GDP for all companies operating in the economic zone reached 826,4 million euros last year. These results are based on the key performance indicators of 26 companies operating in Klaipeda FEZ that have created almost 2500 jobs. Based on these data, Klaipeda FEZ is considered to be the second most important object of economic development in the region.

Most companies in Klaipeda FEZ are foreign-owned industrial companies operating in the manufacture of plastic products, electronic devices, and steel structures, as well as energy and metal processing areas. Major investment companies by turnover include: two main polyethylene terephthalate (PET) resin manufacturers (Ukrainian capital company Neo Group and Thai capital firm Orion Global PET); Lithuanian capital company Mestilla, which is one of the most modern biodiesel producers in the Baltic countries; Espersen, one of the most modern Danish fish processing companies in Europe; and the Japanese company Yazaki, which is one of the world’s largest manufacturers of automotive wiring harnesses and has been operating in Klaipeda FEZ for 14 years. Also, other foreign ownership companies from Scandinavia, Great Britain, Germany, Belarus, and Ireland have signed contracts with Klaipėda FEZ. Furthermore, the economic zone has attracted eight Lithuanian investors.

Klaipeda FEZ has signed 3 new contracts with Vejo Projektai, LLC, Adrem LEZ, LLC, and Advantec turtas, LLC, which are planing on commencing and developing their activities in 2016–2017.

Based on the figures collected by Klaipeda FEZ, the economic zone experienced a total investment of more than 31 million euros in 2015 and paid over 36 million euros in taxes to the national government; it also purchased various goods and services from local businesses for the amount of 197 million euros. Since the start of their operations in 2002, foreign-owned companies have invested more than 546 million euros in the economic zone.

Investors have created 2500 jobs and brought over 90 small- and medium-sized local businesses together that play an important role in various stages of investors‘ activities, such as supplying, manufacturing, and distributing. This means that every new investor creates new opportunities for local businesses and regional workers by both decreasing the level of unemployment and stimulating higher salaries.

In 2015, financial support from the Lithuanian government for the companies of Klaipeda FEZ reached 4,98 million euros. The total amount of governmental support for the economic zone during its entire operating period constitutes about 36,4 million euros (this amounts to about 6% of the total regional investment from all companies operating in Klaipeda FEZ).

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Small service enterprises operating in free economic zones (FEZs) and fitting capital investment and employment requirements will be also allowed not to pay income tax for six years. Before the amendment to the law, companies in order to get FEZ tax incentives, have to invest at least EUR 1 million.

After a due initial incentives period, companies, which qualified for corporate tax exemption, will be able to pay reduced income tax by half for another 10 years.

Starting from 2017, regulatory changes will allow services companies to establish operations and benefit from the tax incentives in FEZs. While FEZs are first and foremost tailored for manufacturing companies, such changes will create more favourable investment environment for small companies in Lithuania as well,

Therefore, Lithuania FEZs will become even more competitive in the Central and Eastern Europe region.

“Investment’s distribution in the country and the whole investors structure in FEZ will change. The service enterprises have more high-value- added workers than manufactaring companies. Accordingly their number in FEZs definitely will grow”, – says Eimantas Kiudulas, Chairman of the Lithuanian Free Economic Zones Association, who is also General Director of the Klaipeda FEZ.

He adds, that FEZs in Lithuania are already prepared to satisfy such investors needs. “The office buildings for rent are currently being constructed, investing a lot into advanced infrastructure with the full range of services that meet the needs of the high-value-added workers.”, ­– says E. Kiudulas.

As all the free economic zones of Lithuania are operating in different regions of the country, its expected that new tax incentives will encourage and attract investments to these regions, not only to the capital city. Furthermore, the good news for investors: less competition for high-value-added specialists exists among the employers in the regions.

“The sector of business services in Lithuania is constantly growing and last year it reached 12 per cent of growth, counting employees in shared service centres. New regulatory changes could be one more turning point in business services sector growth not only in Vilnius and Kaunas, but also in other major cities of Lithuania”, – says Rugile Andziukeviciute-Buze, Regional Development Team Lead at Invest Lithuania.

The newly adopted tax benefits start applying only after company receives auditor’s certification regarding the investment. Also, tax benefits can be applied by companies delivering accounting, administration, human resources, architectural and engineering services and related technical consulting services, but at least 75 per cent of company’s revenue must come from aforementioned activities in a given fiscal year.

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The factory, which generated a turnover of EUR 1.6 million in 2015, has 90 employees. The new development stage will increase the number of employees by a further 25 people.

UAB Be-Ge Baltic was established in the Klaipėda FEZ in 2014, when Swedish investors built production facilities with an area of 3,500 sq m on a leased 1.1 ha plot of land. The investment amounted to EUR 2.3 million.

Further information is available here.

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Lavango is the 28th company operating in the Klaipėda FEZ. “It is the second company in the Klaipėda FEZ that produces technological equipment,” said Eimantas Kiudulas, head of the Klaipėda FEZ.

As stated by the head of the company, although the company currently produces equipment for the food industry, mostly for the Lithuanian market, it plans to increase export volumes. Sweden and Norway are the primary target markets.

“We aim to achieve a 50/50 ratio for the local and export markets,” said Mr Srėbalius. Lavango provides comprehensive solutions covering the implementation and management of a wide selection of production processes. “First, we analyse the needs of an individual company and then, based on the analysis, develop a concept and design new production lines or optimise the available ones,” said Mr Srėbalius.

“We mostly work with the fish industry: we produce customised fish processing equipment. It is one of the reasons why we chose Scandinavia as our primary target export market,” said Mr Srėbalius.

According to Mr Srėbalius, up to 30 people will be employed here. The company currently employs 20 people. “Further favourable prospects of development of the company will also be ensured by the attractive tax environment of the Klaipėda FEZ,” said Mr Srėbalius. Every company that establishes in the Klaipėda FEZ is exempt from profit tax for the first six years and must pay 50% of the tax in the subsequent 10 years. Furthermore, the real estate tax does not apply.

Favourable conditions for quick establishment influences decisions

“The main reason we chose the Klaipėda FEZ is that we had been provided with favourable conditions for quick establishment: we acquired a plot of land in the Klaipėda FEZ together with a construction permit,” said Mr Srėbalius, head of the company. According to Eimantas Kiudulas, head of the Klaipėda FEZ, there are currently several other plots of land with construction permits available, which enable companies to save six months of their time.

The head of the company noted that Lavango provides its products to Vesvela – another company operating in the Klaipėda FEZ and engaged in fish processing. “For this reason, the expansion of the company’s operations here is of key importance if we consider the synergy potential. Cooperation is certainly smoother when our partners are located in the same economic zone,” said Mr Srėbalius about the mutually beneficial cooperation.

The head of the Klaipėda FEZ is convinced that the development direction of the FEZ will provide new synergy prospects thanks to the sharing of know-how in the field of technology, since most of the companies established here have included the development of technological innovations in their plans, and one third of the companies are already implementing such innovations.

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Swedish Consulate in Klaipeda FEZ will begin operating as early as this fall. This will be the first consulate in Klaipeda FEZ.

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