Discussion on further development of export of Latvia’s financial services was held during 20th Baltic Financial Forum
In terms of export of financial services Latvia has already taken a large step ahead of Estonia and Lithuania, - today representatives of the Ministry of Economics of the Republic of Latvia and the Ministry of Finance stressed in the ongoing Baltic Financial Forum. Latvia serves approximately 72% of the assets of foreign companies flowing through the Baltic States, but, in order to keep these positions, pace of development may not be slowed down, as well as purposeful progress towards the development of financial centre.
Photo: Participants of the first session of the Baltic Financial Forum (from the left):
- Edward Lucas - session moderator, journalist and publicist from the Great Britain, International Editor of The Economist
- Stephen Young, Senior Partner of the audit company KPMG
- Dagmāra Lindere, Regional Director of Central and Eastern Europe of Deutsche Bank
- Ilona Guļčaka, Member of the Council of the Association of Commercial Banks of Latvia and Chairperson of the Board of the Baltic International Bank
- Kristaps Zakulis, Chairman of the Financial and Capital Market Commission
- Anna Dravniece, Director of Financial Market Policy Department of the Ministry of Finance of the Republic of Latvia
- Andris Liepiņš, Deputy State Secretary of the Ministry of Economics of the Republic of Latvia
Contribution of the financial sector in the growth of Latvian national economics is substantial accounting for 3.3% of GDP. This indicator is lower than on average in the Europe representing 5%, however, this is the only sector showing higher level of employment that in the pre-crisis period currently reaching 22 000 people, pointed out Mr. Andris Liepiņš, Deputy State Secretary of the Ministry of Economics of the Republic of Latvia. In 2014, approximately 10% of the financial services are being exported, and this indicator has doubled in comparison with last year, also the volume of deposits is growing, bank capitalization indicators are very strong, liquidity indicators are the highest ever.
“Latvia has many advantages for the development of financial centre – understanding about the markets of Western Europe and CIS, their different cultures, language knowledge, settled legislation, strict bank supervision and control. Simultaneously we must be aware of and prevent the risks related largely to provision of transparency in attraction of foreign financing,” stressed Stephen Young, Senior Partner of the audit company KPMG. He pointed out that investors’ interest in Latvia is stable regardless of the fluctuations caused by Russian – Ukrainian crisis. “Banking sector feels strong interest both from the foreign clients in the West and in the East,” stressed Ms. Ilona Guļčaka, Chairperson of the Board of the Baltic International Bank and Member of the Council of the Association of Commercial Banks of Latvia. “Latvia is a strong competitor for every European financial centre – with the aspects of geography and business culture and low administrative costs making our region attractive for investors we are a strong competitor also in terms of the service quality and qualified specialists. However, this is not enough for motivation of clients for long-term investments. We can feel the demand for alternative options of investments. We have to develop the business environment, tax system, alternative financing sources and capital market. One of particular steps is review and reduction of the tax rate for the re-invested profit. In addition, development of various investment attraction platforms must be continued, for example, Commercialization Reactor and TechHub Riga providing communication between the new entrepreneurs and investors. I see also wide opportunities for the development of alternative types of financing, for example, crowd and public financing currently actively used by the foreign future entrepreneurs for the attraction of pre-seeding or seeding capital. Although we can see large potential of such business, banking sector is not always capable to finance such projects at the early stage of development,” said Ms. Ilona Guļčaka.
Ms. Dagmāra Lindere, Regional Director of Central and Eastern Europe of Deutsche Bank also agrees with the opinion that strengthening of Riga as a regional financial centre is very realistic. “Although under the current conditions Baltic States as the nearest EU border from the East is more sensitive to the risks caused by Russian – Ukrainian crisis, in general the region has a potential for high growth and is still developing in comparison with the market of Western Europe. If we use caution when attracting foreign capital, we can reduce the risks down to the minimum,” said D.Lindere.
Development of financial centre walks hand in hand with the sector supervision and prevention of risks. Our demands for everyday comfort and technologies also grow, as well as in relation to the financial security. “In comparison with the automotive industry we have reached a BMW level security of financial sector, and hardly anyone would like to return in twenty years history and to change into a LADA car without safety belts, airbags and other security equipment,” explained Mr. Kristaps Zakulis, Chairman of the Financial and Capital Market Commission.
This year Baltic Financial Forum took place for the twentieth time bringing together local and international experts of financial sector. Three sessions of the forum included discussions about development of Latvia as financial centre, growth opportunities of companies and business technologies, as well as topicalities of financial management and accountancy. Supporters of the forum are: Baltic International Bank, IBM Latvia, ACCA and Association of Accountants of the Republic of Latvia.