Business environment in Lithuania
Lithuania’s business environment in brief:
• There were approximately 104,000 enterprises in Lithuania in early 2017.
• Every year, the government of Lithuania strives to improve the country’s business environment; as a result, Lithuania regularly moves up in international ratings.
• In the World Bank’s latest Doing Business Report, Lithuania is ranked 21st among 190 countries.
Priority – small enterprises
Support for small and medium-sized businesses, as well as facilitation of innovations, are among priorities set by the government of Lithuania. Being in force now, Lithuanian Innovation Strategy 2010-2020 aims for facilitating innovation, further increasing companies’ competitiveness and income. The said strategy does not concern only a small circle of industries and sectors. It entirely concerns all industries, where companies deal with development, as well as innovation of services and products. Lithuanian Economy Ministry has defined green technologies, energy, and creative industries as the sectors with higher value added. The crude oil refinery in Mažeikiai is also highly important to Lithuania as it is the only Baltic states’ refinery of such type
• As of January 1, 2017, there were 104,074 enterprises in Lithuania, which is almost 4,800 more compared with the previous year. Most of them are small and medium-sized, as well as microenterprises. According to data from the Lithuanian Department of Statistics, in early 2017 there were 25,345 enterprises operating in trading sector, 8,029 enterprises in the transport and storage sector, and 7,848 enterprises in manufacturing.
• The major state companies were privatised within the first ten years after the restoration of independence of Lithuania in 1990. Most of them were bought by foreign investors. Telecommunications company that is currently known as TEO LT AB was sold to a Swedish- Finnish corporation that later became TeliaSonera AB. The only crude oil refinery in the Baltic states, AB Mažeikių Nafta, has had different owners since it was sold to the United States’ Williams Companies Inc. in 1999. It was later acquired by Russia’s Yukos International, and currently belongs to Poland’s PKN Orlen SA. Almost all shares in national gas monopoly AB Lietuvos Dujos belong to Lietuvos Energija. Germany’s A.ON Ruhrgas AG and Russia’s Gazprom no longer own stakes in AB Lietuvos Dujos.
• All three largest Lithuanian banks currently belong to Scandinavian banks – Sweden’s Skandinaviska Enskilda Banken AB and Swedbank AB, as well as Norway’s DnB NOR Bank ASA.
Starting a business in Lithuania:
• In the World Bank’s 2017 Doing Business Report, which measures how easy it is to conduct business in 190 countries around the world, Lithuania has dropped one position to the 21st place. Lithuania is in the 29th place in terms of starting a business – it takes four steps, 5.5 days, and business start-up cost is 0.6% of income per capita. Minimum startup capital is equivalent to 20.3% of income per capita.
• Lithuania has received its lowest assessment in resolving insolvency. The country is ranked 66th as the process takes 2.3 years in Lithuania.
• Investor protection has deteriorated compared to the past years in Lithuania, as the country dropped to 51st place in the latest report.
• Lithuania has retained its position in receiving electricity, which was one of Lithuania’s lowest-ranked positions for years. Receiving electricity in Lithuania now requires six steps that take 85 days.
• Meanwhile, property registration is one of the easiest procedures in Lithuania, and in this section the country is ranked second in the report. Registering property in Lithuania involves three steps and takes 3.5 days.
• There is also a public and private credit bureau in Lithuania where both positive and negative information on companies, their figures and debts can be accessed.
• Lithuania, located on the crossroads between Europe’s East and West, has well-developed infrastructure: there are two international transport corridors, three international airports – in Vilnius, Kaunas, and Palanga, ice-free port in Klaipeda, modern railways and roads.
• The country’s biggest problem is dependence on energy imports. According to Lithuania’s EU accession treaty, Lithuania had to shut down the Ignalina nuclear power plant at the end of 2009, but the country’s attempts to secure investments for the construction of a new nuclear power plant have been unsuccessful so far. Lithuania reduced dependence on Russian natural gas by opening liquefied gas terminal Independence in Klaipeda.
• At the end of 2015, the Lithuanian-Swedish power cable NordBalt and Lithuanian-Polish LitPol link were launched in Vilnius, enabling supply of much less expensive electricity to the Baltic countries
Lithuania’s international ratings:
• 35th place in the 2016 Global Competitiveness Report (World Economic Forum, Geneva)
• 59 out of 100 points in the 2016 Corruption Perceptions Index (Transparency International)
• 21st place in the 2017 Doing Business Report (World Bank)
• Lithuania is ranked 16th in the 2017 Index of Economic Freedom