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Latvia was an important chemical and pharmaceutical base during the Soviet era. After declaring independence, it continued its historical duty. It has achieved surprisingly significant growth in this field and has managed to become an exporter. Exports of around 700 million Euros in 2017 have increased slightly each year. In short, the chemical industry continues to grow in Latvia. This makes a serious contribution to both employment and the national economy. What is the general situation of the chemical industry in Latvia? Is it a suitable sector for investment? What are its main advantages?
General Situation of the Chemical Industry in Latvia
Considering the turnover, medicines and other chemical substances make up about 10% of the manufacturing industry in Latvia. Approximately 75% of the productions in this area are exported. This has made the production of pharmaceuticals and chemicals the fourth-largest field in the country.
The development continues due to factors such as experience, R&D capacity, efficiency, and qualified human resources in the chemical industry. The number of companies that know the advantages of being an entrepreneur in Latvia and operate in this field is approximately 500. Moreover, an important part of them consists of small and medium-sized enterprises, which are defined as SMEs. The number of large enterprises is extremely few. While the total employment in chemicals and pharmacy is 4,000 people, the number of jobs in the production of materials such as plastic, glass fiber, and rubber and their components is around 5,000.
The salaries of people working in the chemical industry in Latvia are generally above the national average. It ranks second among sectors with the highest salary. While this situation means more tax revenue for the government, it means a higher quality of life for the employees.
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Major Advantages of the Latvian Chemical Industry
Many different products are produced in the chemical industry here. A large number of products are produced, from cancer drugs to fine dyes, from household chemicals to cosmetics. Most of them are exported. Exports are made to the nearly whole world. However, they are more extensive to some countries. Latvia’s neighbors and nearby countries are the major of these. It can be said that exports are made extensively to countries such as Lithuania, Estonia, Russia, Sweden, Norway, and the Netherlands.
The general advantages of the chemical industry, which has such a successful profile, can be listed as follows:
- >>> It consists of modern facilities that comply with EU standards.
- >>> The workforce is of high quality. It can be said that a qualified workforce is cheaper compared to the EU.
- >>> The value-added of the products produced is very high. Accordingly, the turnover level is above expectations.
- >>> Located close to huge markets such as Russia and Scandinavian countries.
- >>> R&D and research capacity is very high.
- >>> There is wide cooperation among the businesses for an international network for export.
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Investing in the Chemical Industry in Latvia
Latvia is a favorite country for foreign investors in many sectors. The economic success it has achieved in recent years, its membership to the EU, and the increase in export rates have a great share in this. These positive developments have also increased the investments made. The chemical industry in Latvia is also one of the sectors that would be advantageous to invest.
While some of the investors choose to invest in areas such as property, others prefer to establish companies in profitable areas such as the chemical industry. The chemical industry in Latvia is one of the major investment areas with great potential.
CONCLUSION
This is the general situation of the chemical industry in Latvia. It should be underlined that the success achieved by Latvia in this field is extremely important. Besides, researches, investments, and tax incentives in this field continue. It is not difficult to predict that the chemical industry will develop further soon.
Igors Krumins continues his activities as a commercial and international lawyer within the body of “Jurmala Invest”. He has more than 10 years of experience, especially in the investment sector, and has provided consultancy services to numerous companies with his legal expertise. He successfully completed his undergraduate studies at Baltic International Academy and graduate studies at Latvijas Universitate. Apart from his native Latvian language, he can also speak Russian and English fluently.
