According to the survey of foreign investors in Latvia, majority of companies are affected by the Covid-19 crisis and investors affirm the need to make strategic, long-term decisions to minimise the negative implications on the overall business climate in Latvia.
As emphasised by the authors of the report, SSE Riga professor Dr Arnis Sauka and Foreign Investors’ Council in Latvia (FICIL) head of policy Linda Helmane, the aim of the compield foreign investors opinions is to provide the policymakers with information that can contribute to making fair, strategic and evidence-based decisions on recovering from the current crisis.
The foreign investors operating in Latvia shared their insights and viewpoints regarding the existing as well as potential challenges for businesses, while also providing recommendations for the Government on what should be done to stabilise the business environment in Latvia during the current situation. The results showed that majority of the companies surveyed were negatively affected by the Covid-19 pandemic and the precautionary measures due to the State of Emergency, ranging from -5% to a full -100% decrease in demand for their products or services.
Respondents highlighted various challenges they are faced with currently, such as ensuring health and safety of their employees, customers and clients, providing possibilities for working remotely, as well as continuing business in general in the current situation where many transactions and operations have been suspended. As for the long-term concerns for business recovery of the crisis, companies emphasise the challenge of retaining employees and clients, loss of revenue and decrease in business activities, uncertainty of mobility restrictions, financial sector development, demand for products and services, as well as change in overall behaviour of consumers and businesses.
“It is too early to examine concrete problems arising based on Covid-19 crisis; however, it is important to keep exchanging information and communicating on the main questions the current situation alludes to. Also, a crucial factor is the economic recovery plan to overcome this crisis, the focus on which should start now.” – Gunta Jēkabsone
To gain an insight into the daily life of businesses during the State of Emergency, the investors were also asked about the steps they are currently taking to mitigate the negative effect of the current situation. Majority mentioned reducing costs and expenses that unfortunately include redundancies. Amongst other activities, entrepreneurs mention transitioning to remote work and implementing even stricter rules for safety within the companies, as well as implementing Covid-19 prevention measures outlined by the Government. Some companies seek help through active communication within their business communities or advice and financial support from their parent companies abroad. On a positive note, some implement socially responsible activities adhering to best practices. As regards to their parent companies, some are already in the stage of addressing liquidity issues and top-level crisis management.
The survey inquired about the possible long-term implications on the overall economy, to which the responses varied from negative to positive. Among the negative long-term implications were increase in unemployment, bankruptcies, poverty and global recession. As to the positive, companies mentioned the possible improvement in the efficiency of remote ways of doing business, advancement of digital skills, as well as positive change in consumer behaviour and values.
Foreign investors also reflected on what should be done to stabilise the business climate in Latvia after the crisis, as well as provide potential solutions on how the state could support the affected businesses, for example, sick-leave payments and loan guarantees. Investors also emphasise the necessity of improved communication with regards to the impact of Covid-19, efficient support for medical services to fight the pandemic, and call for strategic planning onwards: “The Government should develop a post-crisis recovery plan and assess which EU co-financed projects could accelerate the flow of cash into the economy.” – Service company. Overall, the messages highlight the need for swift and strategic action by policy makers to minimise the negative impact on the investment climate in Latvia.