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Klaipeda FEZ: the most significant free economic zone for its city in Lithuania

05 May 2017

By the end of 2015, Klaipėda Free Economic Zone accumulated EUR 493 million of foreign direct investment (FDI). This accounts for 57% of the total FDI of Klaipėda City Municipality. In the significance of the free economic zone to its city in terms of the FDI portfolio, Klaipėda is ahead of all the other Lithuanian free economic zones.

For comparison, according to published data, Kaunas FEZ, with its EUR 257 million of accumulated FDI, accounts for approximately 25% of FDI in the city of Kaunas, as estimated by the Department of Statistics, while Panevėžys FEZ has attracted EUR 13 million FDI, which is under 6% of the total FDI for the city. Kėdainiai and Šiauliai FEZ have not implemented any investment projects by the end of 2015 (although projects worth over EUR 4 million were commenced in Kėdainiai at the end of last year), and a contract for an investment project worth EUR 100 million was signed in Marijampolė FEZ last year, with the implementation of individual stages of the project scheduled over the next few years.

The significance of Klaipėda FEZ is also the greatest in terms of foreign direct investment accumulated in individual counties. Klaipėda FEZ accounts for 40% of the FDI in Klaipėda County; this figure is 17% for Kaunas FEZ FDI in the total FDI of Kaunas County, and 4% for Panevėžys FEZ in the total FDI of Panevėžys County.

Eimantas Kiudulas, Director General of Klaipėda FEZ, commented that although one of the main objectives of free economic zones around the world is to promote organic investments in cities, regions, and countries in the long run, the significant effect of Klaipėda FEZ for the city of Klaipėda shows investors’ desire to join a functioning ecosystem.

‘Klaipėda FEZ now has distinct investor profiles: we are most attractive to companies working in the vehicles, plastics, and food industries, and we also see considerable potential for the energy industry. In our opinion, new investors come to a FEZ not only because of tax concessions – they are even more greatly attracted by the available infrastructure, experience, and ecosystem created by successfully operating companies. The latter is also strengthened by institutions of higher education in the Klaipėda region, which, in the course of 15 years of operation of the FEZ, have taken into account the needs of the companies representing specific industries in the FEZ and found certain contact points’, said Mr Kiudulas.

According to him, the example of Klaipėda, which has been operating for 15 years now, shows that appropriately developed free economic zones provide new economic opportunities for their cities and regions, for which reason FEZ and municipalities must cooperate closely in order to enhance infrastructure, attract investors, and strengthen the business and talent ecosystem of the region.

‘When we meet potential investors, we first talk about Klaipėda, its people, and its infrastructure, and only afterwards do we tackle the available tax concessions. On the other hand, our FEZ conditions and ecosystem serve as an excellent argument in the course of negotiations for the parties trying to attract investments both to Klaipėda city and region, and to Lithuania as a whole’, said Mr Kiudulas.

In addition to the significant effect on the city’s FDI portfolio, Klaipėda FEZ estimates that it employs every twentieth working-age resident of the city of Klaipėda, while all 29 companies operating in Klaipėda FEZ generate approximately 3% of the Lithuanian GDP and approximately 2.5% of the country’s exports. The main employers in the territory of Klaipėda FEZ are the Japanese capital company Yazaki Wiring Technologies Lietuva and the Danish fish-processing company Espersen Lietuva. These two companies employ over 1,300 people.

This year, the companies already operating in Klaipėda FEZ plan investments of over EUR 80 million. Impetus for the more rapid development of Klaipėda FEZ will also be granted by amendments to the Law on the Fundamentals of Free Economic Zones coming into effect this year, which will facilitate the entry of service companies to Lithuanian free economic zones, and Klaipėda FEZ plans to increase the area of offices intended for investors.

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