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Published: 3 april 2012 10:48

Foreign direct investment in Lithuania on the rise

Naftotiekis vėl gali veikti, jei Lietuva į jį investuotų milijonus dolerių.
Redo Vilimo/BFL nuotr. / .

Cumulative foreign direct investments (FDI) in Lithuania grew by 1.607 billion litas, or 4.5 percent, in 2011, to reach 37.16 billion litas (EUR 10.77 b) at the end of December, Statistics Lithuania and the Bank of Lithuania reports. Analysts, however, see the increase as still far from satisfactory.

Most of the FDI inflow was due to equity investment and reinvestment flow.

According to provisional data, last year's FDI inflow totaled 3.02 billion litas (2.8 percent of GDP), up 1.059 billion litas, or 54 percent, from the respective figure of 2010. Reinvestments made up 1.922 billion litas, while equity investment and investment in other capital totaled 706.07 million litas and 391.89 million litas, respectively.

Last year, the biggest increases were in FDI from Sweden (LTL 3.8 b), Canada (LTL 1.2 b), the Netherlands (LTL 373.3 mln) and Finland (LTL 331.2 mln), while the largest decreases were in FDI from Estonia (LTL 2.2 b), Denmark (LTL 648.9 mln) and Luxembourg (LTL 498.8 mln).

Most of the FDI went to manufacturing (LTL 1.4 b), financial and insurance activities (LTL 1.2 b), wholesale and retail trade, and repairs of motor vehicles and motorcycles (LTL 200.5 m). In the manufacturing sector, most of the FDI went to pharmaceutical production (LTL 499.2 m) and chemicals (LTL 329.9 m).

FDI per capita made up 11,615 litas at the end of 2011.

Sweden accounted for the biggest share of cumulative FDI at the end of 2011, with 5.741 billion litas, or 15.4 percent of the total FDI, followed by Poland with 4.283 billion litas (11.5 pct), Germany with 3.873 billion litas (10.4 pct), the Netherlands with 3.273 billion litas (8.8 pct), Russia with 2.438 billion litas (6.6 pct) and Norway with 2.001 billion litas (5.4 pct).

The total FDI from 27 EU Member States reached 27.957 billion litas at the end of 2011, accounting for 75.2 percent of the total amount. Investments form the CIS countries came to 2.657 billion litas, or 7.1 percent of the total.

As of 31 December, the manufacturing sector attracted the largest chunk of the total FDI, at 29.8 percent, of which 5.312 billion litas, or 48 percent, was in the manufacture of petroleum and chemical products, 1.401 billion litas, or 12.7 percent, in the manufacture of pharmaceuticals, and 1.397 billion litas, or 12.6 percent, in the manufacture of food products, beverages and tobacco.

Some 14.2 percent of the total FDI went to financial and insurance activities, 13.5 percent to wholesale and retail trade and repairs of motor vehicles and motorcycles, 11.2 percent to real estate operations, and 9.3 percent to information and communication activities.

Far from satisfactory

Foreign direct investment (FDI) inflow in Lithuania is still far from satisfactory, Rokas Bancevičius, an analyst with the commercial bank DNB, has said.

“The last quarter of 2011 was not fruitful for Lithuania in terms of investment projects. Compared with the third quarter of 2011, Lithuania’s FDI portfolio contracted somewhat. This might have resulted, among other things, from negative sentiment on global markets amid concerns with the resumption of economic decline in the euro zone,” he said in comments on the latest FDI figures.

The volume of investments would determine the success of Lithuania’s long-term economic development, he said. The analyst compared Lithuania with Estonia and pointed out that Lithuania still lagged far behind Estonia in terms of FDI per capita, which made up 3,300 euros in Lithuania and 9,500 euros in Estonia at the end of last year.

“We often hear discussions in Lithuania about the reasons behind faster growth of the Estonian economy. A three times larger volume of FDI in Estonia is the best indicator of different economic speeds, which, among other things, covers differences in business environment, differences in public sector’s efficiency in attracting foreign investment, and differences in the countries’ accessibility by air,” the analyst said.

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