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Klaipėda FEZ investors paid €75 million in taxes last year

20 Jun 2022

Last year, the 44 companies operating in the Klaipėda Free Economic Zone (FEZ) with investor status achieved a total turnover of €1.22 billion – 30% more than in 2020 or the same as in the record year 2018. This year’s outlook is still complicated by uncertainties over energy and raw material prices, the global economic situation and the outcome of the war in Ukraine.

The biggest impetus for last year’s surge in Klaipėda FEZ turnover came from the activities of polymer and energy companies, which are closely linked to global raw material prices. On the other hand, the absolute majority of FEZ investors recorded revenue growth to one extent or another last year.

In turn, the total exports of Klaipėda FEZ companies, which reached €594 million last year, were 24% higher than in 2020.

According to Eimantas Kiudulas, the CEO of Klaipėda FEZ, last year’s results mainly reflect the post-pandemic recovery and certain supply and demand imbalances. Although companies were quite positive about the prospects for this year before the war in Ukraine, new uncertainties about raw materials, energy, supply, inflation, and the general global economic situation have led to a new phase of caution.

“We are not dramatising the situation, but businesses are still trying to understand what is happening and what will continue to happen in the global markets. We are pleased that the strategic direction of research, innovation, higher value-added activities, and sustainability, which our community chose some time ago, is much more resilient to various shocks than traditional manufacturing. However, it is necessary for us, for Klaipėda and for Lithuania as a whole to look even more actively for new ways not only to attract investors to the infrastructure that is already waiting for them, but also to offer the right talent to meet their current and future needs,” comments E. Kiudulas.

Investors operating in FEZs also paid €75 million in taxes (social security, VAT, and income tax) last year – 17% more than the previous year. Klaipėda FEZ investors’ purchases of goods and services in Lithuania last year amounted to €269 million, or 1.2% more than the previous year, and the FEZ investor community earned a total net profit of €106 million – about 3 times more than in 2020.

The number of employees of companies with investor status – around 2,300 – remained virtually unchanged during the year with the entry and exit of several investors. In total, the Klaipėda FEZ has more than 100 companies that employ around 5,000 staff. In addition to the official investors, there are at least twice as many service businesses in logistics, security, maintenance, and other businesses.

According to Žygimantas Mauricas, chief economist at Luminor Bank, Lithuania’s growth in value added in the industrial sector in the EU was second only to Ireland, with the strong performance of the industry driven by rapidly growing investment and the flexibility demonstrated by Lithuanian companies in the face of changing global supply and production chains.

“The industrial sector is also important for Lithuania because these companies are like employers in other sectors – €1 of value added in industry adds €0.85 to other sectors such as transport, IT, financial and business services, construction, agriculture and energy. This makes the development of the Lithuanian industrial sector particularly important for the Port of Klaipėda, which can diversify its activities and partially reduce losses due to lost transit revenues from Belarus and Russia. Interestingly, per capita value added in the industrial sector in the Klaipėda region is higher than in the Vilnius region, and by this indicator the Klaipėda region is only slightly (3%) behind the leading region in Lithuania, Kaunas,” comments Ž. Mauricas.

According to Mr Kiudulas, the ecosystem of service companies is another obvious value of investment attraction – one job in an investor-status company creates at least one service job in the FEZ territory alone.

“Last year, Klaipėda FEZ once again had a year when the all-time support to businesses – €70.5 million – paid for itself faster than in one year in the form of taxes paid alone (€75.3 million). I, therefore, invite the city and especially the state organisations to continue to cooperate in finding new ways to attract talent and investment,” said Mr Kiudulas.

Lithuanian and foreign investors operating in the Klaipėda FEZ, established 20 years ago, have made and planned investments of €782.7 million. The largest new investment and development projects in the Klaipėda FEZ last year were implemented by Rehau, Retal Baltic Films, Roteksas, Elme Metall, Glassbel Baltic, Pack Klaipėda, Capella Baltic, Gelsta, Elektrinio Transporto Sistemos and Orion Global PET.

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