Klaipėda FEZ receives international awards for non-fiscal incentives and green energy

Klaipėda Free Economic Zone (FEZ) has received an Excellence award for non-fiscal incentives for investors and an Honourable mention for renewable energy solutions in the annual rankings of FDI Intelligence, a publication of the Financial Times group.

In this year’s FDI Intelligence’s Free Zones of the Year rankings, non-fiscal incentives were given special attention. The publication estimates that, although final decisions have not yet been taken, the OECD’s proposed global minimum corporate tax may soon deprive free zones of the crucial argument for lower taxes. 

Therefore, when awarding the prize, FDI Intelligence evaluated the non-fiscal measures of the Klaipėda FEZ in recent years – the quick launch strategy, an active and cooperative business community, established relationships with key local and national partners, talent development, infrastructure development and other advantages that determine investors’ willingness to set up and expand. FDI Intelligene also pointed to recent surveys conducted by the Klaipėda FEZ and its partners, according to which 80% of the city’s residents have a positive opinion of the reputation of the FEZ, and as many as 9 out of 10 existing investors would recommend their experience in the Klaipėda free zone.

According to Eimantas Kiudulas, the CEO of Klaipėda FEZ Manager, this year’s focus on non-tax benefits illustrates a marked change in investor thinking and behaviour.

“The award from FDI Intelligence is clearly encouraging, but it is also a reminder that businesses, especially those that Lithuania wants the most, are becoming less and less interested in costs – taxes or labour. The most common questions we hear from stakeholders are about the quantity and quality of talent, the fluidity of processes, community and infrastructure. Some of these issues we can address ourselves, but local and national government can also play a role – Klaipėda, for example, is one of the few Lithuanian cities with a green corridor for larger investors. However, having already lost its status as a cheap labour country and the argument of tax incentives disappearing, Lithuania simply has to pay maximum attention to developing, attracting and retaining talent,” comments E. Kiudulas.

In this year’s FDI Intelligence’s rankings, Klaipėda FEZ also received an honourable mention for its green energy solutions – solar power plants on company roofs and even fences, and other energy independence measures that have been in place for many years. Last year alone, the total installed capacity of solar power plants in the Klaipėda FEZ doubled to 4MW, and most of the development decisions were taken before the electricity price crisis hit last year. Also, the majority of Klaipėda FEZ companies are buying green electricity from the grid and investing in a variety of other energy efficiency or generation solutions.

In the past, the Klaipėda FEZ has won main and special awards in FDI Intelligence rankings in areas such as quick launch, sustainability, new technologies or investor expansions.

Last year, more than 45 Lithuanian and foreign investors operating in the Klaipėda FEZ achieved a total turnover of EUR 1.76 billion and exports of EUR 780 million. Purchases of goods and services by Klaipėda FEZ investors in Lithuania in 2022 exceeded EUR 500 million, and VAT, GPM and social taxes paid last year reached EUR 107.3 million. In comparison, state aid granted to Klaipėda FEZ investors in 2022 amounted to only EUR 8.2 million.