The first half of this year saw a sharp decline in the number of registered insolvency proceedings in Latvia. The number of business start-ups is also stable and foreign investment fell significantly, according to a data collection by Lursoft. Is the Baltic state well on the way to economic independence?
The country has a stable start-up scene
The Lursoft study shows that 5,549 businesses were registered in the last six months. This corresponds approximately to the figures of the previous year. These start-ups are distributed among all 119 municipalities of the Baltic Republic.
Lursoft points out that the total capital of these registered companies amounts to approximately 77.1 million euros. In the comparison to the previous year that is 29.56 million euro more. Moreover, the share of foreign capital decreased by 56.33% to only 18.66%.
Especially the increasing number of newly registered trades with a capital of several million euros is striking. Among other things, the Lipman family founded the SIA Liplat Holding with a capital of 33.44 million euros.
Above-average number of liquidations
The number of liquidated companies in the first half of 2019 exceeded the number of newly registered companies. In 16 Latvian municipalities, however, the number of start-ups exceeded that of liquidations. The municipality of Madona is the leader with 43 newly registered and 30 liquidated businesses. To date, more than half of the liquidated companies have owed the state a total of 179.28 million euros. 34 of these companies have existed in the last three months without the existence of management.
Significantly fewer insolvency proceedings
The data collected also show that the number of insolvency proceedings initiated continues to fall. In total, there were 994 cases in the last six months. At the same time last year, 53 more insolvency proceedings had been initiated. In the case of private individuals, there is a tendency for proceedings to be initiated more and more frequently against various members of a family.
Decline in foreign investment
Compared to the first months of 2018, there has been a significant decline in foreign investment. So far this year only 14.39 million euros have been invested by foreign sources in Latvian companies. This corresponds to an investment decline of more than 50%.
A particularly large part of this investment comes from the Netherlands. About 8.01 million euros were invested from here in the two Latvian companies IA Gustava parks projekti and SIA Brivibas parks projekti.
The northern European countries Denmark, Norway and Sweden also invested approx. 5.35 million euros in Latvian companies and projects.
However, the investments from the Baltic neighbouring countries should not be underestimated. Among others, the Lithuanian businessman Nerijus Numavicius plans to invest 200 million euros in Riga over a period of several years.
Overall, the participation of foreign investors in the total capital of Latvian companies fell below the 7 billion mark in 2019. According to statistics published by Lursoft, foreign participation fell to a total of 6.14 billion euros.
Born 1981 in Strasbourg, is a freelance journalist for various online media throughout Europe, focusing on finance, real estate and politics. He gathered his professional expertise as a consultant for global players and medium-sized companies. Fournier studied economics and german in Paris and Dresden. He currently lives in Saarland and has been a member of the Euro Leaders team since the beginning of 2019.