the region.

The October 2014 Cambridge Baltic

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Conference, a gathering of high-calibre speakers from a variety of fields met in Britain’s most distinguished university city. They heard speeches and panel discussions that played variations of a constant theme: the supreme importance of teachers and teaching to national economic development.

The event underlined what we all know, but sometimes neglect to think about too deeply: improving the way we impart knowledge

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to our kids is vital if the Baltic region is to compete globally.

It should be stressed that, although, like everywhere else, there are areas where a change of attitude amongst the teaching profession would help, there is nothing irreparably “wrong” with the pedagogy applied in the Baltic States. It stands up well against the world’s leading educational systems. And even if there was some

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fundamental fault, it would not be realistic to somehow replace the existing stock of qualified teachers. There is no alternative corpus of teachers waiting in the wings.

Nor are shortcomings to be addressed, as has been suggested, by simply spending larger proportions of Baltic GDP on secondary and tertiary education. More cash does not equal better outcomes.

Rather than simply resolving to write bigger cheques, it would be logical for Baltic governments first to look at current spending patterns and consider reallocating the existing budget more strategically, before pouring cash into areas that do not necessarily deliver returns.

As was suggested many times at the Cambridge event, the need for re-organisation in Baltic education goes beyond re-training teachers. Evaluation should begin with close examination of the core subjects and how they are offered.

Judging education in my own native country of Lithuania from the perspective of an expatriate student, I must praise the openness towards foreign languages there. This is in marked contrast to the UK, where the lack of professionals with satisfactory language skills has raised justified alarm in the media.

The fact that the number of languages spoken by an average person in the Baltic region is one of the highest in all of Europe is something that we can and should be proud of. Efforts could be made to encourage our young people to apply and to polish these skills further by going overseas for part of their studies.

As suggested by the conference’s keynote speaker, business education benefactor Sir Paul Judge, it would be good for the future of the Baltic States if about half of the region’s young people gained experience abroad under the EU’s Erasmus exchange programme, or through other means.

Given the small size of the Baltic States, we cannot afford to ignore the influence of dominating powers in our continent and indeed around the world. This is not to say that we should not seek to maintain our own identity, but more interaction with those larger countries is crucial.

Before the Baltic economies can create the

educational systems that will help them retain their talent and make it fit for the 21st century they must review their programmes for the final two years of schooling. The current system under which post-16 pupils study a broad and diverse range of subjects is not developing enough of the skills that employers are looking for.

These skills can only be gained and honed by in-depth study. Specialisation is the way forward and we should work towards a system that encourages such narrowing down.

Too many in the Baltic States are under the mistaken impression that a teacher ought to know everything, and should be embarrassed if they do not, and that they should pass this knowledge on to students.

In the internet age, more knowledge is readily available today than ever before. This needs to be borne in mind when devising syllabuses.

The teaching of history is a case in point. To put it crudely, you can Google important dates, but you cannot Google comprehension and contextualisation.

Digital means cannot teach the understanding that can only be gained from intellectual debate. In other words, the good news for humans is that they are irreplaceable in the classroom.

This point was underlined in the closing address by another Cambridge Conference participant, the Nobel Prize-winning Yale economist Prof Robert Shiller. Although he was participating by video link himself, he pointed out that online lectures and virtual teaching were unlikely ever to replace the need for teacher-student interaction. Teachers, he suggested, should focus on the intellectual framework of the subject itself. For example, in the study of history they should impart such concepts as cause and effect, and methods of analysing primary and secondary historical sources to deepen critical thinking.

Unfortunately, this approach is being neglected in the Baltics in the flurry of imparted dates and events, also known as general knowledge.

Displaying such knowledge may impress people in social settings, but it does little for

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AS I SEE IT

job applicants seeking a competitive advantage in the workplace.

Much is claimed about “learning for the sake of learning” but to advance education in the Baltic States and to align it more closely with the region’s economic priorities, sadly such knowledge does not equal competence and capability in the workplace.

To put it simply: education should address the current needs of students, rather than the ingrained ideology of those in positions of authority. Baltic high school students applying to Oxbridge and other universities of comparable international stature soon discover that the knowledge required to succeed in, say, the Lithuanian national maths examination is insufficient to the demands of a challenging undergraduate course there.

As it stands, education offered by the state does not suffice and so additional stepping stones to successful international study are needed, such as the not-for-profit National Student Academy in Lithuania or the hiring of private tutors.

While such initiatives have a positive impact and can improve chances of securing a place at foreign universities, longer term solutions to curriculum inadequacies are needed. If a student’s time outside the classroom is spent seeking to catch up, they have few opportunities to develop non-academic but equally important talents. Extracurricular activities are integral to education.

According to OECD criteria, education in the Baltic States has improved in recent years. The Lithuanian system, for example, has progressed from ‘fair’ to ‘good’ by their measures.

Nevertheless, we need to maintain the pressure, as there is still room for new ideas.

The current system in the Baltic States encourages students to become Jacks (and Jills) of all subjects, but masters of none.

Teaching in the Baltic States is based on high principles that will, and should, continue.

The structures and forms in which they are conveyed need to be a better fit for an increasingly interconnected and competitive global market. n Justina Treigyte is media spokeswoman for the Cambridge Baltic Conference.

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ENTREPRENEUR

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SAVING LIVES, SAVING LIFE Skype co-founder Jaan Tallinn is the Baltic businessman everyone wants to emulate.

Colin Donald talks to him about how his focus moved from how we communicate to how we survive In any cloud of angel investors, the one with the biggest, whitest, fluffiest wings is likely to be Jaan Tallinn, Estonian physicist, entrepreneur, tycoon and big thinker.

Since BQ’s launch, this writer has rarely met a Baltic business person who did not aspire to emulate the success of Skype, the voiceover-internet titan that Tallinn’s code-writing genius helped to found. While that company has become a universal brand, whose global impact remains the beacon of all Baltic business, those who know anything about Jaan Tallinn, 43, personally are in awe of the skill and humility with which he and his colleagues have handled their good fortune since first becoming a global household name, and before being sold to eBay in 2005 for an estimated $3bn, then to Microsoft in 2011

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for $11bn. It is therefore a great privilege for this magazine to catch up with the Alexander Graham Bell of our age to hear about his postSkype angel activities. It is an even greater pleasure to find him as down-to-earth and modest as fellow Estonian tech entrepreneurs have told me that he is, refusing to accept, for example, that he is a walking symbol of Estonia’s extraordinary reputation for innovation and “smart” 21st century living.

BQ Baltic encounters Tallinn on a rainy day in London, where he has been addressing a conference, something he is regularly asked to do throughout the world. Tallinn is now a global authority in the field of artificial general intelligence (AGI), the still hypothetical phenomenon in which computers are able to assume all of the intellectual capabilities >>

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ENTREPRENEUR of humans, including reasoning, forward planning, and learning and thus are enabled to override any of the controls with which we currently keep them in check. If and when this happens, human capacity to control the process will be hopelessly inadequate.

This may sound like an eccentric sci-fi obsession, but Tallinn is deadly serious about the potential for the computer “intelligence explosion” disaster in which – in the most famous example ”a machine designed to optimise the production of paperclips, turns the whole world into paperclips”.

Computer intelligence running amok and inadvertently destroying life on earth (he doesn’t hold with “anthropomorphic nonsense” about computers turning malevolent), is just one of the issues that Tallinn grapples with at the recently founded Cambridge Centre for the Study of Existential Risk, in the distinguished company of the philosopher Prof Huw Price and the astrophysict Sir Martin Rees.

Most of Tallinn’s time, however, is spent in the city he share’s his name with (he has six children based there), and the rest either globetrotting or in New York, where the main object of his current interest as an investor and mentor is based.

MetaMed, a healthcare company in New York, is a potentially revolutionary new “personalised medicine” service, with the power to transform how we think of ourselves as “consumers” of health service, and to disrupt something far older and more fundamental even than traditional fixed-line telephony – the relationship between patients and their medical practitioners.

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“I deal with quite a lot of companies as an angel investor,” Tallinn tells me. “And then there are a few companies that I feel more interested in and MetaMed is probably my main interest along with communications software Fleep.io, which is messaging communications software, invented by fellow ex-Skype engineers”.

The main vehicle for Tallinn’s investment largesse and technical and business advice used to be Ambient Sound Investments, but he hints that the seed investment company is not the tech innovation powerhouse that it once was.

“We formed the company together with all four founding engineers from Skype and we have discovered that we are fairly different in our attitude towards VC or angel investment.

In practice we end up doing sort of commondenominator investment, buying shares in public companies or buying real estate, things like that. The other technology angel investment we tend to do privately.”

“MetaMed is probably the most important company that I have invested money in and invested my time in but we have just got a new CEO in August and I want to give him some room.

“I would not want to be messing around with the company while he is just getting started.” The new chief executive is Dutchman Walter Hoogland. “He’s a doctor himself, which is nice.”

“He seems to be doing a good job. My job is to advise him but not try to manage the company directly. One of his first priorities is to come up with new solutions for the website and our marketing material.”

MetaMed exists to ensure that the sum of human knowledge about a health condition can be accessed by the person suffering from that condition

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It’s a long leap from telecommunications to medical research, which suggests that Tallinn’s success and his status has prompted the kind of soul-searching about what matters most that very few of us have the chance to undertake.

“I kind of realised that my resources are money and time. Money is a more flexible resource. Time is an inflexible resource because there’s a finite amount of it.”

This is the closest that Tallinn gets to a reference to the great wealth and freedom that the Skype sale has brought him and his partners.

“You cannot invest time and get more time out of it. Well you sort of can but .. anyway, I tried to invest my time in areas where I would be creating something that is more valuable than money. And by that I mean I wanted to create things you just can’t buy with more money.”

In the case of MetaMed this means a chance of extended or improved life for people suffering from chronic or apparently terminal conditions.“MetaMed is a really prime example of that. The people behind MetaMed basically identified what everyone, kind of anecdotally knows – that the medical system in the US is horribly, horribly broken.”

Tallinn also describes it as the professionalisation and validation of a service that already exists in a very crude and sometimes dangerous form to anyone with internet access; self diagnosis and selftreatment through the internet, an obvious minefield to those without the qualifications to interpret the results.

“People who are sick are going to the internet and doing their own research when they have medical problems, so one way of presenting what we do is as a professional version of that. We have access to specialist university research literature, and we have access to additional resources.”

The reason that they do this is because, in the US at least, the strong correlation between your health and your wallet is now one of the greatest social and political issues of modern times.

“Sure if you are a patient and if you have the means you can just spend more money and get to places like the Mayo Clinic [the top

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flight facility in Minnesota]. However, there are still systematic problems that prevent you from getting the treatment that is right for you.”

“One way of putting it is that there is a certain body of knowledge that humanity has about the human anatomy and how to basically cure illnesses. And then there is a subset of that which is about putting it into practice.”

MetaMed exists to ensure that the sum of human knowledge about a health condition can be accessed by the person suffering from that condition.

“There are various reasons why the whole body of knowledge does not get put into practice but the main one is that there are no strong incentives for the system to kind of adopt new breakthroughs in research as quickly as possible.”

“The incentive systems are somewhat strange.

Let’s just say that they are not perfectly aligned with what patients need. If you look at the system with enough perspective, you see that

ENTREPRENEUR

the US system really is in the business of selling treatments in a way that serves the interests of the insurance companies. Whether people get better or worse is not the main concern.

“The incentives that pharmaceutical companies have are perverse. When they start investigating in a new drug, a potential drug, in a perfect world they would be brutally honest about whether it works or not and if it doesn’t, to cut it short as quickly as possible.

However, once they have advanced it through all their different stages of trials, they have made a major investment in it, and they are going to treat this investment more gently…”

He seems to be hinting that they will want to market this drug, even if they know it is not all that effective.

“If true, it certainly suggests that the US health system itself is fundamentally sick. But how is MetaMed the cure?

“We have basically two core ideas. One is that we want our incentives perfectly aligned so we

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get our income directly from our customers, that is the patients. We do not take money from insurance companies and we do not represent pharmaceutical companies. We are a perfect ‘first line’ company”.

“The other thing is that we want to treat medical problems as client’s problems, so you have people who are actually qualified to look into medical literature, who can assess the soundness of that. They can dig up whatever evidence there is from the latest medical literature that is true and relevant to the patient”.

“We are empowering the patients and empowering the success of their treatment programme. The success of our treatments directly affect our income. We are selling to the market of customers who want to improve their healthcare.”

“The way it works is that first we perform an intake assessment. The patient talks to a team composed of a doctor, a case >>

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ENTREPRENEUR manager and a patient representative. Together they come up with a research plan that includes a menu of investigations that we can offer.

They all have associated budgets. And once the client approves one or more of those items of research they come back with a research report. Then, together, we figure out what the next step should be and how we can assist with these steps. Eventually we have regular followups with the client.”

MetaMed’s services are directed to those in the unhappy situation of having hard to diagnose or complex health problems, making it – to put it crudely – a kind of last chance option available to those with access to the means.

“The majority of our clients are either terminally ill, or they have some serious chronic condition that they have not been able to have treated by the medical system.

“We have had clients who had a rare sleep disorder but who were perfectly healthy otherwise – but we were able to help with the sleep disorder.”

“I think we can provide value for anyone who who has some medical problems, though clearly we get a lot of people who are highly motivated because they are desperate for any help they can get.”

So far MetaMed has helped more than 60 patients, with the amount they pay for the service varying widely.

“We have been experimenting with a pricing scheme. Currently during the intake process, we brainstorm and put together the research plan, and gather the data, all of which costs about $5,000.

“Then we come back to the research plan which is dependent on how deep the client

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wants to go, and how complex the research looks. Our typical research plan is about $20,000. However, we have had cases where it has cost up to $250,000.

“We have about 50 people on the staff – when I did a count a year ago there were 30 researchers and 20 doctors.”

Given the power of the combined vested interests who might see this patient-centric system as a challenge, I ask Tallinn if there has been any sign of resistance from any in the pharmaceutical, medical, insurance or legal establishments who might like to nip in the bud a phenomenon capable of short-circuiting the labyrinthine current system, which may not serve patients very well, but is in many ways highly lucrative for those who service them.

He thinks not. “First of all we are a fairly small start up so I do not think we have yet registered on any big players’ radar.”

“But yes, when we do talk to doctors, sometimes they get defensive about the status quo, because doctors themselves know that the system they are working in isn’t perfect.

One way of putting it is that doctors do not think that the system is perfect but they still think that they are the ones who should be in charge of it!”

“That said, we have taken a more collaborative approach with medical practioners recently and, in fact, we are working with several doctors in the US and UK to work as a back office to them. We want our service to empower the doctors in a new way, to offer our research capability as a kind of outsourced service to them.”

“Some doctors at the top of their profession have pretty demanding clients so they are faced

The majority of our clients are either terminally ill, or they have some serious chronic condition that they have not been able to have treated by the medical system

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with the choice of whether they do a lot of research themselves, or find someone to do the research, or basically turn to us, and have a team that already knows how to do such research.”

The US healthcare system is a world on its own, characterised by complexity and strange dynamics. Does Tallinn think the MetaMed model is transferable, and will work anywhere in the world?.

“Yes absolutely, but the US health care systems, in terms of price performance, is about twice as bad as the European ones. I think that the contrast that MetaMed can provide in the US is much more dramatic than in Europe, though we do have European clients.”

One early indication of how successful MetaMed is likely to be is the amount of imitators it has. Tallinn is such a high profile investor, so one would expect others to follow where he leads.

“It depends on how widely you draw the line to define imitators,” he says. “There are a lot of companies who are basically providing a service of a second opinion, or providing a service of access to specialists. I even have a few investments with other medical companies whose strategy is to provide complementary services. There’s one investment I have in New York called RubiconMD, which is basically a network of specialists.”

“I don’t think there are great direct competitors yet, meaning competitors who are really trying to solve medical issues with scientific research.

However, there are a lot of companies that are basically disaggregating doctors in one way or another.”

All of this is a world away from software creation for Tallinn, who studied theoretical physics at Tartu University.

But he still keeps one foot firmly in that discipline with his support for Fleep, a B2B messaging application, with roots in the Estonian Skype organisation as a parallel instant messaging function, but which fell by the wayside as the Skype phenomenon took off in other directions.

“Because Skype’s messaging service was used extensively as an internal tool this generated a massive amount of ideas about how to improve it – we could see the bottlenecks and short

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ENTREPRENEUR cuts. Tallinn’s support for Fleep has involved him dabbling in his first love – code writing.

He says: “I wrote some code for Fleep.io, recently. I really like coding so every once in a while I find some high value project that I can get involved in.”

“The interesting thing about Skype was that Skype engineering was run on Skype IM [instant messaging] – all the engineering discussions and all the interesting communications ran on Skype chatrooms, not the voice chatrooms.”

“At some point I took a group of high end engineers from Skype, which was owned by Microsoft by then, and they decided to do their own start up. They took the approach that, OK, time has moved on, there are all these new ideas about how to do IM properly, and they just basically went for it.

So now it’s a multi-platform service – you should check it out. It works on all major platforms, Android, Mac and Windows.

“It definitely has the potential to become as big as Skype, but the interesting thing is that, with Skype and Microsoft, the bulk of their code was written for [old-style] computing environments, essentially a big computer plugged into the wall.

For that reason, while the code is sub-optimal for mobile communications they can’t just start anew because they have this massive backwards compatibility requirement. TVs out there expect to receive Skype calls, so we can’t just kill them all and start again.”

“In that sense Fleep and other upstarts – such as WhatsApp, also other Skype competitors – are in a much better position to adjust to the current environment, because they started later.

“Fleep obviously doesn’t have the disadvantage of having to match the existing network, so yes, it stands a good chance”.

And with that, Tallinn signs off, leaving me to reflect on what he has achieved. First he helped obliterate the world’s great distances by realising the long-held futuristic dream of cheap and easy video communication. From transforming lives, it is not such a big leap for him to move into the realm of saving lives, and, who knows, if he can devise a way to prevent computers from getting ideas above their station, of saving life itself. n

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INTERVIEW

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HARNESSING THE DIGITAL REVOLUTION BUSINESS QUARTER | WINTER 14

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Piret Mürk-Dubout wants to take the way Estonians communicate to the next stage.

Kristina Lupp meets Eesti Telekom’s executive vice president of marketing After four years at TeliaSonera in Stockholm, overseeing the commercial development of mobile services in seven countries, then as vice president and head of brands for 16 countries in Eurasia, Piret Mürk-Dubout has come home.

Her post in the Swedish company that is the

majority shareholder of Eesti Telekom has given her plenty of international experience, placing her in an array of different business communities and environments, from Oslo to Kathmandu, as well as many former Soviet states.

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INTERVIEW

Prior to that, Mürk-Dubout, whose background is in media and economics, as well as law, was a board member at EMT, the leading mobile operator in Estonia. And before that she had the task of rebranding Elion, the leading broadband operator, in charge of communications and marketing at the former Estonian telephone company, transforming it into the business we know today.

Mürk-Dubout speaks with animation, even excitement about her new role at Eesti Telekom. In September this year, AS EMT, Estonia’s leading mobile phone service provider, and Elion Ettevõtted AS, Estonia’s leading >>

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XXXXXX

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internet provider merged with Eesti Telekom.

The group has 2,100 employees in Estonia, a large payroll in a small country. In 2013 Eesti Telecom showed profits of nearly €42m, a 3% rise on the previous year’s figure.

The morning we meet, she is busy preparing for a presentation, the launch of the MyTV service which offers recordability, film libraries, and 20 TV channels available on all screens and devices. It’s the first service of its kind in Estonia.

“Innovation is in our DNA in Estonia,” MürkDubout tells me. “Every year we have a goal to introduce a society-wide improvement in our industry. This year we are introducing a way to watch and record your favourite TV programmes via mobile.” While it is not a completely new idea, it is the logical first step after a merger between a mobile phone company and an internet service provider.

Eesti Telekom has certainly seen remarkable changes over the last 20 years. What started as a state-owned enterprise in 1991 after Estonia re-established independence and restructured its telecommunications sector, has now turned into one of the Baltic’s largest mobile operators.

“We have seen tremendous change over the last 20 years, especially in the way our services are consumed. What we can be proud of is that our company has been a part of the E-Estonia story, the transformation of technology, devices, and innovations.”

By E-Estonia, Mürk-Dubout is referring to the many e-initiatives implemented in Estonia.

Mobile parking or m-parking, for example, was introduced in 2000 and today 90% of parking revenue comes via mobile.

The system has now spread throughout the world and is used throughout Europe, North America and elsewhere.

“We can also be proud of how well we have contributed to the e-society. We were the first in the world to offer m-voting”. Citizens can vote via mobile, an innovation that has changed the ecosystem of Estonian society, according to Mürk-Dubout. “How can we make your life easier? This is our main goal.

Then we offer the best quality networks and services.”

However futuristic and scary they might seem, Estonians have been very welcoming

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INTERVIEW

to e-initiatives. In the last decade, the Tallinn government has launched such e-services as e-banking, e-tax, e-health systems, and mobile-ID. “Estonians have a passion for new technology”, Mürk-Dubout says. “But with new technology comes new responsibility.

Development brings a digital divide.” That is why part of our business strategy is to contribute to various educational initiatives.

“When e-banking was introduced, together with the banks, we contributed to the education of 100,000 elderly people,” she says proudly.

Among other educational initiatives was Tiger Leap in 1996. This innovative project prioritised information technology infrastructure and allowed schools to access computers and the internet. It is thanks to these efforts that Estonia’s citizens have become tech-savvy, and the project continues to this day.

“Tiger Leap showed us how to navigate through the digital world – how to find services, what services are available, what are the risks, as well as educating parents.

Together with the Ministry of Education we are implementing online security initiatives, including an educational programme for teens.”

“Telecom companies are becoming the omnibus of social buzz,” Mürk-Dubout says.

“More [devices] have the intelligence to talk to us, to tell us the facts. Eesti Telekom wants to be the platform between the organisation and these things, the translator for different software applications if you will.”

With change comes disruption as well.

Technological development has been very fast in the telecoms industry. Nordic investors have made considerable investments into >>

Estonians have a passion for new technology – but with new technology comes new responsibility

BUSINESS QUARTER | WINTER 14

INTERVIEW

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technology and communication networks. The Estonian sector is one of the most developed in Central and Eastern Europe.

Estonia is covered by digital mobile phone networks, and according to the last census in 2011, there are more mobile phone contracts than residents.

“The rapid technological development has impacted us in a much greater way than the printing press, or even the technological revolution. Services come to us via different screens; they follow us. We are looking for a way to communicate and navigate in

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the future, and I think telecom is a big part of that.”

Estonian telecoms is a highly competitive field.

Eesti Telekom has a strategy for remaining a leader in this fast-paced market. “Our engineers, sales and service people are proud that we always strive for the best quality networks and services. We are striving for the most loyal customer base, and how does one do this? By having the largest amount of satisfied customers. We work with our customers and listen to their concerns. And most importantly, we innovate.” To Mürk-

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Dubout, innovation and reliability go together.

“Obviously not everything is seamless when it first hits the market. That is why we offer early services – services still in beta testing, to the public. You need to test and fail in order to test and succeed.”

One of the goals of the recent merger between EMT and Elion is to focus on more customer sectors, to create a new generation of telecom company to further Estonia’s e-society. In addition to the MyTV service, EMT and Elion will offer the fastest internet in Estonia, allowing for download speeds of up to 300

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Communications: the next generation EESTI TELEKOM is a new generation of integrated IT and telecoms company offering a wide range of integrated mobile, broadband, TV and IT solutions, as well as valuable content to B2B and B2C customers under the brand names EMT (mobility) and Elion (IT, broadband and TV).

Mbps in EMT 4G and Elion fibre broadband networks. That’s not as easy as it sounds. While the industry is embracing and moving forward with new technologies and innovations, the question remains, where does the money come from? One of the biggest challenges facing all telecom companies is how to monetise these developments? Telecom companies were previously sustained by a service (telephone calls, for example) which people do not need to pay for anymore. EMT has supported 2G, 3G, and 4G at the same time. All of these need development and investment. “We have customers still using 2G. We have to please everyone,” explains Mürk-Dubout.

That does not change the fact that business margins are falling and shareholders are getting concerned about the future. Service revenues in local currency, excluding acquisitions and disposals, decreased 4.7% (Q3 2014 vs Q3 2013) due to EU regulations and lower voice traffic. Mobile service revenues grew, supported by solid data revenue growth.

Top players must provide services on existing networks, but in different ways. “The future means a huge investment in bandwidth and more internet network capabilities because volumes are already high, and are continuing to grow. The entire industry is challenged with how to monetise on this volume of growth in Internet and data.”

“The future is in the internet. There will be no more voice minutes for voice calls, even if it is a significant part of our revenue. We will flourish in the future with more unique business models between different partners.” Unique business models and partnerships have already been implemented. EMT recently teamed up with Swedish music streaming site Spotify. The partnership has resulted in more than 1,000 customers after the first month and 20,000 followers of special Estonian playlists. Spotify has drastically changed the music industry by competing with piracy. They offer access to

millions of songs for free or via subscription.

“I just love their vision”, says Mürk-Dubout.

“They wanted to create a service better than the one piracy was offering”. And they did it.

Spotify has now launched in over 90 countries.

“The way we partner up is the new business model. We will probably see more partnerships between different companies.” She explains the money will come from these different and unique partnerships, from things like the cloud business, data models, applications and platforms, and the way in which we transform signals, protocols, and applications. From 2013-2014, Eesti Telekom in co-operation with Estonian leading banks Danske Bank, Nordea Pank, SEB Pank, Swedbank and the retail group Tallinna Kaubamaja (Tallinna Kaubamaja, Selver) piloted the project Bank Payment Card in Mobile. The pilot project tested a prototype of the Estonian NFC Mobile Wallet service named My Wallet. The service allows a mobile phone to be used as a regular bank card. In order to pay for goods, the user, instead of inserting the card to the terminal, must lightly touch the terminal with the phone. “There will be money,” Mürk-Dubout says reassuringly.

“There will still be services people are willing to pay for with cash, but the industry itself needs to be ready for a huge transformation. We are looking forward to that and are excited”.

With the launch of Apple’s ApplePay, everyone is wondering when mobile payments will come to Estonia. Piret explains they are working

INTERVIEW

on it. It also depends on partnerships. “We are also trying to understand what mobile payments are and what they would mean for Estonians”. Can mobile payment add more value to an e-society? “We think consumers and businesses would be willing, but we need to understand the security implications.”

In comparing Nordic and Baltic markets, the most obvious difference is of course purchasing power. Pricing packages in the Nordic countries are flat because of the consumption of data.

In cities with metro systems, the population consumes more data.

The EMT/Elion merger allows for new services, bringing the company into a new stage in the industry. “Integration is unique in Estonia because telecom services co-operate with other services. This is not happening yet in the Nordics.” Sweden, however, is innovative technologically. They were the first country in the world to launch 4G. “It has been a good experience to work in different business environments,” MürkDubout reflects, “The Baltic market is highly competitive. Latvia and Lithuania are struggling with technological infrastructure. However, we have been able to cooperate and study from each other’s successes and failures.”

Estonia remains at the forefront because of the willingness to co-operate from all sides – telecom and government. It is also about the country’s readiness for risk taking, of being in the right place, at the right time.

“We were also lucky,” confirms Mürk-Dubout.

“We did not have any legacy 20 years ago.

There was no [telecoms] law, no infrastructure.

It is more about overcoming and adapting.

I’m happy to be back here. The way we innovate and the way our customers are willing to accept innovation and new services is astounding”. n

Rapid technological development has impacted us in a much greater way than the printing press...we are looking for a way to communicate and navigate in the future, and I think telecom is a big part of that

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OVERVIEW

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PINSTRIPES AND PASSPORTS: THE BUSINESS OF BUSINESS TRAVEL Are the Baltic cities delivering value for business tourism?

Dalius Simenas looks at the region’s MICE traps While there is no hard data on which Baltic city provides best value for the meetings, incentives conferences and exhibitions (MICE), representatives of this young industry are well aware of the factors that matter. These include connectivity to major European business centres, the character and charisma of the venues available and, of course, the location of those venues within in the city. Put simply, they need to be no more than 10-20 minutes’ walk from the city centre or the old town for clients to feel they are getting the full experience, not stuck out in some soulless purpose-built venue.

It is not all about cost.

Organising a conference in Vilnius may be cheaper than doing so in London, Warsaw or even Riga, but the fact is that the entertainment offer matters no less than cost to MICE participants, and this is an area where some experts see room for improvement to the Lithuanian capital. Riga has better connectivity, while Tallinn receives more funding and benefits from more focused location marketing of the MICE industry than either of its Baltic sister capitals.

Vilnius, however, recently gained a competitive edge by winning Convene, a Baltic Sea Region exhibition and meeting point for MICE industry players, for the third consecutive year.

How then can the Baltics accumulate more demand from meetings and events businesses in the future? BQ Baltic sought some advice from experts – not all of them impartial – as to how the Baltic states compete, both with each other, and internationally.

Evald Roos, managing director at Vilnius-based corporate team building company Force One,

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The Fifth ESWI Influenza Conference was held in Riga on 14-17 September, 2014

has been providing MICE services for more than 10 years: “Many of our clients who have been in the other Baltic states tell us they prefer Vilnius due to the many possibilities for unique incentive activities, creative events and a great diversity in the choice of meeting facilities that meet all kinds of budgets and needs,” Roos says.

Force One works closely with the client to clarify the exact needs and requirements and

36

make sure that they deliver satisfactorily.

“This is one of the ways we in Force One prepare unforgettable experiences that make our clients want to come back,” Roos explains.

Aigars Smiltans, marketing director at the government agency Meet Riga, naturally points out that their city offers the best value, and that there are more than 80 direct flights to Riga International Airport.

Smiltans also insists that the Baltics offer newer

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infrastructure than their Nordic neighbours, with hotels being opened and refurbished.

“We have newer conference and meeting halls, plus we also can offer various different meeting and event venues starting from medieval period, Baroque, and even the Soviet era! Plus we can offer more for less.”

Made Pandis, convention co-ordinator at Tallinn City Tourist Office and Convention Bureau, talks about the need for co-operation rather than competition.

“To meet clients’ requirements and improve the quality of MICE services, there should be more collaboration at both national and international level. Additional improvements could come from MICE industry-related training. Also, the will to provide good service and individual improvement will help the industry along.”

On a more conciliatory note, Smiltans admits that if some meetings planner or event organiser is considering bringing groups to Riga, they could consider asking for proposals from Vilnius or Tallinn. “With activity in one of three Baltic States, all of us gain some publicity and awareness. I think one of the best examples is the Convene workshop.”

The bottom line is that the Baltics are still young and unknown destinations for MICE travellers, whereas Western Europe has been hosting MICE business since the 1950s.

“However, we are fast learners and quick adapters, and we can shrink the gap with Western Europe and Scandinavia,” he says.

Paul Kennedy, the British-born director and owner of Kennedy Integrated Solutions and a business advisor for Convene, notes that the Baltic region competes well with Europe and Scandinavia and deserves better promotion.

However, he admits that considerable infrastructure developments are needed if the three Baltic countries want to be known as prime destinations for meetings and events.

OVERVIEW

Hot spots for meetings in the Baltics: above - Nordea concert hall in Estonia, below left - Riga Congress Centre, below right - the new building of Latvian National Library The latest report from the International Congress & Convention Association (ICCA) shows that Vilnius has hosted more meetings than any other Baltic city.

With 48 events held by international associations in 2013, the Lithuanian capital has risen by nine places and currently stands in 25th. Vilnius has surged ahead of not only the other Baltic capital cities Riga (38) and Tallinn (51), but also such established convention cities as Milan, Geneva, and Zurich.

Jolanta Beniuliene, director of the Vilnius Convention Bureau, adds that capital cities need world class convention centres and Vilnius is set to deliver this. In the city centre,

Incoming Tourism in the Baltic States

Lithuania

on the right bank of the river Neris, only a 10 to 15 minute walk from the majority of hotels, Vilnius Congress Centre is expected to be opened by 2019.

The Centre will rise “like a phoenix” from the old Sport Palace and be capable of seating 3,000 delegates with all the breakout meeting facilities in the same centre.

Baltic air connections need to be improved, in particular flights to key commercial capitals and hub cities throughout Europe including importantly London. Improvements in the international standard hotel stock should also continue, Beniuliene says. According to ICCA statistics, Vilnius in 2013 has managed to >>

Estonia

Latvia

Tourist arrivals in 2012, million

2.7

1.4

1.9

Average annual growth rate (2008 to 2012), %

7.2

-3.9

4.2

Travel receipts in 2012, USD million

1,226

722

1,361

Hotel beds in 2012

31,590

27,067

26,114

Hotel occupancy rate, %

45.1

24.6

28.1

Source: OECD Tourism Trends and Policies 2014

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OVERVIEW

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gain 25 extra meetings, compared with 2011, when Riga last year had 15 more meetings (totalling 33). However, numbers in Tallinn shrank by almost half – from the peak of 51 meetings held in 2011 to only 27 last year. Nevertheless, the so called old MICE market players from the Nordic countries still rank well above the three Baltic capital cities.

For instance, Copenhagen and Stockholm, respectively with 109 and 93 meetings in 2013, stand at 13 and 16 in the European ranking.

The top five cities in both the Worldwide and the European rankings are Paris, Madrid, Vienna, Barcelona, and Berlin, with London and Singapore coming next, all gathering up to 200 meetings, with Paris even

climbing to 204 meetings last year.

ICCA statistics exclusively count international gatherings of associations. These must be attended by at least 50 participants, must take place regularly and rotate among at least three different countries. Next February, Danish exhibitors will be making their debut at Convene in Vilnius next February, with Visit Denmark, Wonderful Copenhagen, Park Inn

by Radisson, Copenhagen Airport and DMC Nordic already confirmed completing a Baltic Sea circle of exhibitors.

“In its first two years Convene has established a great reputation as an elegant and effective trade event delivering an impressive array of hosted buyers to a clearly defined regional

Nordic and Baltic Capital Cities by association meetings organised in 2013 City

No. of meetings*

No. in the European ranking

No. in the Global ranking

Copenhagen 109

13

16

Stockholm 93

16

21

Helsinki 85

17

24

Oslo 62

20

35

Vilnius 48

25

49

Riga 33

38

74

Tallinn 27

51

90

*- international gatherings of associations, attended by at least 50 participants, take place regularly and rotate among at least three different countries.

Source: ICCA

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Convene has established a great reputation as an elegant and effective trade event exhibitor group, who benefit from a very well managed appointment schedule supported by great networking and education,” Steen Moeller, director of Business Events for Visit Denmark says. Jolanta Beniuliene, event director of Convene and the head of the Vilnius Convention Bureau, said she was pleased with the Danish joining the event, because Denmark is a mature meetings destination with a reputation for quality facilities and service.

Convene will be held on 11-12 February 2015 in Vilnius at Litexpo, the biggest Lithuanian Exhibition and Congress Centre. The show will accommodate 160 pre-qualified senior meeting buyers from the corporate, association, agency sectors from nine Baltic Sea region destinations. Danish exhibitors will join others from Sweden, Finland, Poland, Russia, Latvia, Estonia and Lithuania and there will also be representation from Lviv in the Ukraine and from Belarus. Riga’s year as capital of culture in 2014, has brought great publicity for the Latvian capital and the country as a MICE destination. However, Smiltans believes that Latvia’s hospitality industry will not see the benefits immediately. “The same will be with the Latvian EU Council Presidency,“ he says.

Lithuania’s presiding over the EU Council during the second half of 2013 brought 30,000 foreign guests from different member states and EU institutions.

The Lithuanian Association of Hotels and Restaurants calculates that each participant spent around €869 (LTL 3000). This is two times more than the average of €396 (1273 LTL) per incoming tourist in 2013 according to Statistics Lithuania. Additional income to the country may have brought extra €26 million (LTL 90 million) in revenue to the hospitality >>

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OVERVIEW

Value added tax rate in 2014

On hotel accommodation, restaurant and catering services

*- as of Jan, 2015 Lithuania will reduce VAT rate on hotel accommodation, restaurant and catering services from regular rate of 21% to 9%.

Source: European Commission

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The LNL, construction of which helped mitigate the 2008-2009 crisis, contains a modern hightech conference centre with capacity for up to 450 delegates in the main Ziedonis hall, plus six other meeting halls of different sizes. Partly to meet the demand at least four new hotels in central Riga will open in 2015, bringing an additional 600 rooms and 15 new meeting >>

Top 15 Biggest Convention Hotels in the Baltic Capitals by maximum capacity in the meeting room Radisson Blu Hotel Latvija (Riga City Centre)

1100

Lithuania to slash the tax burden on hospitality services

Vilnius Grand Resort (Outer Vilnius)

800

Trasalis Trakai Resort & Spa Centre (Vilnius surroundings)

800

Meriton Grand Conference & Spa Hotel (Tallinn City Centre)

750

Radisson Blu Hotel Lietuva (Vilnius City Centre)

600

As of 1 January, 2015, Lithuania introduces a reduced VAT rate from 21% to 9% on hotel accommodation, restaurant and catering services. How may this tax change affect incoming tourism industry and MICE business in the Baltics?

Mantas Kaluina (above), senior research analyst at Euromonitor International, says: “The hotel industry often claims that a VAT reduction will help attract new international visitors, but according to Euromonitor International, the impact of a VAT reduction on Lithuanian tourism will be negligible. More likely, it will boost the hotel sector’s profit margins. This is not a bad thing as it can help to improve hotel quality, as the gains will be used on refurbishment and service improvements, maybe even expansion which means new jobs. More employment means higher additional tax receipts. A reduced VAT rate will also improve Lithuania’s attractiveness to international chains.

“When going on a trip people choose a destination country first, and then book a hotel. If their first choice hotel seems too expensive they just book a cheaper hotel, they don’t switch country. Business tourism is less price sensitive. The VAT reduction will not result in a noticeable price decline. Room pricing is very complex and dependant on many factors of which VAT is only one. “

Original Sokos Hotel Viru (Tallinn City Centre)

550

Karolina Hotel (Vilnius City)

550

Swissotel Tallinn (Tallinn City Cetre)

500

Laulasmaa Spa and Conference Hotel (Tallinn surroundings)

480

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Maritim Park Hotel Riga (Riga City Centre) as of 1 Jan 2015, Bellevue Park Hotel Riga 630

Radisson Blu Hotel Olumpia (Tallinn City Centre)

440

Best Western (Vilnius City Centre)

420

Crowne Plaza Vilnius (Vilnius City Centre)

410

Baltic Beach Hotel (Jurmala, outside Riga)

350

Kempinski Hotel Cathedral Square (Vilnius Old Town)

250

Top 15 Biggest Convention Venues in the Baltics by maximum capacity in the meeting room Siemens Arena (Vilnius City)

8000

Zalgirio Arena (Kaunas City)

7400

Saku Suurhall Arena (Rocca al Mare, Outside Tallinn) Kipsala International Exposition Centre (Riga City Centre)

7200 5100 (500)*

Lithuanian Exhibition and Congress Centre LITEXPO (Vilnius City)

4.200 (1800)*

Nordea Concert Hall (Tallinn City Centre)

1830

Riga Congress Centre (Riga City Centre)

1140

Lithuanian National Opera and Ballet Theatre (Vilnius Old Town)

1000

Estonian Concert Hall (Tallinn City Centre)

889

National Gallery of Art (Vilnius City Centre)

800

Arena Hall (Vilnius City Centre)

800

Lithuanian National Philharmonic Society (Vilnius Old Town)

680

The Great Guild (Riga Old Town)

669

National Library of Latvia New Building (Riga City Centre)**

450

Riga Latvian Society House (Riga Old Town)

450

*-in brackets max. capacity in the meeting room for conferences **-opened at the end of August, 2014

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Source: www.meetriga.com ; www.vilnius-convention.lt ; www.tourism.tallinn.ee

industry of Lithuania during the six months of the presidency. “But at the same time [the EU presidency] could have reduced the number of other business conferences and seminars, as we have only opened one new modern conference venue in Riga, a special facility at the new Latvian National Library.”

Smiltans admits.

Source: www.meetriga.com ; www.vilnius-convention.lt ; www.tourism.tallinn.ee

OVERVIEW

When travelling to Vilnius on business or leisure, you are kindly invited to stay at the three and a half star EUROPA CITY VILNIUS hotel.

EUROPA CITY VILNIUS: J.Jasinskio St. 14, LT-01112 Vilnius, Lithuania

Phone: +370 5 2514477, Fax: +370 5 2514476, e-mail: vilnius@europacity.lt www.groupeuropa.com

A bright and modern hotel, located in the central part of Vilnius.

The six-floor hotel features 128 comfortably furnished, cozy guestrooms, decorated in warm colours, with an impressive range of facilities.

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Conference facilities guarantee flawless meetings, successful training sessions or a cocktail party:

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6 fully equipped meeting and conference halls; Smallest hall can accommondate up to 20 guests (40 sq m); Largest hall can accommondate up to 250 guests (220 sq m); Perfect acoustic and air conditioning systems, modern audio and video equipment; Helpful, careful staff.

OVERVIEW

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There were five million tourist arrivals in 2012 and US$ 3.3 billion tourism receipts to Estonia, Latvia, and Lithuania halls. MICE industry representatives admit that there is a paucity of statistics on quality and pricing in the Baltics that could prove assumptions about the progress of the sector.

“Unfortunately, we don’t have precise stats on what would be meetings industry generated input to entire tourism business of Riga and Latvia. Our immediate task is to separate MICE stats from mass tourism statistics” Smiltans adds. Paul Kennedy suggests using the tried and tested methodology developed by the United Nations World Tourism Association (UNWTO). “The results have in every case demonstrated the growing importance of the business of meetings and events to national economies in terms of GDP contribution, jobs and taxation revenues”, he explains.

According to OECD data, there were five million tourist arrivals in 2012 and US$ 3.3 billion tourism receipts to Estonia, Latvia, and Lithuania. Tourist arrivals during the period of 2008 to 2012 grew from 4.2% in Lithuania, 7.2% in Estonia, while Latvia witnessed a decline of -3.4%.

Hotel occupancy rates in 2012 stood at 45.1% in Estonia with 28.1%, and 24.6% in Lithuania and Latvia, respectively. In the Nordic countries occupancy rate averaged at around 35-40% and tourist arrivals growth rate during the period of 2008 to 2012 varied on average from 1.0-1.2% in Finland and Sweden to 4.4% in Denmark and Norway.

Tourism in 2012 directly contributed, on average, around 4.7% of GDP and 6% of employment in OECD countries.

This was on par in Estonia as to GDP ratio, but lower as to the contribution to Estonia’s employment. Data for Latvia and Lithuanian on the latter was not available. n

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We can and will grow, says travel group boss When Baltic Travel Group Chairman Vlad Korjagin started in the business travel industry, the Baltic States still carried the gloomy aura of [Soviet travel agency] InTourist, and were completely off the map for business visitors. Now, 15 years after starting BTG, the former languages student and tour guide says that the Baltic meetings, incentivisation conferences and events (MICE) market is thriving, boosted by big EU and NATO events.

BTG now employs 70 people around the region, and is established as one of the leading destination management companies locally. This year the firm expects to achieve a turnover of €21.5m, an 18% increase on last year’s €17.7m and more than double 2010’s €9.78.“In the early days there were just two of us, myself and my partner Inese Avenite,” Vlad Korjagin remembers. “It was a real garage start-up, just one phone line, one fax and one computer. From this romantic period of the business, our development has been pretty fast.”

BTG can now claim to be a dominant player in the market, and it is anticipating another bumper year in 2015, this time due to the Latvian Presidency of the Council of the EU which opens on 1 January, and which comes with a calendar of events that will see many Eurocrats visiting Latvia for the first time.

“It’s a good boost to local industries, the impact [of Lithuania’s Jan-June 2014 European Presidency] was very good, and we had a lot of involvement in that. Latvia will show what it is capable of – these events will put us on the mental map of European people. Lots have no idea about our hotel industry or our cities and what a beautiful background to an event they create.

“When we started the company in the year 2000, we knew we wanted to focus on MICE. We had the vision that this was something new for the region that we wanted to develop. Our offering was a big change from what was available then, and from what is happening nowadays.

At that time the Baltics were almost unknown – we weren’t EU members or NATO members, and service levels were mostly post-Soviet, with very few hotel rooms, a lack of infrastructure, and not many places for people to eat.” BTG’s main customers so far have been the Scandinavian and Russian markets, the latter having taken a bit of a battering due to the tensions of recent months.

A necessary step, Korjagin says, to further development, is to improve the area’s capacity to compete with other destinations: “At the moment one of the biggest problems for us is the lack of a state-of-the-art multi-functional conference centre. The biggest venue we have is the Conference Centre at Radisson Latvia hotel. It’s suitable for conferences for up to 1,000 people, and you have several surrounding hotels for the delegates. But if you are talking about big international conventions for 5,000 people we are still not very competitive.

“This lack of venues is dragging down our development. We unfortunately have witnessed the situation where Riga was losing tenders for big events because our infrastructure was not up to the requirements. There is still room for improvement and there are some projects in the pipeline whose aim is to satisfy the shortage of these sort of venues.”

With the determination that has been the hallmark of BTG’s 15 years of growth, Korjagin says: “There is a lot of business out there, we just need to go out there and fight for it. If you compare the Baltic quality offering and the price you pay for it, we are one of the best in terms of value for money, for hotel rooms, meals, venues, big events.

“We have it all, the question is how to create the demand. This is the biggest issue for us, and where we need big support from the state and the municipalities to create awareness of the restraints we face. We need to be looking not just at traditional markets but at new markets.

We need to tell others about our value proposition.”

With the right infrastructure and marketing in place, Korjagin is in no doubt that the Paris, Berlin or London manager of the future, who proposes holding their company’s MICE event in Tallinn, Riga of Vilnius, will earn himself or herself promotion and kudos for a brilliant, cost-effective suggestion.

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COMPANY PROFILE

WINTER 14

Convene unlocks the Baltic Sea region for meeting professionals Jolanta Beniuliene, head of the Vilnius Convention Bureau and exhibition director talks to BQ Baltic about the challenges of organising Convene, the Baltic Sea region’s expo for the meetings, events and incentives market HOW DOES CONVENE DIFFER FROM OTHER EVENTS? Convene is the premier event of its kind in the Baltic Sea area, providing an opportunity for the region to show how much it has to offer to the planners of meetings, incentives and conferences. diversity, high quality and price competitiveness. We have stunning natural scenery, rich historical and cultural heritage, excellent accessibility, affordability, forward thinking people and advanced societies, and a number of new venues and hotels; all this puts the Baltic region among the freshest and most desirable meeting destinations out there.

Suppliers from the countries of the Baltic Sea Region and hosted buyers get together under one roof to do serious business. We strive to focus on creating effective business meetings rather than a traditional show model of maximising the sale of space. All exhibiting companies occupy the same sized space with a single colour scheme across the event floor. All participants are provided with free refreshments throughout the day with an interval in the event where hot lunch is provided for hosted buyers and exhibitors alike, allowing for more relaxed business networking, a welcome aspect of the business day.

HOW HAS CONVENE BECOME A SUCCESSFUL PROJECT AND WHAT DOES IT MEAN FOR VILNIUS? Convene is not a regular two-day show, it is a trademark successfully representing Vilnius and the Baltic Sea Region. It is the best ever marketing campaign for our city and country running 365 days per year and making Vilnius a real gateway to the whole region. This is a huge responsibility stimulating us to understand client needs, market developments and new trends, as well as providing clients and exhibitors with

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Convene 2014

the best possible business environment and experience. The time at the show is used to the maximum benefit of hosted buyers and exhibitors.

Understanding that personal contact is critical in the meetings industry we provide more networking opportunities than any other trade shows, and participants greatly appreciate that.

Even though the organiser is a Vilnius Convention Bureau, the event is based on a public-private partnership (PPP) model. There is a strong governmental support, the whole Vilnius supply chain is a part of the organisation as well as regional and international partners. Eight of the city’s hotels such as Kempinski Hotel Cathedral Square, Radisson Blu Royal Astorija, Radisson Blu Hotel Lietuva, Holiday Inn, Novotel, Artis, Crowne Plaza and Amberton hotel are Convene partner hotels and provide accommodation with breakfast for hosted buyers free of charge. One of the most

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important strategic partners is the Lithuanian Exhibition and Congress Centre Litexpo. Being the largest and the most up-to-date conference centre in the Baltics it is also the main venue of the show.

Baltic Travel Group, one of the largest destination management companies in the Baltic States with offices in Vilnius, Riga and Tallinn, is an official partner of Convene for the third consecutive year since the events began in 2013. Baltic Hospitality & Retail Systems (BHRS) OÜ is continuing to sponsor the show for the second year. There is also a group of regional, national and international media partners. All these partners indeed are big supporters of Convene.

WHAT HAVE BEEN THE RESULTS OF TWO YEARS DEVELOPMENT OF CONVENE? The two-year development period of the exhibition is not long, but the results have been

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overwhelmingly positive. The idea of setting up the show for the region was to present this undiscovered Baltic Sea area to the European meetings market. Although the countries of the region have similar challenges, they are still very different. Convene unites us and enables us to work together seeking, first of all, to raise the awareness of the region, and only then to compete with each other. So far Convene has hosted over 300 meeting professionals from 26 countries and more that 5500 appointments have been made.

Even after two years it is clear that Convene has become the most important Baltic Sea regional hub for the meetings industry.

WHAT IS THE AIM OF CONVENE OVER THE NEXT FEW YEARS? Convene plans to develop and improve in the years ahead. The event will never be fixated on size, but will focus on the quality of experience for the

COMPANY PROFILE

hosted buyer community and the region’s supply chain. We will continue to focus on the quality of the education programme, which will be always anticipated by participants.

The event will continue to focus on accelerating wider recognition of the region as a new kid on the block in the competitive world of international meetings, conferences and incentives.

WHAT TO EXPECT AT CONVENE 2015?

The third Convene takes place 11-12 February in Vilnius and will see an increased representation of countries with the Baltic Sea on their doorsteps when exhibitors from Denmark join their counterparts from Lithuania, Latvia, Estonia, Poland, Finland, Russia and Belarus. The event will host some 160 hosted buyers undertaking 3000+ pre scheduled appointments over the two days of the event.

Convene 2015 is enhanced by a three-day

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professional education programme which kicks off with an all-day sales and marketing academy.

Industry luminaries such as Patrick Delaney, Linda Pereira, Paul Kennedy, Roger Kellerman, Fiona Pelham will be providing sessions on specific aspects of business development.

We will also be welcoming for the first time the largest meetings industry trade association MPI which will contribute to the education programme and support the development of the meetings profession alongside with the other industry partner ICCA.

www.vilnius-convention.lt

BUSINESS QUARTER | WINTER 14

INTERVIEW

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ON THE BRINK OF A NEW DAWN Only 21 years after its reintroduction, Lithuania will abandon the Litas and become the last Baltic state to join the Eurozone on 1 January, 2015. With the single currency – and the EU as a whole – still beset by problems, BQ Baltic asked Rimantas Šadžius, Minister of Finance of the Republic of Lithuania, about the risks and opportunities of the common currency HOW CHALLENGING HAVE PREPARATIONS FOR EUROZONE ACCESSION BEEN? The only comparable challenge has been Lithuania’s access to the European Union on 1 May 2004. Looked at from today’s perspective, that was a huge leap forward for our country.

I don’t just mean the degree of financial assistance, which so far includes €6.6 billion of investment in infrastructure and human resources, but we also stepped up to a higher political level to experience European freedoms and to assume a European identity. In my opinion, joining the Euro is the next stage of the development for our country.

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WHAT ARE THE MAIN WORKSTREAMS THAT YOUR MINISTRY HAS HAD TO COMPLETE? We had two main priorities. We coordinated the whole process of the Euro introduction and we were also in charge of the information campaign. The Government approved the National Changeover Plan and the Communication Strategy last year. The Seimas [Parliament] passed the Law on the Euro Adoption in the Republic of Lithuania in the middle of April 2014. So we already had our legislation in place before the official invitation to join the Eurozone. All measures that we could foresee have been implemented

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according to plan and now we are solving the remaining questions in close dialogue with the municipalities and business associations, including SME organisations. In preparation for the Euro, we are closely co-operating with the European Commission.

HOW CONFIDENT ARE YOU OF A SMOOTH TRANSITION? We’re doing everything we can to make it smooth. We provide all-round information on practical aspects of the changeover to different target audiences, including the populace, business, municipalities, national minorities and people with disabilities. One

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INTERVIEW

of the channels is the toll free Euro telephone line 8 800 34528 – the last five numbers are the same as the Litas exchange rate!

This information line has been popular with business callers. We pay a lot of attention to protecting consumer rights on the one hand, and to helping businesses to find the optimal solutions on the other. The prices in Litas and the Euro have been displayed since the end of August with the intention that people and business would get used to the new money.

Dual prices will continue to be shown until the end of June 2015.

WHAT LESSONS HAVE YOU LEARNED FROM OBSERVING THE TRANSITIONS OF ESTONIA AND LATVIA? We watched the progress of these countries on the road to the Euro and the process of the Euro introduction. We focused more on Latvia because of its traditionally close links with Lithuania. On the whole, during preparation to the Euro introduction we tried to use all good practice and examples from previous changeovers in different parts of the continent. Economically they benefited from decreased bond yields even before >>

We pay a lot of attention to protecting consumer rights on the one hand, and to helping businesses to find the optimal solutions on the other

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Rimantas Šadžius, Minister of Finance of the Republic of Lithuania

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INTERVIEW

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Estonia and Latvia have benefited from increased economic growth, and the Euro’s impact on inflation was only modest. We use these examples also in our public communications

they introduced the Euro, but with the precondition that they will introduce the currency. We have experienced the same this year – for example Lithuania issued a twelve-year €1 billion Eurobond at the lowest coupon in the history of the country – 2,125% in EUR market. Imminent Eurozone membership was one of the important factors in the case. Estonia and Latvia have benefited from increased economic growth, and the Euro’s impact on inflation was only modest. We use these examples also in our public communications.

WHAT ARE THE MAIN ADVANTAGES OF EXCHANGING THE LITAS FOR THE EURO IN YOUR VIEW? We think that Lithuania, like other countries, should become more attractive to investors, and should benefit from an economic boost.

Borrowing costs should reduce, as will the risk of devaluation, and Litas-Euro exchange costs will disappear.

We have concrete figures for that, as the Bank of Lithuania brought out a study in October 2013, which proved that the long-term benefit of adoption of the Euro could significantly exceed the one-off costs.

According to the baseline scenario, the average interest rate on government securities in the year of the Euro introduction would decrease by 0.80 percentage points and the residential and business borrowing cost would decrease by 0.49-0.55 percentage points if the Euro was not being introduced. Lower

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interest rates in the medium term (2015 – 2022) would save LTL 2.0 – 3.9 billion (€580m – €1.1bn) in interest costs. Residents and businesses would have the majority of these benefits — LTL 1.6 – 2.3 billion (€463m – €666m) while the other part — LTL 0.4 – 1.6 bn (€116m – €463m) — due to lower debt servicing costs, would be saved from the state budget. With the introduction of the Euro, there would be no more changeover costs.

On average, in the past few years, these expenses amounted to 0.14% of GDP (about LTL140 million or €40.5 million annually). In terms of this, the non-banking sector (individuals, businesses, etc.) over the medium term could save LTL 1.9 bn (€550m) in currency exchange costs. According to international research on the impact of the Euro in the foreign trade performance of the countries that have adopted it, it can be predicted that Lithuania’s exports (excluding mineral products), even by conservatively assessing the effect of the Euro, from 2015 to 2021, should gradually increase by at least 5%. During this period, the amount of additional foreign sales of goods and services is expected to be about LTL 34 bn (€9.8 bn).

WHAT ARE THE MAIN RISKS? In my view risks only arise if we do not enter the Eurozone. These risks are related to the reputation and reliability of the country, and they are primarily directly linked with state debt management costs and the investment climate.

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IS THE TIMING OF THIS TRANSITION PROCESS IN SYNC WITH THE LITHUANIAN ECONOMIC CYCLE? Currently Lithuania’s economy is on a growth path and we expect the Euro will provide additional opportunities for development. Of course, when the economy is growing, prices usually go up as well, so there is a risk in terms of public perception. People might say that adopting the Euro has put prices up. However, past experience shows that the impact of the Euro introduction on prices is is not signficant.

DID THE 2013 LITHUANIAN PRESIDENCY OF THE COUNCIL OF THE EU HELP ALIGN LITHUANIAN AND WIDER EU ATTITUDES TO GROWTH? A debate on fiscal and structural adjustments versus growth stimulation emerged after the financial crisis and continued to be elaborated on for several years after that.

With the national currency being pegged to the Euro, Lithuania was an example of a country for which the necessary measure to combat the crisis was ‘internal devaluation’, i.e. adjustment of wages and reducing of public expenditure in areas that were the least detrimental to growth. However, each member state is in a different fiscal and economic position, and this is why differentiated growthfriendly policies, tailored for each country, are needed. This is a real expression of the principle of the European Union – we are ‘united in diversity’. To this end, during the Presidency of the Council of the EU, Lithuania

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INTERVIEW

Rimantas Sadzius (right) inspecting the first Euro coins to be produced by the Lithuanian Mint in June 2014, with Prime Minister Algirdas Butkevicius (left) and Vitas Vasiliauskas Governor of the Bank of Lithuania (centre)

focused on ensuring the right long term environment for sustainable growth in Europe, emphasising the continuation of responsible policies of public finance, conducting the necessary structural reforms, and restoring the credibility of financial markets.

HOW MUCH ARE YOU CONCERNED ABOUT THE DIFFICULTIES FACING THE EUROZONE, AND DO YOU EXPECT THESE DIFFICULTIES TO CONTINUE? I believe that it is easier to overcome the difficulties together than alone. The most important factor here is that the Eurozone

has proved its resistance to stress, so whatever challenges may come, they will be solved.

It would be naïve to think that the Eurozone crisis would not influence Lithuania, a small and open economy, concentrated on exports.

All of Europe sits in the same boat, so continuing to be outside the Eurozone would be a burden, not an advantage for us.

HOW MUCH POPULAR SUPPORT FOR THE TRANSITION TO THE EURO EXISTS IN LITHUANIA? DID YOU EVER CONSIDER HAVING A REFERENDUM ON THE ISSUE? IF NOT, WHY NOT?

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There is a trend showing that the number of Euro supporters is rising while the number of Euro pessimists is decreasing. According to the latest Eurobarometer survey, we have almost the same number of Euro supporters as Euro opponents. The idea of a referendum was in the air. However, it never came to reality. In 2003 Lithuanians voted in a referendum for EU membership, and at the same time voted for the introduction of the Euro when Lithuania will comply with Maastricht criteria.

We fulfilled all the requirements this year, hence Lithuania joining the Eurozone from 2015. n

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BUSINESS LUNCH

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BUSINESS LUNCH

Information is power, and Sarunas Legeckas’s vision for its use has the potential to create a world-beating business. Colin Donald reports

EXPLOITING LITTLE DETAILS THAT MAKE A BIG DIFFERENCE I’ve fixed to meet Sarunas Legeckas at Saint Germain, a restaurant where the Baltic meets the Mediterranean. Dainius Vasiliauskas’s intimate little eatery, in the heart of Vilnius’s “senamiestis” or old city has a sunny, southern French decor, which can cause a culture shock on days when the snow is piled up outside.

No such risk today, with the autumn sun streaming through the small windows onto the pale painted-wood furniture. Thick walls and low ceilings give the impression that an inn on this site has warmed patrons and travellers with good food and drink for centuries.

As we’ve arranged to meet despite overlapping busy schedules, I’m already on my scallops with bacon and asparagus when Sarunas arrives. The physicist-turnedentrepreneur has been conducting interviews himself all morning, scouting for new members of the team that he hopes will conquer the world with PlaceILive.com, the neighbourhood information site that he believes has the potential to jolt the “smart cities” movement from the abstract to the everyday, with a potentially transformational

impact on the online real estate and tourism worlds. While I was waiting I checked out the address we are sitting in on Kurgyvenu.lt, the Lithuanian version of PlaceILive. Thanks to the public data that Legeckas’s company has mined and presented I know that 9 Literatu Street, Vilnius, has a preliminary average market value of Litas 4,802 per square metre (€1,381), has low air pollution, has suffered 13 crimes of violence and 29 car thefts within a 500m radius, and much else beside. If I was planning on investing in Lithuanian property, or planning to take a holiday house here, I would need to know this.

PlaceILive, which has received €200,000 of seed funding from Vilnius-based VCs Practica Capital, along with other help from local accelerator StartupHighway, offers rich information about specific addresses in major cities, allowing prospective house buyers or tourists more information than they can find elsewhere about the place in which they are interested. The company was founded two years ago, and the beta version of the site has been up for a year.

The English-language site covers London,

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New York, Berlin, Chicago and San Francisco “major cosmopolitan cities” according to Sarunas. “For some reason no-one else is using all this information,” he says.

How close is the property or venue you are interested in to transport links and leisure facilities? What is the average age and employment rate of the population?

What is the racial makeup of the area? (potentially controversial one that), how polluted is it? What is the crime rate? If PlaceILive can get the right mix between breadth and depth of data, and find ways to make it meaningful, useful and available, the name could become part of everyday international parlance.

To succeed, Sarunas tells me, a new business needs “the three Hs: a hustler, a hacker and a hipster”. He is by his own admission, the hustler, though without the glibness or insincerity that word implies. Our business lunch leaves me with the impression of a confident but self-deprecating straight-talker with wide international experience and a clear vision of how this tool can conquer the B2C and B2B worlds. >>

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BUSINESS LUNCH His frankness about the travails of an early stage company also gives a privileged insight into what it feels like to pioneer a new kind of venture, where there are no models to follow, false starts to be endured and inter-personal dynamics to be negotiated.

First, he tells me, he must find the right team, hence his lateness. “I don’t want to give you the impression that we are growing so fast that we need lots of new people. It’s more like we are trying to change some things about the company. We are looking to see what kind of structure of team we want to go with. We are going out there and talking to people and getting feedback.”

“There’s no definite way about how you should go about building a company, for us it’s about creating a team that works, and that’s what we’re going through at the moment.”

PlaceILive’s personnel changes are part of Sarunas’s ongoing experimentation with the company, which was founded by someone else (now departed) but has shifted direction.

“The guy who had the original idea didn’t have the relationships with the stakeholders, investors and so on, and eventually he got tired. He wanted to build a real estate company like [British residential property site] Zoopla in Lithuania, but the rest of the team, including myself, wanted to do something based on the data, because we can’t compete with Zoopla and Zero and the big boys, we need to find a niche where we can be the best, and anyway we were thinking beyond Lithuania, while he wanted to stay local.”

What happened to him? “He’s taking a break and thinking what his next move is. It was a very nice separation, but in the end I said, you want to build a real estate company and I’m interested in manipulating and packaging data. Let’s do different things. But there are lots of examples in business where the founder gets demotivated or can’t get along with the team.”

“So there are five of us now. There were seven at one point but obviously… you know you experiment with different team members, you add a data guy, you try to work out if there could be five different types of ‘data people’ that you could hire… you learn as you go and then you realise that some of the people you hired are not the ones you really need.”

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I am very happy with our investors – they understand that you need to focus on building the product “This is what happened with some people we hired. They expected it to be one thing in particular and then they came to understand that it’s a pretty complex product with different layers, and even [the algorithm behind] the scoring system is quite complicated, also that it’s a product in itself with its own branding and so on and so on.”

If Sarunas is the hustler, the man with the business development vision and strategy, the hacker is Mindaugas Kiznis, formerly a senior IT architect. He has succeeded in structuring the software “back end”, gathering and crunching the local data, which presumably comes in all different formats, but the end result of which means that it’s “pretty much plug and play now, we could add another 50 data systems really easily.”

With the hustler and the hacker on board, all they need is the “hipster” the social media-oriented movers and shakers, who will help create the buzz that is essential if the concept is to work and user-generated content is to amass. This, he hints, is proving more problematic.

“These are people who like to be creative and

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don’t perhaps have much loyalty, so it’s a big struggle. We have tried a few that haven’t fitted in, so I guess I’m going to have to be more careful, but I’m confident that we will have a good combination of people.”

Although it’s clear that bringing a concept like PlaceILive to market is harder than he thought it would be, Sarunas’s manner suggests he knows he will crack it in the end.

“I am very happy with our investors, they are very open-minded and they understand that in this type of business you need to focus on building the product, you need to test some different business models to understand how you are going to make money going forward.

But it’s not like you need to have a revenuestream to support yourself or be cash positive or something. What we have agreed with this investment is that we are trying to reach some milestone from the user point of view, but they are not asking us to be making a monthly income – I think it is wrong as it distracts you from building the company.

“There are some businesses where it’s easy to make money from the beginning but when you are building a consumer product you need to work out how you are going to attract people. Our backers want us to try out different business models so that when we hit growth we will straight away know where to put our money”.

As I tuck into my steak entrecote (an impulse choice, delicious, but regrettably unadventurous) Sarunas fills me in on his own eventful career. Originally from the port city of Klaipeda, he shone at school (although he plays down how much) and went on to study telecommunication physics and electronics at

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Vilnius University, a discipline he says which “teaches you how to think”.

“There’s lots of smart guys, politicians and businessmen who are physicists. It teaches you the logic to adapt, to learn new things quite fast.” It was while he was studying on an Erasmus programme in Augsburg, Germany, wearing a white coat and measuring particles at -300 degrees celcius and being a “real scientist” that he made the choice. The hustler in him was trying to break out.

“I realised that it just wasn’t my thing. I wanted to be with people, I wanted to be in management but not too far from technology.

When I graduated I started working as a project manager in a local company doing security systems, and then I got sick and tired of that and went to do my masters at Newcastle University in the North of England, which in turn led him to a four year

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position as an IT specialist project manager for Barclays Bank. Sarunas’s remembers his Masters in Innovation Creativity and Enterprise Management as a particularly happy experience, “The reality was very similar to what I wanted. I am very positive about Newcastle, I loved the city. And I liked the teachers and the students. It was also my first taste of running a business. As an exercise we would each put £200 into a model business, ours was in t-shirts, and specialists from marketing, finance and HR would come and advise us. It was really interesting to learn these business skills and I use them for real these days, though obviously we screwed the company, we lost our £200 and we couldn’t sell the T-shirts, but it was a really good lesson!”

This time in England coincided with the financial crisis of 2008-9, not a bad time to be

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outside of the Baltic states. Unlike many other bright young Balts, however, Sarunas was keen to return. One of the many attractive aspects of his personality is his patriotism.

“I think the most important thing in life is maybe your friends and family and I cherish that,” he says, as we tuck into our desserts. “For me that’s one of the most important things. Also I felt there was a lot of opportunity back in Lithuania. There is so much potential there, and you can really feel you are contributing to the country’s development. It’s a small country, so it’s easier to succeed and to contribute. If you make a success you can generate a lot of tax revenue.

“I feel proud of my country. I might one day end up in London or New York or Sydney, but I feel like making a business here.”

Is Lithuania good to its entrepreneurs?

“Yes and no. I think some of the >>

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BUSINESS LUNCH bureaucratic things emanating from the state are still very complicated. It’s not like some other countries where you can open a new business in 30 minutes, and some of the accountancy procedures are a real headache. The Estonian government saw the opportunities [to promote itself as a “smart” business hub] much earlier than we did, and in Lithuania we still don’t see it as a major driver, but we do have a few big technology centres and people are pleasantly surprised by the quality of English, the level of education and the attitude towards work. By outsourcing IT services, it shows that we can sell our brains, and not just our crops and our cheese and our pork.

“Our long term strategy must be to build around that, although there are left wing parties and right wing parties here and they have very different views towards start-ups.

“On the other hand there are lots of good initiatives driven by private individuals or private companies or private funds or accelerators that have initiated a healthy start-up community in Lithuania – people like Practica and Start Up Highway which deserve a lot of credit for what they have done.

Also the EU helps us a lot. There is a digital fund of €50bn, and a brilliant organisation called Enterprise Lithuania which helps a lot by selecting the best start-ups and putting them on a roadshow.” This year PlaceILive has been one of the eight taken at the state’s expense to tech shows in Tel Aviv, London, San Francisco, Dublin and Helsinki, to sell their wares to investors looking for the next big idea. “They are not tourist trips!” Sarunas assures me, “you have to do a lot of hard work setting things up in advance, and you are looking for partners and investors and new

The tricky part is how you put all this information in one place and present it in a digestible way BUSINESS QUARTER | WINTER 14

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opportunities.”It’s obvious that PlaceILive.com is at a delicate stage. The idea seems great, but the scale of its ambition to be “the IMDb [international movie database] for cities” is formidable, as even becoming reasonably comprehensive on a global level entails data on a scale not meaningfully different from being infinite. Surely if you aren’t comprehensive, you aren’t useful?

“We believe that smart cities are the ones that have smart citizens and they are the ones who make the right decisions based on data.

There is no very successful company currently packaging and presenting that data in the right way.“The skill is in getting the best data, and getting the critical mass of users as there are three types of information – one is the data we can get from government sources, another is what social media says about the area, and the third is about what people think and what they generate in the way of content, which is often more meaningful, as you would find that the hard data would say that expensive parts of London are crime-ridden because there are a lot of pick-pockets, but it’s not really a reflection of the neighbourhood.

“The tricky part is how you put all this information in one place and present it in a digestible way, so we set great store by creating a special algorithm that combines these scores.”How then does the site make money? The business model now being tested out is to package the information to sell it to online real estate companies and travel websites in order to enrich the information they are able to provide, without putting them to the expense of elaborate data-collecting operations of their own. As this data would (they hope) be enriched by consumers themselves, the beauty part would be to use a free B2C function to create unique content to add value to a B2B proposition.

Does PlaceILive.com have the “secret sauce” to go from being a company that no-one has heard of to one that only the terminally uncool, haven’t heard of? The history of the web economy suggests that it’s difficult, if not impossible, to predict which grand gamechanging visions will succeed and which will be forgotten, but Sarunas Legeckas has the air of a man who has all the right tools and the right experiences to make it happen. n

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Opera singer’s food worthy of an encore Saint Germain owner Dainius Vasiliauskas has a simple ambition: “to run the best French restaurant in Vilnius.” By all accounts he has succeeded, as the restuarant is a 10-year fixture on the Old Town’s ever-changing restaurant scene, and is as popular with business lunchers and diners as it is with tourists who find themselves in Literatu gatve (“the street of the writers”) and Pilies gatve, the Old Town’s main drag, perhaps en route for nearby gothic brick fantasy St Anne’s Cathedral.

Vasiliauskas trained as an opera singer (bass) but got waylaid into the life of the restaurateur, priding himself on creating as good an atmosphere in the kitchen as he does “front of house”.

The proof is that his staff, including his head chef Gediminas Švencionis, have been there almost as long as the restaurant has existed, unusual longevity in a busy kitchen.

Olives and sun dried tomatoes LTL 20/€5.79 Fried scallops with asparagus LTL 54/€15.63 (scallops, asparagus, Parma ham, sour cream) Spicy prawns with oranges and Aioli souce LTL 38,00/€11 (prawns, mixed greens, oranges, chili peppers, garlic, sesame seeds, orange and Aioli sauces) Steamed sea bass with ginger LTL 64 /€18.53 (sea bass, ginger, cilantro, scallions, soy sauce, peanut oil, baked mashed potatoes) Beef Entrecote 300gr. LTL 80 /€23.16 (ask the waiter for garnish) Fondant au chocolat LTL 18 /€5.21 Crème brûlée LTL 18 /€5.21 Total: LTL 292/€84.53

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RESTAURANT REVIEWS

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Corporate leaders and entrepreneurs based in the Baltic or visiting here for trade talks have an abundance of choice when it comes to food and drink spots for business or pleasure >> International Jurmala Vienibas Prospekts 6, Bulduri, Jurmala LV-2010, Latvia On stepping through the restaurant door, you instantly feel welcome thanks to the pleasant vibe.

The lighting and minimalistic interior design, lounge music playing quietly in the background and on-point service make it clear that this is a well thought out concept.

And the restaurant certainly lives up to its name with a menu containing a wide selection of dishes that are either well-known internationally or have their origins in specific countries.

Uniqueness of International lies in its core idea – small dishes for a reasonable price that offer diners the chance to experience numerous different types of cuisine at one sitting.

However, the portions are generous enough to satisfy the needs of many foodies.

This is a great restaurant for gatherings – be it a late breakfast (they have a special breakfast menu for all preferences), a business meeting or a romantic evening to celebrate a special occasion.

You are guaranteed a gastronomic experience that will have you coming back for more.

Also, it’s well worth checking the restaurant’s Facebook page for special, thematic events that are regularly organised during winter to make your visit even more pleasurable.

Reviewed by Baiba Berzkalne, local gourmet and an expert on the best dining spots in Riga Contact: T: +371 67767735 E: jurmala@international.lv W: http://jurmala.international.lv/en/content/main

>> Star Lounge

33 Dzirnavu Street, Riga, Latvia After a long day crammed with work and business meetings, or spent wandering around the picturesque Christmas markets of Riga, it is always pleasant to arrive at the Star Lounge at the Albert Hotel and have a drink or two, and perhaps a light dinner. The Albert Hotel is named after the great Albert Einstein, so don’t be surprised if you find time disappears into a pleasant cosmic black hole during your visit. The lounge is spacious and the full length glass wall provides remarkable views over the spires, rooftops and terraces of central Riga. It is a great feeling to sit inside with a warm drink, looking out of the window towards the snow-covered rooftops as they melt into the darkness of long winter evenings. The couches and low tables invite guests to tip back and relax. The lounge is famous for its cocktail selection served by skilful barmen, so on weekend evenings the bar counter is always busy. The menu features dishes such as pasta, club sandwiches, and Caesar salad and is perfect for many occasions: an informal chat with colleagues, a hot date, a birthday celebration, or even a full-scale corporate event.

Reviewed by Kate Kolbina, Star Lounge frequent visitor Contact: T: +371 67142749 E: restaurant@alberthotel.lv

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RESTAURANT REVIEWS

>> Hopner Beer Restaurant Vanaturu Kael 3, Tallinn, Estonia

This cosy restaurant, located just a stone’s throw from the Town Hall Square in Tallinn is Estonia’s only beer restaurant. Not unlike a gastro pub, the food on offer can be paired with almost 200 different types of beer. The restaurant’s owner, Marko Mägi, is a sommelier specialising in beer. “Every beer has its place,” he says. “Beer can be tasted and appreciated just like wine.”

Indeed, this is why Hopner organises regular beer tastings and beer dinners (event details can be found on its Facebook page). The restaurant opened earlier this year and boasts a large selection of local Estonian craft beers.

Hopner’s regular menu has been created to pair with these beers. Marko and his chef Jörgen Kohal have the task of writing a menu that brings out the subtle nuances in the beer and in the food. Take the pikeperch ceviche, for example. The vibrant flavours of the lime and chilli can be enjoyed with pale ale. The beer and food pairing works with desserts also. Põhjala’s Must Kuld, a local porter, is best enjoyed with warm chocolate cake. At Hopner, you get professional service in a casual setting. With the cold winter months setting in, the restaurant offers great meals and the chance learn something you didn’t know about beer.

Reviewed by Kristina Lupp, Tallinn-based food writer and translator Contact: T: +372 6333 009 E: guest@hopner.ee

>> Köök Pikk 42, Tallinn, Estonia Köök – or kitchen in English – opened five years ago with the firm intention of not being a regular restaurant. And it isn’t. Köök is all about food, and that means getting involved in the preparation of it, as well as tasting the creations of British chef and owner Tim Bramich. Good-quality organic ingredients inspire menus, and what Tim calls modern European cuisine – a merging of different international flavours. If you’re looking for a different type of dining experience, Köök is the place to come in Tallinn. Here you can mix business with pleasure, as the restaurant also offers the possibility of holding seminars and meetings, while partaking in cooking classes or demonstrations.

It also organises tastings, where local experts are brought in to talk on specialist subjects like tea, wine, or beer. You can browse sample menus online, but Tim also welcomes new ideas from diners. Sample menus include variations on different cuisines like British, Mediterranean, winter (seasonal), and vegetarian.

Tim will work with you to develop a menu to suit your needs. Köök is also a private restaurant, so if you don’t want to partake in a class then you can book the chef’s table.

Private meals can be booked for groups of up to 30 for a sit-down dinner.

Reviewed by Kristina Lupp, Tallinn-based food writer and translator Contact: T: +372 644 0431 E: info@kook.fi

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ROTHKO REVISITED A bold new art museum in eastern Latvia reinvents a 20th Century great.

By Mason Pearson

In his lifetime Mark Rothko personified all of the angst of the modern artist. His giant, brooding canvasses, with their implied backstory of emotional and intellectual heaviness created an aura of sanctity about his works, which has helped them sustain multi-million pound prices tags at auction.

The atmosphere surrounding Rothko’s famous ‘colour field’ canvasses was enhanced by his tragic suicide in 1970, and then given an extra edge by a long and sordid squabble over his (by then astronomically valuable) estate. This was essentially a feeding frenzy of greedy New York lawyers and art dealers trying to cheat his

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young family out of their inheritance.

How ironic, and how pleasing therefore, that nearly 45 years after his death Rothko – born Marcus Rothkowitz in Dvinsk in 1903 – this troubled expatriate should become the agent of a sunny cultural springtime in the city that he left when still a child.

That town, once in Russia, now in eastern Latvia with its name now changed to Daugavpils, is host to one of Eastern Europe’s newest and finest arts centres and visitor attractions. By reclaiming Rothko for the European tradition, it presents him in a refreshingly different light – the local boy >>

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made good. The museum also suggests that the brooding genius projected by the art critics does not reflect the many sides to Rothko, the family man. Set in a classical palazzo, a small part of the spectacularly wellpreserved and brilliantly restored czarist-era Dinaburg fortress, the Mark Rothko Museum in Daugavpils houses only a small selection of his works, supplemented by a lot more contemporary Latvian and international work, in various media.

The Rothkos that comprise the star attraction here have been long-loaned by his children Kate and Christopher, and form the core of a display that includes a state-of-the-art, interactive exposition of the man himself, and the vanished Jewish culture of the old Russian province of Vitebsk.

The Rothko Centre opened in June 2013, and attracted 91,000 visitors in its first year, a figure expected to be well over 100,000 in 2014. Despite its out-of-town location in a city remote from the capital that lacks a good train service, let alone an airport (although AirBaltic provides free buses here for their passengers), the project seems to be a success.

Three hours drive from Riga, and two and a half from the Lithuanian capital Vilnius, Rothko is a must-see, destination attraction that could boost the economic fortunes of post-industrial Daugavpils and do what the Guggenheim Museum did for the neglected port of Bilbao in Spain, or the outpost of the Victoria & Albert Museum (V&A) is expected to do for the faded Scottish city of Dundee.

In a part of Latvia, the Latgale, which has little profile in international tourism terms, the Rothko Museum looks to this visitor like a textbook example of the intelligent and daring deployment of the €10 million EU state and regional funds that have been spent in its development. The museum is a spirited exploitation of the simple fact of the artist’s birth and childhood in Dvinsk, as he left it when still in short trousers.

Rothko’s parents – prosperous, well-educated Jewish pharmacists – decided to leave the city on the Dauguva River (then called the Dvina) for the West Coast of America when Rothko was only 10. Although a frequent visitor to Europe, the great man never broached the iron curtain to visit it as an adult. If he had,

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he would have found the world of his childhood doubly destroyed by the Nazi and Soviet regimes.

With memories of the terrible 20th Century now receding into the past, Rothko’s heirs, who appear to be far more gregarious and easy-going than the family name might suggest, visit often. Christopher Rothko and Kate Rothko Prizel have been close and active supporters of the Daugavpils project since being tracked down by Daugavpils civic arts museum official Farida Zaletilo in 2003.

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The Rothko ‘children’, now middle-aged, even paid half the insurance for transporting the six canvasses, carefully chosen from the family collection from different phases of his career, from the early figurative, the surreal and the ‘multiform’ (semi-abstract) to the subtly-applied, floating boxes of contrasting or complementary colour for which he is most famous. These works virtually demand that the viewer pause for private meditation when standing in front of them.

This viewer enjoys communing with Rothko’s

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The great contribution of this museum is to illuminate the richness and depth of the artistic inheritance that the young Marcus took with him to the US fuzzy-edged subtle paint effects as much as the next person, though it must be said you don’t need to come to Eastern Latvia to do this. The Tate Gallery in London, the Museum of Modern Art in New York and the Rothko Chapel in Houston Texas, all have many more, and much bigger Rothkos than are to be found in the intimate, barrel-vaulted chambers of this former ammunition store in the old fort. The great contribution of this museum is to illuminate the richness and depth of the

artistic inheritance that the young Marcus took with him to the US. All this is fully brought to life in the Rothko Museum’s audio-visual display materials, which look at turn-of-the-century Dvinsk in the round. It is fascinating. When he was born, Dvinsk, then part of Russia’s far-Westerly Vitebsk province, contained four theatres, seven libraries, and 39 ‘social schools’.

This heavily Jewish-influenced intellectual and cultural heritage was to vanish almost

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completely in the horror and catastrophe of the Second World War and its aftermath, a fate that may have cast a shadow on the hard-living artist’s anguished mental state, to the benefit of his pioneering art. On the European edge of the Russian empire, and encompassing much of modern Belarus as well as Eastern Lithuania and Latvia, Vitebsk was the nursery of Russian modern art, with Chagall, El Lissitzky, and Malevich all from these parts. The great achievement of the Centre is to show Rothko not as some remote high priest of New York modernism, but a man rooted in an old world European intellectual tradition, successfully transported and adapted in the New World. Rothko’s family are unlikely to have had much to do with Daugavpils’ fortress however, so why locate the museum here? It is an interesting question. When Daugavpils >>

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municipality was developing the idea for the museum, it considered commissioning a foreign architect to build a landmark new building. A fashionable French architect even drew up preliminary plans. In the end, however, the city went with the option of locating it in the arsenal of the old fortress.

Now that the centre is open, this seems like the right call, as both attractions reinforce each other. Yes, it takes quite a lot of

adapting to turn an 1833 artillery arsenal into a 21st Century arts centre, with all the requirements that entails for secure and climatically-controlled gallery space, offices, music room, business conference space, library and accommodation for resident artists.

Nevertheless, modernist gallery buildings are ten-a-penny and all but a few of them still look ‘cool’ after a decade or so. This building, beautifully restored by the Latvian

conservation architect Ilze Ratniece from Arhis, is both unique and distinctive. And who knows? Rothko might well have enjoyed the fact that a place that was off-limits as a Soviet military flying school during his lifetime has now thrown open its doors to display his art to the world. Dinaburg is so huge, that restoration work, already totalling about €30m worth, is likely to continue for years, if not decades. It will also involve finding useful

Rothko might well have enjoyed the fact that a place that was off-limits as a Soviet military flying school during his lifetime has now thrown open its doors to display his art to the world BUSINESS QUARTER | WINTER 14

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functions for the many old buildings, like the arsenal that houses the Rothko, which need to be conserved and restored. The location within the walls of the Daugavpils fortress will have the added benefit of bringing people here for whom the idea of a well-preserved Napoleonic-era fort was not much of a draw in itself.

That would have been unfortunate, as they would have missed one of the architectural and engineering wonders of Europe.

Commissioned by Czar Nicholas I in 1810 to guard the Eastern entrance of his vast empire against Napoleonic attack (which duly came – and was repulsed – in 1812), the fort represented the pinnacle of military technology and architecture of its day, and remains a wonder even now, both in the extraordinarily complex star-like plan of its sophisticated defenses, and in the quality of its execution, in its super-thick walls, its four ceremonial gates (named Alexander, Konstantin, Nicholas and Mikhail) casemates, ramparts, bastions, lunettes, ravelins, counterguards, reduits and redoubts (look them up!).

All of which will fascinate military buffs in particular, but others will simply enjoy the sense of wandering around a complex that preserves the world of ‘War and Peace’.

Apart from a brief baptism of fire in 1812, when Napoleon’s Marshall Oudinot tried and failed to take the fortress, Dinaburg’s mighty defences were never tested, and thus remain largely intact. Because the site is a mile or so from the main town, its ramparts and moats were not filled in for housing and roads.

In fact it ceased to be more than a showpiece even before it was finished in 1878, as advances in artillery had meant its defences were then obsolete.

Even if 19th Century military architecture is not a particular interest, you can spend as much time admiring the beauty and precision in the way the irregular stones are fitted together, or the elegance of the brick work, as you can spend staring at a Rothko canvas. n

For information and details see www.rothkocenter.com/rmc/en www.visitdaugavpils.lv/en/tourism/ daugavpils-fortress visitlatgale.com/en/

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INTENSIVE CARE FOR HOUSE HUNTERS Lidija Liegis talks to Ilze Mazurenko, CEO of Baltic Sotheby’s International Realty, about selling luxury property in the Baltic states, a career change from doctor to realtor, and how to weather an economic crisis

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INTERVIEW Luxury apartment in central Riga

Ilze Mazurenko opened the first Baltic branch of Sotheby’s Realty in Riga in 2010, and then another in the seaside resort Jurmala two years later. The business focuses solely on the luxury real estate sector. It opened its Estonian and Lithuanian branches in 2011 and 2012 respectively.

Before joining Sotheby’s Mazurenko managed her own real estate business, but her career path has been anything but conventional. Born in Riga to parents who were both doctors, she initially decided to follow the same path. She practised medicine for eight years, including a stint working in intensive care. The job was prestigious but poorly paid. “Times were tough and wages were very low,” says Mazurenko. In 1998 her sister, who was already working in real estate, suggested she take a break from medicine for a year and join local Latvian real estate company Oberhaus.

She was soon closing deals for high-end properties to rent at several thousand Euros a month. “The job started going very well and I began earning ten times more than I was making in medicine,” says Mazurenko.

Although she never returned to clinical practice, she did take several skills, including persistence and fearlessness, from her experience as a medic. “As a doctor, especially in intensive care, you won’t be successful if you say you’ve had enough or are tired. You

As a doctor, especially in intensive care, you won’t be successful if you say you’ve had enough or are tired.

You need to be relentless. This trait definitely helps me in business need to be relentless. This trait definitely helps me in business.” She explains that real estate is much easier than working in medicine because “if the deal doesn’t go through, no one dies”.

She began working in the mid-range sales market and was eventually made head of Oberhaus’ Riga Old Town department. In 2004 she founded her own real estate company, Immostate, which gained a reputation for the development of prestigious projects and the sale of some of the most expensive properties in Latvia.

Mazurenko co-owns the Sotheby’s franchise in the Baltic states along with two other Latvians, Vestards Rozenbergs and Leonid Kil, and two Lithuanians. Rozenbergs is responsible for marketing and ensuring all properties meet Sotheby’s luxury standards.

He met Mazurenko through Immoweb, where he remains chairman of the management

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board. Kil is currently the CEO of ABLV Asset Management, a subsidiary of Latvian bank ABLV. He was a client of Mazurenko’s when she worked at Immostate, and they later purchased the Sotheby’s franchise together.

He handles the finance and accounting side of the business. Mazurenko heads all four offices and visits Estonia and Lithuania at least once a month. The offices are streamlined in that they have the same management structure and marketing strategy. Baltic Sotheby’s employs 29 staff across its four offices: six in Estonia, 15 in Latvia and eight in Lithuania.

Her ambitions, it is no surprise to learn, extend beyond the Baltic states: “Even at medical school, I always wanted to work internationally and not just for a local company. I dreamed of working for a company with a big brand name.” Although she has never lived abroad, she has travelled across Europe, the U.S. and the Far East. She has >>

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Suburban mansion in Mezparks, Riga

a penchant for extreme sports and practises diving, skiing, wakeboarding, kiteboarding and riding, amongst others.

When asked what she likes most about her job, Mazurenko says she enjoys meeting new people: “You get to know the purchasers in both a business sense, and on a personal level.” She doesn’t appreciate inflexible people, and when deals don’t go through.

“The sellers and purchasers are ambitious, opinionated customers and they can change their minds quickly. You want to discuss a deal and close it, but that doesn’t always happen.

Sometimes it’s the financial circumstances but at other times you don’t know the reasons until the end.”

I ask about her most and least successful transactions. A deal she names as equally one of her most challenging and successful ones was for a Russian client moving to Latvia.

The client purchased two properties at the same time, in Riga and Jurmala, worth a total of €7 million. One of the properties had

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30 co-owners. Before the building could be purchased, Mazurenko had to go to a notary with each of them to ensure they wouldn’t exercise their right of purchase. As many as 29 of them refused to do so initially. “If a sale usually takes one month, this one took four months,” she explains with a weary smile.

I ask her about the criteria for a property to be deemed as luxury. She explains this isn’t determined solely by its price, but rather its location, its physical condition and its market value. “The properties don’t have a price criteria; a flat can be worth €100,000 or

€5 million. The properties must, however, be renovated and in a good state.”

The key to Sotheby’s success is its reputation, says Mazurenko. However, it has been challenging advertising the fact that Sotheby’s is not solely an auction house, but a realtor dealing in truly high-end properties. In the Baltic states Sotheby’s occupies a niche and is renowned for its work selling the luxury properties of longstanding clients. Customers appreciate Sotheby’s discretion, as “not everyone wants the world to know they are selling.” Mazurenko describes Sotheby’s as

The sellers and purchasers are ambitious, opinionated customers and they can change their minds quickly. You want to discuss a deal and close it, but that doesn’t always happen

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a last-stop agency for many clients. “People try to sell their properties by themselves initially, and only after they have tried multiple agencies do they come to us. We try to explain to people that they don’t need to take the long road.” I ask if the reason for this is because clients believe Sotheby’s will be very expensive to work with. Mazurenko explains: “This was the stereotype that we had to fight against initially, that Sotheby’s puts its properties on sale for 20% higher than their actual worth and then takes the profit.

This isn’t how it works; we sell a property for the price it’s worth. We also oppose the idea that clients can put any price on a property and that Sotheby’s will sell it.” She says

INTERVIEW

is predominantly a local one, with a minority of foreigners. This contrasts to Latvia, where the sales market is dominated by foreigners.

The largest real estate market for Baltic Sotheby’s is in Latvia, both in central Riga and in the beach resort Jurmala.

Estonia boasts a very active local sales market, but also attracts a large number of Finnish clients thanks to its proximity and similarities in language and culture. Mazurenko notes that there have been more and more investors coming from St. Petersburg in Russia. Similarly, the Lithuanian sales market is also dominated by local clients, with some Belarusians and Russians. In contrast to both Estonia and Lithuania, Latvia attracts many Russian

This was the stereotype we had to fight against initially – that Sotheby’s puts its properties on sale for 20% higher than their actual worth and then takes the profit. This isn’t how it works that Sotheby’s success and prestige lie in its extended client and agency networks, and first-rate safety precautions when it comes to the financial aspect of transactions.

She notes that Sotheby’s has a lot at stake, since it only opened its Baltic franchises four years ago. “Anything that goes wrong will reflect badly on our reputation, so it’s essential to us that everything is done properly. We do occasionally turn down deals because we don’t want to be involved in any bad practices.”

According to Mazurenko, the rental market remains stable across the three Baltic states. It was scarcely affected by the global economic crisis which hit this region particularly hard.

The rental market comprises mostly of foreigners, including diplomats and other expats, and locals who have purchased properties elsewhere and want to rent out their homes. Despite sales prices tripling since 2000, rental prices remain the same at approximately 10 Euros per square metre in Riga. The sales market in Estonia and Lithuania

investors and clients; many of them have longstanding ties with Latvia. Throughout the Soviet era, citizens travelled to beach resort town Jurmala to spend summers on its white sandy shores. As well as differing trends, clients invest in the three countries for different reasons, explains Mazurenko.

“Estonia can be challenging for foreign clients because of the language barrier and cultural differences. Estonians are more conservative and reserved than Latvians and Lithuanians, so clients tend to see it as a place to do business; many of them work on office or retail space projects.” Lithuania and particularly Latvia are seen as more friendly in terms of attitude and language, and as places where people can come to relax, buy a holiday home and speak in their own language (Latvia has a minority of 26.9%, Estonia slightly fewer at 24.8%, and 5.8% for Lithuania.).

Following the crisis, in 2010 Latvia passed a controversial law allowing foreign investors to gain temporary residence permits through the purchase of property. The residence >>

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permit automatically guarantees free movement for the purchaser and any dependents within the Schengen area, currently consisting of 25 European countries.

Upon expiry of the term of the residence permit, investors and their family members are eligible to apply for a renewal.

When the law was introduced, purchasers had to invest €143,000 in real estate in Riga, or €72,000 elsewhere in the country. On 1 September, 2014, the immigration law was changed to significantly limit the number of temporary residence permits given out; properties purchased must now have a minimum value of €250,000, and a taxable value of €80,000 at the time of purchase, both in Riga and elsewhere in the regions.

Although Latvia already had long-lasting links with Russia, the passing of the law saw a vast increase in the number of Russians purchasing property there.

It also attracted purchasers from Ukraine, Uzbekistan, Kazakhstan, Belarus, and most recently, China. Of course, not all purchasers come solely for a residence permit – in the past year purchasers from Austria, Germany and Switzerland have also increased.

According to reports published by the Latvian government, by the end of 2012 the number of real estate transactions with the goal of acquiring temporary residence permits in Latvia exceeded 3,000 – a total of €600 million. For Sotheby’s, the change in law had a wholly positive impact on the real estate market because it increased foreign investor interest and drove capital back into all aspects

Above and below Kukšu Manor, Jaunsatu, Latvia

I want to show people globally that there are great properties here at very reasonable prices. I want people to know that it’s a beautiful region

Property prices across the Baltic states Estonia: between €1,500 and €3,000 per square metre.

Latvia: starting at €2,000 per square metre in Riga, going up to €8,000 per square metre in Jurmala average. They occasionally sell properties at €10,000 per square metre.

Lithuania: between €1,500 and €4,000 per square metre.

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INTERVIEW Luxury apartment block, Riga

of the market. “New clients entered the market: they wanted to buy both residential and commercial properties,” she says. “The development market came back to life, new projects appeared and construction picked up again. There was money going into restaurant and retail development, and any industry related to real estate – architecture, construction, mortgages – picked up as Latvian real estate took centre stage” Since Mazurenko started working in real estate in 2000, she notes that there are many more properties which could be called ‘luxury’.

Nevertheless she thinks that in the Baltic states there aren’t truly any properties which fit into the luxury category: “I’ve seen what properties look like in Dubai, Moscow and Hong Kong.

There is still some way to go.” The positive, she says, it that in the past 15 years many properties have been renovated and turned into flats and sold, and new projects have been constructed in other regions. “[Latvian beach resort] Jurmala has totally changed. At one time it consisted of a single, sad street with a few private houses. Where previously you sold what there was, there are now many more properties. The real estate portfolio has changed.” She says that the Estonian and Lithuanian markets have followed

similar trends, with many properties being rejuvenated and sold in recent years, and more appropriate luxury sector properties appearing.

When I ask about Baltic Sotheby’s competitors and what sets Sotheby’s apart from them, Mazurenko replies proudly: “In the Baltic states there is no comparative competitor; there are a few companies which try to copy us or do similar things. Globally our only real competitor is Christie’s, because they too have auction houses and a global network.”

It seems much of Sotheby’s success in the region is thanks to Mazurenko herself and the personal responsibility she feels towards her clients. “Our reputation is extremely important to us, as are our clients. I would never advise them to do something which

might create problems for them. We work with knowledgeable lawyers who advise our clients from start to finish so they reach their goals.” Mazurenko modestly attributes the company’s success to its highly-reputed brand and forward thinking management style. She is most proud of the fact that her clients are satisfied and recommend them further, and is pleased that Sotheby’s handles “reasonably big and successful deals.”

Her aim, she says, is to show the Baltic property niche to the world: “I want to show people globally that there are great properties here at very reasonable prices. I want people to know that it’s a beautiful region, a wonderful place to visit and live in. That’s my ultimate goal.” n

Real estate investments and residence permits In the first half of 2014 almost 1,000 people got residence permits in Latvia; the majority of them are from Russia, China, Ukraine, Uzbekistan and Kazakhstan.

Their investments totalled €1 billion by June 2014, with €823 million from real estate purchases and the remainder from investments in banks and private companies.

The majority of these purchasers bought properties in Riga (2,027 purchases between July 2010 and June 2014), seaside resort Jurmala (118 purchases) and the remainder in other regions including Ozolnieki, Babite municipality and Cesis.

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FASHION

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FASHION THE HOME OF THE WORLD’S BEST WELLIES

Not everyone would happily part with £700 for a pair of rubber boots, but then not all rubber boots are made like Le Chameau’s. Josh Sims caught up with the firm’s MD to find out more >>

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FASHION

The best quality check is the knowledge of the person who makes the boot – it’s a very manual, very human process so of course mistakes can be made, but we try not to make too many Beverley Williams certainly had second thoughts about moving to France to take charge of a manufacturer of rubber boots.

As for many people, for the retail supremo – who has been a senior executive under the likes of Richard Branson and Philip Green – the prospect seemed decidedly unsexy.

Until she saw the boots. “What we have here is a hidden gem that I want to put on a global stage,” says Williams, who took over as managing director at Le Chameau, based in Paris, Pont D’Ouilly in Normandy and Casablanca, 18 months ago. “These are not just rubber boots. In France they are iconic.

And they are, I think, the best in class.”

This perhaps explains not only why Le

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Chameau are the go to rubber boot maker for French farmers, sailors, fishermen, equestrian types and those with country estates, but has also been so for the likes of Louis Vuitton.

When Chanel wanted a rubber boot made – of all things one might not associate with the fashion house – it went to Le Chameau. And the reason is simple. The €25m company, established in 1927 by one Claude Chamot and now making some 350,000 pairs a year – half of which, however, are bought by the French alone, who happily wear them around town – places an unusual emphasis on materials. It uses a secret recipe of the highest concentration of natural rubber in the market (no boot can be 100% rubber and

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be durable), meaning the footwear is that much more pliable and comfortable. But to those materials it then applies the principles of classic hand-made leather boot-making.

Indeed, the Normandy factory, where the company’s more premium models are made – yours for up to £700, which could get you a nice pair of bespoke shoes – has just four ‘maitres bottiers’, each of whom makes each pair of boots from start to finish. Each comprises the careful application of some 20 to 30 rubber parts, cut much as those for a pair of leather boots are, over an aluminium last. And since each boot is available made-tomeasure in eight calf-fittings – resulting in a more fitted, streamlined style – that >>

FASHION means a lot of lasts. The naturally sticky rubber parts then hold their shape while the proto-boot undergoes Vulcanisation in giant ovens at around 140C, which effectively makes these parts molecularly of a piece – or, in other words, means there are no seams through which water might enter the boots.

Just to make sure, each pair is pumped full of air underwater – with a single rogue bubble causing them to be rejected. More unnervingly, a high voltage is also passed through the water to ensure the boots are non-conductive of electricity.

“But the best quality check is the knowledge of the person who makes the boot – it’s a very manual, very human process, so of course mistakes can be made, but we try not to make too many,” jokes Marc Longuet, one-time bespoke boot-maker and now Le Chameau’s product director, whose father was also a director at the company from 1955. “But making rubber boots is actually a very complex business. The recipe for the rubber has to keep evolving – the right amount of sulphur, the right amount of dye and so on, but even buying the raw material can be tricky. Rubber is a commodity, after all, so we buy supplies at least a year in advance and have to be conscious of fluctuating prices.”

If that makes the product sound all too workaday, note that the top of the range styles are also leather-lined, an idea revolutionary to the rubber boot market back in the 1950s when Le Chameau introduced it. Fortunately for the customer, only the best leathers – those that might be suitable for the uppers of a decent pair of shoes – are able to survive the Vulcanisation process unscathed. These are, if you like, the John Lobb of wellies, with styles the likes of the Saint-Hubert, Vierzon and Chasseur Le Chameau’s very own classics.

“I’m very much fixated with product. That’s what it comes down to in the end – whether the boots are any good,” says Williams. “I’ve spent a lifetime working in fashion retail and I think that is what the customers want more and more now. That’s what I love about the story of Claude Chamot – that he started the company after going out and actually speaking to farmers, hunters and fishermen about what they wanted in a boot. And then he decided to do something about making it.” n

That’s what I love about the story of Claude Chamot – he started the company after speaking to farmers, hunters and fishermen about what they wanted in a boot. And then he decided to do something about making it

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FOCUSING ON TIMELESS QUALITY

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EQUIPMENT Skano Furniture is a furniture retail company with 10 showrooms in the Baltics and Ukraine.

We have six showrooms – four of them in Estonia, one in Riga and one in Vilnius.

The first showroom opened over 10 years ago in 2003 in Tallinn. That was followed in 2005 by a showroom in Riga and, two years later, showrooms in Lithuania and in major cities in Ukraine opened.

Skano Furniture is owned by Skano Group AS, the first and only Estonian timber processing company with shares listed on the main NASDAQ OMX Tallinn Stock Exchange.

The Group’s history goes back to the post-war year of 1945, when Pärnumaa Production Centre was established with the initial aim of producing fuel, footwear and furniture.

However, the production traditions of the company are even older – skis, for example, have been produced in Pärnu since 1939.

Later the company was renamed to Viisnurk and its main focus was furniture production.

The company managed to survive the turbulent first years of Estonia regaining its independence and was exporting an impressive 75% of its production to western Europe. In 2002 its famous Maxx hockey stick was presented at the Olympic Games and world championships. Indeed, lots of people in the Baltics remember Viisnurk skis and hockey sticks. They were produced in Pärnu where, nowadays, wooden insulation boards, furniture and other popular products are manufactured – such as bookshelves with glass doors, the design for which dates back to 1882. In the furniture market, Skano stands for high quality, timeless design and true craftsmanship. Skano offers a range of products in classical styles, such as furniture made of solid wood as well as famous >>

The company managed to survive the turbulent first years of Estonia regaining its independence and was exporting an impressive 75% of its production to western Europe

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EQUIPMENT

We are proud to have so many loyal customers who recommend us to others so often – a sign that the products and customer service are of a high level

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Italian and Estonian brands of upholstered furniture and elegant lights. Its showrooms are unique, with their interior design and product range following the trends and tastes of the countries they are located in. The best example of Skano’s style is the Skano Classic furniture line, which is more than a century old. The design is suitable for furnishing libraries, home offices, dining rooms, living rooms and nurseries with hand-made, quality, solid wood furniture.

Furthermore, this timeless design has been enhanced with modern functions.

The Skano Classic line comprises more than 100 products which are made using many types of finishing.

Indeed, anyone visiting Skano’s showrooms is able to design their entire home furnishings – and get a first-rate professional service too.

The Skano brand symbolises Northern quality and reliability in the retail furniture business.

Another distinctive feature is its high level of customer service. As Liina Treimann, the Baltic Retail Manager at Skano, puts it: “We are proud to have so many loyal customers who recommend us to others so often – a sign that the products and customer service are of a high level”.

Despite the closure of a number of showrooms in Lithuania in 2007 and 2008, sales have

EQUIPMENT

been growing steadily in recent years throughout the Baltic region. Indeed, we are constantly searching for new places for showrooms in order to expand our reach.

In the past year we opened brand new showrooms in Estonia’s second largest city, Tartu, and a bigger one in Riga which boasts the largest product range in the Baltic States.

All of this was possible thanks to Skano’s talented and highly experienced management team. Liina Treimann, Baltic Retail Manager (pictured above), has more than 15 years of experience in the retail and financial sectors, her education being in the field of economics.

Liina constantly seeks ways to improve Skano’s sales channels, ensures that the quality is at the highest level across the Baltics, and follows the key retail financial indicators. In addition to its retail chain, Skano has been selling furniture for many years in Scandinavia, Russia, and Belarus. Also, Skano is establishing firm positions in other European countries, such as France and the UK. n

We are constantly searching for new places for showrooms to expand our reach. In the past year we opened showrooms in Estonia’s second largest city, Tartu, and a bigger one in Riga

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REAR VIEW

WINTER 14

WHAT A DIFFERENCE A YEAR MAKES As we prepare to embark on year two of the BQ Baltic adventure, it seems strange to think that the magazine has only been around for a year.

Looking back at earlier editions, it becomes clear just how much has changed in 12 months

with Charles Cormack The first edition of this magazine in December 2013 had the almost smiling face of Valdis Dombrovskis on the front page. At the time he was a successful two-term Latvian Prime Minister who came to power as Latvia plunged into the economic abyss that saw GDP drop by over 20%. He had steered the country back to economic growth and the adoption of the Euro through internal devaluation of the currency.

Little did we know when we did the interview that he would leave his post within weeks of publication due to the Maxima disaster. He is now, twelve months on, a Vice President of the European Commission “Euro and Social Dialogue” (whatever that means), and his successor Laimdota Straujuma has just successfully steered her party back into government. Also, global politics has impacted the region over the last 12 months, the crisis in Ukraine is felt more keenly in the Baltic than anywhere else in Europe, the geographic proximity, the large Russian ethnic population and the weight of recent history mean that many Balts feel nervous about 2015. NATO and the EU have reassured the Baltic states that any aggression by Russia will be met with THE LINEN QUEEN OUT OF THE WOODS force, but anyone ESTONIA’S E-GOVERNOR GROWTH CULTURE who has studied the HISTORY MAN history of the Soviet Union knows Russia will continue to www.bq-magazine.co.uk

ISSUE ONE: WINTER 2014

Fabric empire’s seamless success story

Walk on the wild side keeps tech giant alive

Lunch with Nortal’s boss

Riga prepares to welcome the world

ISSUE ONE: WINTER 2014: BALTIC EDITION

BusinessQuarterBaltic_205x260_151113.indd 1

Latvian premier Valdis Dombrovskis on a momentous chapter in his nation’s history on the eve of its Euro switch

BUSINESS NEWS: COMMERCE: FASHION: INTERVIEWS: TRAVEL: EVENTS

29.10.13 14:14

BUSINESS QUARTER | WINTER 14

provoke the Baltic governments into giving it a reason to “intervene”.

That said, business has been good. The economies are out of recession and confidence is coming back. Companies that weathered the storm seem to have matured, and are approaching business in more considered manner. The release of the new devolved EU funding at the start of 2015 will provide another boost to the economy. This funding is being largely used to improve the competitiveness of SMEs, allowing them to access training, equipment and consultancy.

I wonder what will change in the next 12 months? From a BQ Baltic point of view, we should have launched our new weekly digital news digest and have run our first BQ events.

From a regional viewpoint, I hope I can report not much has changed, and stability remains.

>> I won’t forget Maxima It’s a year since the Maxima supermarket tragedy and I will never forget hearing the news on the BBC. It started with texts from people in the office alerting me to it.

Then a horrible 12 hours whilst we waited to hear that colleagues and friends were safe. For such a small country the disaster was a truly shattering experience. I want to extend my sympathy to all the families of those involved, whose grief will have barely been diminished by the passing of a year.

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>> Increasingly acquisitive One thing I have noticed through my day to day work over the past few months is that the Balts are starting to look at buying foreign companies. Up until about six months ago we were only ever involved in helping international companies who wanted to acquire a business in the Baltic, but recently we have been approached by three separate companies to head up their search for an target in the UK market. I take this as a good sign, underlining the increasing maturity of Baltic businesses, and their increasing understanding of strategic market entry, long may it continue!

>> Making a difference My company CCG’s team in the Baltic has been asking me for some time about developing a strategy for Corporate and Social Responsibility. I am keen we put something back into the markets we work in, and we have regularly done little bits to help local charities. However, the team wanted to do more. We came up with a novel solution, allowing CCG to make a meaningful contribution to supporting charities, and also giving our staff the chance to “get their hands dirty.”

Now staff can donate one day a month to volunteer at a local charity (which we will pay them for). A good solution, which I think will make a genuine difference.

EVENTS

WINTER 14

BQ’s business events diary gives you lots of time to forward plan.

If you wish to add your event to the list send it to colin@bq-baltic.co.uk and please put ‘BQ events page’ in the subject heading

DECEMBER 20 Royal Ballet Gala in Tallinn. Gala performance that brings together the outstanding Ballet Stars from all over the World. www.royalballet.eu 20 Latvian Chamber of Commerce (LCCI) Annual Ball in Riga. LCCI invites members to celebrate their 80th anniversary together in the glamorous Annual Ball. Program includes speech from President of Latvia, piano concert, vocal performances and live music. More info at www.chamber.lv/en

JANUARY 4 Celebration of Sherlock Holmes’s 161st Birthday. From 1979 to 1986 Riga was the hosting platform for Adventures of Sherlock Holmes and Dr.Watson, a TV series that achieved popularity worldwide, so a new celebration tradition was created. The event will have a costume parade with an award ceremony, concert, British dog breed exhibition, and traditional 5 o’clock tea time. More info at www.holmes.lv Until 7 Old Town Christmas Market. This will be the 10th time the annual Christmas Market takes place in Riga Dome Square. It brings together all generations to see daily musical performances and concerts, appreciate local hand crafted goods and enjoy special holiday treats. More info www.vzt.lv 22 Ars Résumé in Riga. Culture and entertainment programme “Ars Résumé” will be a contemporary dance performance that will explore human thinking levels and the way how the mythological world view comes into unison with the contemporary world. It will follow human perspective changes on their place in the Universe through the centuries. More info at www.lnmm.lv 30-8 MustonenFest Music Festival in Tallinn, Tartu, Pärnu, Jõhvi. Organised regularly since 1989, the festival takes place for the fourth time. It is called MustonenFest after its founder and artistic director Andres Mustonen. The midwinter music festival presents a selection of brilliant musicians who will present various large-scale works like Requiem by Verdi and Canticum Canticorum by Knaifel. More info at www.concert.ee/mustonenfest-about

FEBRUARY 6-8 Balttour 2015. The biggest travel tradeshow in the Baltics will take place at Kipsala International Exhibition Centre in Riga. It is expected to gather more than 450 exhibitors and 700 participating organizations from 40 countries of Europe, Central Asia and the Middle East. Participants include national and regional tourism authorities, hotels, airline companies, travel agencies, tourism service providers, regional tourism organisations and many others. The tradeshow will also host a business forum for tourism professionals that would facilitate the exchange of tourism services, offering discussions for tourism professionals and informal networking events. More info at www.balttour.lv 11-12 Baltic Sea Region Exhibition for Meetings, Events and Incentives CONVENE in Vilnius. It is an annual business-to-business two-day event for the meetings industry for the Baltic countries. Launched by Vilnius Convention Bureau the event offers every year a fully hosted buyer programme, which accommodates 160+ qualified buyers from the whole of Europe. Up to 100 exhibitors including convention bureaux, hotels, conference centres, special venues and specialist suppliers that will be showcasing their meeting products and services. A major professional education programme and a series of high quality business networking events will support the event.

More info at www.convene.lt

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20 Opera Night in Riga. An exclusive opportunity to enjoy the Opening Night of Giacomo Puccini’s Manon Lescaut at the Opera in good company. Admission is EUR 75 for AmCham members and their guests, EUR 100 for non-members.

Invitation includes a ticket to the performance, wine & hors d’oeuvres. Black Tie dress code. More info at www.amcham.lv 25-27 Latvian companies in Eco House & Eco Building Expo in Tokyo. It is the largest eco construction expo in Japan that gathers more than 80,000 people and brings together eco material suppliers, builders and construction companies. This will be the first time when Latvia will have its own national stand, 16 m2 in size. The costs are covered by Investment and Development Agency of Latvia.

26 Export Day in Riga. Latvian Chamber of Commerce (LCCI) invites to listen about successful company experiences, exchange personal knowledge and learn more about new export possibilities. During Febraury LCCI will also have special Poland evening event, while March will bring Export management courses and China evening event. More info at www.chamber.lv/en 28 Elier SPA&SPE programme in London. Londoners will have a chance to try the gem of Latvian wilderness that international scientists have called the 8th wonder of the world, in what is called SPA&SPE program by Elier. SPE is a new concept, derived from the old Baltic language expression “ellõ liegã era” meaning “life giving mud of the ancient lake”. Elier is a Latvian group of companies started in 1996 that manufacture cosmetics and rehabilitation products using high-organic mud. The 10 million year old mud has more than 800 biologically active elements and works on the cell level. Elier is a global franchise with offices in Latvia, Estonia, Lithuania, Russia, Ireland, and Philippines. More information and application for the program: Ilze Veinberga, (+371) 261 52 690, ilzevein@gmail.com.

APRIL 16 Human Development Award Dinner. AmCham and the U.S. Embassy in Latvia and the Civic Alliance of Latvia will hold the 2nd Annual Human Development Award in Latvia in 2015. The goals are to promote human development and to further Latvia’s sustainable economic growth and prosperity, increase the productivity, health and well-being of Latvia’s people, encourage social responsibility and raise awareness of the significance of human development in Latvia. More info TBA in January at www.amcham.lv

Please check with contacts beforehand that arrangements have not changed. Events organisers are also asked to notify us at the above email address of any changes or cancellations as soon as they are known.

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