On the Approval of the Investment Promotion Programme 2008-2013


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Official translation
14 March 2008
 
 
 
GOVERNMENT OF THE REPUBLIC OF LITHUANIA
 
 
RESOLUTION no 1447
 
of 19 December 2007
 
ON THE APPROVAL OF THE INVESTMENT PROMOTION PROGRAMME
2008-2013
 
Vilnius
 
Implementing paragraph 351 of the Implementing Measures of the Programme of the Government of the Republic of Lithuania for 2006-2008, approved by Resolution No 1020 of 17 October 2006 of the Government of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 112-4273, 2006; No 63-2415, 2007), the Government of the Republic of Lithuania h a s   r e s o l v e d:  
1. To approve the Investment Promotion Programme 2008-2013 (as appended).
2. To establish that the implementing measures of the Investment Promotion Programme 2008-2013 (hereinafter referred to as "the Programme") shall be funded from the general appropriations approved in the budget of the Republic of Lithuania for the respective institutions and bodies responsible for the implementation of the implementing measures of the Programme, from the European Union structural funds and from other legally obtained resources.
3. To charge the Ministry of Economy with the task of coordinating the implementation of the Programme.
4. To recommend local authorities to participate in the implementation of the Programme's implementation measures.
 
 
 
Prime Minister                                                                    Gediminas Kirkilas
 
 
 
 
Minister of Economy                                                          Vytas Navickas
 
_________________
 
APPROVED by Resolution No 1447 of the Government of the Republic of Lithuania of 19 December 2007
 
 
 
 
 
INVESTMENT PROMOTION PROGRAMME 2008-2013
 
GENERAL PROVISIONS
 
1. The Investment Promotion Programme 2008-2013 (hereinafter referred to as "the Programme") was drafted on the basis of the Law on Investment of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 66-2127, 1999), the provisions of the Programme of the Fourteenth Government of the Republic of Lithuania for 2006-2008, approved by Resolution No X-767 of the Seimas of the Republic of Lithuania of 18 July 2006 (Valstybės žinios (Official Gazette) No 80-3143, 2006), on investments into human resources, knowledge and innovations, green field investments, investments into public infrastructure and creation of industrial zones, and on the National Lisbon Strategy Implementation Programme, approved by Resolution No 1270 of the Government of the Republic of Lithuania of 22 November 2005 (Valstybės žinios (Official Gazette) No 139-5019, 2005) as well as on the  Lithuanian Strategy for the Use of European Union Structural Assistance 2007-2013 designed for the attainment of convergence objectives, approved by Decision No CCI 2007LT16UNS001 of the European Commission of 26 April 2007, and the Economic Growth Action Programme, approved by Decision No CCI 2007LT161PO002 of the European Commission of 30 July 2007, which implements that strategy.
2. The purpose of the Programme is to set out the goals, objectives and measures of the general investment promotion policy for the period 2008-2013 and to designate institutions responsible for the implementation of the measures of the Programme.
3. Definitions used in this Programme:
New equipment means unused equipment acquired for the first time from its direct producer or authorised representative, which was produced not more than two years before the start of its use at the company that acquired it.
An industrial park means a territory defined in territory planning documents, which is intended for the implementation of more than one project of green field investments, has engineering networks and transport communications, is controlled by a single operator and is the location of the implementation of production development investment projects.
A multinational company means a company that makes products or provides services in at least two countries and, in addition to an office in each of them, has branches.
4. The other terms used in the Programme are defined in the Law on Investment of the Republic of Lithuania or other legislation.
5. The Programme uses the latest data officially published by the Statistical Office of the European Communities (hereinafter referred to as "Eurostat") and the Department of Statistics to the Government of the Republic of Lithuania (hereinafter referred to as "the Department of Statistics").
 
II. ANALYSIS OF THE CURRENT SITUATION
 
6. Direct foreign investment in Lithuania on 1 July 2007 totalled LTL 32,658.8 million (EUR 9,466.5 million). Compared with 1 July 2006, it increased by 35.2 per cent). Foreign direct investment per capita amounted to LTL 9,688 (EUR 2,806) on 1 July 2007 and to LTL 7,169 (EUR 2,076) on 1 July 2006. Based on this indicator, Lithuania lags behind the majority of European Union (hereinafter referred to as "the EU") states. Foreign direct investment in Estonia totals EUR 9,214 per capita.
7. According to 1 July 2007 data, the biggest shares of foreign direct investments went to manufacturing (39.1 per cent), financial intermediation (17.4 per cent), transport, warehousing and communication companies (12 per cent), wholesale and retail (10.3 per cent), electricity, gas and water supply companies (9.3 per cent). Major investors: Poland – LTL 6.97 billion (21.3 per cent of all foreign direct investment), Denmark – LTL 4.07 billion (12.5 per cent), Sweden – LTL 3.57 billion (10.9 per cent), Germany – LTL 2.91 billion (8.9 per cent), Estonia – LTL 1.92 billion (5.9 per cent), and Finland – LTL 1.7 billion (5.2 per cent).
8. In 2000-2005, the average yearly flow of foreign direct investment per capita in Lithuania totalled EUR 166 and surpassed only those of Latvia (EUR 151) and Poland (EUR 162). In the year 2006, on Eurostat's preliminary data, the flow of foreign direct investment per capita totalled EUR 66.7 in Lithuania, EUR 77.6 in Poland and EUR 592 in Estonia.
9. According to Eurostat's data for 2005, the average flow of domestic and foreign investment compared to the GDP in Lithuania totalled 1.3 per cent – one of the lowest indicators in the EU (2.1 per cent in Poland, 2.7 per cent in Latvia, 12.8 per cent in Estonia). In 2005, the ratio of foreign direct investment stock to the GDP in Lithuania was 33 per cent, again one of the lowest in the EU (31 per cent in Poland, 32 per cent in Latvia, 96 per cent in Estonia).
10. The bulk of investments in Lithuania go to low-tech areas. On 1 January 2007, the value-added of the manufacturing industry created by high technologies accounted for 5.7 per cent of the total Lithuanian industrial production, while the EU15 average for 2004 amounted to 12.9 per cent. On 1 January 2007, the total industrial production of high and medium-high technologies accounted for 16.8 per cent of the total Lithuanian industrial production, while the respective figure for EU15 states in 2004 was 45.5 per cent. That predetermined relatively low production efficiency in Lithuania.
11. On 1 January 2007, investment in the formation of fixed capital in Lithuania totalled 23.9 per cent of the GDP. Based on this indicator among new EU states, Lithuania is ahead of Cyprus (19.5  per cent), Malta (19.8 per cent), Hungary (21.5 per cent) and Poland (22.3 per cent). Certain rapidly developing countries, such as China and South Korea, allocate a larger share of the product generated to production modernization: 45.6 per cent and 29.1 per cent respectively.
12. The active part of investments in tangible assets that goes to equipment, machinery and means of transport and determining the level of technology updates and labour productivity has been gradually rising in Lithuania: from 1.2 per cent in 2002 to 22.8 per cent in 2006.
13. Labour productivity in Lithuania is several times lower than that in the countries of West Europe: in April 2007, it was 2.4 times lower compared with Ireland, 1.9 times lower compared with the United Kingdom, 1.8 times lower compared with Germany, 1.5 times lower compared with Slovenia, and 1.1 times lower compared with Poland and Estonia.
14. Another reason why the Lithuanian economy needs modernization is its high energy intensity. The data of Eurostat shows that in 2004 energy intensity in Lithuania (1,136 kgoe/EUR 1,000) was 5.6 times above the EU 15 level (203 kgoe/EUR 1,000), 5.5 times above the EU 25 level (205 kgoe/EUR 1,000), 9.5 times higher than energy intensity in Denmark (120 kgoe/EUR 1,000), 1.9 times higher than that in Poland (597 kgoe/EUR 1,000), 1.6 times higher than that in Latvia (696 kgoe/EUR 1,000) and 1.3 times higher than that in the Czech Republic (852 kgoe/EUR 1,000), yet lower than that in Estonia (1,140 kgoe/EUR 1,000).
15. With the increasing prices of energy, the production costs of Lithuanian producers are rising as well. The price of gas in 2004-2006 went up by 35.4 per cent, while that of gasoline jumped by 52 per cent. To improve the current situation and the competitiveness of the Lithuanian economy, it is necessary to modernize production and invest in production upgrading and new technologies.
16. Unemployment in Lithuania has significantly declined as a result of rapid economic development and worsening of the demographic situation. The Department of Statistics reports that unemployment (the unemployed, the labour force) totalled 5.6 per cent nationally, having decreased by 2.7 percentage points compared to 2005 and 6.8 percentage points compared to 2003. According to the data of the Lithuanian Labour Exchange at the Ministry of Social Security and Labour, registered unemployment in Lithuania (unemployed people registered with the labour exchange, working-age residents) totalled 3.4 per cent in 2006.
17. Data provided by the Department of Statistics shows that 404,000 residents emigrated from Lithuania in 1990-2005. According to the data of the declaration of the place of residence, 3,000 residents emigrated from Lithuania in the period from January to March 2007, i.e. 358 residents more than in the same period the year before. Negative net migration over the said period totalled 1,253 persons.
18. A stimulus to emigration was higher wages in West European countries. In 2005, the average monthly wage in Lithuania was 6.8 times lower compared with that in Germany, 7.3 times lower than in Great Britain, 2.8 lower than in Slovenia, 1.5 times lower than in Poland, and 1.3 times lower than in Estonia.
19. The average monthly wage in Lithuania has been constantly rising: in 2006 compared with 2005, the average monthly gross wage climbed 17.5 per cent. However, it is expected to remain much below the West European average for a long period of time, which means that migration from the country may continue as well. 
20. With regard to the factors mentioned above, it may be concluded that long-term economic development is possible only through ensuring rapid growth of labour productivity, which directly depends on the changes and structure of investments.
 
III. FACTORS DETERMINING LITHUANIA'S ATTRACTIVENESS TO INVESTORS
 
21. One of the factors encouraging investment by foreign and Lithuanian investors in the Lithuanian economy is Lithuania's membership in the North Atlantic Treaty Organization (hereinafter referred to as "NATO") and the EU, which provides stability of the economic, political and social environment, thus also creating additional business development opportunities. Apart from that, Lithuania maintains close economic ties with the neighbouring East European countries. Its strategic geographical location between the EU and the Commonwealth of Independent States (hereinafter referred to as "the CIS") is favourable for business development. Lithuania is understood as a kind of a bridge between the EU and the CIS. Investor confidence in business security is ensured by EU standards-compliant legislation governing investment.
22. Investors are also attracted by qualified and competitive workforce in Lithuania. Lithuania is one of the leaders – not only in East Europe by throughout the EU – according to the share of higher education degree holders per 1,000 residents. The average of 20 per cent of the graduates of Lithuanian schools of higher education majored in engineering. The average wage in Lithuania remains one of the lowest in the EU. A rather high qualification of the labour force and low wages yield a ratio of labour force quality to labour costs that is attractive to business.
23. The prices of goods, utilities and various other services as well as the costs of living in Lithuania are one of the lowest among central and eastern European states. In addition to geographical proximity to the eastern market, Lithuania has an advantage of inexpensive goods and services. That enables both domestic and foreign investors in Lithuania to comparatively reduce their general expenses.
24. Lithuania is a region of the EU convergence objective, which, in the course of the next seven years, will receive LTL 23.4 billion in aid for the implementation of a convergence objective in accordance with the Lithuanian Strategy for the Use of European Union Structural Assistance 2007-2013. The largest share of this sum (over 60 per cent) will be used for the implementation of the Action Programmes for Human Resource Development and for Economic Growth approved by the European Commission. To achieve long-term and sustainable economic growth, nearly 17 per cent of the aid allocated to Lithuania from the European Regional Development Fund will be invested in measures directly contributing to the development of innovation and technologies, to an increase of business productivity, to the improvement of business environment and to similar objectives.
25. The profit tax in Lithuania, 15 per cent, is rather low compared to other EU countries: 28 per cent in Sweden, 25 per cent in Slovenia, and 19 per cent in Poland.
26. Investment environment is positively influenced by a well-developed Lithuanian transport network. Directorate-General for Energy and Transport of the European Commission has described Lithuania as a regional transport centre: 2 out of 10 priority transport corridors of Europe cross Lithuania. Lithuania's main industrial centres are interconnected by 4-lane roads meeting all EU standards. The highway Via Baltica is now under construction, which will become a part of the Transeuropean road system, the main Baltic transport artery connecting the road infrastructure of the Baltic states with the road system of the Russian Federation. The construction of a European gauge railway, Rail Baltica, is also envisaged. In addition, Lithuania has 4 international airports and the ice-free Klaipėda State Seaport.
27. One of the factors stimulating foreign direct investment and domestic investment is the established free economic zones in Lithuania. The Law on the Fundamentals of Free Economic Zones of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 59-1462, 1995) was passed on 28 June 1995. Two free economic zones are operating. Klaipėda Free Economic Zone (205 ha) was founded on 12 September 1996 after the adoption of the Law on Klaipėda Free Economic Zone of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 92-2143, 1996). It was the first free economic zone to launch its activities in Lithuania, which now enjoys successful development. Kaunas Free Economic Zone (534 hectares) was founded on 22 October 1996 after the adoption of the Law on Kaunas Free Economic Zone of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 109-2474, 1996).
28. Another source of encouragement to invest in the Lithuanian economy is the recognition of Lithuania as a country attractive to investors by international organizations. Due to favourable investment conditions and adequate investment environment, the following well-known multinational corporations have invested in Lithuania: Siemens,  Telia, Philips, Motorola, Mars/Masterfoods, Sonera, Kraft Food International, Festo, Lancaster Steel, Partec, Danisco, SEB, Carlsberg, Marzotto and others.
29. Recognition by international companies is making Lithuania's economy more open. Many foreign companies invest in Lithuania with the view to export products to other regions in the future. Since early 2002, the export of Lithuanian goods has been steadily growing: 11.2 per cent in 2003, 21.4 per cent in 2004, 26.9 per cent in 2005, and 18.7 per cent in 2006. On 1 January 2007, it reached LTL 118.1 billion.
30. The investment environment offered by Lithuania is viewed favourably, as attested by the opinion of experts from international financial institutions. Germany's Bertelsmann Foundation ranks Lithuania second out of 116 world countries in terms of political and economic progress in 1998-2003. In the investment environment assessment review "Doing Business in 2005" of World Bank and the European Bank for Reconstruction and Development, Lithuania ranked sixth among the top reformers in the world and 17th (highest among EU newcomers) according to the ease of doing business. In an analogous review of the World Bank and the European Bank for Reconstruction and Development, "Doing Business in 2006", Lithuania advanced from the 17th to the 15th spot and was the leader among the new EU members. In the review "Doing Business in 2007", Lithuania remains one of the most favourably viewed newcomers of the EU, although in terms of ease of doing business it slightly dropped, to No 16. However, in the new annual assessment of the conditions of starting and doing business published by the World Bank, "Doing Business in 2008", Lithuania has gone down by 2 positions (it ranks 24th in "Doing Business 2007" based on an altered methodology) to end up in the 26th place, behind Latvia (22nd) and Estonia (17th).
 
IV. FACTORS LIMITING INVESTMENT IN THE LITHUANIAN ECONOMY
 
31. Conditions for investment in Lithuania are objectively less favourable than those offered by its competitors for direct foreign investments in Central and East Europe (the Czech Republic, Poland, Hungary, Slovakia, Slovenia, Latvia, and Estonia). Compared to some of the said states, Lithuania has a small domestic product and labour market, a smaller purchasing power of the population, few domestic suppliers, and the country is situated further away from the great EU market.
32. Research conducted in 1999-2005 by Lithuanian and international organizations, business associations representing foreign investors in Lithuania and scientific institutions has revealed that obstacles to investment are few. Lithuania can be said to offer favourable conditions to invest in different branches of industry and business, but there is a lack of motivational factors, i.e. additional attractiveness to investors.
33. The procedures of preparing and obtaining approval for land acquisition and territory planning documents are complicated and lengthy, because the time limits set in the legislation are not respected.
34. There is a need for a general information data base that would provide an investor with the necessary, reliable and thorough information about companies, organizations, specialists, potential business partners, land plots and real estate for sale (rent), infrastructure,  permits, training institutions and useful contracts, the qualification of the workforce etc in all regions of Lithuania. At present, the Real Estate Cadastre, the Real Estate Register, the Register of Addresses and the Register of Legal Entities, which are managed by the state company Centre of Registers, supply useful information to potential investors seeking information on the legal status and form of companies, including data on reorganization, bankruptcy and liquidation. However that is not sufficient.
35. Lithuania lags behind most EU countries based on the indicators determining or characterising innovativeness, such as the general industrial technology level, the general level of spending on research and experimental development (hereinafter referred to as "R&D", the number of researchers working in business, the number of patents, the numbers of design registration certificates and trademarks, and the numbers of internet users and personal computers.
36. The specialist training systems at universities and other schools of higher education are too slow in adapting to the changing labour market requirements. The emphasis remains on theoretical instruction, the material base and technical facilities of training are out of date and the introduction of innovations is too sluggish, which make finding qualified personnel more and more difficult. For the said reasons, the attractiveness of the ratio of labour force quality to its costs is decreasing.
37. Economic migration of the population, the shortage of workforce, a decrease in the already small number of consumers, as well as low industrial productivity combine to reduce the investment attractiveness of the country.
38. Taxation of the labour force in Lithuania is not competitive. In accordance with Articles 6(1) and 6(3) of the Law on Personal Income Tax of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 73-3085, 2002), the previous 33 per cent rate of the personal income tax was reduced to 27 per cent as of 1 July 2006 and will go down to 24 per cent as of 1 January 2008. In Latvia, the current personal income tax is 25 per cent, in Estonia – 22 percent, in Sweden – 0-25 per cent, and in the United Kingdom – 10-40 per cent. The majority of EU countries apply the maximum limits for social insurance contributions, which are not in force in Lithuania (various limits apply in Ireland, Austria, Belgium, Italy, Spain, Greece, Cyprus, Latvia, Poland, Sweden and other countries). Moreover, the total tariff of social insurance contributions amounts to 33 per cent in Latvia, 14.7 per cent in Ireland and 22.8 per cent in the United Kingdom, compared to 34 per cent in Lithuania. For the Lithuanian economy to become a knowledge economy, it is crucial to develop the areas of economy requiring more qualified labour and higher wages and resulting in higher added value. Thus, the taxing of workforce is a significant factor that may stimulate or impede investment in such areas.
39. The current labour relations regulatory framework does not provide favourable environment for the development of the human intellectual capital intensive areas. Strict regulation of the work and leisure regime, working hours accounting and administration, along with the granting of the exceptional right to represent employees only to trade unions and work councils limit the possibilities of organizing work more flexibly and increase the costs of organizing work, working hours accounting and filling out various documentation. The review "Doing Business in 2008" of the World Bank and the European Bank for Reconstruction and Development ranks Lithuania 124th in the category of "Employing Workers", although it is in the 26th position according to overall business conditions. Consequently, Lithuania lags far behind other Central European countries (Hungary, Poland, Czech Republic, Slovakia) according to the number of multinational corporations of European or global scale that are already established or being formed and therefore it misses the opportunity to attract investment that would use the human intellectual potential of Lithuania efficiently.
40. Lithuania is not active enough in building its image as a country attractive for business and investment and boasting a number of advantages (competitive profit tax, the Baltic states' largest domestic market, abundance of qualified workers etc). For that reason investors choose other countries.
41. Lithuania trails behind the leaders of attracting foreign direct investment: the Czech Republic, Slovakia, Hungary and Poland, which are capable of offering investors ready investment locations (industrial parks, free economic zones) equipped with infrastructure and communications. So far, Lithuania has been able to offer them only Klaipėda Free Economic Zone. Due to delays in the procedure of taking land for public use, Kaunas Free Economic Zone territory is not ready yet. Other projects for industrial park development are only in their initial stages. According to preliminary estimates, over the period 2007-2013 the area of active industrial parks in Lithuania should expand to around 600 hectares, in addition to the free economic zones in Kaunas and Klaipėda. Industrial parks should be developed in the municipalities of Alytus, Panevėžys and Šiauliai towns,  Akmenė, Kėdainiai and Radviliškis districts as well as Marijampolė and Pagėgiai. The issue of establishing an industrial park within the municipality of Ukmergė district is also worth consideration. In order to ease the municipalities' burden of investments related to establishing industrial parks, LTL 195 million of EU structural aid will be allocated for this purpose, although much greater sums are actually required.
42. Paragraph 24 of the Programme mentions one of the factors determining Lithuania's attractiveness to investors, in particular the 2007-2013 period of the use of EU structural assistance, during which major attention will be devoted to increasing business innovativeness, productivity and international competitiveness. In order to maximize high-quality foreign direct investment, Lithuania needs specific financial incentive measures characterized by comparatively flexible procedures of granting state aid with the smallest amount of bureaucracy involved. Unfortunately, the system of EU structural aid administration fails to encourage foreign direct investment. Before deciding on a country to invest in, a potential foreign investor carefully weighs the proposals from the countries competing for its investment and wants to have guarantees that the investment project will be able to benefit from the support envisaged in the legislation. In the case of EU structural assistance, financial support to business projects is provided based on limited duration tenders and the applicants must be registered with the Register of Legal Entities of Lithuania. As demonstrated by the experience of foreign countries, the state aid schemes promoting foreign direct investment should rely not on limited duration competitions but rather on negotiations with potential investors on possible conditions of state aid provision if they invest in Lithuania and meet their obligations undertaken during the negotiation. Without such financial measures, Lithuania finds itself at a disadvantage in competing for foreign direct investment. An analysis of the provision of state financial aid to investors in the countries of Central and East Europe has shown that nearly all of them direct the support mainly to the businesses making big-scale investments (from LTL 3.5 million in Poland to LTL 55 million in Hungary) that invest in new manufacturing capacities with the aim to modernize the operations (Slovakia, Poland), create new products (Slovakia), create new long-term jobs (Hungary, Slovenia, Poland, the Czech Republic), and develop high-tech production (the Czech Republic). Many of the mentioned countries coordinate financial support with their regional policies, i.e. provide support to investments made in the regions suffering from high levels of unemployment or general backwardness (the Czech Republic, Slovakia, Hungary).
43. Both foreign and domestic investors often note one more problem, namely excessive bureaucracy and multitude of various licenses and authorizations, which make starting a business difficult.
 
V. GOAL, OBJECTIVES AND MEASURES OF THE PROGRAMME
 
44. The goal of the programme is to improve Lithuania's investment environment and create and effective system of promoting direct domestic and foreign investment, primarily oriented to long-term national economic development, economic growth and improvement of  public welfare.
45. The objectives of the Programme are:
45.1. to improve the image of Lithuania as a country attractive to investors;
45.2. to increase flexibility in labour relations regulation;
45.3. to create and improve the system of investment promotion measures;
45.4. to create a business-friendly tax environment; 
45.5. to accelerate the processes of territory planning and construction document processing;
45.6. to create and expand a network of industrial parks and to stimulate the development of other industrial territories;
46. in implementing the goals and objectives of the Programme, priority should be granted to direct investment related to:
46.1. structural changes in the national economy: development of high or medium-high technology sectors or increasing the number of companies creating high value-added products.
46.2. solving employment problems and creating high-quality jobs, especially recruiting  highly-qualified staff (including Lithuanian emigrants).
47. The institutions responsible for the implementation of the implementing measures of the Programme and the time limits of their implementation are set out in the annex.
48. The measures aimed to attract investment envisaged in paragraph 3.2 of the Programme's implementing measures (hereinafter referred to as "the measures") will be implemented using the resources of the state budget of the Republic of Lithuania in accordance with the special programmes and/or other programmes of the Strategic Activity Plan of the Ministry of Economy, in compliance with the following provisions:
48.1. the measures are applicable only to the investors that are implementing in the Republic of Lithuania a green-field investment project valued at LTL 20 million or more and, in the case referred to in paragraph 48.1.1 of the Programme, at LTL 5 million or more, which meets at least one of the following criteria: 
48.1.1. the investment is made in the establishment and/or development of an R&D centre;
48.1.2. the investment is made in a multinational company's established and/or developed branches responsible for the company's activities in more than one country or in service centres serving clients and/or companies belonging to a group of service centre companies or their branches in foreign countries;
48.1.3. the investment is made by a multinational company holding internationally famous trademarks;
48.1.4. the investment is made by a multinational company of high or medium-high technologies;
48.1.5. the investment is made in the establishment and/or development of a company with R&D divisions and the investment in the R&D divisions amounts to the minimum of 20 per cent of the entire project;
48.1.6. the investment is made in the establishment and/or development of a company, and at least 20 long-term (maintained for the minimum of three years) jobs will be created, at least 50 per cent of which will be paid a wage that is at least 3 times the average wage in the country;
48.1.7. the investment is made in the formation and/or development of a company, and at least 70 per cent of the envisaged output of the company will be exported and the investment in new technological equipment will amount to at least 50 per cent of the total invested sum.
48.2. The measures must be in compliance with the provisions of the Commission Regulation (EC) No 1628/2006 of 24 October 2006 on the application of Articles 87 and 88 of the Treaty to national regional investment aid (OJ 2006 L 302, p.29), Commission Regulation (EC) No 68/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to training aid (OJ 2004 Special edition, Chapter 8,  Vol. 2,  p. 128) or Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid (OJ 2006 L 379, p.5), and the intensity of aid should not exceed 50 per cent of eligible expenses.
48.3. The Description of the Funding Procedure (hereinafter referred to as "the Description"), which complies with the requirements of paragraph 48.2 of the Programme and with the Rules of Measure Funding and Administration shall be approved by the Minister of Economy.
48.4. The Description shall stipulate that tender procedure is not applied to the project selection. Attempts shall be made to find an individual package of supporting measures for a potential investor and to reach an agreement with it regarding the conditions of granting state aid. If such an agreement is achieved, a letter of intent shall be signed regarding specific measures and the conditions of their application to the investment project envisaged by the potential investor.
48.5. The measures are applicable only to investment projects with the estimated payback period to the state through direct taxes and social insurance contributions not exceeding 10 years (apart from the multiplication effect).
48.6. The Ministry of Economy shall be entitled to stipulate in the Description that it entrusts all or part of the functions related to the selection, administration and funding of the investment projects meeting the requirements set in paragraph 48.5 of the Programme to the public institution Lithuanian Development Agency and/or public institution Lithuanian Business Support Agency.
48.7. The final decision on the allocation of funds in accordance with the letter of intent referred to in paragraph 48.4 of the Programme shall be taken by the Minister of Economy.
49. Measures other than the ones listed in paragraph 48 of the Programme shall be funded from the general appropriations approved in the budget of the Republic of Lithuania for the concerned institutions and bodies responsible for the implementation of the implementing measures of the Programme, from the European Union structural funds and from other legally obtained resources.
50. With regard to the study "Analysis of the Management Models for Industrial Parks", conducted to the order of the Ministry of Economy, the State, which supports the establishment and/or development of industrial parks, shall be enabled to take part in decision-making regarding the admittance of particular investors into these parks. In such a case, when there is a need for a potential investor that requires a land plot to be granted to it, it would be possible to come up with a solution to this issue that is acceptable to both parties.
 
VI. ASSESSMENT CRITERIA
 
51. The Programme shall be assessed every calendar year in the period from 2010 to 2014. Annual assessment shall include the comparison of the pervious two calendar years' official data published by the Department of Statistics with the information on the attracted direct investments provided by the public institution Lithuanian Development Agency.
52. The following indicators shall be used for the annual assessment of the Programme:
52.1. foreign direct investment stock per capita (an increment of no less than 5 per cent);
52.2. the share (percentage) of foreign direct investment in the GDP (an increment of no less than 1.25 per cent);
52.3. the average annual flow of foreign direct investment (an increment of no less than 5 per cent)
52.4. attracted large-scale (at least LTL 20 million) green-field foreign direct investment projects (at least 2 per year);
52.5. created long-term (for at least 3 years) high-quality jobs (at least 50 per year).
53. Following the implementation of the Programme, its results shall be assessed by comparing the total values of the respective indicators referred to in paragraph 52 of the Programme against the total values of the achieved indicators of annual assessments.
 
_________________
 
Annex to
the Investment Promotion Programme
2008-2013
 
 
 
 
 
 
IMPLEMENTING MEASURES OF THE INVESTMENT PROMOTION PROGRAMME 2008-2013
 
 
Tasks
Measure
Period of implementation
Bodies responsible for implementation
1. To improve the image of Lithuania as a country attractive to investors.
1.1. To make sure that every year 3-5 international media organizations are provided with exhaustive and attractive information about the Lithuanian economy, investment environment, successful investments and other issues
2008–2013
Ministry of Foreign Affairs, Ministry of Economy, public institution Lithuanian Development Agency (hereinafter referred to as "Lithuanian Development Agency")
 
1.2. To develop a draft of the sample presentation of the Lithuanian economy, business and investment conditions, to regularly update it with the latest available information and provide it to all public authorities, so that their image building provisions do not differ; at least once a year, to update the sample project presenting the investment and business conditions in Lithuania; and at least once in a quarter, to update the informational webpage on the portal of the Lithuanian Development Agency
2008–2013
Ministry of Economy, Ministry of Foreign Affairs, Lithuanian Development Agency
 
1.3. To take part in high-level events in the sphere of economy
2008–2013
Ministry of Economy, Lithuanian Development Agency
 
1.4. To organize 3-5 annual economic forums in Lithuania and other countries important for Lithuania in terms of investment, intended for the heads of legal entities and other persons responsible for investment
2008–2013
Ministry of Economy, Lithuanian Development Agency
 
1.5. To organize presentations of the Lithuanian economy to target groups of potential investors abroad
2008–2013
Ministry of Economy, Lithuanian Development Agency
 
1.6. To invite an internationally recognized expert of national economic image building to draft a plan of measures for the development of the image of a country attractive to investors.
2nd quarter, 2008
Ministry of Economy, Lithuanian Development Agency
 
1.7. To develop a single Lithuanian data base covering the regularly updated business information about potential business partners, land plots and real estate for sale (rent) and the available engineering and communication infrastructure therein, construction permits, institutions of science and studies, the qualification of available workforce etc.
2008
Ministry of Economy, Lithuanian Development Agency
 
1.8. To reconsider the amounts of aviation charges with a view to attracting new flight operators to Vilnius International Airport
2008
Ministry of Transport and Communications
 
1.9. To improve the infrastructure of access to Vilnius International Airport.
2008–2013
Ministry of Transport and Communications
2. To regulate labour relations more flexibly
2.1. To analyze the need for a draft of the Law Amending the Labour Code of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 64-2569, 2002) in order to regulate labour relations more flexibly and improve the investment environment
4th quarter, 2008
Ministry of Social Security and Labour
 
2.2. To analyze the need to prepare and/or approve the drafts of the legislation that would unify the information provided by legal entities to public authorities regarding the personal income tax and social insurance contributions (forms, time limits and periods); ensure the possibility of online submission of all the forms that must be submitted to the State Social Insurance Fund Board under the Ministry of Social Security and Labour (hereinafter referred to as "the State Social Insurance Fund Board") and to the State Tax Inspectorate under the Ministry of Finance (hereinafter referred to as "the State Tax Inspectorate"); establish the procedure to be followed by the Department of Statistics to the Government of the Republic of Lithuania in using the information already collected by other public authorities (State Social Insurance Fund Board, State Tax Inspectorate and others), thus reducing the burden of statistical forms to be filled by legal entities as well as their administrative burden.
3rd quarter, 2008
Ministry of Finance, Ministry of Social Security and Labour, Communications Regulatory Authority of the Republic of Lithuania, State Social Insurance Fund Board, State Tax Inspectorate
 
2.3. To draft the Law Amending the Law on the Legal Status of Aliens of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 73-2539, 2004), i.e. to facilitate the issuance of temporary residence permits to the spouses of foreign (non-EU) citizens falling within positions 1-4 of the Classification of Professions of Lithuania (Valstybės žinios (Official Gazette) No 21-708, 2001) in the cases of family reunion by stipulating that the requirement set in paragraph 4 of Article 43  of the said law does not apply when family members come to an alien who has obtained a temporary residence permit on the grounds specified in paragraph 1 of Article 40 of the law.
3 quarter, 2008
Ministry of the Interior, Ministry of Foreign Affairs, Ministry of Social Security and Labour
 
2.4. To coordinate specialist training plans approved by the Ministry of Education and Science in cooperation with the Ministry of Economy and the Ministry of Social Security and Labour in order to properly adjust theoretical instruction of students at institutions of science and studies to the labour market needs.
2008–2013
Ministry of Education and Science
3. To develop and improve the system of investment promotion measures
3.1. In implementing the Lithuanian Strategy for the Use of European Union Structural Assistance 2007-2013 designed for the attainment of convergence objectives, approved by Decision No CCI 2007LT16UNS001 of the European Commission of 26 April 2007, and the Economic Growth Action Programme, approved by Decision No CCI 2007LT161PO002 of the European Commission of 30 July 2007, implementing that strategy (hereinafter referred to as "the Economic Growth Action Programme"), to provide EU structural aid to companies' initial investment projects related to their research and experimental development and increasing productivity as well as international competitiveness.
2008–2013
  Ministry of Economy, public institution Lithuanian Business Support Agency (hereinafter referred to as "Lithuanian Business Support Agency"), private limited company Investicijų ir Verslo Garantijos
 
3.2. To develop and implement special financial measures for the attraction of investment, so that it is possible to cover part of the costs incurred by a potential investor in the investment project as well as in training or requalification of needed personnel, and to apply them to legal entities, as specified in paragraph 48 of the Investment Promotion Programme 2008-2013 (hereinafter referred to as "the Programme").
2008–2013
Ministry of Economy, Lithuanian Development Agency, Lithuanian Business Support Agency
 
3.3. To promote the establishment of valleys, i.e. integrated centres of science, studies and business, in order to increase the national economic competitiveness, to stimulate cooperation between industry and science, to fully utilize the available scientific potential.
2008–2013
Ministry of Education and Science, Ministry of Economy, Ministry of Agriculture, local authorities
 
3.4. To perform an analysis of the Lithuanian market's potential and need to attract investors meeting the criteria set in paragraph 48.1 of the Programme and to encourage these investors to start business in Lithuania.
2008–2013
Ministry of Economy, Lithuanian Development Agency
 
3.5. To draft an amendment to the Regulations of the Register of Legal Entities, approved by Resolution No 1407 of 12 November 2003 of the Government of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 107-4810, 2003) in order to create an opportunity to register a company with the state company Centre of Registers within an hour, to ensure tougher control of the procedure of presenting financial reports to it, and to make financial reports of companies accessible on the internet.
2008–2009
Ministry of Justice, Ministry of Economy
 
3.6. The enhance the capacities of the Lithuanian Development Agency to attract foreign direct investment to Lithuania and to allocate the resources intended for the implementation of the Economic Growth Action Programme to be used for this purpose.
2008–2013
Ministry of Economy
 
3.7. To draft the Law Amending the Law on Investment of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 66-2127, 1999), i.e. to revise the provisions on investment promotion and define the functions and responsibilities of the Lithuanian Development Agency.
2nd quarter, 2008
Ministry of Economy
 
3.8. To draft proposals encouraging foreign legal entities to establish in Lithuania their research and experimental development branches or research centres, to draw up a priority list of such legal entities, initiate contacts with them and organize their visits, thus attracting their investments
3rd quarter, 2008
Ministry of Economy, Lithuanian Development Agency
4. Create business-friendly tax environment
4.1. In implementing Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (OJ, 2004 special edition , Chapter 9, Vol. 1, p. 380), to draft a Law Amending the Law on Corporate Income Tax of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 110-3992, 2001), i.e. to stipulate that, as of 1July 2008, interest and royalties paid to a foreign unit shall not be taxed
2nd quarter, 2008
Ministry of Finance
 
4.2. After the Seimas of the Republic of Lithuania adopts the draft Law on the Corporate Income Tax of the Republic of Lithuania proposed by Government Resolution No 1347 of 17 December 2007 of the Government of the Republic of Lithuania, which stipulates that, when calculating the corporate income tax, the costs, except the costs of long-term assets depreciation or amortization, incurred while conducting research and experimental development are deducted from the income three times during the taxable period in which they were incurred, to draft the Description of the Procedure of Treating Costs as the Costs of Research and Experimental Development Work
2008
Ministry of Finance
5. To accelerate the processes of territory planning and construction documentation processing
5.1. To inform the Government of the Republic of Lithuania semi-annually about the preparation of municipal territory master plans and to issue proposals regarding their faster preparation
2008
Ministry of Environment
5.2. In those cases when investors that are subject to a decision regarding the granting of the financial assistance measures specified in paragraph 48 of the Programme are involved in the processes of territory planning or construction, to obligate the Lithuanian Development Agency to inform country governors as well as directors of municipality administrations about the institutions or concrete public servants (employees) who fail to fulfil their obligations (or do that improperly) based on their competence established in the legislation relating to the processes of territory planning and construction
2nd quarter, 2008
Ministry of Economy
 
5.3. To draft amendments to the relevant articles of the Code of Administrative Violations of the Republic of Lithuania (Valstybės žinios (Official Gazette) No 1-1, 1985), so that the heads of legal entities responsible for the preparation of certain parts of a set of territory planning and construction specifications shall be held liable for failure to comply with the instructions of country governors, municipality administrations and the State Territory Planning and Construction Inspectorate under the Ministry of Environment
2 quarter, 2008
Ministry of Environment
 
5.4. To speed up the formation of vacant agricultural land plots for sale (rent) and, when required, to prepare proposals to county governor and municipality administrations regarding the allocation of additional funds
2nd quarter, 2008
Ministry of Agriculture
6. To create and develop a network of industrial parks and to encourage the development of other industrial territories
6.1. To fund the implementation of the projects of setting up engineering networks and transport communications of industrial parks and/or industrial territories as well as the preparation of related project documentation
2008–2013
Ministry of the Economy, Lithuanian Business Support Foundation, local authorities
6.2. To implement the measure InvestLT under the Economic Growth Action Programme, which envisages financial support to the implementation of the investment projects for the establishment and/or development of industrial parks, and other programmes – to set up engineering networks and transport communications of industrial parks
2008–2013
Ministry of Economy, Lithuanian Business Support Agency, local authorities
 
6.3. To submit proposals to the Government of the Republic of Lithuania regarding the recognition of concrete projects for industrial park establishment and/or development as economic projects of national significance.
2008–2013
Ministry of Economy
 
6.4. To provide legal and natural persons with information on the development opportunities of industrial territories as well as on the application of related state promotion measures.
2008–2013
Ministry of Economy, Lithuanian Development Agency, local authorities