- Business Relationships
- Foreign direct investment
- FTAs and Treaties
- Development Cooperation
- Prospective fields of study (MOP)
Trade relations with the EU
Lithuania has a relatively well-diversified export base. According to EIU analysts, local exporters can be expected to maintain a positive trend in competitiveness growth, however they fail to increase productivity faster than nominal wages in the long term, which increases labor costs.
- Allcountrylist: Overview of major industries in Lithuania, including mining, construction, transportation, tourism, and foreign trade.
|Exports from the EU (million EUR)||14,479.1||15,550.5||16,302.1||16,057.8||28,579.1|
|Imports into the EU (million EUR)||19,206.50||20,456.40||21,205.00||20,618.90||22,307.5|
|Balance with the EU (million EUR)||4,727.4||4,905.9||4,902.9||4,561.1||-6,271.6|
Source: European Commission, Trading Economics
Trade relations with the Czech Republic
Despite the difficult period, bilateral trade between the Czech Republic and Lithuania maintained minimal positive growth. The Czech Republic remains an important Lithuanian trade partner. Mainly exported to Lithuania are machinery and industrial equipment, boilers, means of transport (passenger cars, railway vehicles), electrical machinery and equipment, plastics (polyethylene), drugs and pharmaceuticals, chemical products (laundry and cleaning agents), ground glass, assembled objects, data processing equipment. The largest Czech exporters to Lithuania include Škoda Auto, Škoda Transportation, Glaverbel Czech, Chemopetrol Litvínov, Laufen CZ, OKZ Holding, Procter&Gamble, Barum Continental, Euromopos Olomouc, Jäkl, Zentiva, Aerosol and ZPA Smart Energy. The main items of Czech imports from Lithuania are raw materials and semi-finished products for the chemical industry, including synthetic fabrics, plastics, fertilizers, products of the electrical industry,
|Exports from the Czech Republic (billion CZK)||7.2||15.6||17.9||18.3||18.9|
|Imports to the Czech Republic (billion CZK)||16||8.1||9.3||9.7||10.5|
|Balance with the Czech Republic (billion CZK)||9||-7.4||-8.6||-8.6||-8.3|
Trade relations with countries outside the EU
Despite the opportunities offered by the free trade agreements signed between the EU and Japan, or Vietnam, there are threats that have a negative impact on Lithuanian exports, such as possible trade disputes between the EU and the USA or the current Chinese politically conditioned embargo on Lithuanian exports.
|Exports from countries outside the EU (million EUR)||10,944.7||12,720.50||13,321.40||12,631.50||14,641.50|
|Imports to countries outside the EU (million EUR)||8,222.2||10,569.8||9,190.8||7,736.3||ON|
|Balance with non-EU countries (million EUR)||2,722.5||2,215.5||2,686.5||4,129.6||ON|
Source: EIU, Eurostat
Foreign direct investment
In 2021, the volume of foreign direct investment in Lithuania reached a record level, further strengthening Lithuania’s position in the business services sector, in addition, the country continues to seek to exploit the potential of the life sciences industry and the growing demand for digital technologies. Not only the developed ecosystem of the technology sector contributes to this, but also very favorable state measures to support investments: the benefits of the Giga regulatory package, initiatives for retraining and attracting talent, the possibility of collective relocation, etc. In 2021, 27 new companies started operating in Lithuania. Over the next three years, it is planned to create 5,435 new jobs (a third of them outside Vilnius) and to invest almost EUR 205 million in fixed assets.
Accumulated foreign direct investment (FDI) in Lithuania increased by 8.4% year-on-year and amounted to EUR 26 billion at the end of 2021, or 46.9% of the country’s GDP. Average FDI per capita in Lithuania was EUR 9,286 (EUR 8,517 at the end of 2020). The biggest investors are Germany (€billion), Sweden (€4 billion), Estonia (€billion), the Netherlands (€billion) and Hong Kong (€billion). Although the inflow of FDI in 2021 decreased by 43.2% year-on-year to EUR billion, reinvestments increased by 34.3% to EUR billion. The largest investment flows were recorded in capital companies from Hong Kong (EUR 607.6 million), the Netherlands (EUR 35million) and the USA (EUR 278.2 million). Belarus ranked 7th in 2021, its investment increased times to EUR 117.7 million.
FTAs and treaties
After joining the EU, Lithuania and the EU member states are dealing with intra-community trade, which is subject to the same regulations as trade with other member states of the EU. Intra-EU trade is not subject to customs supervision or control regimes. However, there is a registration obligation in the INTRASTAT statistics system and measures resulting from the application of national tax regulations in the area of VAT and consumption tax. The basic regulations are the Community Customs Act (Council Regulation (EEC) No. 2913/92 and Commission Regulation (EEC) No. 2454/93). However, intra-Union trade cannot be considered national trade, as there is no common institution of private law. When negotiating any commercial legal relationship between two entities with headquarters in different member states, it is in practice a relationship with a foreign international legal entity. Any conflicts are resolved through court proceedings or arbitration.www.czso.cz, or on the website of the customs administration www.cs.mfcr.cz.
Lithuania is not a recipient of any official development aid from the Czech Republic. Lithuania is a beneficiary of the European Structural and Investment Funds (ESIF) with a total allocation of up to EUR 1 billion in the period 2021-2027, which is EUR billion more than it was allocated in 2014-2020 (12, EUR 8 billion). It is estimated that 1 euro paid into the EU budget will generate 4 euro of EU support for Lithuania.
Prospective fields of study (MOP)
The civil aviation industry, the transport industry and infrastructure, the energy industry and railway and rail transport remain strategic sectors for Czech solutions even after the end of the coronavirus pandemic, where opportunities for Czech companies derive from long-term Lithuanian government strategies.
Civil aviation industry
The Lithuanian government sees the development of air transport and related support activities as one of the potential directions for the future. For that reason, aircraft repair and maintenance are among the priority areas supported for FDI support in Lithuania. Significant investments are directed into the aviation infrastructure – since 2018, a long-term reconstruction of the Vilnius airport has been underway. The government estimates investments in the expansion of Lithuania’s international airports in Vilnius, Kaunas and Palanga by 2028 at around EUR 700 million. The Ministry of Transport is also considering the construction of a new airport between Vilnius and Kaunas. The final decision on the construction is to be taken by the end of 2022, based on the assessment of the increasing capacity requirements of air transport, the logistics of the overall concept of the transport solution and the demands of conservationists. It is a feasible project,
Transport industry and infrastructure
Lithuania still does not have a high-quality and dense road network – the statistics of the local Ministry of Transport indicate 309 km of highways and 1,639 km of first-class roads. On the other hand, the density of Lithuanian roads of lower classes (19,592 km) approached the EU average. A total of six European road corridors pass through the territory of Lithuania. Currently, the greatest emphasis is placed on the international transport corridor Via Baltica, the highway has been granted the status of special state importance. The reconstruction of the more than 40 km Kaunas – Marijampolė – Suwałki section is to be completed by 2026, the total cost is EUR 4million. The Lithuanian government pays increased attention to improving the quality of the road network and the construction of highways and city bypasses, including the use of EU funds. EUR 6.71 billion was allocated from structural funds for transport projects in the period 2014-2020.
In 2018, Lithuania approved a new national energy independence strategy. The main vision of the document is to ensure the country’s complete independence in the field of energy, which Lithuania wants to achieve by strengthening the connection with continental Europe, disconnecting from the current BRELL grid system (Russia, Belarus and the Baltics), diversifying the supply of energy raw materials, strengthening domestic electricity production and achieving full independence from fossil fuels by 2050. According to the new economic recovery plan, the Ministry of Finance intends to provide EUR 311 million to increase the use of renewable energy sources, increase energy efficiency and competitiveness of the energy sector. The Ministry of the Environment has provided a €10 million subsidy from the Climate Change Program for the use of energy from renewable sources in public and residential buildings. This represents concrete opportunities for Czech companies in the form of supported development of renewable energy sources (30% in 2020, by 2030 this share is planned to be 45% and in 2050 up to 80%), especially wind and solar energy. The restoration and modernization of the Kruonis pumped water power plant is about to improve, the situation in the field of energy efficiency, reduction of consumption and losses during production, transmission and consumption, use of modern technologies (Smart Grids) is to improve. In 2000, Lithuania and Poland signed an agreement on the construction of the Harmony Link submarine high-voltage cable between the two states. The European Commission provided EUR 720 million for the second phase of the Baltic electricity grid synchronization project with continental Europe, of which EUR 300 million was allocated to Lithuania.
Rail and rail transport
The density of the rail network in Lithuania is less than half of the EU average, with a total length of 1,869 km of tracks, of which only 152 km are electrified. It is estimated that approximately 850 km of tracks need repair and modernization. Huge investments from the state budget and especially from EU funds continue for the Rail Baltica project (connecting the Baltic states with the EU and unifying the track gauge). The total volume of project costs is estimated at EUR billion and EUR 13,000. jobs, the planned completion and commissioning is in 2026. In addition to this project, Lithuanian Railways is investing in the renewal of the rolling stock (most of the locomotives and wagons are outdated and require modernization or replacement), electrification (only 7% of the tracks are electrified) and the modernization of signaling and security device. The most interesting opportunities for Czech companies are represented by the Rail Baltica projects, electrification of the Vilnius–Klaipeda line, Vilnius intermodal terminal, modernization of locomotives and wagons. In the future, high-speed trains are a priority in passenger rail transport in Lithuania. Related to this is the need to upgrade or build adequate infrastructure to enable transport at speeds over 200 km/h.