Foreign investors appreciate the open dialogue with the government and note visible progress in implementing reforms, however, they also point out that reforms often move too slowly, and progress frequently stalls halfway. Furthermore, investors are concerned about the lack of effective governance and insufficient enforcement of fair competition, both of which hinder investment attraction. These and other issues affecting state competitiveness and the investment environment will be at the centre of this year’s FICIL 29th High Council Meeting, aiming to find joint solutions and strengthen Latvia’s regional competitiveness.
On 30 and 31 October, the Foreign Investors’ Council in Latvia (FICIL) will hold the 29th High Council Meeting between investors and the government. The event that has taken place annually in Latvia since 1999, organised in cooperation with the Investment and Development Agency of Latvia (LIAA). This year’s focus topic, Effective Governance and Fair Competition: The Key to Investment Attraction, highlights foreign investors’ concerns regarding fair competition, the efficiency of the public procurement system, and the implementation of good governance principles in the public sector. These issues will be addressed by Minister of Economics – Viktors Valainis and Competition Council Member – Kārlis Piģēns on the first day of the event and will be joined by 30 other high-level public sector representatives. The results of these discussions will be presented at the Cabinet of Ministers on 31 October, together with FICIL’s new Position Papers, which this year cover four main areas — Human Capital, Public Sector Modernisation, Combatting the Shadow Economy, and Investment Protection.
Since last year’s High Council meeting between FICIL and the Latvian government, 39 recommendations have been partially implemented, and only 3 have been fully implemented. Despite visible progress and certain achievements, foreign investors observe that many initiated reforms stall halfway. Developed strategies and set objectives often remain unimplemented due to insufficient political will, weak governance, and a lack of decisive institutional action. This signals to investors that Latvia is failing to fully capitalise on its economic potential, thereby risking a loss of competitiveness in the Baltic region. Below is a summary of progress made in implementing FICIL’s recommendations in key areas.
Human Capital and Requalification: Since the previous High Council meeting, only two recommendations have shown measurable progress — the lowest result across all areas. This limited progress is deeply concerning, given the central role of human capital in the economy. Greater determination and long-term investment in people are urgently needed. One of the key insights from the FICIL Sentiment Index study is clear: Without people, there will be no economy. “The slow progress in human capital development shows that it remains a low national strategic priority, despite the government’s declared ambitions for growth,” – emphasises Claudio Rivera (FICIL’s Labour Force and Requalification Work Group leader, Founder and Director of RBS Bachelor’s Programmes).
Public Sector Modernisation and Digitalisation: Over the past year, the government has taken several steps toward modernisation –– including digitalisation, shared services, administrative streamlining, improved institutional coordination, and the introduction of performance-based budgeting. FICIL welcomes these initiatives yet notes that in many cases they have not led to tangible change or have progressed too slowly. “Public administration reform still suffers from weak leadership support, given the limited willingness of policymakers to implement systemic and necessary changes. From the perspective of foreign investors, introducing a performance-based budget is absolutely critical to improving public sector efficiency, productivity, accountability, and transparency,” – notes Reinis Āzis (FICIL’s Public Sector Reform and Digitalisation Work Group leader).
Shadow Economy Combatting: Significant progress has been made in strengthening prosecutorial accountability in complex investigations, improving measures to prevent money laundering, and enhancing technological solutions that support data exchange between investigative institutions. However, the implementation of the Shadow Economy Reduction Plan 2024–2027, which sets out a structured framework for combatting the shadow economy, strengthening tax administration, and improving tax compliance, remains slow. “The plan has been launched, but we are still waiting for its real implementation. A plan alone is not enough — what matters is coordinated action and the political will to deliver results,” – stresses Evita Goša (FICIL Shadow Economy Combatting Work Group leader, Environmental and Legal Affairs Director at SCHWENK Latvia).
Investment Protection: There has been considerable progress in some areas, including the proposal for public procurement reform and Civil Procedure Law amendments, which expand the jurisdiction of the Economic Court. Nevertheless, issues concerning legislative quality and state-owned enterprise governance remain outside the political focus, despite investors’ growing concerns about signs of state capitalism. “Ensuring a level playing field between private investors and state or municipal enterprises has long been viewed as a crucial element of a healthy investment environment,” – notes Māris Vainovskis (FICIL Investment Protection Work Group leader, Senior Partner at Eversheds Sutherland Bitāns).
Energy and Sustainability: Since 2024, the Ministry of Climate and Energy has advanced several significant legislative initiatives, which investors highly appreciate. However, many issues remain unresolved as ongoing political debates about the scale and pace of the green transition have frozen progress in energy, environmental protection, natural resource management, CO₂ capture, transportation, and storage. Potential shifts in political direction and policy uncertainty negatively affect investor confidence and delay planned investments. As a result, this year marks the first time that FICIL will not submit a Position Paper to the government in this area. “Although foreign investors do not question the need for the transition to a circular and green economy, FICIL will await the government’s clear stance on the priorities of this transition,” – emphasises Dace Cīrule (FICIL Energy and Sustainability Work Group leader, Partner at LarkLaw).
To ensure a reliable and growth-oriented investment environment, FICIL calls on the government to prioritise not only the development of new policy documents but also the practical implementation of existing laws and strategic frameworks. Foreign investors recognise that the path toward meaningful reform is not an easy one and remain ready to support the government by sharing their expertise and actively participating in the development of solutions. The key question is — is the government ready for the necessary reforms?