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news2biz LATVIA
                                                                                                                                  "We do sometimes feel we may have missed the train."
                                                                                                                                                            Jonas Sigurgeirsson of Iceland's Kaupthing Bank
                                                                                                                                                                                                            page 3
17 September 2007. No 238. Creating transparency in the market since 1991.




 MANUFACTURING page 2                                                                                                                GDP up 11%, inflation hits 10%
 Latvia's industrial output                                                                                                          The Latvian economy is not slowing as soon as was ex-
 growth still weakening                                                                                                              pected by many experts. Meanwhile, inflation has hit
                                                                                                                                     double digit figures and threatens to get out of hand.
 FINANCE page 3
 Iceland's Kaupthing still                                                                                                           Drastic measures by                Latvia's GDP growth y/y
 eying Baltic banking market                                                                                                         the government to crop
                                                                                                                                                                     12%
                                                                                                                                     spending are seen as
 FOOD & AGRICULTURE page 4                                                                                                                                           11%
                                                                                                                                     the only softer way out         10%
 Daugava dairy turns to                                                                                                              from the overheated              9%
 lower segment, eyes exports                                                                                                         market situation. Some           8%
                                                 Braced for high rising. The Latvian capital has plenty of new projects in           say the economy is               7%
 PROPERTY & CONSTRUCTION page 6                  the pipelines. Some experts say the current housing and real estate pause
                                                                                                                                     stable, others say it's          6%
 Danish TK to develop                            will put several projects on hold. Above: buildings in grey are yet to be                                            5%
                                                                                                                                     vulnerable. Either way
 residential project in Riga                     built on what should become Riga's west bank business district.                                                      4%
                                                                                                                                     - it's on a knife's edge.




                                                                                                                                                                             2002

                                                                                                                                                                                    2003

                                                                                                                                                                                           2004

                                                                                                                                                                                                  2005

                                                                                                                                                                                                         2006

                                                                                                                                                                                                                H1 07
                                                                                                      Image: skyscrapercity.com
 RETAIL & SERVICE page 8                                                                                                                               page 13
 Estonia's GSMvalve aims
 to secure Latvian market
                                                Baltic housing market:                                                               Most important updated key figures in this issue

 IT & MEDIA page 9
                                                just a temporary pause?                                                              Inflation (page 16), Industrial output and GDP (page 18). See
                                                                                                                                     all key figures on pages 15-18.
 The Blackstone Group chosen                    With the economy overheating and the real estate market flat-
 to fund Lattelecom MBO                         tening after years of breakneck growth, many are predicting a                        Business people talk to news2biz
                                                crash. Is the hype just to do with herd mentality? We speak to ex-                   Andris Brutans on tax cut for investments at VSS fibreglass (page 2)
 TRANSPORT page 10
                                                perts at Ober-Haus and Koba, who see the market in a more                            Martin Hendre of GILD on the pan-Baltic market (page 4)
 Iceland's SMI building
                                                positive light.                                                                      James Clarke on why BNTP has sold their mall in Jelgava (page 7)
 EUR 50m logistics centre
                                                                                                                pages 5 & 6          Rene Michaelsen on localising DIY magazines (page 10)
 ENERGY & ENVIRONMENT page 11                                                                                                        Events
 Statoil aims for Baltic                        Investor focus on renewables                                                         in Riga, Jurmala, Liepaja and London (page 14).
 leadership in biofuel retail
                                                The German-Baltic investors forum in Riga organised by GLC
 ECONOMY & POLITICS page 14                     Glucksburg Consulting is set to prove investors are shifting away
                                                                                                                                     Northroup Newsletters publishes similar business journals on Estonia, Lithuania
 Baltic productivity gap                        from the real estate market toward other targets like renewable energy               Poland and China. As a subscriber you have access to your country journal six
 still wide, but reducing                       sources.                                                                             years back through our on-line archives at www.news2biz.com. Multiple user
                                                                                                                     page 11         access available - contact customer@news2biz.com or tel +45 33 33 07 20.
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2                                                                                                                 news2biz LATVIA              no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S


                                                                                                                    metal product production (+14%) and                  second plant almost a year ago, effec-                    Growth for sales and profits
      MANUFACTURING
                                                                                                                    electric machines and tools (+12%).                  tively replacing the outdated two-stage
                                                                                                                                                                                                                                   The new EUR 36m plant launched in
                                                                                                                        Besides the 0.5% growth for manu-                fibreglass production process.
                                                                                                                                                                                                                                   October 2006 considerably slashes the
                                                                                                                    facturing in July, Latvia also saw a 9%
PRODUCTION CRUNCH                                                                                                                                                                                                                  amount of pre-processed raw materials
                                                                                                                    drop in mining and quarrying and a 6.6%
                                                                                                                                                                                                                                   the factory has to buy (see also no 189
Latvia's industrial output                                                                                          rise in the electricity, gas and water sup-
                                                                                                                                                                                                                                   page 2) and has thus given a positive
growth still weakening                                                                                              ply sector.
                                                                                                                                                                                                                                   boost to cost efficiency and profits.
                                                                                                                        Latvia's manufacturing potential is still
Though the average 1% industrial output                                                                                                                                                                                               While turnover for the plant increased
                                                                                                                    clearly suffering from weakened com-
growth in Latvia for the first six months                                                                                                                                VSS produces many products from fibres to                 4% to LVL 18.9m during the Jan-Jun pe-
                                                                                                                    petitiveness as companies adjust them-
was improved by 1.8% y/y growth in                                                                                                                                       yarn and fabrics used in array of industries.             riod in 2007, profits were up 140% in
                                                                                                                    selves to growing labour, energy and
July, further weakening in several seg-                                                                                                                                                                                            the period to 0.8m LVL on account of in-
                                                                                                                    construction costs. The overheating                                      Photo: Valmieras Stikla Skiedra
ments continues to cause concern.                                                                                                                                                                                                  creased sales and lowered costs.
                                                                                                                    economy is also making many investors
Industrial output                                                                                                   hesitate before setting up business in               "The decision to invest EUR 36m towards
                                                                                                                                                                                                                                   Heading up?
monthly change y/y in past year                                                                                     Latvia, as the Baltic state's rapid devel-           the new plant was made after the Lat-                     VSS profits in LVL m
                                                                                                                    opment and further convergence with                  vian government approved a 40% tax
8%                                                                                                                                                                                                                                              2
                                                                                                                    Western Europe demands a shift in                    rebate on the investment amount back in
6%
4%                                                                                                                  strategies.                                          September 2005," says Andris Brutans,
                                                                                                                                                                                                                                                         1.2
2%                                                                                                                      Industrial output in Latvia gained               VSS president, to news2biz LATVIA, "but                      0.9                                    0.8
                                                                                                                                                                                                                                                                      0.7
0%
                                                                                                                    4.8% y/y in 2006 after 5.6% in 2005.                 it was a complicated issue and took until
-2%                                                                                                                                                                      May in 2006 before Brussels gave ap-
      Aug 06




                                                            Feb 07
                                                                     Mar 07
               Sep 06


                                 Nov 06
                                          Dec 06
                                                   Jan 07




                                                                              Apr 07
                                                                                       May 07
                                                                                                Jun 07
                                                                                                         Jul 07
                        Oct 06




                                                                                                                    More on Industrial output: no 236 page 2
                                                                                                                                                                         proval, by then we had already started
                                                                                                                                                                                                                                     2003      2004     2005      2006      H1 07
                                                                                                                                                                         building the plant and purchased much
                                                                                                                                                                                                                                   Source: OMX Riga
The average annual manufacturing out-                                                                               IMPROVED PROFITS                                     of the equipment."
put in July gained just 0.5% y/y (com-                                                                              New Valmieras SS fibre-                                  Mr Brutans explains that in this cir-                 VSS, listed at the OMX Riga Stock Ex-
pared to 1.1% in all of H1). This included                                                                                                                               cumstance the company will only be able                   change, exports almost all of its products
a 7% drop in timber product production,
                                                                                                                    glass plant boosts profits
                                                                                                                                                                         to gain a tax rebate on what was spent                    with 70% of exports heading for EU
a 2% drop for printing and publishing, a                                                                            Not all manufacturing is biting the dust.            after the green light was given by the                    countries. Officially the company still ex-
6% drop for non-metallic mineral prod-                                                                              Especially those companies with share-               European Commission. He estimates this                    pects a turnover of LVL 39m in 2007 (LVL
ucts, a 2% drop in both metal production                                                                            holders willing to invest big amounts to-            to be worth several millions of euros                     35m in 2006) and a modest profit ex-
and machinery production, and an 8%                                                                                 wards new technologies and serious                   gained in tax rebates over the next ten                   pectation of LVL 0.7m.
decline in furniture output.                                                                                        modernisation.                                       years. The tax rebate came about as part
                                                                                                                                                                                                                                   We have talked to
   The only segments of manufacturing                                                                                  German-owned Valmieras Stikla                     of a government investment support pro-                   Andris Brutans glassfibre@vss.lv
to show strong growth included paper                                                                                Skiedra (VSS) fibreglass producer is one             gram and is applicable to most invest-                    Tel +371 2922 32 64 (mobile)
and paper product production (+15%),                                                                                such example. The plant has reported a               ment projects worth over LVL 10m (see                     More on VSS: no 196 page 2, no 189 page 2
rubber and plastic products (+13%),                                                                                 huge growth in profits for the first six             also no 196 page 2).
                                                                                                                    months of 2007 after the launch of its
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                                                   news2biz LATVIA                 no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S                                                          3

                                                     Metalmeistars. The new plant will pro-                                                                     from countries like Sweden have long
Metalmeistars diversifies                                                                                                FINANCE
with fourth plant in Jelgava                         duce large-scale and non-standard metal                                                                    since got both feet in the market," he
                                                     frames used both in construction and the                                                                   says.
After riding the wave of Baltic construc-            automotive industry. The main clients will
tion boom, Latvian Marupes Metal-                                                                           BALTIC LURE
                                                     be found in the Baltic and Nordic coun-                                                                       "We do sometimes feel we
meistars is now diversifying its output              tries.
                                                                                                            Iceland's Kaupthing still                              may have missed the train."
with the help of a new large-scale metal                 The Jelgava plant, initially employing             eying Baltic bank market                                   Jonas Sigurgeirsson of Kaupthing Bank
frame plant in Jelgava, south of Riga.               around 20 people and later twice that,                 Though admitting that it is possibly too
This is the company's fourth and largest             required investments of LVL 0.7m, over                 late for an entry to the Baltic banking             In recent years Kaupthing Bank has made
plant by area after having opened three              half of which will be repaid by EU struc-              market, Iceland's biggest bank, Kaup-               several acquisitions, including the Danish
in the nearby industrial town of Olaine.             tural funds. Most of the funds were used               thing Bank, is still toying with the idea.          FIH Erhvervsbank in 2004 and the
    All four units are located at industrial         for buying modern and highly productive                    After a recent EUR 3bn deal acquiring           UK's Singer & Friedlander in 2005. Ice-
parks operated by Icelandic NP Proper-               equipment.                                             Dutch NIBC bank, Kaupthing still says it            landic banks and financial institutions
ties, the biggest player in the field in
                                                     More on Metalmeistars: no 209 page 8                   is eager to further its geographical spread         have been on an aggressive expansion
Latvia.
                                                                                                            in the Benelux region, Northern Germany             stretch in recent years, as they attempt to
                                                     IN BRIEF                                               and the Baltic states. Another EUR 3bn              increase revenue flow and reduce de-
                                                     • PHARMACEUTICAL PROFITS Latvia's second               are said to be available for acquisitions in        pendency on the fluctuating home econ-
                                                     largest pharmaceuticals producer Olainfarm has re-                              these regions.             omy.
                                                     ported threefold growth in profits for H1 this year                                 "For now our               Mr Sigurgeirsson of Kaupthing says
                                                     reaching LVL 0.7m on sales of LVL 9.5m (up 23%).
                                                                                                                                     hands are full with        that no more big acquisitions can be ex-
                                                     The listed company reported that increased activity
                                                     on both foreign and domestic markets lead to the                                integrating NIBC,"         pected from them probably for the next
Previously focusing on roofing systems,              sales consequent growth of sales and profits.                                   says Jonas Sigur-          year or two.
Metalmeistars is now diversifying its range of                                                                                       geirsson,      chief           Iceland's financial sector is already
metal products.                                      FAIRS                                                                                                      present in Latvia through the investment
                                                                                                                                        communications
                    Photo: Marupes Metalmeistars
                                                     Baltic Furniture 2007                                                           officer at Kaup-           company Straumborg, which acquired
Previously focusing on steel building                2nd annual international furniture and interior fair                            thing, to news2biz         a 51% share in Latvia's Lateko Banka
                                                                                                             "For now our
frames and roofing systems, Marupes                  Latest data ('06): 167 participants, 34,300 visitors                            LATVIA.                    (now renamed as Norvik Banka) in
                                                                                                             hands are full, but
                                                     Time: 4-7 October, Riga                                                             "But the Baltics       early 2006 (see no 204 page 3). Other
Metalmeistars managed to boost sales                                                                         the Baltics are still
                                                     Organiser: Bt1
from LVL 1.6m in 2005 to LVL 3m last                 Contact: info@balticfurniture.net
                                                                                                             an interesting          are still an inter-        business sectors have also seen a steep
                                                                                                             area," says Jonas       esting area and as         rise in Icelandic ownership in recent
year. This year sales are expected to                phone: +371 706 50 00
                                                                                                             Sigurgeirsson.
reach LVL 5m, followed by LVL 6-7m in                                                                                                we have presence           years.
                                                     Woodworking 2007                                         Photo: Kaupthing Bank
2008.                                                4th annual woodworking, machinery, technology
                                                                                                                                     in Finland and             We have talked to
   The company's board member Andris                 and tools fair                                                                  Sweden, the Baltic         Jonas Sigurgeirsson jonas@kaupthing.com
                                                     Time: 4-7 October, Riga                                states would be a natural way forward               Tel +354 444 6112 (direct)
Skolmeistars has told the local media
                                                     Organiser: Bt1                                         for us. We do, however, sometimes feel
that the new plant will expand both                  Contact: Kardijs Broks Kardijs.broks@bt1.lv
product range and export markets for                 phone: +371 706 50 14                                  we may have missed the train, as banks
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4                                             news2biz LATVIA              no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S


BANKING                                            "Our primary competitors are the local          Biscuits for export,                              ent target market. The company has also
GILD to launch private                          players from SEB and Hansabank, but                Antaris expands capacities                        announced plans to expand its distribu-
                                                some aspects of our businesses do not                                                                tion from the Latvian capital Riga to the
banking across Baltics                          correspond and we do not have direct               Latvian baker Antaris, based in south-            country's regions and is negotiating pos-
The Estonian investment bank GILD               competitors in those fields," says Mr              eastern Daugavpils, is investing towards          sible export deals.
Bankers has opened a private banking            Hendre.                                            improving the quality of its biscuit pro-            Setting up its own chain of specialised
division and hopes to claim a leading po-          Guild has the largest corporate fi-             duction and expanding output capacity.            stores is also an option being explored,
sition in the independent private banking       nance team in the region and claims to                 Antaris currently sells around 70% of         though seen as a risky move by some
sector in the Baltic countries within the       be the most experienced in offering al-            its products in Latvia and the rest in the        market players.
next five years.                                ternative investment options, including            Baltics, but exports further out in Europe
    The bank currently holds investment-        management of long-term private equity.            are the next goal for the innovative
related offices in Tallinn, Riga, Vilnius,         Meanwhile, GILD has just appointed a            baker.
Kiev and Sofia.                                 new head of the team in Riga, Mr Mar-                  The company is also introducing new
    Despite the bank's operations ex-           tins Paegle, as former managers have de-           technologies and more automatic equip-
tending beyond the Baltics, the primary         cided to seek new opportunities. Mr                ment to save on growing wage levels.
market thus far has been regional, with         Paegle previously held top management                  Antaris posted sales of LVL 9.4m in
the exception of Latvia, due to differ-         positions with Latvenergo, the SAS                 2005, followed by LVL 11.5m in 2006.
ences of investment culture.                                                                       This year the baker expects to expand
                                                Group, IATA and airBaltic.
    "The Baltic markets are quite similar -        "We are certain he will not only intro-         sales to LVL 15m.
the most notable differences are cultur-        duce several new deals, but also diversify         More on Antaris: no 186 page 8
ally based - Estonia has the longest in-        the scope of various GILD activities in the
vestment and savings history, Lithuania is      Latvian and regional M&A market," read                                                               Daugava sees success in it's specialised high-
second and Latvia is in third place.            a statement by the Estonian group.                               FOOD &                              end dairy products packaged in glass, like
Though in Latvia there are certain niche           GILD Bankers is the leading independ-                                                             this cottage cheese (above). It now aims to
banks, which serve their own business           ent investment bank in the Baltics. Al-
                                                                                                           AGRICULTURE                               expand its regional presence also with the
clientele," says private banking manager        ready since 1999, the bank's corporate                                                               help of cheaper products in plastic.
                                                                                                                                                                                     Photo: Daugava
of GILD Bankers, Martin Hendre, to              finance team has completed over 100                DAIRIES
news2biz.                                       transactions, worth over EUR 2.8bn.                Daugava turns to lower                            The company's hi-end fully natural dairy
    According to Mr Hendre, private                The bank's assets, including 2 hedge                                                              line is branded Daugava (after the big-
banking's main clients today are entre-         funds and one real estate fund, exceed
                                                                                                   segment, eyes exports
                                                                                                                                                     gest river in Latvia) and is packaged in
preneurs, who in addition to possessing         EUR 120m.                                          After testing out Latvia's consumer craze         special glass bottles and jars imported
liquid assets also own stakes in various        We have talked to
                                                                                                   with hi-end dairy products, Latvian               from France. The new cheaper line of
companies. Large commercial banks try           Martin Hendre martin.hendre@gildbankers.com        Daudznozaru Kompanija Daugava                     products is branded Aiviekste (a tributary
to adjust to clients needs but independ-        Tel +372 51 38 209 (mobile)                        (DK Daugava), producer of natural dairy           of the Daugava) and is packaged in plas-
ent investment banks can offer financial                                                           products and bread, is now moving on to           tic bottles and includes added bifido
advice faster and more effectively.                                                                distributing cheaper products for a differ-       bacteria and calcium additives.
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                                                  news2biz LATVIA                   no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S                                                          5

   "The main reason for launching the                  Bauskas Piens spent LVL 5m towards                        Strong institutional investors with               managing director at Ober-Haus to
new product line was to target a new                the project thought never installed any                   long-term goals entering the Baltic real             news2biz LATVIA, adding that banks
market segment," says Aigars Vaivars,               equipment. The dairy's late owner had                     estate market over the past couple of                have currently reined in lending and put
owner of DK Daugava, to news2biz LAT-               planned the move and expansion, but                       years indicate that the market should                the brakes on residential price growth.
VIA adding that the company aims to ex-             current owners have moved all process-                                              continue climb-                But Mr Morris says the underlying
pand distribution through large retail              ing to a nearby dairy in Stelpe.                                                    ing at least in the        fundamentals of the three Baltic econo-
chains across Latvia. He also confirmed                According to the dairy, the building in                                          long-term.                 mies are good and residential prices are
that he expects to see the first specialised        Bauska (south of Riga) can be used for                                                   Nevertheless,         still 50%-70% lower than in Scandina-
stores selling the company's own dairy              any kind of production, warehousing or                                              rifts in the global        via.
and bread products open in late 2008 at             logistics.                                                                          financial market,              "Convergence with Western Europe
various shopping malls.                                                                                                                 triggered        by        has been the story of the CEE region, and
   DK Daugava is also negotiating possi-            FAIRS                                                                               woes over the              to do so residential prices need to nearly
ble exports of its dairy and bread prod-                                                                                                sub-prime mort-            triple again. As we expect full conver-
                                                    Agricultural Equipment 2007                                Peter Gage Morris:
ucts to retail chains in the UK, Sweden                                                                                                 gage market in             gence to take another 10-15 years, we
                                                    Farmstead 2007                                             "Underlying fund-
and Denmark. Exports to the Russian re-             16th international exhibition for agriculture, forest
                                                                                                                                        the U.S., teamed           expect residential real estate prices in
                                                                                                               amentals are good.
gion of Kaliningrad are already scheduled           harvesting, agricultural processing, environmental                                  with        Latvia's       Tallinn, Riga and Vilnius to grow 10%-
                                                    protection equipment and farmstead                               Photo: Ober-Haus
to commence this autumn.                                                                                                                overheating and            12% per year over that period. The cur-
                                                    Time: 4-7 October, Riga
   Some LVL 4m of investments have                  Organiser: AML Ramava
                                                                                                              vulnerable spend-thrifty economy make                rent pause in price growth presents an
gone towards modernising the company                Contact: izstade@aml-ramava.lv                            the situation worrying, if not alarming.             excellent opportunity to buy now and
since 1999. DK Daugava employs around               phone: +371 676 00 409                                                                                         benefit from that upcoming conver-
                                                                                                              Ober-Haus: Buy now
50 people and is located in Serene,                                                                                                                                gence," he says.
south-east Latvia. Turnover for 2006                                                                          Despite some experts forecasting the
                                                                                                                                                                      "The current pause in price
reached LVL 1.3m (+30%), while sales in                         PROPERTY &                                    Baltic real estate market to grind down to
                                                                                                                                                                      growth presents an excellent
the first half of 2007 showed modest                                                                          a halt later this year, the Finnish-owned
growth to LVL 0.7m.
                                                            CONSTRUCTION                                      Ober-Haus real estate advisor group is                  opportunity to buy now and
                                                                                                              still optimistic about the residential mar-             benefit from that upcoming
We have talked to
                                                                                                              ket and even says that now is the time to               price convergence."
Aigars Vaivars aigars.vaivars@daugavadk.lv
                                                    REAL ESTATE
More on Daugava: no 187 page 6                                                                                buy.                                                             Peter Gage Morris of Ober-Haus
                                                    Baltic housing market:                                        Ober Haus largely bases its optimism
                                                                                                                                                                   Meanwhile, Ober Haus also expects the
Bauskas Piens dairy                                 just a temporary pause?                                   on the expected further convergence of
                                                                                                                                                                   price of land in the Baltics to continue
selling new plant                                   Everyone in the Baltics is still talking                  the Baltic states with nearby Scandinavia
                                                                                                                                                                   climbing steadily, as strong economic
                                                    about real estate. Nowadays it's all about                over the next 10-15 years.
Latvia's small Bausakas Piens dairy                                                                                                                                growth continues to push demand for
                                                    how prices have stopped growing. This                         "In both Latvia and Estonia, residen-
company has decided to sell a building it                                                                                                                          space. The price of land grew an average
                                                    could be the calm before the bubble                       tial price growth has been flat in 2007,
just built for housing a new dairy proc-                                                                                                                           60% in 2006, according to the broker
                                                    bursts, but some say it's just a temporary                after surging more than 100% over
essing plant.                                                                                                                                                      company and 25% in the first half of
                                                    pause.                                                    2004-2006," says Peter Gage Morris,
                                                                                                                                                                   2007.
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6                                             news2biz LATVIA               no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S


Latio: even new projects to hurt                ske Bank predict a heavy crash for Baltic               "We believe that the Baltic market still       on Milgravju iela in north-east Riga. This
                                                property (see no 237 page 7).                       has a strong background, determined by             is TK's first residential development in the
Putting optimistic smiles aside, local real
                                                   "You can't predict what happens                  internal demand and economic growth,               Baltics. In Riga, the company's biggest
estate brokers are reporting significant
                                                three or even six months from now, but I            and will not collapse in the near future,"         project so far was the Galerija Azur mall
drops in prices for the secondary market
                                                can certainly tell you that in five years           says Jan Dahl of Koba in Lithuania, to             which was sold to Austria's Meinl last
in Riga this year. Speculative owners of
                                                time prices will be significantly higher            news2biz LATVIA. "However, we do see               August.
flats in new residential projects have even
                                                than today," says Mr Morris from Ober-              an eventual slow down in its expansion."               Since the authorities have allowed TK
been lowering prices 20% below the
                                                Haus, adding that real estate investments               Koba bases its forecast on trends such         to construct more square meters on the
price offered by developers in order to cut
                                                must be long-term.                                  as falling unemployment and growing                lot, the residential part will dominate the
possible losses.
                                                We have talked to                                   wages, but says the market is stabilising.         development even more.
    Latvian Latio real estate brokers, the
                                                Peter Gage Morris peter.morris@ober-haus.com            "The market is flattening out and                  "The intention was from the begin-
largest on the market, reports that the         Tel +48 22 528 54 54 (switchboard)                  prices are more stable now. We believe             ning to have a residential development
secondary market saw a further 3% drop          More on realty market: no 235 page 4, no 234        that economic growth will be healthy in            with retail on the ground floor. The resi-
in average prices in August since July,         page 6
                                                                                                    the long run, yet slowing down and thus            dential part has just taken prominence,"
making up a drop of around 12% since
                                                Koba: no collapse for                               residential process will no longer double,         says Frede Clausen, TK's CEO, to
May. Average prices are still 20% higher
                                                                                                    like they did in the period of 2002-               news2biz LATVIA. It is expected that the
than they were one year ago.                    Baltic residential markets
                                                                                                    2006." Says Mr Dahl.                               construction will begin either in late 2007
    "Factors that may stop the price cor-       Though many analysts in Latvia are still                Koba, previously consultants for com-          or early 2008 - and the architectural de-
rectional process in coming months are          very worried about the long-term                    mercial property, has just ventured into           tails are not completely in place.
not yet visible," stated Latio's latest re-                            sustainability    of         the residential market by launching its                "The authorities have increased the
port, suggesting that the drop in prices is                            Latvia's economic            Koba Living brand in Lithuania (see                number of square meters that we are al-
expected to spread also to the new resi-                               growth and warn              news2biz LITHUANIA no 238 page 6).                 lowed to build on our lot and we have to
dential project market, with some of the                               of economic reces-           Once established there, Mr Dahl says               adjust the architectural part of the project
new projects put on hold.                                              sion and a crash in          Koba will also bring its residential con-          so that it takes care of this," says Mr
    "The number of sellers considering                                 the property mar-            sulting to Latvia and Estonia.                     Clausen.
lowering the price offer is on the rise in                             ket, Peter Morris
                                                                                                    We have talked to                                      In a residential market seen by many
almost all segments. Entrepreneurs are                                 from Ober-Haus               Jan Dahl jd@koba.lt                                as overheated, TK Development does not
drawing more attention to investments in        "The Baltic proper-    (see story above)            Tel +370 524 872 25 (direct)
                                                ty markets have a                                                                                      hesitate.
their core businesses, refusing the previ-                             need not feel he is          More on Koba: no 227 page 6, no 192, page 9
                                                strong back-                                                                                               "There has been a tendency of short
ously popular option of investments in          ground," says Jan      so alone with his                                                               time buying and selling without any ac-
real estate and choosing to clinch rent         Dahl of Koba.          optimistic views on          VIEW FROM THE TOP
                                                                                                                                                       tual development, because the general
deals instead."                                         Photo: KOBA    the market.                  Danish TK goes                                     price increase has made this attractive.
    Another Latvian broker, Balsts, has                                   Danish Koba               residential in Riga                                Our approach is quite different - we do
reported that it expects the drop in Riga       property consultants also believe the Bal-
                                                                                                    The listed Danish developer TK Devel-              not start construction before we have
housing prices to ease off by the end of        tic market is safe and will continue to see
                                                                                                    opment plans to erect more than                    tenants, and quite frankly, we even hope
the year, while analysts at Danish Dan-         strong growth in the long-run.
                                                                                                    21.000 sq.m of residential and retail area         that the market will cool down, because
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                                                news2biz LATVIA             no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S                                                 7

this will have an effect on construction          Latvia, Irish-owned BNTP investment              The centre is clearly destined to become          WINDOWS
prices that have been rising quite out of         company has succumb to an offer that             another location for the Jysk Icelandic's         Glaskek building new plastic
control," says Mr Clausen.                        could not be refused by Iceland's ex-            retail arm – a franchise of the Danish            windows plant in Latvia
                                                  panding SMI Real Estate Group.                   Jysk household goods retailer.
                                                                                                                                                     The Estonian wooden and plastic win-
   "Let's hope it cools down."                       The 14,000 sq.m. Valdeka centre, the               Since entering Latvia in 2004 with the
                                                                                                   acquisition of a standalone property built        dows maker Glaskek will soon start to
  TK Development's Frede Clausen on the Riga      largest mall in Latvia's fourth largest city,
                                                                                                   for DIY stores (see no 182 page 9 and no          build a EUR 4.5m PVC windows plant in
                             property market      was BNTP's first inroad to Latvia after
                                                                                                   183 page 9) SMI has really expanded in            Adazi near Riga.
                                                  starting up its property investment busi-
"We've had this lot for some time and                                                              both Latvia and Lithuania.                            The plant would replace the existing
                                                  ness in Lithuania (see no 219 page 7).
we have considered whether to sell the                                                                  "Our office in Riga has been running         rented area that Glaskek currently uses in
                                                     "Our initial strategy was not to sell
construction rights, but the view from                                                             for about a year now and since then               Riga and will complement the other win-
                                                  the property so soon, as we have me-
the apartments over the Daugava and                                                                things have really picked up pace," says          dow factory that Glaskek runs in
                                                  dium to long-term goals on the market,"
the Mezaparks area will be stunning -                                                              Ms Strazinska.                                    Daugavpils.
                                                  says James Clarke, CEO and co-owner of
there will always be a market for apart-                                                                                                                 "The Riga plant with its 4,500 sq.m
                                                  BNTP, to news2biz LATVIA.                             Today the Latvian properties include a
ments like those," says Mr Clausen.                                                                shopping mall in Liepaja just about to            will be about as big as the PVC plant we
                                                     "But after having developed an ex-
   TK Development has been active on                                                               undergo significant expansion and have a          have in Tallinn and it will also include of-
                                                  pansion concept for the centre, we
primarily retail developments in Poland                                                            multi-story car park added to it, a DIY fa-       fices," says Indrek Pajuri, CEO of
                                                  cashed in on the its potential," he says,
since the mid-Nineties.                                                                            cility in Riga expected to be expanded, a         Glaskek, to news2biz.
                                                  adding that BNTP is looking at other
   TK made a profit of EUR 33m in the                                                              brand new shopping centre in Riga and                 The company has stopped boosting
                                                  projects in Latvia in order to continue as-
2006/07 financial year during which it                                                             now Valdeka. The company is also                  the capacity of its Tallinn plastic windows
                                                  sembling its Lithuanian-based portfolio.
sold off properties for a total of EUR                                                             working on plans for developing a new             plant, as it believes that the Estonian
                                                  SMI expanding rapidly                                                                              market will soon give up on the cheap
134m. Apart from its main office in Aal-                                                           shopping mall itself and has just started
borg and an office in Copenhagen, TK              The SMI Real Estate Group, part of               the construction of a 50,000 sq.m. logis-         alternative and return to wooden or alu-
Development has offices in Riga, Vilnius,         the Jysk Icelandic Group, is not only            tics centre (see page 11).                        minium windows that cost by around 30
Sofia, Warsaw, Prague, Berlin, Stockholm          planning to expand the newly acquired                 "We are also working on several other        percent more.
and Helsinki.                                     mall in Jelgava, it is rapidly expanding its     very large projects both in Riga and else-            "The schizophrenic growth in the
                                                  presence in Latvia itself.                       where, but I can not give any details on          market where volumes shot up by 100
We have talked to
Frede Clausen fc@tk.dk                               "We plan to invest towards immedi-            these as yet," says Ms Strazinska.                percent a year is certainly over and the
Tel +45 88 96 10 10 (switchboard)                 ate improvement of the centre with bet-               SMI Real Estate Group is headquar-           market will stabilise," says Mr Pajuri.
More on TK Development: no 216 page 7
                                                  ter placing of tenants and improving the         tered in Reykjavik and runs commercial            "But I do not feel pessimistic about the
                                                  internal logistics of Valdeka," says Rita        real estate operations in Iceland, the            market for windows in general and we
COMMERCIAL PROPERTY                                                                                                                                  expect normal growth in Latvia."
                                                  Strazinska, Latvian director for SMI, to         Faroe Islands, Latvia, Lithuania and Ro-
Irish BNTP sells Jelgava mall                     news2biz LATVIA. "We will then signifi-                                                                Glaskek says that plastic windows are
                                                                                                   mania.
to Icelandic SMI Real Estate                      cantly expand the shopping centre."                                                                still in high demand in Latvia, with the
                                                                                                   We have talked to
Less than a year since acquiring the Val-            Valdeka's has 28 tenants with an-             James Clarke james@bntp.lt
                                                                                                                                                     local supply barely reaching demand.
deka shopping mall in Jelgava, central            chors Maxima retailer and Nelss DIY.             Rita Strazinska rita@smire.lv
                                                                                                   Tel +371 2925 0765 (mobile)
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8                                                         news2biz LATVIA                  no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S


    In Estonia the market for plastic win-                  Linstow Center Management, has undergone                   company is preparing to further spread            plans, our Latvian and Lithuanian cus-
                                                            EUR 1.1m renovations throughout this year for im-
dows is moving from homes to factories,                     proving customer flow and re-allotment of tenants.
                                                                                                                       the e-revolution from Estonia to Latvia by        tomer base shall exceed that of Estonia
schools or garages. Offices and apart-                      Construction has also begun on a further extension,        selling wireless security systems to cus-         at latest by 2010. But our expansion is
ments are tending to start using wooden                     which will house a 8-screen cinema complex to be           tomers in the Riga area, with the goal of         not restricted to the Baltic countries,"
                                                            opened late next year. The EUR 12m expansion will
windows instead. Glaskek has thus                                                                                      becoming the largest security provider of         says Mr Eelmaa.
                                                            increase Alfa's floor space by 7,000 sq.m. to 56,000
boosted the capacity of its wooden win-                     sq.m (see also no 219 page 7).                             its kind within the next two years.                  GSMvalve primarily aims to attract
dows plant in Tartu, which produces also                                                                                   Currently GSMvalve is the segment's           new clients, since the majority of house-
for Latvia.                                                                                                            leader in Estonia, capturing 3% of the            holds still lack any kind of security. The
                                                            FAIRS
    The next step for Glaskek would be to                                                                              total security market share, with hopes of        company's turnover for 2006 was EUR
open a window plant in Panevezhys,                          House. Apartment 2007                                      reaching 5% by year's end. Back home              0.2m, and expects a turnover of EUR 1m
                                                            6th International building and refurbishment exhibi-
Lithuania, which is expected to be a copy                   tion and fair
                                                                                                                       GSMvalve installs 150 new security sys-           for 2007.
of the plant in Riga and could be running                   Latest data ('06): 232 participants, 32,200 visitors       tems each month, hoping to increase this          We have talked to
sometime in 2009. Glaskek turned over                       Time: 18-21 October, Riga                                  amount to 200 per month by the end of             Risto Eelmaa risto@gsmsecurity.eu
EEK 992m in 2006 with production units                      Organiser: BT1                                             the year.                                         Tel +372 581 88144 (mobile)
                                                            Contact: Roberts Brede Roberts.brede@bt1.lv
in Estonia, Latvia and St Petersburg.                       phone: +371 706 50 12
                                                                                                                           The service offered by the company is
We have talked to                                                                                                      based on wireless technology.                     Lithuanian Eurocash1
Indrek Pajuri indrek.pajuri@glaskek.ee                      Realty Baltics 2007                                            In case of an emergency, the client is        eyes Latvia and Estonia
Tel +50 23 68 81 (mobile)                                   International real estate exhibition and forum             warned of the situation by receiving a
                                                            Time: 18-21 October, Riga
                                                                                                                                                                         Lithuania's fast-growing security services
                                                                                                                       text message to their mobile - whether            firm Eurocash1 is expanding to Latvia
IN BRIEF                                                    Organiser: BT1, LANIDA
                                                                                                                       it's a break-in or the fire alarm has been
                                                            Contact: Anita Ozolina lanida@lanida.lv                                                                      and Estonia to form a regional group,
• DIY EXPANSION Three years after buying Es-                phone: +371 733 20 34                                      activated - the client can call from a list       specialising in cash security services.
tonian Ehitus Service DIY chain, Swedish Askem-             Oskars Bagants oskars.bagants@bt1.lv
                                                            phone: +371 706 50 14
                                                                                                                       of contact numbers to inform the                      "Just as in Lithuania, the other two
bla Growth Fund is ready to roll out the concept in
Lithuania (see news2biz LITHUANIA no 238 page 7).
                                                                                                                       authorities of the situation.                     Baltic states do not have real competition
Preparations also for a Latvian entry are already un-                                                                      GSMvalve does not offer its own on-           in cash services, there's only one real
derway, but still at an early stage.                                                                                   site security guard service. Instead, the
• LEC ACQUISITION OKAYED                 The Latvian
                                                                RETAIL & SERVICE                                       client decides if it is a false alarm, will
                                                                                                                                                                         player, so we will try to fill in this niche in
                                                                                                                                                                         all three countries," says Vytautas La-
competition council has given the go ahead for Esto-                                                                   check out the situation for themselves,
nia's Alta Capital Management to acquire one of
                                                                                                                                                                         beckas, general manager of Eurocash1,
                                                                                                                       call the police or fire department.               to news2biz.
Latvia's largest construction companies, LEC (see no        E-SECURITY
230 page 5).                                                                                                               "We believe that traditional security             "Talks are now underway with a Bal-
                                                            Estonia's GSMvalve aims                                    services are a thing of the past and the
• RBSSKALS PLANS NEW BLOCK                      Latvian                                                                                                                  tic peer firm, maybe an acquisition or a
construction company RBSSKALS has announced an              to secure Latvian market                                   future lies in GSM based wireless secu-           partnership will work out. We have no
international tender for architects to design a 30,000
                                                            The tech-savvy Estonians are bringing                      rity," says Risto Eelmaa, CEO of                  deadline for establishing ourselves
sq.m. mixed purpose block in Riga redevelopment.
                                                            mobile-based wireless home security                        GSMValve, to news2biz.                            abroad even though it is our strategic
Up to LVL 100m is expected to be invested in the
project with construction starting in 2010 or 2011.         systems to Latvia.                                             "Our primary turnover is still from Es-       goal. First of all we want to build our
• ALFA MALL EXPANDING The largest shopping                     GSM Apsardze, the Latvian subsidi-                      tonia. Of course the Latvian and Lithua-          cash services business at home."
mall in Latvia, Alfa, operated by Norwegian                 ary of Estonia's GSMvalve security                         nian markets are larger, and according to
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                                                        news2biz LATVIA                 no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S                                                9

    To do that, Eurocash1 plans investing                 2006. Higher salaries and utility costs were blamed    earlier this summer (see no 236 page            newly founded Latvian company Time
                                                          for the loss. Despite the loss, Rimi claims it was a
EUR 2m into a network of major-city cash                  good year with sales on EUR 440m, up 26%. In Jan-
                                                                                                                 11).                                            Investments, has started a law suit
management centres over the next year.                    Aug this year Rimi Baltic saw sales gain 21% in all       The Blackstone Group is expected to          against the expected MBO.
   "We will also provide other security                   three Baltic states to EUR 746m, including EUR         gain 51% in Lattelecom by investing LVL            The company is challenging the rights
                                                          350m in sales in Latvia.
services in Latvia and Estonia, like physi-                                                                      90m. Another LVL 200m to cover the              to a management buy-out and wants an
cal and electronic security, but there the                • STOCKMANN PROFITS UP Finnish Stock-                  deal will be arranged by loans from four        open auction for the privatisation of the
                                                          mann department store in Riga generated sales of
problems are the same as at home, the                     LVL 40.3m in 2006 (+24% y/y) and operated with a
                                                                                                                 banks operating in Latvia: Nordea,              Latvian-scale giant telecom operator,
biggest one being the lack of workforce,"                 profit of LVL 3m. The previous year saw Stockmann      Parex Bank, DnB Nord and UniCredit              promising to bid at least EUR 50m higher
adds Mr Labeckas.                                         report a turnover of LVL 33m and losses of LVL         Bank.                                           than the prepared MBO deal.
                                                          0.3m.
   Eurocash1, a former subsidiary of the                                                                            "The main issue was to find ourselves           An initial appeal has already been re-
biggest Baltic retailer (Lithuanian)                      • WHOLESALER DOING WELL Latvia's Greis                 a partner who would be ready to support         jected by courts, but representatives of
                                                          Food, beverages and tobacco wholesaler has re-
Maxima, upped turnover last year by                       ported a turnover of LVL 57m for 2006 (+32%) with
                                                                                                                 our goals not only for infrastructure in        the claimant suggest possible litigation at
30% to EUR 3.2m and pursues 18%                           profits of LVL 1.8m (+34%). Greis announced that       Latvia, but also the wish to expand             the Court of Europe.
growth in 2007.                                           an expanding range of products help boost sales        abroad," said Nils Melngailis, chairman            Lattelecom would not comment on
                                                          faster than the average retail market growth.
We have talked to                                                                                                of Lattelecom, at a press conference.           the issue, merely saying that the com-
Vytautas Labeckas info@eurocash1.lt                                                                                 The company management and em-               pany is acting in accordance to the
Tel +370 5 274 46 86 (switchboard)                                                                               ployees plan to invest around LVL 10m           agreement made by its shareholders in
                                                                     IT & MEDIA                                  towards the MBO deal, also via Riga             support of the MBO process.
Aibe retailer co-op boosts                                                                                       Capital, a company recently founded by             As Time Investments refuses to name
profits 67% in 2006                                                                                              Mr Melngailis himself. After the deal,          the investors it represents, some experts
The Latvian co-op retailer Aibe reports a                 TELECOMS                                               Blackstone will hold 51% and Lattelecom         feel the whole ordeal may be a sham in
67% increase for profits in 2006 reach-                   The Blackstone Group to                                management and staff 49%. Mr                    order to demand a settlement with the
ing LVL 0.4m on a turnover of LVL 1.6m                                                                           Melngails said at the press conference in       Lattelecom management, however, oth-
                                                          fund Lattelecom MBO                                                                                    ers fear that the legal process, if upheld,
(not including store sales).                                                                                     Riga that the distribution of shares
   Turnover doubled for the co-op, which                  The management of Latvia's incumbent                   should remain that way for a while,             will delay the MBO and thus weaken the
counted 445 stores at the end of last                     telecommunications operator Lattele-                   adding that in future the management            development and competitiveness of
                                                          com has chosen a leading U.S. invest-                  could gain more interest in the company         Lattelecom, ultimately lowering the price
year operated by 150 small businesses.
                                                          ment fund, The Blackstone Group, to                                                                    of the company that may eventually be
   The co-op of grocery and convenience                                                                          by buying shares back from the invest-
                                                          help fund the company's management
stores boasted a 6% market share for                                                                             ment fund.                                      placed on public auction.
                                                          buy-out process.
2006.                                                                                                               The Blackstone Group is based in New            As Lattelecom poses great export po-
                                                             Blackstone was chosen together with
                                                                                                                 York and manages assets of around USD           tential for Latvia and its ambitions to
                                                          Lattelecom consultants Lazard, how-
                                                                                                                 92bn.                                           launch mobile services would give addi-
                                                          ever, final approval for the LVL 290m
IN BRIEF                                                  deal from Lattelecom shareholders, the
                                                                                                                                                                 tional competition to the telecommuni-
                                                                                                                 MBO challenged
• RIMI RETAILER IN THE RED Latvia's largest                                                                                                                      cations market, a swift MBO is in the in-
                                                          state of Latvia and Nordic TeliaSonera,
retail chain Rimi, owned by Swedish ICA, has re-                                                                 Just when we thought it was all over, a         terests of Latvia's economy as opposed to
                                                          must still be gained. The two sharehold-
ported a loss of LVL 1.5m for operations in Latvia in                                                            mystery "investor", represented by a
                                                          ers already agreed upon the MBO deal
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10                                               news2biz LATVIA              no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S


an even further prolonged and sluggish             Pasaule, the interior decoration mag               nia still have some catching up to do in
                                                                                                                                                                             TRANSPORT
privatisation process.                             musumaja and Latvia's best-selling agri-           the area.
We have talked to                                  cultural magazine Agrotops.                           "While in Estonia we do a back-
Maija Celmina maija.celmina@lattelecom.lv             Apart from Latvian and Russian, Gor             ground check of new users - based on ID                      PROPERTY
Tel +371 7055 343 (direct)                         Det Selv is published in Danish, Swedish,          cards or through an individual's online
More on Lattelecom: no 236 page 11, no 235
                                                                                                                                                                   Iceland's SMI building
                                                   Norwegian and Finnish.                             bank account - in Latvia and Lithuania,
page 10
                                                      "With each new language, you have               similar practices would either be too                        EUR 50m logistics centre
                                                   to alter the contents as well so that read-        complicated or too expensive to execute.                     Iceland's SMI Real Estate Group, part
Bonniers brings                                    ers are not alienated. E g standard brick          If we don't check an individual's details,                   of the Jysk Icelandic Group, has just
Do-It-Yourself to Latvia                           sizes differ between Denmark and Swe-              there's greater risk for fraud," says Mr                     launched construction of a 50,000 sq.m.
                                                   den and we have to take that into ac-              Raist to news2biz.                                           logistics centre on the northern outskirts
Bonniers Publications, a Danish
                                                   count in the text - and they have to do               Turnover for osta.ee was EUR                              of Riga with total investments expected
magazine publishing company that forms
                                                   that in Latvia, too," says Mr Michaelsen.          135,000 in 2006, while profits totalled                      to reach up to EUR 50m.
a part of Sweden's Bonniers group en-                                                                 EUR 55,000. Turnover for 2007 is pre-
                                                   We have talked to
lightens Latvian DIY-enthusiasts.                  Rune Michaelsen rune.michaelsen@bp.bonnier.dk      dicted to double.
    The journal Gor Det Selv (Do It Your-          Tel +45 39 17 20 00 (switchboard)                     Consolidated auctions is apart of the
self) that contains practical recipes and
                                                                                                      parent company, Moonfish Media,
instruction for everything from removing
old wallpaper to building a new family
                                                   Estonians to take                                  which also owns the Estonian real estate
                                                                                                      website kv.ee and search engine hy-
home is published both in a Latvian-               online auctions to Baltics
                                                                                                      dra.ee.
language (Dari Pats) and a Russian lan-            Consolidated Auctions, the Estonian
                                                                                                      We have talked to                                            SMI's 50,000 sq.m. logistics centre will join
guage (Delai Sam) edition.                         company that manages osta.ee, an on-               Toomas R. Raist Toomas@osta.ee
    "In Latvia, we have chosen a different                                                                                                                         the ring of logistics complexes mushrooming
                                                   line auctions website similar to eBay,             Tel +372 67 18 102 (switchboard)
                                                                                                                                                                   around the Latvian capital.
approach since there we have a license             plans to offer its services in Latvia and          More on Moonfish Media: news2biz ESTONIA no
agreement with a local publisher. In the                                                              224 page 06                                                                       Image: SMI Real Estate Group
                                                   Lithuania within the next several months.
Nordic countries, we translate, adjust and             It would run the first online auction                                                                       "The centre is located on the Via Baltica
market the magazine ourselves," says               sites in these countries. osta.ee has been         IN BRIEF                                                     highway, so easy access to Estonia and
Rune Michaelsen, editor-in-chief of Gor            run in the Baltics since late 1990s.               • BUSINESS PORTAL IN RUSSIAN Latvia's larg-                  Lithuania," says Rita Strazinska, Latvian
Det Selv to news2biz LATVIA.                           osta.ee plans to first open a similar          est business daily Dienas Bizness, owned by the              director for SMI, to news2biz LATVIA,
    Bonnier's companion in Latvian media           website in Lithuania where preparations            Swedish Bonnier group, has just launched a new               adding that the close vicinity to Riga will
market is the Latvian publisher Mediju             are currently underway. According to               free-of-charge online business news portal in the
                                                                                                      Russian language called NewsBiz.lv. The portal has
                                                                                                                                                                   also ensure easy access to the labour
Grupa Tops (also part of the Bonnier               Toomas Raist, managing director of Con-                                                                         pool.
                                                                                                      its own editorial team and claims to be more than
group) whose other titles are the Latvian          solidated Auctions, there is potential in          just a translated version of the daily, which has been           The Bergi logistics centre, named after
version of the science mag Illustreret Vi-         Latvia and Lithuania for similar websites,         published in Latvian for the past 15 years.
                                                                                                                                                                   the suburb of Riga it is located in, is lo-
denskab, Illustreta Zinatne, the women's           but unlike Estonia, where Internet secu-                                                                        cated on a 12 ha plot of land and is also
mag Una, the garden digest Darza                   rity is quite advanced, Latvia and Lithua-                                                                      expected to see a second stage of con-
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                                              news2biz LATVIA             no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S                                                                   11

struction with a 10,000 sq.m. office                                                                the capital Riga in addition to the one                       ships, while the rest of the growth was thanks to
                                                airBaltic takes off to regions                                                                                    ferry activities of Tallink and DFDS Tor Line.
block.                                          for expanding client range                          already open.
    For now Jysk Icelandic Group's retail                                                               Though internet penetration in Latvia
arm Jysk Linen 'n Furniture will be an-         Latvia's national carrier airBaltic (owned          remains high, rural areas have plenty of
                                                by the Latvian state and SAS) is prepar-
chor tenant in the logistics centre, taking
                                                ing the launch of new regional offices
                                                                                                    people still lacking knowledge about                                       ENERGY &
up one third of the space. Jysk's retail                                                            internet use or access to a credit card for
arm will move its Baltic and Balkan re-         across Latvia before the end of this year           online payments. Seeing as airBaltic is                               ENVIRONMENT
gion headquarters to the centre's office        in order to increase accessibility for re-          also working towards developing domes-
spaces and the logistics centre will serv-      gional residents of the country.                    tic flights in Latvia (Riga-Liepaja already
ice the Baltics, Hungary and Romania                airBaltic has a clear focus on online           operational, Ventspils and Daugavpils in                      INVESTORS FORUM
(The Icelandic group has franchise rights       ticket sales and today only has one office          the pipelines) reaching out with real flesh                   German-Baltic investor
from Danish Jysk for the Baltic, Hungar-        in the capital Riga.                                offices could turn out to be quite suc-
                                                    "Compared to Western Europe, the                                                                              forum to focus on energy
ian, Romanian, Icelandic and Canadian                                                               cessful.
                                                residents of Latvia currently use airline               airBaltic serviced 866,000 passengers                     The third German-Baltic Investors Forum
markets).
                                                services to a relatively lesser extent in           in the first six months of 2007 (+36%                         organised by German consultancy GLC
    Finland's Itella Logistics (part of
                                                their travel. Therefore, there are still            y/y) with a turnover of LVL 71m (+40%)                        Glucksburg Consulting is scheduled
Itella Group, formerly Finland Post) has
                                                many individuals in the country and es-             and profits of LVL 9m (+57%). The intro-                      for mid-October in Riga this year and will
leased out another third of the centre,
                                                pecially in its regions who could poten-            duction of an online check-in system was                      focus on renewable energy sources and
with the remainder still available.
                                                tially become our passengers already in             the biggest achievement during this pe-                       environmental infrastructure.
    "Both current tenants have expressed
interest in taking up the remaining             the near future," says Berthold Flick,              riod.                                                            This is the third forum organised by
15,000 sq.m., but for now they are still        president of airBaltic, in a press release.                                                                       GLC after staging the first in Riga in
                                                                                                    More on airBaltic: no 237 page 9
available for the right client," says Ms                                                                                                                          2004 and the second in Vilnius in 2005.
Strazinska, explaining that they would                                                                                                                            German-Norwegian DnB Nord is again
prefer a tenant taking up all of the re-                                                            IN BRIEF                                                      the key sponsor of the event.
maining space instead of dealing with                                                                                                                                With an estimated 80-100 people
                                                                                                    • BENTLEY DEALER IN RIGA Latvian Luxury &
several other tenants.                                                                                                                                            taking part, the conference really means
                                                                                                    Sports Cars has gained distribution rights to
    SMI Real Estate Group first entered                                                             Bentley vehicles in the Baltics and is setting up a           business.
the Baltics in 2004, but has rapidly ex-
                                                                                                    showroom in Riga, taking over the former Mitsubishi              "The conference is not one with front
                                                airBaltic is reaching out to Latvia's regional      showroom. A service centre has already been set up            speakers, but more close together dis-
panded operations in the past year (see         consumers in anticipation of future sales           in Estonia and one in Lithuania will soon follow.
also story on page (see page 7).                                                                    Luxury & Sports Cars was founded as a European                cussing concrete projects and new mar-
                                                growth with new offices.
                                                                                                    Company and can operate in any EU country. Focus              ket trends in a personal manner," says
We have talked to                                                                Photo: airBaltic
                                                                                                    on quality post-sales servicing of the Bentley vehicles       Edith Seemann, event manager at GLC,
Rita Strazinska rita@smire.lv                                                                       is a key goal of the new dealer.
Tel +371 2925 0765 (mobile)                     airBaltic intends to open new offices in                                                                          to news2biz LATVIA.
                                                                                                    • RIGA PORT PASSENGERS The Riga port has                         Ms Seemann says that investors
                                                Liepaja, Ventspils, Daugavpils, Jelgava             seen an 89% rise in passengers this year so far be-
                                                and Valmiera. A new sales point and                 tween January and August reaching over 332,000.               mainly from Germany and Austria will be
                                                consultation office is also scheduled for           Over a third of this came from passengers on cruise           coming to meet bio-energy plant devel-
                                          <<      <       Search     my toolbar         zoom in   zoom out       website           Print         >

12                                             news2biz LATVIA             no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S


opers and builders personally and to dis-        companies get their feet into the market         LATVIA, adding that the fuel retailer is           facility in Lithuania, acquiring a 43%
cuss specific projects.                          in order to start investing, start business      already working on soon introducing                stake in Klaipeda-based Mestilla (see
   "This is the success of our forums, as        operations or for finding partners." says        gasoline and diesel with 5% bio content            news2biz LITHUANIA no 238 pge 11).
we experience that they later really get         Ms Seemann, adding that they also offer          for use in regular engines.                        We have talked to
together and carry out various investment        consulting on corporate finance, project             Even though, due to lower taxes the            Margarieta Akmens margarieta.akmens@gmail.com
projects, she says.                              financing and more.                              E85 fuel will be considerably cheaper to           Tel +371 29 188 230 (mobile)

   Though renewable energies were dis-              "Besides consulting, we also have our         traditional gasoline (but also 30%-40%             More on Statoil: no 233 page 11

cussed at the previous forum two years           own investors group behind us, who               less effective in terms of mileage output),
ago, both of the two previous German-            have been investing in Baltic real estate,       growth of sales is expected to be slow. It         Neste expands unmanned
Baltic investor forums run by GLC were           and have now turned to renewable en-             is yet unclear when more cars with FFV             fuel chain in Western Latvia
mainly focused on the real estate market,        ergy projects themselves."                       engines may enter the market and so the
                                                                                                                                                     Finnish Neste has started expanding its
the hot topic of the moment.                     We have talked to                                E85 fuel, produced by Latvian distillery
                                                                                                                                                     chain of unmanned fuel stations across
   "Real estate is no longer the first in-       Edith Seemann eseemann@glc-group.com             Jaunpagasts Plus, is currently sold only
                                                 Tel +49 40 85 40 06 21 (direct)                                                                     the Western Latvian region of Kurzeme.
terest for foreign investors in the Baltics.                                                      at one station in each of the three Baltic
                                                                                                                                                         The chain's fourth A24 unmanned
We are now focusing on the new and                                                                capitals.
                                                                                                                                                     station in the region was recently opened
very high growing future market of re-           BIOFUELS                                             Marketing though educating the pub-
                                                                                                                                                     in the town of Talsi, but another four
newable energies," says Ms Seemann,              Statoil aims for Baltic                          lic on biofuel awareness is one way Sta-
                                                                                                                                                     stations in Kuldiga, Liepaja and Ventspils
adding that many of the large German                                                              toil expects to increase interest and sales
                                                 leadership in biofuel retail                                                                        are planned for opening before the end
and Austrian companies operating in                                                               of the products in the coming years.
                                                 Norwegian Statoil, the largest fuel re-                                                             of this year.
these fields are yet to enter the Baltics.                                                            E85 gasoline has been on the market
                                                 tailer in the Baltics, has just launched the                                                            Neste's A24 chain includes a total of
                                                                                                  in Sweden since 1999 and is available in
   "Real estate is no longer the                 sale of E85 biofuel (a gasoline with 85%                                                            42 stations across Latvia, including 20 in
                                                                                                  over 200 Statoil stations.
   first interest for foreign inves-             ethanol content) almost simultaneously in                                                           the capital Riga and is the second largest
                                                                                                      Though Statoil, being the largest fuel
   tors in the Baltics. Renewable                all three Baltic capitals.                                                                          fuel retailer in the Baltic state in terms of
                                                                                                  retailer in the Baltics, may well believe it
   energy is now in focus."                          The Baltics are thus among the first in                                                         station numbers, lagging behind Norwe-
                                                                                                  has what it takes to become the market
                                                 Central and Eastern Europe to have the                                                              gian Statoil, and just ahead of Russian
 Edith Seemann of GLC Glucksburg Consulting                                                       leader, it is certainly not the first to
                                                 option of using E85 fuel for new cars                                                               LUKoil.
                                                                                                  launch biofuel retail. Besides a handful of
GLC's main business is consulting. Based         with specialised flexible fuel vehicle (FFV)                                                            Olli Pylkkanen, head of development
                                                                                                  small independent fuel chains that have
in Hamburg with six offices across Ger-          engines. Currently only one Saab model                                                              for Neste in Latvia, told news2biz LATVIA
                                                                                                  been selling Latvian-made biodiesel for
many, GLC came to the Baltics with an            with an FFV engine is available on the                                                              earlier this year that the chain is aiming
                                                                                                  several years, Russia's LUKoil chain has
office in Riga in 2003. In Riga GLC helps        Latvian market and only two such vehi-                                                              to raise its number of stations to 50 by
                                                                                                  also beaten Statoil in the race so far. LUK-
international companies looking to enter         cles are registered in Latvia- so for now                                                           strengthening positions in the country-
                                                                                                  oil sells biodiesel made from rapeseed oil
the Baltics.                                     the launch is rather symbolic.                                                                      side after already being well-represented
                                                                                                  at four of its stations in Latvia (none in
    "We have found that Riga really is the           "Statoil aims to be the leader in bio-                                                          in the cities (see no 231 page 12).
                                                                                                  Riga) since May this year. But this should
first place everyone wants to go when            fuel retail," says Margarieta Akmens,            change soon, as Statoil itself has also just       More on fuel retail market: no 235 page 12
coming to the Baltics. We help other             Latvija Statoil spokesperson, to news2biz        bought into its first biodiesel production
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                                               news2biz LATVIA                    no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S                                                                                                                               13

ENVIRONMENT                                      CO2 quotas for 2008-2012                                    significant easing of the inflation rate                                                                     GDP
                                                 In m tons, selected EU member states*                       should be expected for the coming year.                                                                      11.1% H1 GDP growth,
Latvia to claim higher
                                                                                                                Meanwhile, the Latvian government
CO2 quota through courts                         Country                Allowed            Proposed                                                                                                                       imbalance prevails
                                                                                                             continues to keep its head in the sand,
Discontented with the lower than needed          Estonia                  12.7                24.4           reluctant to take strict and decisive                                                                        The Latvian statistics office, Statistikas
CO2 emission quota Latvia is to launch           Latvia                    3.4                 7.7
                                                                                                             measures for cutting budget spending in                                                                      parvalde, has confirmed second quarter
                                                 Lithuania                 8.8                16.6
legal action against the European Com-                                                                       order to help ease the situation, which                                                                      GDP growth figures for Latvia, down-
                                                 Poland                  208.5               284.6
mission, thus joining a group of six other                                                                   threatens to escalate into a crisis for the                                                                  grading from the initial preliminary figure
                                                 Czech Rep.               86.8               101.9
member states with similar intentions.                                                                       entire economy.                                                                                              of 11.3% to 11.0%.
                                                 Hungary                  26.9                30.7
    Latvia has been allotted 3.4m tons of        Slovakia                 30.9                41.3
CO2 quota annually for the 2008-2012                                                                                                                                                                                      GDP growth in Latvia in Q2 2006
                                                 *) quota allowed by EU vs. quota proposed by member state   Steep hike
                                                                                                                                                                                                                          Selected sectors, compared to Q2 2005
period, compared to 7.7m tons asked for          Source: European Commission                                 Annual inflation in Latvia
by the government.                                                                                           since EU accession in May 2004                                                                               Sector                              Trend
    The new quota has already been split                                                                     10%
                                                                                                                                                                                                                                                              Domestic demand
up between companies already in opera-                                                                                                                                                                                                                        continues to fuel the
tion and would not be enough to cover            ECONOMY & POLITICS                                           9%                                                                                                          Trade
                                                                                                                                                                                                                          Textiles, clothing, footwear:
                                                                                                                                                                                                                                                              economy. A slow down
                                                                                                              8%                                                                                                                                              in growth for vehicle
the 1.6m quotas needed for a new EUR                                                                                                                                                                                      +38%
                                                                                                                                                                                                                                                              sales was only noted in
                                                                                                                                                                                                                          Pharmaceuticals +37%                Q2, but if economic
200m cement plant being prepared by                                                                           7%
                                                                                                                                                                                                                          Vehicles: +24%                      troubles lead to a
Mexican Cemex (see no 225 page 7).                                                                            6%                                                                                                          Food: +13%                          crunch, consumer
                                                 INFLATION                                                                                                                                                                                                    spending will also fall.
    The new quota is a 57% reduction on
the current 2005-2007 period and is far          Latvia's inflation rate                                      5%
                                                                                                                                                                                                                          Transport & Communi-




                                                                                                                   Apr 04

                                                                                                                            Aug 04



                                                                                                                                              Apr 05

                                                                                                                                                       Aug 05



                                                                                                                                                                         Apr 06

                                                                                                                                                                                  Aug 06



                                                                                                                                                                                                    Apr 07

                                                                                                                                                                                                             Aug 07
                                                                                                                                     Dec 04




                                                                                                                                                                Dec 05




                                                                                                                                                                                           Dec 06
                                                                                                                                                                                                                          cations
less than needed when taking into ac-            hits hot double-digits                                                                                                                                                   Freight: +18%
                                                                                                                                                                                                                                                          Logistics and transpor-
                                                                                                                                                                                                                                                          tation services continue
count future expansion of the country's          Latvia's average annual inflation rate hit                                                                                                                               Passenger transport: +15% to enjoy the growing
industrial and energy needs. Other coun-         10.1% in August this year, marking a                        The August figures include a 13% aver-                                                                       Post and communications:        demand caused by ex-
                                                                                                                                                                                                                          +9%                             panding businesses.
tries that will challenge Brussels' decision     new record high. Inflation woes continue                    age hike for education, 13% for food                                                                         Activities assisting, accompany-
on their CO2 quotas are Estonia, Lithua-         to trouble businesses and investors alike,                  prices, 16% for housing costs, 19% for                                                                       ing transportation: +8%

nia, Poland, the Czech Republic, Slovakia        as escalating wages, rising energy and                      alcohol and tobacco and 20% for the                                                                          Manufacturing
                                                                                                                                                                                                                                                             The timber sector is
                                                                                                                                                                                                                                                             contracting and growth
and Hungary – all new EU member states.          food costs continue to stretch the econ-                    HoReCa sector.                                                                                               Minerals: +17                      in the food and metals
                                                                                                                                                                                                                          Finished metal products:           segments is slowing
    The countries base their argument on         omy to its limits.                                              Most experts forecast that the average                                                                   +7%                                down. Total GDP from
claiming that the European Commission                August saw the average price for                        inflation rate for all of 2007 will be at                                                                    Food & beverages: +2%              manufacturing eased off
                                                                                                                                                                                                                          Timber products: -10%              -0.1% in Q2.
has breached the founding treaty of the          goods gain 8.7%, while services saw in-                     least 9%, gradually easing thereafter.
                                                                                                                                                                                                                          Construction                       A clear slow down in
European Community, which determines             flation of 13.9%. With food prices set to                   More on inflation: no 236 page 13                                                                                                               growth of the construc-
                                                                                                                                                                                                                          Residential: +22%
that any decisions that significantly effect     further rise, real estate taxes expected to                                                                                                                              Administrative: +15%
                                                                                                                                                                                                                                                             tion sector caused by
                                                                                                                                                                                                                                                             market fears, a labour
a member states choice in terms of energy        surge as of 2008, and a new hike of                                                                                                                                      Roads, bridges: +1%                deficit and tighter credit
                                                                                                                                                                                                                          Industrial: -2%
sources can only be made unanimously at          40% on natural gas in the pipelines, no
                                                                                                                                                                                                                                                             terms.

the Council of the European Union.                                                                                                                                                                                        Source: statistics office, Statistikas parvalde
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14                                                 news2biz LATVIA                       no 238 17 September 2007 © N O R T H R O U P N E W S L E T T E R S


    This brings average GDP growth for                   The latest report by the UN's Interna-                thanks to longer hours worked on aver-                     SCC study trip to Liepaja
the first six months of the year to 11.1%,           tional Labour Organisation (ILO) on key                   age. Thus the data for value added per                     Two day study trip to see Swedish businesses in
                                                                                                                                                                          Liepaja area, trip to Liepaja by bus, return by flight
showing a slight ease from the 11.9%                 indicators of the global labour market                    hour worked would be slightly different.                   Time: 26-27 September
average in all of 2006.                              shows that average productivity in Latvia                    The report shows that the productivity                  Organiser: Swedish Chamber of Commerce
                                                                                                                                                                          Details: http://www.scc.lv/?DocID=312
    Experts forecast a gradual cooling of            in 2006 reached USD 28,650 of value                       gap between the U.S. and most devel-
the economy later this year and through-             added per person employed in the entire                   oped countries continues to widen, with                    AmCham chilli cook-off
out 2008, however, trends in several key             year.                                                     the exceptions of Ireland, Finland, Swe-                   Annual chilli cook off contest
sectors of the economy remain concern-                   Latvia is slightly ahead of Lithuania on              den and the UK. The Baltics were also                      Time: 27 September
                                                                                                                                                                          Place: El-Charlito's, Riga
ing, not least of all the rapid drop in              USD 24,877, while Estonia remains the                     highlighted as one of the exceptions,                      Organiser: American Chamber of Commerce
growth of industrial output (see page 2).            clear Baltic frontrunner with USD 43,232                  however the productivity gap for the                       Details:
                                                                                                                                                                          http://www.amcham.lv/page.php?cat=441&id=1447
    Though some signs show of easing,                added value per person.                                   three countries remains considerable (see
other indicators are still aggravated. Lat-              In comparison, the U.S. showed USD                    graph below).                                              BCCL Monthly Dinner
via's current GDP growth is considered               63,885 added value per person in 2006,                       Readers must realise, however, that                     Meet new Brittish ambassador to Latvia and UKTI
unsustainable and expected to ease to                followed by Ireland on USD 55.986 and                     wage adjusted labour productivity (value                   trade delegation on business development plans
                                                                                                                                                                          Time: 8 October
7%-8% in coming years. Of course, crit-              Luxembourg on USD 55,641.                                 added divided by labour costs) in the                      Place: Hotel Europa Royale, Riga
ics of the government and their flimsy fis-              Compared to other Central and East-                   Baltic states remains quite high. Despite                  Organiser: British Chamber of Commerce
                                                                                                                                                                          Details: http://www.bccl.lv/events/2007-10-08
cal policies argue that the economy is               ern European countries, Latvia also re-                   the huge surge in wages in the past few
destined to crash.                                   mained ahead of Poland, Hungary, the                      years, wage-adjusted productivity is still                 German-Baltic Investors Forum
    GDP in Latvia gained 11.9% in 2006               Czech Republic, Bulgaria and Romania.                     higher than the EU average (see table in                   3rd bi-annual forum. Key topic: renewable energies
                                                                                                                                                                          and environmental infrastructures
and 10.6% in 2005.                                                                                             no 219 page 4).                                            Time: 11-14 October
More on GDP: no 236 page 14, no 234 page 13
                                                     Productivity in 2006                                      More on Productivity: no 219 page 4                        Place: Riga
                                                     Selected developed countries; value                                                                                  Organiser: GLC Glucksburg Consulting AG
                                                                                                               Further info: www.ilo.org                                  Details: http://www.glc-group.com/investors-forum/
                                                     added in USD per person in 2006
PRODUCTIVITY                                                                                                                                                              BCCL delegation London visit
Baltic productivity gap
                                                      63,885
                                                            55,986
                                                                                                               EVENTS                                                     Annual visit to London by British Chamber delegation
                                                                                                               Contracting Training for Coalition                         for partner matching Latvian companies with con-
still wide, but reducing                                            43,232
                                                                                                               Partners Seminar                                           tacts in the UK
                                                                                                                                                                          Time: 17-19 October
Though average productivity of the la-                                    28,650                               Two day free seminar targeting Latvian firms working
                                                                                24,87723,452                                                                              Place: London
                                                                                                               as prime contractors or sub-contractors and inter-
bour force in the Baltic states remains                                                     16,218                                                                        Organiser: British Chamber of Commerce, Latvian
                                                                                                  10,196       ested in upcoming business opportunities throughout        Investment and Development Agency
well behind that of many developed                                                                             the world. Conducted by instructors from the U.S.          Price: GBP 50, or LVL 165 (incl. flight from Riga)
countries, Estonia, Latvia and Lithuania                                                                       Dept of Arm in Washington DC, Defense Acquisition          Details: http://www.bccl.lv/events/2007-10-18/105
                                                                                                               University, U.S. Corps of Engineers, and General
are among the few exceptions that have                 USA IRL       EE      LV     LT     CZ   BL   RO        Services Administration
since 2000 been able to continue reduc-                                                                        Time: 20-21 September
                                                     Source: ILO                                               Place: Hotel Jurmala Spa
ing their productivity gaps in comparison                                                                      Organiser: Dept of Army in Washington DC, US
to the world leader in productivity, the             The ILO explains in the report that pro-                  Embassy Riga Commercial Service
                                                                                                               Details:
United States.                                       ductivity in the U.S. is the highest also                 http://www.amcham.lv/page.php?cat=441&id=1451
                                                             news2biz LATVIA no 238, 17 September 2007                                                                                                                                                                                                                 15


WAGES                                                                                                      REAL EARNINGS


Average monthly wages in LVL (column A)                                                                     500                                                               Real earnings index (right axis)                                                                                                         4,4
Indexed average wages (column B)                                                                            480                                                                                                                                                                                                        4,2
                                                                                                                                                                              Money-wage index
                                                                                                            460                                                                                                                                                                                                        4,0
                                                                                                            440                                                               Consumer price index                                                                                                                     3,8
                                                                Gross *)                                    420                                                                                                                                                                                                        3,6
                                                                                                            400                                                                                                                                                                                                        3,4
 Sector                                     4th Q 2006         1st Q 2007           2nd Q 2006              380                                                                                                                                                                                                        3,2
                                             A          B        A          B        A        B             360                                                                                                                                                                                                        3,0
                                                                                                            340                                                                                                                                                                                                        2,8
 Industry                                   312       296       338        321       n/a      n/a           320                                                                                                                                                                                                        2,6
 Construction                               318       427       317        425       n/a      n/a           300                                                                                                                                                                                                        2,4
 Agriculture, hunting, and forestry         291       353       318        386       n/a      n/a           280                                                                                                                                                                                                        2,2
 Retail and wholesale                       271       264       297        289       n/a      n/a           260                                                                                                                                                                                                        2,0
 Transport and communications               352       243       380        262       n/a      n/a           240                                                                                                                                                                                                        1,8
 Government                                 526       534       490        498       n/a      n/a           220                                                                                                                                                                                                        1,6
                                                                                                            200                                                                                                                                                                                                        1,4
 National wage average                    419.00 433          405.50 419           463.34 478               180                                                                                                                                                                                                        1,2
 Unemployment in per cent                   6.5          -      6.3          -       5.8          -         160                                                                                                                                                                                                        1,0
                                                                                                            140                                                                                                                                                                                                        0,8
Note: January 1996 = index 100.                                                                             120                                                                                                                                                                                                        0,6




                                                                                                                       2nd Q 03




                                                                                                                                                                   2nd Q 04




                                                                                                                                                                                                                 2nd Q 05




                                                                                                                                                                                                                                                             2nd Q 06




                                                                                                                                                                                                                                                                                                         2nd Q 07
                                                                                                                                                        1st Q 04




                                                                                                                                                                                                      1st Q 05




                                                                                                                                                                                                                                                  1st Q 06




                                                                                                                                                                                                                                                                                              1st Q 07
                                                                                                                                  3rd Q 03
                                                                                                                                             4th Q 03




                                                                                                                                                                               3rd Q 04
                                                                                                                                                                                           4th Q 04




                                                                                                                                                                                                                            3rd Q 05
                                                                                                                                                                                                                                       4th Q 05




                                                                                                                                                                                                                                                                        3rd Q 06
                                                                                                                                                                                                                                                                                   4th Q 06
*) Excluding the employer's legally fixed social tax of 26%
Source: The Latvian statistical office, Centrala statistikas parvalde.


                                                                                                           Note: The diagram shows the developments of the average national gross wages and inflation.
                                                                                                           The difference between the two graphs may be read as the average improvement of the real
                                                                                                           earnings compared to January 1996. The columns show an index of the real earnings. If index
                                                                                                           is above 1, the wages have increased more than inflation compared to January 1996.


TRADE


Latvian exports and imports according to commodity groups

                                                                           EXPORT in LVL m                                                                                                                   IMPORT in LVL m

                                                  Jan-Jun                   Jan-Jun                                                                Jan-Jun                                                       Jan-Jun
 (according to Latvian classification)                          Share                      Share       2006          Share                                                           Share                                                        Share                            2006                             Share
                                                   2007                       2006                                                                  2007                                                           2006
 Agricultural & food products (I-IV)                 244.0        13%             193.9    12%          433.4         13%                               395.0                              11%                              199.7                    12%                             702.7                           11%
 Food, beverages & tobacco (IV) *                    149.4         8%             111.1     7%          242.3          7%                               217.7                               6%                               96.6                     6%                             379.8                            6%
 Mineral products (V)                                 80.6         4%              92.6     6%          182.6          6%                               432.3                              12%                              260.0                    15%                             862.9                           14%
 Chemical products (VI)                              139.2         7%             109.2     7%          219.0          7%                               313.4                               9%                              167.2                     9%                             522.2                            8%
 Wood & articles of wood (IX)                        439.7        23%             357.6    21%          734.8         23%                                 n/a                               n/a                              50.7                     3%                             159.8                            3%
 Textiles (XI)                                       145.7         8%             132.8     9%          267.0          8%                               163.4                               4%                               87.8                     5%                             293.6                            5%
 Metal (XV)                                          307.6        16%             231.6    17%          486.8         14%                               366.5                              10%                              160.0                     9%                             597.7                           10%
 Machinery & electric equipment (XVI)                190.7        10%             130.4     9%          317.4         10%                               764.0                              21%                              315.0                    18%                           1,215.7                           19%
 Transport vehicles (XVII)                             n/a         n/a             93.8     7%          195.0          6%                               527.6                              13%                              204.1                    12%                             843.7                           13%
 Various, including furniture (XX)                    75.7         4%               n/a     n/a         147.6          5%                                 n/a                               n/a                               n/a                     n/a                            206.3                            3%
 Other commodity groups                              174.5        15%             201.9    12%          278.0          8%                               729.8                              20%                              292.2                    17%                             863.4                           14%
  TOTAL                                           1,897.7       100%        1,543.8 100%              3,261.6        100%                        3,692.0                             100%                        2,764.3 100%                                                  6,268.0                              100%

*) Please note that this commodity is included in the previous category.

Latvia's largest export markets                                                                                 Latvia's largest import markets
(ranked according to 2006 in LVL m)                                                                             (ranked according to 2006 in LVL m)

                                  Jan-Jun                                                                                                                                                 Jan-Jun
No Country                                           Share               2006        Share                      No Country                                                                                                        Share                                    2006                             Share
                                   2007                                                                                                                                                    2007
 1    Lithuania                     276.5            14.6%               474.7        14.6%                      1    Germany                                                              553.3                                   15.0%                                    954.3                            15.2%
 2    Estonia                       262.3            13.8%               410.1        12.6%                      2    Lithuania                                                            503.3                                   13.6%                                    816.3                            13.0%
 3    Germany                       169.3             9.5%               331.6        10.2%                      3    Russia                                                               316.0                                    8.6%                                    499.1                             8.0%
 4    Russia                        179.5             8.7%               291.9         9.0%                      4    Estonia                                                              294.4                                    8.0%                                    482.7                             7.7%
 5    UK                              n/a               n/a              258.2         7.9%                      5    Poland                                                               258.6                                    7.0%                                    447.9                             7.1%
 6    Sweden                        135.5             7.1%               211.4         6.5%                      6    Finland                                                                n/a                                      n/a                                   353.9                             5.6%
 7    Denmark                         n/a               n/a              159.7         4.9%                      7    Sweden                                                                 n/a                                      n/a                                   320.6                             5.1%
 8    Finland                         n/a               n/a               96.4         2.9%                      8    Belarus                                                                n/a                                      n/a                                   297.7                             4.8%
      EU-27                      1,442.9             76.0%            2,436.1         74.7%                           EU-27                                                          2,740.8                                       74.2%                                4,778.9                              76.2%
      EU-15                        775.4             40.8%            1,412.8         43.3%                           EU-15                                                          1,630.8                                       44.2%                                2,793.9                              44.6%
      CIS                          276.3             14.6%              461.2         14.1%                           CIS                                                              401.6                                       10.8%                                  902.7                              14.4%
Source: The Latvian statistical office, Latvijas centrala statistikas parvalde.


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                                                   This newsletter may not be photocopied or redistributed in any way
16                                                                          news2biz LATVIA no 238, 17 September 2007


MONEY SUPPLY                                                                                                                                  CREDIT


Money supply in LVL m                                                                                                                         The financial sector's net lending in LVL m *
                                            Mar 07          Apr 07            May 07              Jun 07             Jul 07                      Type of loan            Mar 07        Apr 07       May 07         Jun 07          Jul 07
M0                                     2,180.8           2,244.8            2,245.0            2,311.8            2,268.9                     Loans to enterprises
                                                                                                                                                                             10,767       11,114      11,385        11,755          11,981
M1                                     4,032.7           4,058.9            4,079.1            4,214.3            4,280.7                     and individuals
- Currency outside banks                 933.6             940.6              932.3              948.6              946.8                     - Short term **                1,237.9      1,243.7     1,275.6       1,355.3         1,373.9
- Demand deposits                      3,099.1           3,118.3            3,146.7            3,265.7            3,333.8                     - Long term **                 9,529.3      9,870.2    10,109.0      10,399.0        10,606.0
M2                                     5,663.2           5,754.9            5,821.2            6,035.3            6,044.5
Time deposits                            935.8             968.8              988.6              971.3              927.5                     MFI credit to general
                                                                                                                                                                               -77.6        -92.2        -197.8         -150.8       -239.4
Foreign currency dep.                  1,999.8           2,083.6            2,133.4            2,247.6            2,316.6                     government, net
M3                                     5,736.9           5,835.7            5,900.0            6,146.6            6,167.0                     *) Balance by the end of month.
M0 = Latvian currency emitted by Latvijas Banka and money on accounts held with it.                                                           **) Short term loans are up to 1 year; long term loans are over 1 year.
M1 = currency outside banks as well as demand deposits.                                                                                       Source to both tables: Latvia's central bank, Latvijas Banka
M2 = M1 plus savings and time deposits, repurchase agreements; M3 is the broad measure
of money supply, including also debt securities with maturity of up to 2 years.


INFLATION                                                                                                                                     INTEREST RATES


Inflation year-on-year                                                                                                                        Average weighted annual interest rates on credits
10,5%                                                                                                                                            Type of loan            Mar 07        Apr 07       May 07        Jun 07          Jul 07
10,0%
 9,5%                                                                                                                                         To companies (LVL)              8.0%      10.4%        10.1%          9.8%            8.4%
 9,0%                                                                                                                                         To individuals (LVL)           11.0%      13.3%        14.9%         15.4%           16.5%
 8,5%                                                                                                                                         Refinancing rate of
 8,0%                                                                                                                                                                        5.5%         5.5%          6.0%        6.0%            6.0%
                                                                                                                                              the central bank
 7,5%
 7,0%                                                                                                                                         Source: Latvia's central bank, Latvijas Banka.
 6,5%
 6,0%                                                                                                                                         Riga Inter Bank Offered Rate (RIGIBOR)
 5,5%
                                                                                                                                               Overnight              1 week           1 month           3 months           6 months
                 oct 05




                                                                           oct 06
        aug 05




                          dec 05




                                              apr 06

                                                       jun 06

                                                                aug 06




                                                                                    dec 06




                                                                                                        apr 07

                                                                                                                  jun 07

                                                                                                                           aug 07
                                   feb 06




                                                                                               feb 07




                                                                                                                                                  8.66%               8.83%            10.04%             10.82%             10.86%
                                                                                                                                              Source: Latvia's central bank, Latvijas Banka, as of 14 September 2007.
Source: The Latvian statistical office, Centrala statistikas parvalde.


CONSUMER PRICE INDEX


Consumer price index 100 = current 12 months
                                                                   Jan 2004 Jan 2005 Jan 2006 Jan 2007                                           Mar 2007 Apr 2007 May 2007 Jun 2007                        Jul 2007 Aug 2007
 Food and non-alcoholic beverages                                        103.2                109.0              109.5              109.9           111.3            112.1        110.7          112.5         112.2             112.6
 Alcoholic beverages and tobacco                                         102.4                102.4              109.1              106.9           108.6            108.6        108.9          110.3         114.3             118.5
 Clothes and footwear                                                    101.7                100.4              101.1              101.3           102.0            101.6        101.3          101.3         103.5             103.8
 Housing, electricity and gas                                            109.5                103.9              111.4              113.4           113.3            114.3        114.1          114.3         115.2             116.4
 Household items and furniture                                           102.1                102.5              103.1              104.3           104.7            104.7        104.7          105.3         105.0             105.0
 Transport                                                               104.2                112.5              110.6              103.2           107.7            106.7        104.8          105.9         106.7             106.0
 Communications                                                           99.2                 99.0               93.0               94.5            95.7             95.0         95.4           92.8          92.6              93.1
 Gross consumer price index                                              103.9               106.6               107.5              107.1          108.5          108.9          108.2           108.8         109.5         110.1
 Inflation year-on-year                                                  3.9%                 6.6%               7.5%               7.1%            8.5%           8.9%           8.2%           8.8%          9.5%         10.1%

Consumer price index 100 = previous month
                                                                         Nov 2006 Dec 2006 Jan 2007 Feb 2007 Mar 2007 Apr 2007 May 2007 Jun 2007                                                            Jul 2007 Aug 2007
 Food and non-alcoholic beverages                                          102.1               100.3                102.2             100.8         101.2            101.4        100.6          101.9         101.7              98.6
 Alcoholic beverages and tobacco                                            99.7                99.7                101.2             101.2         101.1            100.4        100.8          102.3         106.1             104.4
 Clothes and footwear                                                      100.0                99.6                 94.7              95.5         106.1            101.7        100.4           98.5          96.1             100.2
 Housing, electricity, and gas                                             102.5               100.3                102.2             102.0         100.6            101.0        100.8          100.7         102.4             101.0
 Household items and furniture                                             100.9                99.9                100.7             100.4         101.0             99.8        100.1          100.4         100.1             100.6
 Transport                                                                  99.3               100.5                102.5             101.4         102.0            101.6        101.2          101.3         100.9             100.0
 Communications                                                             99.6                98.5                100.3              99.3          99.9             97.1         99.9           98.8          99.7             100.0
 Gross consumer price index                                               101.0                100.3              101.3              100.5         101.4          100.9          100.6           100.9         101.2         100.4
 Inflation month on month                                                 1.0%                 0.3%                1.3%              0.5%           1.4%           0.9%           0.6%           0.9%          1.2%              0.4%
Source: The Latvian statistical office, Centrala statistikas parvalde.



                                                                                             Copyright            © NORTHROUP NEWSLETTERS
                                                                This newsletter may not be photocopied or redistributed in any way
                                                           news2biz LATVIA no 238, 17 September 2007                                                                                                                                                                                                                                                                                                                                                                        17


CURRENCY


Exchange rates as of 14 Sep 2007                                                     Nordic currencies against LVL                                                                                                                                                                                                       EUR and USD against LVL
(transfers of foreign currencies into lats LVL)
                                                                                                          DKK                                                         NOK                                                                  SEK                                                                                                                         EUR                                                                         USD
  Cur-
                   SEB              Parex               LB*                                                                                                                                                                                                                     0,72
 rency                                                                   0,096                                                                                                                                                                                                  0,70
             Buy         Sell     Buy      Sell       Average            0,094                                                                                                                                                                                                  0,68
                                                                         0,092                                                                                                                                                                                                  0,66
100 EUR 69.74 70.66 69.87 70.53                        70.28
                                                                         0,090                                                                                                                                                                                                  0,64
100 USD 50.13 51.18 50.05 51.15                        50.60
100 GBP 101.10 103.40 101.10 103.32                   102.60             0,088                                                                                                                                                                                                  0,62
100 CHF 42.00 43.30 42.21 43.12                        42.70             0,086                                                                                                                                                                                                  0,60
100 CAD 48.20 49.70 48.34 49.40                        48.80             0,084                                                                                                                                                                                                  0,58
100 DKK   9.29   9.57   9.32   9.53                     9.44             0,082                                                                                                                                                                                                  0,56
100 SEK   7.47   7.69   7.49   7.66                     7.57             0,080                                                                                                                                                                                                  0,54
100 NOK   8.81   9.07   8.85   9.04                     9.00             0,078                                                                                                                                                                                                  0,52
100 EEK   4.42   4.45   4.44   4.54                     4.49             0,076                                                                                                                                                                                                  0,50
100 LTL  20.00 20.60 20.11 20.55                       20.40             0,074                                                                                                                                                                                                  0,48
100 RUR   1.96   2.03 1.967 2.026                       1.99             0,072




                                                                                                                                                                                                                                                                                                            26 sep 06




                                                                                                                                                                                                                                                                                                                                                                                                                                                                               14 sep 07
                                                                                                                                                                                                                                                                                              25 aug 06




                                                                                                                                                                                                                                                                                                                                                                                                                                                             15 aug 07
                                                                                                                                                                                                                                                                                                                                               30 nov 06
                                                                                                                                                                                                                                                                                                                                                           4 jan 07




                                                                                                                                                                                                                                                                                                                                                                                                                    15 may 07
                                                                                                                                                                                                                                                                                                                                                                                                                                14 jun 07
                                                                                                                                                                                                                                                                                                                                                                                                                                            16 jul 07
                                                                                                                                                                                                                                                                                                                               26 oct 06




                                                                                                                                                                                                                                                                                                                                                                       5 feb 07
                                                                                                                                                                                                                                                                                                                                                                                      7 mar 07
                                                                                                                                                                                                                                                                                                                                                                                                     10 apr 07
                                                                                              12 sep 06




                                                                                                                                  13 dec 06




                                                                                                                                                                                                                                                       14 sep 07
                                                                                 14 aug 06




                                                                                                                      09 nov 06


                                                                                                                                              16 jan 07




                                                                                                                                                                                                 21 may 07
                                                                                                                                                                                                             19 jun 07
                                                                                                                                                                                                                           18 jul 07
                                                                                                                                                                                                                                          16 aug 07
                                                                                                          11 oct 06




                                                                                                                                                          14 feb 07
                                                                                                                                                                      15 mar 07
                                                                                                                                                                                  17 apr 07
Note: LVL has remained strong against EUR since it has been
pegged to it, hence the commercial exchange rates are below the
average rate set by Latvijas Banka (see also no 198 page 13).
*) Latvijas Banka (Central Bank). Source: banks' own data.                                                                                                                                                                                                                     Source: Latvia's central bank, Latvijas Banka.


STOCK EXCHANGE


Riga Stock Exchange / Rigas Fondu Birza                                                                                                                                                                                    OMX Riga* (LVL) the last three months
     Selected securities                  Last price           Change              Change                                                                                  760
    (in alphabetic order)                 14 Sep 07           31 Aug 07          end of 2006
                                                                                                                                                                           750
   Grindex                                     7.85               - 2%                         + 9%
   Latvijas Balzams                            4.33                 0%                          - 2%                                                                       740
   Latvijas Gaze                               9.97              + 1%                           - 3%
                                                                                                                                                                           730
   Latvijas Kugnieciba (LASCO)                 1.53             + 11%                        + 43%
   Olainfarm                                   2.88               - 4%                       + 18%                                                                         720
   SAF Tehnika                                 3.98              + 3%                         - 67%
   Valmieras SSR                               1.80              + 1%                         - 24%                                                                        710
   Ventspils Nafta                             3.15              + 6%                        + 34%
                                                                                                                                                                           700
   OMX Riga                                755.74                + 4%                        + 12%
   OMX Baltic Benchmark                    664.14                + 1%                         + 7%                                                                         690

Indices: The OMX Baltic Benchmark index consists of the largest and most traded stocks on                                                                                  680
the OMX's Baltic Market, representing all sectors. It is a good comparative index for investors.

                                                                                                                                                                                                                                                                                                                                                                                                                                 4 sep 07

                                                                                                                                                                                                                                                                                                                                                                                                                                                 10 sep 07

                                                                                                                                                                                                                                                                                                                                                                                                                                                                         14 sep 07
                                                                                                                                                                                              22 jun 07

                                                                                                                                                                                                               28 jun 07

                                                                                                                                                                                                                                   04 jul 07

                                                                                                                                                                                                                                                      10 jul 07

                                                                                                                                                                                                                                                                   16 jul 07

                                                                                                                                                                                                                                                                                 20 jul 07

                                                                                                                                                                                                                                                                                                26 jul 07

                                                                                                                                                                                                                                                                                                                   01 aug 07

                                                                                                                                                                                                                                                                                                                                           07 aug 07

                                                                                                                                                                                                                                                                                                                                                           13 aug 07

                                                                                                                                                                                                                                                                                                                                                                          17 aug 07

                                                                                                                                                                                                                                                                                                                                                                                             23 aug 07

                                                                                                                                                                                                                                                                                                                                                                                                                 29 aug 07
The OMX Riga* Stock Index is calculated on a continuous basis from the most recent prices of
all shares listed on the Riga Stock Exchange’s Main List and I-List. Index 100 = 1 January 2000.
Source: Riga stock exchange, Rigas Fondu Birza.
                                                                                                                                                                      *) Riga Stock Exchange's RIGSE benchmark index renamed as OMX Riga as of 3 Oct 2005.


PRICES                                                                                                                                                                RETAIL TRADE


Prices of selected goods and services in LVL                                                                                                                          Relative retail trade performance
Food                               Sep 07         Non-food                                       Sep 07                                                                                                      Month                                                                           Mar 07                                   Apr 07 May 07                                                                    Jun 07                                  Jul 07
Milk, 1 l                               0.53      Cigarettes, Marlboro, pack                               1.03                                                        Since the beginning of the year
Butter, 82%, 200g                       0.78      Alka-Seltzer, Bayer, 10 tab.                             3.02                                                                                                                                                                              128.0                                         126.9                                  126.3                                      126.0                               125.8
                                                                                                                                                                       on the same period year before
Bread, loaf                             0.46      Dienas Bizness business daily                            0.49
Beef , T-bone steak, 1 kg               2.95      Photo film, Kodak, 36/200                                2.79                                                        Index 100 = previous month                                                                                            101.5                                              99.3                              102.6                                      102.0                               100.8
Chicken broilers, 1 kg                  1.89      Taxi, per km                                             0.50                                                        Index 100 = same month
Tomatoes, 1 kg                          1.05      Local phone call, 1 min.                                 0.02                                                                                                                                                                              127.7                                         124.0                                  124.3                                      124.4                               124.0
                                                                                                                                                                       the previous year
Apples, 1 kg                            0.95      Int'l phone call, 1 min., to EU                          0.10
Bananas, 1 kg                           0.87      Local letter, up to 20 g                                 0.22                                                                                                  Year                                                                        2002                                          2003                              2004                                        2005                                  2006
Eggs, 10 pieces                         0.69      Electricity, kWh                                        0.051
Sugar, 1 kg                             0.75      Water, cb.m                                              0.27                                                        Turnover in LVL m                                                                                                     2,363                                         2,758                                  3,249                                3,868                                 4,732
Coffee, Jacobs, 500 g                   2.59      Natural gas, cb.m                                       0.174
Beer, Aldaris Zelta, 0.5 litre          0.52      Petrol 95E, 1 litre, Statoil                             0.64                                                        Index 100 = previous year                                                                                             112.4                                         113.6                                  112.3                                      121.3                               120.1
Mineral water, Vichy, 0.3 litre         0.27      Diesel, 1 litre, Statoil                                 0.64
                                                                                                                                                                      Note: Retail trade performance indexes are calculated at constant (2000) prices only.
Note: prices are in Riga, for popular brands at popular shopping locations; rates are average                                                                         Source: The Latvian statistical office, Centrala statistikas parvalde
peak in Riga for households.
Source: news2biz LATVIA survey.



                                                                    Copyright                        © NORTHROUP NEWSLETTERS
                                                   This newsletter may not be photocopied or redistributed in any way
18                                                           n e w s 2 bi z LATVIA no 238, 17 September 2007


INDUSTRIAL OUTPUT


          On monthly basis
                                                  Jan         Feb        Mar          Apr     May         Jun        Jul
                                                                                                                               news2biz
                                                 2007        2007        2007        2007     2007       2007       2007    Newsletters to professionals
Index 100 = Previous month                        97.6       102.7       100.1        98.1    104.0       99.0      100.3        doing business in
Index 100 = Same month previous year             100.2       102.0       101.0        99.1    103.4      101.2      101.8     Eastern Europe & China
                      Year                       2000        2001        2002        2003     2004       2005       2006
                                                                                                                               N ORTHROUP N EWSLETTERS
Index 100 = Previous year                        103.2       106.9       105.8      106.5    106.0       105.6      104.8             Bredgade 25 D
Note: Industrial output equals industrial production.                                                                            DK-1260 Copenhagen K
Source: The Latvian statistical office, Centrala statistikas parvalde.                                                          phone: +45 33 33 07 20
                                                                                                                                telefax: +45 33 33 07 91
PRODUCER PRICES                                                                                                              e-mail: contact@news2biz.com
                                                                                                                             homepage: www.news2biz.com
                                                  Jan         Feb        Mar          Apr     May         Jun        Jul
          On monthly basis
                                                 2007        2007        2007        2007     2007       2007       2007

Index 100 = Previous month                       103.4       101.1       101.5       101.8    101.5      100.4      100.8         news2biz   POLAND
Index 100 = Same month previous year             115.4       115.8       116.0       117.8    117.9      117.7      117.6         news2biz   LITHUANIA
                      Year                       2000        2001        2002        2003     2004       2005       2006          news2biz   LATVIA
Index 100 = Previous year                        100.6       101.7       101.0      103.2    108.6       107.8      110.3         news2biz   ESTONIA
Note: Producer prices are prices of industrial goods excluding VAT and other taxes.                                               news2biz   CHINA
Source: The Latvian statistical office, Centrala statistikas parvalde.
                                                                                                                             Published on-line every 2 weeks
GDP                                                                                                                          in English, Swedish and Danish.
                                                                                                                             Investments, companies, market
                                     Real growth                       LVL m at                        GDP per               trends, key figures. Independent
 Period
                                     year on year                    current prices                  capita in EUR              news research since 1991.
 2nd quarter 2007                       + 11.0%                            3,389                         2,098
                                                                                                                              On-site journalists in Warsaw,
 1st quarter 2007                       + 11.2%                            2,898                         1,809
 4th quarter 2006                       + 11.7%                            3,290                         2,050
                                                                                                                             Vilnius, Riga, Tallinn and Beijing.
 3rd quarter 2006                       + 11.9%                            2,971                         1,849              Main editorial staff in Copenhagen.
 2nd quarter 2006                       + 11.1%                            2,694                         1,674
 1st quarter 2006                       + 13.1%                            2,309                         1,433
 4th quarter 2005                       + 11.4%                            2,624                         1,626
 3rd quarter 2005                       + 11.4%                            2,340                         1,448                         Publisher
 2008 *                                  + 8.2%                               n/a                           n/a
                                                                                                                                    John Bo Northroup
 2007 *                                 + 10.2%                               n/a                           n/a
 2006                                   + 11.9%                           11,265                         7,002                       john@news2biz.com
 2005                                   + 10.6%                            9,059                         5,602
 2004                                    + 8.6%                            7,428                         4,733                     Newsdesk Latvia
 2003                                    + 7.2%                            6,318                         4,212                       Maris Biezaitis
*) Forecast by SEB.                                                                                                                 latvia@news2biz.com
Source: The Latvian statistical office, Centrala statistikas parvalde, SEB Unibanka, Latvijas Banka.
                                                                                                                                Staff and translators
CURRENT ACCOUNT                                                                                                                Aleksander Slaw, Ulla Hinge
                                                                                                                               Peter Kyhn, Carol Todd-Moir
                                                                                                                              Tanja Tjerry, Stefan Gehander
   (excerpts shown in LVL m)                      2004           2005             2006       Jun 2007           Jul 2007
Trade balance                                    - 1,502.9     - 1,715.1         - 2,752.3     - 285.2            - 393.3          Customer Service
Services                                             325.4         344.2             385.3        60.5               33.7
Direct investments, net                              344.3         409.0             915.9        80.0               34.9
                                                                                                                                     Andrejs Visockis
Current account balance                            - 961.2     - 1,137.3         - 2,376.0     - 191.0            - 379.2          customer@news2biz.com
Current account deficit in % of GDP *               12.9%         12.6%             21.1%          n/a                n/a
                                                                                                                            Subscription prices e-access
Source: Latvia's central bank, Latvijas Banka.
                                                                                                                              3 months (5 issues) EUR 250
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 Net and stock in LVL m                                  2005        2006
                                                                                    3Q        4Q        1Q          2Q          This edition completed
                                                                                   2006      2006      2007        2007
                                                                                                                                   17 September 2007
Foreign direct investment, net *                         362.7       834.0         115.3     282.0      245.6       369.3
Foreign direct investment stock                          2,836       3,670         4,222     4,504      4,750       5,142          Next issue on-line
*) Foreign direct investments in Latvia minus Latvian investments abroad.                                                            1 October 2007
Source: Latvia's central bank, Latvijas Banka.
                                                                                                                                www.news2biz.com/latvia/uk/



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