Message from Ambassadors

Lithuania - a gateway to Europe—How Japanese companies could
benefit from investing in Lithuania —Aurelijus ZYKAS
Ambassador of the Republic of Lithuania to Japan
Aurelijus ZYKAS was appointed the Ambassador of Lithuania to Japan in May 2022. Prior
to the current position, he served as Commissioner of the Radio and Television Commission,
Associated Professor of the Department of Culture Studies and Head of the Centre for AsianStudies at Vytautas Magnus University.

Lithuania has been working hard to make its economy
attractive to foreign market players, becoming one ofthe most investor-friendly European countries in theprocess. From business environment and infrastructure
to cybersecurity and talent – it has it all in spades.
In 2022, Lithuania and Japan celebrated the 100th
anniversary of their official relationship, which includes
active cooperation in areas like high-tech, robotics,
energy, and IT. Given this long tradition of mutual
understanding, as well as today’s geopoliticalenvironment and the pressing need for more extensive
strategic partnerships, we’d like to invite Japanese
investors to explore the business opportunities thatLithuania has to offer, thereby bringing our countries
even closer together in 2023 – and beyond.
Without further ado, let’s take a closer look at thereasons why Lithuania is a top-performer when it comesto FDI, and how Japan could benefit from that in theyears to come.

Business environment
To begin with, Lithuania is currently 5th globally interms of greenfield FDI. This is also reflected by thecountry’s performance in this area over the course of2022. FDI income rose by 5.9% to €3 billion, while
cumulative FDI grew by 9.7%, reaching €29.7 billion,
or 44.4% of GDP.
Lithuania is also 2nd in Central and Eastern Europe(CEE) in terms of economic freedom (EF), which
determines how attractive different countries are toinvestors. Apart from legal framework, monetary policy,
and other factors, a key role in EF rankings is assigned
to taxation. Lithuania shines even in this regard, being
the 8th globally in terms of tax competitiveness.

Furthermore, the country has a strong
manufacturing sector, which accounts for 20% of its
GDP, and a large presence of German and Nordic
capital, 1/3 of which features value-added functions.
Key areas include: traditional manufacturing, industrial
machinery, life sciences, automotive, engineering, ande-mobility.
Last but certainly not least, in addition to being
ranked alongside countries like Sweden and Denmarkin terms of business environment, Lithuania also offers
an unbeatable cost-to-quality ratio.

Skilled talent pool
With a 1.5 million-strong labour pool (200,000+working in manufacturing), Lithuania is:• 4th in the EU by tertiary educational attainment forages 25-34 (56%)• 3rd in CEE by the share of students choosing STEM
(36%);• 4th in the EU by the proportion of youth with (above-)basic digital skills (93%);
The country has many modern universities,
vocational training schools, and other education
institutions. Most of them work closely with theirforeign counterparts, as well as local research centres,businesses, and public agencies. This ensures thatstudents could always obtain the most in-demand
knowledge and skills, as well as practise them during
internships, and find jobs right after graduation.
Over the years, international investors haverepeatedly noted the exceptional diligence and skill of
their Lithuanian workers. Most of them are also
multilingual – a highly prized ability with foreign andinternational companies.
2023.729

Physical and digital infrastructure
Lithuania’s geographical location makes it highly
convenient for businesses engaged in trade, logistics,and manufacturing. Situated at a busy crossroads
between the East and the West, Lithuania offers direct
rail cargo routes to Western Europe and Asia. In
addition, the long-term Rail Baltica project, set forcompletion in 2025, will connect Berlin to Helsinki via
Poland and the Baltics.
The country also boasts multiple connections on
the East-West and North-South road transport corridors,
used by the large number of local and international
logistics companies that have a strong presence here.
And Lithuania doesn’t merely connect all of thesedisparate places by road, but does so with a high degreeof excellence – it is 2nd in CEE by road quality.
Moreover, Lithuania has an ice-free port in
Klaipėda (one of few such ports in Northern Europe)that generates over 6% of the national GDP and isgenerally recognised as the 1st in the Baltics by cargoturnover.
There are also 3 international airports giving
access to major European cities within 2-3 hours, and afully modern, inexpensive, and convenient public transit
system.

The government also covers up to 70% of the costs
associated with talent apprenticeship and training, as
well as up to 50% of investments into long-term assets.
To support innovation, companies are also permitted todeduct their R&D expenses on 3 separate occasions.

Environment and culture
Lithuania is comparable to Japan in more ways thanone. For instance, both countries score high ingovernment effectiveness rankings (81.7% forLithuania, 90.4% for Japan), and prefer to focus on thelong-term when it comes to business and planning (82%and 88% respectively), which makes cooperation evenmore attractive.
The country is also relatively safe in terms ofenvironmental disruption, thanks in part to being
situated in a zone of low seismic activity. The risk oftsunamis and extreme heat during the summer islikewise very low. In fact, Lithuania is the least affected
country in Europe by temperature rise.
And to top it all off, Vilnius – the Lithuanian capital– has been named the greenest city in Europe by theHusqvarna Urban Green Space Index, and is widely
credited as among the TOP 10 globally for work-lifebalance.

Government support

Conclusion

As mentioned at the beginning of this article, Lithuania
is pro-active when it comes to making its businessenvironment attractive to global investors. Much of thecredit for that is due to the government, which continues
to pursue changes in policy and to provide assistance tonew and foreign companies – especially startups andother innovators.
One way of doing so has been the establishment of7 Free Economic Zones. These, in addition to offering
0% Corporate Profit Tax, 0% Dividend Tax, and 0%
Real Estate Tax, feature special industrial sites withhigh-quality, well-developed infrastructure.
Another initiative is the Green Corridor for LargeScale Development, which offers many benefits tocompanies in the manufacturing, data processing, andserver-hosting areas. Eligible players are exemptedfrom paying Corporate Profit Tax for 20 years, andprovided with a massive reduction of red tape:streamlined migration process, rapid construction
permits, tailored study programmes, expedited
infrastructure development, and more.

Lithuania and Japan have a long history of friendly
relations and many areas ripe for collective action. Oneof such areas is economic integration. Lithuania canoffer Japan a European-class business and investment
environment, a large pool of highly qualified talent, astrong manufacturing and cutting-edge technology
sector, and extensive government support.
The time has never been better for both countries
to consolidate their relationship and become long-term
partners in building a brighter future!
302023.7お問い合わせ

JOI 事業企画部
E-mail: bd@joi.or.jp

駐日リトアニア共和国大使館

Aleksandras Laurinavicius, Commercial AttachéE-mail: aleksandras.laurinavicius@urm.lt
https://jp.mfa.lt/jp/jp/