Observer "Lietuva"

WEEK 14TH

Saturday, 3rd of April

EU wind is favourable for transport business
Officials claim that haulage procedures will become simpler in Lithuania after the country joins the European Union (EU). Lithuania’s minister of communication Zigmantas Balcytis says the Lithuanian carrier will not need bilateral or multilateral permissions for cargo transportation to the Western European countries.
By May 1, Lithuanian legal acts regulating the transport system should be complied with the EU legal acts. Moreover, it is planed to create a modern multi-modal transport system in Lithuania, technical parameters and service quality of which would meet EU standards.
Lithuania is located in the crossing of trade roads. 2 out of 9 European transport corridors cross Lithuania – I and IX transport corridors. LTL 280 million were invested in modernisation of the railroad infrastructure in 2003.
Automobile road through Lithuania to Poland already meets the international requirements.
The international airports of Vilnius, Kaunas and Palanga are being reconstructed, following the Schengen treaty and Palanga airport.
(Lietuvos Zinios)

Ministry speaks about increase of retirement age
Lithuania‘s Ministry of Finance warns that the social insurance pension and pension accumulation systems might suffer financial problems in future. The ministry has mentioned a possibility to increase the retirement age.
According to the draft governmental decree About Ratification of the National Strategy Concerning Overcoming of the Residents’ Aging, due to the peculiarities of the country’s demographic and economic development, the means should be complied with the goals set in the European Union, following which the retirement age might be increased by five years.
The strategy authors claim that even though the proportion of social tax payers and recipients might improve, it will worsen significantly in the long run and the problem of the financial stability of the social insurance pension system will arise.
(Kauno Diena, Lietuvos Zinios)

It is proposed to forbid paid financial services that are not ordered
It is proposed to forbid banks and other financial service companies to provide paid services to their clients unless the latter order them.
Yesterday, the Seimas ratified the amendments to the Consumer Right Protection Law introducing the abovementioned ban. The amendments will stipulate provision of banking, investment and other financial services to the consumers by phone, fax, internet and e-mail.
The amendments also enable the National Council for Consumer Protection to address the courts or consumer protection institutions of other EU countries with a request to forbid illegal activities of service providers.
At present, Lithuanians dissatisfied with the services received abroad have to seek for the loss compensation on their own or to hire a lawyer.
(Respublika)

Brewers choose cans
As the summer approaches, Lithuanian breweries offer a broader assortment of canned beer. Beer in cans has become more popular over the last years, as this package is more convenient for picnickers.
The biggest novelty has been presented by Kalnapilis-Tauras group: Kalnapilis Original and Tauro Pilsneris in cans.
Stig Henriksen, marketing director of the brewery, claims that the decision to start selling beer of Tauras family in cans has been preconditioned by the approaching summer and a wish to offer an attractive novelty to beer lovers.
Not long ago, new cans of Carlsberg have been presented in the market. Relying on the data of Lietuvos Rytas, beer of HBH Vilkmerg_ will also be available in cans soon.
(Lietuvos Rytas)

Friday, 2nd of April

Barriers for Alita’s plans
Lithuanian Competition Council has refused to permit Alita, the local sparkling wine producer, to pursue concentration through the purchase of 100 percent of Anyksciu Vynas, the largest Lithuania's wine producer, until an extensive market research is carried out.
The watchdog will consent to concentration or pass another decision pursuant to the provisions of the Law on Competition after thorough analysis of concentration notification, submitted by the economic entity.
"In this particular case we have to conduct an extensive research. Both Alita and Anyksciu Vynas conduct business on the same horizontally related markets. Concentration may result in a significant change in concentration levels on respective markets - purchase of fruit and berries, fortified fruit and berry wines, sparkling wines, etc., thus leading to the curbing of competition," the panel said.
According to unofficial sources, Alita, which sees the privatization of Anyksciu Vynas as a chance to strengthen its positions on domestic and foreign markets, has placed the largest bid for the state-owned stake in the winery, about LTL 25 million.
(Lietuvos Rytas, Verslo Zinios)

EBRD will focus on private sector
The European Bank for Reconstruction and Development (EBRD) plans to focus on the private sector in Lithuania, promoting development of small and average-sized companies and expansion of bigger companies to the neighbouring countries; it also plans to continue the energy and infrastructure projects.
The new strategy of EBRD activity in Lithuania has been announced this week. It says that the country’s economy has not reached the level of the developed industrial countries yet in spite of the rapid economic development over the recent years and the approaching membership in the European Union.
EBRD participated in 27 projects in Lithuania at the end of 2003. The general project value amounted to EUR 973 million, while the bank’s funding stood at EUR 393 million.
62 percent of EBRD investments were allocated to the private sector last year.
(Verslo Zinios, Respublika)

NDX Energija acquires additional 19.5 percent stake in VST
NDX Energija, the company set up by VP Market's shareholders, has acquired additional 19.5 percent in Vakaru Skirstomieji Tinklai (VST), Western Lithuania's power grid operator, from small shareholders, including Germany's E.ON Energie, for a total of LTL 136.757 million.
NDX Energija has raised its holding in VST to 96.5 percent. The official tender bid, announced for NDX Energija for small shareholders, expired on Thursday.
(Verslo Zinios, Lietuvos Rytas)

Thursday, 1st of April

Country’s economy increased by 9 percent
Lithuania's gross domestic product (GDP) soared by 9 percent in 2003, a record high growth rate since the country regained its independence from the Soviet Union in 1990, according to preliminary data released by the Statistics Department on Wednesday.
In late January, the Statistics Department released preliminary data showing that Lithuania's GDP growth reached 8.9 percent last year. The economy expanded by 6.8 percent in 2002.
Lithuania's economy surged by 10.6 percent in the fourth quarter of 2003, versus the same period in 2002.
The GDP totalled LTL 55.737 billion in the full year 2003, and it reached LTL 14.935 billion in the fourth quarter.
GDP per capita amounted to LTL 16,136 last year, a 9.4 percent increase over the previous year.
The GDP statistics showed a strong growth in value-added in the following sectors: energy (24.8 percent), construction (17.1 percent), manufacturing industry (14.1 percent), extraction industry (13 percent), trade (11.1 percent), transport and communications (6.8 percent), and hotels and restaurants (6.5 percent).
(Lietuvos Rytas, Kauno Diena, Respublika)

Lithuanian post provides more services
As Lithuania prepares to join the European Union (EU), Lietuvos Pastas (Lithuanian Post or LP) expands the service spectrum and creates new working places. Jonas Salavejas, CEO of LP, claims that real competition in the post sector will be seen only in 2009, when post companies of all EU countries will be stock companies. Lietuvos Pastas is to become a stock company by the end of the year; the government will control a 100 percent stake in LP. By the end of 2008, LP and Lithuania’s Ministry of Communication will have to prepare the study of LP privatization and possibilities. The CEO of the Lithuanian post company reports that they provide over 100 different services, including new ones, e.g. faxograms. There are over 900 post offices in the country. In the internet centres opened in post offices, users can create their e-mail boxes and write electronic letters.
LP has been include in the international CAPERS system already, UNEX Light system is to be installed in Lithuania, Latvia and Estonia n the nearest future. These systems enable the company to control the mail delivery process.
(Lietuvos Zinios)

Big trade chains do not restrict sale of sugar and salt
Even though sales of salt, sugar, flour and grits have increased in the Lithuanian stores lately, the biggest retail trade chains do not restrict the quantity of the sold goods and claim that there will be no lack of these products in the stores.
However, the amount of sugar and grits sold to one buyer has been restricted in Saulute trade centers of VP Market because of the campaign during which buyers can purchase these products at lower prices.
The retail trade chain CBA Aibe might introduce restrictions on the amount of the sold salt, sugar, flour and grits starting next week. The director of the chain Egidijus Aleinikovas says this will be done for the sake of the buyers in order to prevent them from purchasing such amounts of products that they will not be able to consume during their validity period.
Iki and RIMI trade chains do not restrict the sales of any products and do not plan to do so. The CEO of Rimi Lietuva Inga Skisaker says the panic is exaggerated. She agrees that the sales of salt have increased in the stores of Rimi Lietuva chain but the company has been prepared for that.
(Kauno Diena, Lietuvos Rytas, Verslo Zinios)

Wednesday, 31st of March

Seimas passed a new Banking Law
Any persons with previous convictions will not be allowed to manage any credit institution in Lithuania, whereas the shares in the possession of shareowners of commercial banks with poor performance results may be nationalized pursuant to the new wording of the banking draft bill, which Lithuania's parliament voted into law on Tuesday.
According to the law, which will come into effect on May 1, the public company Indeliu ir Investiciju Draudimas (Deposit and Investment Insurance) might launch share nationalization procedures should the banking supervision institutions notify that the operations of a domestic bank are not safe and reliable, which may lead to the insolvency of the banking institution.
With the new bill, the state would have a tool to interfere into banking operations and rescue banks from looming bankruptcy, the Social Democrat MP Arturas Plokstas, parliamentary budget and finance committee member, hailing the passing of the document.
Eduardas Vilkelis, president of Lithuanian Banking Association, agreed with the provision stipulating for the requisition of shares in banks with poor performance results. However, he blasted the mechanism of share nationalization as laid down in the document.
(Kauno Diena, Verslo Zinios, Respublika, Lietuvos Zinios, Lietuvos Rytas)

Sub-contractors for implementation of project worth LTL 150 million will be searched
A tender for the contractor of Vytenai trade centre construction should be ended by mid-April. There are two companies left that aim at the contract worth some LTL 150 million. It is planned to start the construction of a new huge trade centre near Vilnius-Klaipeda highway by summer.
Saulius Merkys, a representative of AB Baltic Shopping Centers (BSC), says the results of the negotiations with the two candidates should be clear next week. BSC is the company implementing the project of Vytenai trade centre.
By summer, the contractor will have to choose sub-contractors.
UAB SSPC controls a 51 percent stake in BSC, the second shareholder is the German company Dr. Werner Pfeiffer Objekt Entwiklung GmbH. The German company wanted to implement the project alone but it failed to do so therefore it sold a 51 percent stake in BSC to SSPC, a company controlled by the family of Augustinas Rakauskas, the co-owner of Senukai chain.
(Verslo Zinios)

Brewers create their own business
Ovidijus Jankauskas, former head manager of UAB Kalnapilio-Tauro Grupe, will start working in a company that he has established as of July 1, however, he has not named the business area yet.
Lately, Jankauskas has been working as a project manager of Brewery Group in the Baltic countries. He was also a coordinator of Biotec consortium. Jankauskas was appointed the director of Vilniaus Tauras brewery in December 2000; he headed Kalnapilio-Tauro Grupe brewery from October 2002 to July 1, 2003.
According to Jankauskas, he has left Brewery Group Denmark because the shareholders set unrealistic company development plans.
(Verslo Zinios)

Tuesday, 30th of March

Lithuania is in the plans of Samsung
South Korean technology giant Samsung Electronics has said it sees good expansion opportunities in the Baltic countries and does not rule out investing in electronic appliance production in Lithuania.
Chang Gyu Ahno, head of Samsung Electronics' representative office in the Baltic countries, said that the group, which owns production lines in Asia and Central Europe, is always on the lookout for prospective markets.
"We are continually looking for the best production opportunities, which means that Lithuania is a potential investment location too," said Chang Gyu Ahno, "But everything will depend on the situation."
In the meantime, he said Samsung Electronics' activities in Lithuania and the other two Baltic countries are focused on increasing product sales. The company set up its regional representative office in 1999.
Chang Gyu Ahno also noted that Samsung Electronics holds strong market positions in the Baltic countries in certain product categories, such as projection TVs, digital video recorders, home cinema systems, computer monitors and hard drivers.
(Lietuvos Rytas)

Separated companies of corporation are managed more efficiently
Reorganisation of the Western Lithuania’s Industry and Finance Corporation (WLIFC) has been ended: four activity trends have been distinguished and the companies controlled by the corporation have been separated.
Owners of the companies that work independently now believe that their management will become more efficient and the results of independent activity will be seen in several years.
Activities of WLIFC have been divided into logistics and cargos, wood industry, power industry and activities of corporation companies. Former main shareholders and board member of WLIFC – Rimantas Stonys, Sigitas Paulauskas, Antanas Bosas and Martinas Gusiatinas – have already taken over management of specific corporation companies. WLIFC, headed by Antanas Bosas, retains 10 companies.
WLIFC has lost the advisory and consultation functions, too, because the companies create their activity strategies independently.
(Verslo Zinios)

Ekranas plans to boost the authorised capital by LTL 34.4 million
Ekranas, Lithuania's kinescope producer, gears up to raise authorized stock capital with additional contributions from existing shareholder by LTL 34.4 million, to LTL 208.89 million.
Angelija Zokaitiene, head of the PR department of the company, says the authorized stock capital of Ektranas will be raised by capitalizing investments in the kinescope production line purchased from the Japanese electronics company Hitachi.
Ekranas, which announced an unaudited net profit of LTL 21.7 million for 2003, intends to earmark LTL 1.3 million for dividends. The remaining profit will be channelled for investments.
According to company's projections, pre-tax earnings should reach at least LTL 25 million this year, rising to LTL 35 million under favourable conditions. Turnover is expected to hit LTL 560 million.
(Respublika)

Monday, 29th of March

Klaipedos Nafta posted smaller profit
AB Klaipedos Nafta (Klaipeda Oil or KN) posted LTL 22.5 million profit for the last year, a nearly 50 percent drop since 2002. Credits taken by KN and sinking US dollar rate have been the main reasons of the shrunk company’s profit.
KN board plans LTL 23.8 million investments this year and LTL19.8 million investments in 2005.
Evaldas Bivilis, KN board chairman, says that the company posted profit “on paper” in 2002. This year, the profit should amount to LTL 11 million but it will be a real profit brought by the company’s activity.
(Verslo Zinios)

It is possible to declare revenues online
Hansabankas presents documents necessary for filling in the revenue declaration in the internet banking website www.hanza.net. The service is available also to the users of Vilniaus Bankas and Nord/LB Lietuva; it will be provided to the clients of AB Siauliu Bankas in early April.
Hansabankas has invested LTL 100,000 in the project.
AB Snoras issues the documents necessary for filling in revenue declarations in all bank’s offices, it is already possible to order them by phone. A bank’s representative said they did not plan to provide this service online.
(Verslo Zinios)

IT market followed GDP tracks last year
Lithuania's IT market, which totalled LTL 1.035 billion in 2002, rose 8-10 percent in 2003, the Infobalt association has announced.
The growth of domestic IT sector, weighed down by a decline in prices and market saturation, equalled that of Lithuania's gross domestic product (GDP), which soared 8.9 percent, to LTL 54.846 billion last year.
In 2003 Lithuania's growth was stimulated by the expansion of textile and oil segments, as well as by stronger domestic consumption, said Virginijus Jasaitis, Infobalt vice-president, predicting that knowledge-based businesses should gain greater importance in the long run.
Jasaitis, CEO of IT company Skaitos Kompiuteriu Servisas, attributed a slowdown in the growth of domestic IT market revenues to a decline in prices, with the price of the most marketable PC declining to slightly over LTL 1,000, from LTL 4,000 several years ago.
Lietuvos Rytas
(Verslo Zinios)

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