“The Latvian political elite has created a unique kind of perversion.”
Doctor of Economics Uldis Osis made a very harsh comment on the latest Eurostat data on the social network X, according to which Latvia lags behind Estonia in terms of foreign direct investment by almost one and a half times and almost twice behind Lithuania!
"This is a verdict on Latvia's economy over the past two decades. While Estonia markets itself as a digital future and Lithuania becomes a new engine of European production, Latvia is stuck in self-satisfied provincialism. We are merely watching the backs of our neighbors recede. We are not lagging behind – we have consciously chosen stagnation.
The Latvian political elite has created a unique perversion: bureaucratic perfectionism without results. We have created an environment where it is safer for a bureaucrat to say 'no' or demand ten more approvals than to take responsibility for letting a major investor into the country. Our legal environment has resembled a swamp for years – the 'golden age' of insolvency administrators and slow judicial processes have scared away any reasonable capital that has a choice between Riga, Tallinn, or Vilnius. Investors are reluctant to invest in countries where justice is still purchasable or where it takes a decade to obtain.
The so-called 'capital repair' of the banking sector has become an outstanding example of how, in the attempt to wash our dirty laundry, we burned down the whole house. The fight against money laundering turned into a hysterical nightmare where any foreign businessman was automatically considered a criminal. While our neighbors opened doors for FinTech companies, we closed doors even for basic lending, turning the banking sector into a sterile but incapable apparatus for developing the economy.
Our tax policy was not a strategic tool but a patch for a leaky budget. We punish entrepreneurs for wanting to pay salaries (high tax burden on labor in the low-wage segment) and change the rules of the game every election. What signal are we sending to investors? We are telling them: 'We do not know what we will do tomorrow, but we definitely want to take more from you.'
We continue to ignore demographics. We talk about attracting investments and high technologies, but we do not have people who will work in these factories. The political courage to open the labor market to truly qualified labor is replaced by populism, while real businesses simply move to where skilled hands and minds are available.
What needs to be done? (If there were enough courage)
Eliminate bureaucratic terror: introduce the principle of 'silence is consent' – if a government institution is unable to respond within the established timeframe, the permission is considered granted. Responsibility must be shifted from the businessman to the officials and politicians.
Tax moratorium: vote for the immutability of the tax system for a period of 10 years. Period. Stop pulling the business with every new budget cycle.
Realism in education and immigration: if we are unable to produce 3000 engineers a year, we must buy them tomorrow from abroad. Without prejudice and without hesitation.
Latvia can no longer afford the luxury of being 'mediocre.' If we continue on this course, we will remain a beautiful but empty museum between two prosperous countries. It is time to stop fearing capital and start fearing the poverty caused by our own cowardice and indecision," the economist wrote.
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