According to foreign investors, the situation in the financial sector last year was completely new and very important, including Moneyval’s decision to include Latvia in enhanced control and a warning about its inclusion in the gray list, if there is no improvement. This will also have a very negative impact on the investment environment, the overall image of Latvia and local entrepreneurs.
Another new problem was considered the role of Riga in the development of Latvia and its insufficient ability to compete with other major cities in the region. However, the study was conducted before the arrests in connection with the procurement of the municipal enterprise Rīgas satiksme.
One of the urgent problems in the study is called corruption in the public sector. Investors also called the quality and inaccessibility of the workforce, as well as the effectiveness of public administration, an acute problem.
Along with the shadow economy and the education system, the chronic problem is also uncertainty, which is largely associated with the reforms undertaken.
To improve the situation, investors recommend promoting regional mobility and housing development in order to improve the availability of labor, open borders for labor more broadly, and integrate groups of people (disabled, elderly) that are now partially excluded from it. As for the shadow economy, investors believe that corruption in Latvia is not sufficiently punishable, and indicate that “being honest is not profitable” in Latvia.
More than half of the polled foreign investors plan to continue to invest in Latvia, 35% do not intend to invest this year additionally, 10% indicated that this will depend on the circumstances.