The future of High � Tech industries in Baltic

							The future of High – Tech
   industries in Baltic

                     Alvydas Vitkauskas
       MicroLink group Country Manager, Lithuania



                           Vilnius, 2003 10 21
Why Baltic states need High–Tech?

• Current low productivity of the economy
• Insufficient availability of labor resources and
  rising labor costs
• Competitive science potential and traditions
• Relatively good quality of education
State of Baltic IT industries

• A lot of IT companies
• 7 or 8 digit turnover numbers of major IT
  companies
• Market increases at a rate of 10-15% annually
                                    m EUR, 2002
     M
         ic




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                                                                  Size of Baltic IT companies




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                                                 …same at different perspective




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The problem

              Sales breakdown

                                Local market
          5%
                                Foreign market




                    95%
Challenges for Baltic IT sector

• Dependence on local demand
• Small size, fragmentation, low specialization
  and weak capital base
• Low value-add efficiency compared to CEE or
  Nordic peers
Cure: consolidation and innovation

• Emergence of real pan-Baltic IT companies
• Emergence of export oriented high - tech
  companies
• Increased spending on R&D
What’s more?

• Facilitation of entrepreneurship
• Financial support for new companies
• Venture and equity capital
How to create new Nokias?

• Finnish funds invested 391 m EUR in 256
  companies
• Danish funds invested 283 m EUR
• 50% of capital goes to High-Tech companies
It means

       there are more than
               200
new potential Nokias in Finland and
          Denmark alone
EU funds for:

• Low cost infrastructure for High-Tech
  enterprises
• Substantial improvements in education system
• Investments in R&D and applied science
• Information and communication technologies
  for state and municipalities
Case study: SAF Tehnika

• A 18 m EUR Baltic company
• Succesfully competes on global telecom
  equipment market
• The only really successful Baltic technology
  company
 SAF’s sales geography

6.000.000


5.000.000

                                                        EU
4.000.000
                                                        CIS
3.000.000                                               CEE

2.000.000                                               Baltics

                                                        China, Asia
1.000.000


       0
    Jul-Dec 01   Jan-Jun 02   Jul-Dec 02   Jan-Jun 03
What to do next?

• Facilitate R&D, use EU funding to do it
• Facilitate entrepreneurship and provide
  infrastructure for new companies
• Consolidate Baltic IT market to form capable
  IT enterprises
Thank you!