Observer "Lietuva"

WEEK 22nd

Saturday 31st of May, 2003

Absence of laws impedes establishment of pension funds
Although the pension reform is supposed to start on January 1, 2004, a lot of correspondent laws have not been passed as yet.
Vitalijus Novikovas, the head of Pension Reform Department at the Ministry of Labour and Social Security, claims that next week, the Pension Accumulation Law as well as the amended Pension Funds and Pension System Reform Law will be submitted to the government. Novikovas expressed his hope that the Seimas' session will be prolonged and the draft laws and amendments will be approved.
The Ministry of Labour and Social Security forecasts that in 2004, some 6 percent of the insured people will direct their payments to private pension funds or life insurance companies. Some 5 companies are expected to establish pension funds in 2004.

Construction of blockhouses grew by one-fourth
Over the three months of this year, 465 houses with 938 flats were constructed in Lithuania, an increase of 26.1 percent if compared to the respective period last year.
The Department of Statistics has reported that construction of 1-2 flat houses declined by 5.2 percent while that of blockhouses rose by 83.3 percent.
Over the first quarter of the year, 315 non-residential buildings, area of which made 171 thousand sq. metres were constructed, 68.1 thousand sq. metres more than last year.
88 agricultural, 18 transportation and communication, 5 medical and sports and 10 administration buildings were constructed.
Lietuvos Zinios

Lithuanian industry is growing at the most rapid pace
Lithuania maintained the biggest industry growth speed in the first four months this year if compared with the other two Baltic countries. The Lithuanian Statistics Department reported that the overall sales of the Lithuanian industrial sector at constant prices grew by 17.4 percent year-on-year, whereas the industry output growth in Estonia made 10 percent only. Latvia, which reports about its industry output with a delay of one month, witnessed a 9.8 percent annual growth.
In April, the annual industry output sales in Lithuania increased by 6.5 percent, and 6.8 percent in Estonia. Latvia though reported the annual 12.3 percent increase in March.
As for the annual industry output prices, they were by 2.9 percent 0.2 percent lower in Lithuania and Estonia respectively while Latvia reported an increase of 3 percent.
Lietuvos Zinios

Development of mobile communications slowed down
Lithuania's three mobile telephone operators had a total of 1.648 million users in late March of this year, which represented a 1 percent increase on a quarterly basis. At present, the mobile communications penetration rate amounts to 48 percent. Compared to late March 2002, the total number of users surged by 40.8 percent.
The number of Omnitel's subscribers increased by 5,000 over three months of the year and now amounts to 855.3 thousand. The number of Bite GSM clients dropped by 12,000, down to 476 thousand. The third mobile communications operator Tele2 does not publicise the number of clients in separate countries but Pranas Kuisys, the commerce director of Tele2, said the number of company's clients increased at a more rapid pace compared to the competitors in the first quarter of the year.
Representatives of the three mobile communications operators remarked that the penetration growth has slowed down this year.
There is a lack of a standardized method for collecting general statistics about subscribers. Previously, several operators and the Communications Regulatory Authority discussed a possibility to standardize the methods of clients' number calculation.
Lietuvos Rytas

Friday 30th of May, 2003

Area of modern offices to double in Vilnius
The area of modern offices in Vilnius presently accounts for some 77,000 sq. metres. Ober Haus, the real estate company in the Baltic states, says that after the new projects are implemented, the area is likely to expand by another 80,000 sq. metres over the coming two years.
According to Ober Haus, office rent prices have slightly declined over the recent period and presently makes some EUR 15/sq. metre per month. It is forecasted that the rent prices will remain steady in the near future, as the increasing offer will cover the growing demand.
In 2002, the area of non-rented premises shrank by 26 percent down to 16 percent of the total area of premises. Ober Haus forecasts that the overall area of trade premises will reach 355,000 sq. metres in Vilnius by the end of 2004. Presently, it makes some 245,500 sq. metres.
Verslo Zinios

The state debt dropped by more than a billion
Lithuania's total public debt shrank by LTL 1.024 billion to LTL 13.328 billion in April of this year and accounted for 24.8 percent of the country's projected gross domestic product (GDP). The drop was mostly predetermined by government's redemption of a Eurobond issue worth EUR 250 million, which was placed in 1999.
Direct state liabilities (received on behalf of the state) fell by LTL 995.3 million over the month and accounted for LTL 11.663 billion as of April 30, or 87.5 of the total debt. Contingent liabilities (loan guarantees issued by the state) dropped by LTL 28.9 million to LTL 1.665 billion, representing 12.5 percent of the total debt. Lithuania's debt to the international development organisations made LTL 1.717 billion; the country also owed LTL 484 million to foreign government bodies, LTL 181.6 million to the International Monetary Fund, and LTL 6.856 billion to other creditors (commercial banks and financial institutions).
The country's total domestic debt reached LTL 4.090 billion at the end of April, which accounted for 30.7 percent of the total public debt.
Respublika, Verslo Zinios

Consumption of mineral water grows at a rapid pace
Producers of mineral water are rubbing their hands with delight – consumption of the product is constantly growing. In 2002, Lithuanians drank some 73 million litres of mineral water and the consumption volume increases by some 25 percent every year. It is forecasted that this year, some 80 million litres of mineral water will be consumed. The slower growth is associated with colder spring this year.
In Lithuania, Vichy, Rasa, Tiche and Darida mineral water takes the largest share in the market.
The oldest players of the market – Vytautas and Birute – keep their stable share of 3-4 percent.
Yet, a statistical Lithuania's resident drinks some 20 litres of mineral water per year, which is several times lower than the average figure in Europe.
Lietuvos Rytas

Thursday 29th of May, 2003

Sic Rinkos Tyrimai has turned into TNS Gallup
After reorganisation, the market research company Sic Rinkos Tyrimai and its secondary company Sic Gallup Media have been renamed into TNS Gallup.
In 2001, one of the largest European research companies, TNS, turnover of which accounted for USD 1.4 billion last year acquired 55 percent of shares in the Lithuanian market research company.
Zydrunas Gaudiesius, the head of TNS Gallup, says that presently, the company controls some 50 percent of the Lithuanian market research market while last year the growth in the sector made 30 percent.
According to Gaudiesius, Lithuanian companies spend some LTL 14-15 million on market research per year, which is 9 times fewer if compared to Finland where companies spend LTL 200 million. Therefore, Gaudiesius forecasts that market research market will be rapidly growing in Lithuania over the coming 3-5 years.
(Respublika, Lietuvos Rytas)

Audejas posts steady turnover
The furniture textile producer, Audejas boosted its turnover by 0.7 percent up to LTL 14.2 million over the first four months of this year if compared to LTL 14.1 million in the respective period in 2002. The company's turnover includes sales of its furniture trade centre.
Tomas Tolpeznikas, the finance manager at Audejas, says that sales volume of the furniture trade centre jumped by 15 percent while that of textile has changed negligibly.
This year, Audejas expects to reach turnover, similar to that of last year – LTL 46.176 million.
In 2001, Audejas posted a net profit of LTL 1.32 million while its turnover constituted LTL 44.2 million.
(Verslo Zinios)

The average monthly gross earnings made LTL 1125.4
Average monthly gross earnings in Lithuanian economy, excluding sole proprietorships, rose by 3.4 percent to LTL 1125.4 in the first quarter of 2003 compared to the same period of last year. Monthly real wages (considering customer price index) increased by 8.7 percent over the year. Average earnings in the public and private sectors over the year grew by 3.3 percent to LTL 1149.8 and by 3.6 percent to LTL 1103, respectively. Compared to the previous quarter, average earnings in public sector rose by 2.4 percent and earnings in the private sector increased by 1.1 percent.
(Kauno Diena, Verslo Zinios)

Wednesday 28th of May, 2003

Lex System is planning a double growth
The company of urgent package transportation, UAB Lex System, transported 45 percent more packages in the first quarter of this year if compared to the respective period last year. This year, the company expects to double its turnover.
Nerijus Celkonas, the head of UAB Lex System, says that the company has achieved better results, as the service is gaining popularity in Lithuania – companies tend to refuse taking care of package transportation themselves and entrust the function for professional courier companies.
Lex System transports some 2,000 packages per day. According to Celkonas, the number is likely to grow; therefore, the company is anticipating twice as big turnover for this year.
However, Vytautas Kudzys, the CEO of Baltic Logistic System Vilnius (BLSV), says that the plan of their competitor to double turnover is unreal. "Lithuanian users are too lazy to fill in documents on the internet; therefore, the new system E@syShip offered by Lex System will not be popular", he says.
Last year, BLSV posted turnover of LTL 10.5 million and anticipates the turnover of LTL 13 million for this year. The company transported 163,000 packages over the first quarter of this year, a rise of 16.4 percent if compared to the respective period in 2002.
(Verslo Zinios)

Three banks operating in Lithuania will be crediting Mazeikiu Nafta
The three banks operating in Lithuania are to take over the loans of over USD 182 million granted to the Lithuanian oil refinery Mazeikiu Nafta (Mazeikiai Oil) owned by the Russian oil concern Yukos. Mazeikiai Oil will pay lower interest of 2.2 percent instead of 10 percent to its new creditors, which will help the company to save up to LTL 35 million annually.
The Vilnius branch of Germany's Vereins-und-Westbank together with Lithuania's Hansabankas and Vilniaus Bankas plan to take over the state guaranteed loans granted by Russia's Yukos Oil Corporation, Holland's Yukos International UK B. V. and Japan's Bank of Tokyo Mitsubishi.
The government itself has granted USD 323.9 million loans to Mazeikiai Oil, the refinery also got state guarantees for USD 246.4 million of loans. To date the company has not paid back about USD 200.5 million of the above loans.
(Lietuvos Zinios, Kauno Diena, Verslo Zinios)

Grigiskes and the Danes have found a new niche
Grigiskes, Lithuania's leading hardboard and toilet paper manufacturer, together with Dansk Traeemballage (DTE), Denmark's largest wood packaging producer, and Pier Nielsen, a Danish businessman, has set up a joint venture under the name of BaltWood. Grigiskes will own 45 percent of shares in the new wood processing enterprise, DTE will have 40 percent of shares, and Nielsen will hold 15 percent of shares.
Gintautas Pangonis, CEO of Grigiskes, says that joint investments in the new company would reach an estimated LTL 15 million.
BaltWood, which will employ a workforce of 60 people, is expected to launch production at the end of this year. Under the plan, some 90 percent of the company's output will be exported to Denmark and other countries.
Grigiskes announced sales of LTL 24 million for the first four months of 2003, a 16 percent increase over the same period last year. The company said its net profit for the four months soared more than four-fold, in year-on-year terms, and reached LTL 2.377 million.
(Lietuvos Rytas)

Tuesday 27th of May, 2003

Number of foreign visitors shrank by one-tenth
A total of 942,000 foreigners visited Lithuania in the first four months of this year, a 10.2 percent decline over the same period in the previous year. In April 2003 compared to April 2002, the number of foreign visitors dropped by 5.1 percent.
The largest number of visitors came from the neighbouring countries this year: 30.4 percent arrived from Russia, 28.9 percent from Latvia, 14.8 percent came from Belarus and 7.4 percent from Poland. The flow of visitors from Belarus decreased by 21 percent, and the number of visitors from Russia and Latvia fell by 13 percent and 12 percent, respectively.
The number of arrivals from the United Kingdom rocketed up by 107.8 percent, while the number of visitors from Italy and Spain grew by 22 percent each. Arrivals from Germany and Estonia increased by 9 and 6.2 percent, respectively.
The total number of foreigners visiting Lithuania reached 3.999 million people this year, a 4.7 percent drop from 4.195 million visitors last year. A total of 1.013 million Lithuanian residents visited foreign countries in the first four months of 2003, a 0.5 percent decrease over the same period last year. A total of 3.584 million Lithuanian residents went abroad in the previous year, 5.7 percent up from the figure in 2001.
(Lietuvos Zinios, Kauno Diena, Lietuvos Rytas)

Alita boosts turnover
Lithuania's largest sparkling wine producer Alita posted a turnover of LTL 21.864 million for January-April of this year, a 1.1 percent rise from LTL 21.634 million over the same period last year. Alita forecasts increasing competition this year, influenced by the liberalized alcohol market, and plans a turnover drop by 2.4 percent to LTL 90 million for 2003. The company hopes to earn a net profit of LTL 6 million this year, a 86-percent leap from the figure in 2002.
Alita reported in the previous year an audited net profit of LTL 3.226 million and a turnover of LTL 92.178 million. The company's net profit for the first quarter of 2003 was LTL 464,600.
(Lietuvos Rytas)

Demand for trucks is unexpectedly high
Number of new trucks sold in Lithuania is growing; in the first quarter of this year, 255 new trucks were sold, a rise of 35.6 percent if compared to the respective period in 2002. New truck dealers are surprised with the active trade, as they have not noticed any serious factors that might have caused the increasing demand for trucks; truck dealers do not lure clients with low prices, either.
"Lithuanian carriers are complaining about lower transportation prices, yet trade in our company is good enough", Svajone Drabatien, the marketing manager at Volvo Lietuva, is surprised. However, she forecasts that the overall number of trucks purchased this year will be lower than last year.
Scania Lietuva also rejoices with growing trade volume.
Truck dealers say they have noticed growing demand for local transportations as well as trucks equipped with engines that meet Euro-3 requirements.
(Verslo Zinios)

Advertising clients do not use Internet sufficiently
As the number of Internet users is growing, turnovers of companies selling online advertising have more than doubled.
Specialists claim that travel agencies, IT sector and distributors of luxury goods have not used a possibility to advertise their services in the Internet yet.
In Delfi portal, advertising volumes increased by 217 percent in the first quarter of the year compared to the relevant period last year and amounted to LTL 621,000. The turnover of UAB Adnet, increased more than 2.5 times over four months of this year.
Relying on the data of SIC Gallup Media, 20.3 percent of country's residents used Internet at least once per month, compared to 13.1 percent a year ago.
(Verslo Zinios)

Monday 26th of May, 2003

Carriers will litigate with the government
According to the estimations of the Lithuanian carriers' association, Linava, carriers incurred losses of more than LTL 0.5 million due to the farmers' road blockade, as a day of a truck demurrage costs LTL 600-1,200. Moreover, some carriers will have to pay fines for delay. The largest Lithuanian exporters are also worried, as their reputation has suffered.
Algimantas Kondrusevicius, the president of Linava, says that they have decided to sue the government – after the road blockade began, Linava addressed heads of transportation companies asking them to register demurrage. The association will calculate the overall loss and sue the government, because, according to the Lithuanian laws, the state institutions have to ensure practicability of roads.
Mykolas Aleliunas, the vice-president of the Lithuanian Industrialists' Confederation, claims that exporters have incurred large losses, too. He says he understands farmers' problems and encourages state institutions solve them as soon as possible.
(Verslo Zinios)

German investors have parted with Itera Lietuva
The German companies Verbundnetz Gas and Stadtwerke Leipzig that control 20 percent of shares in Klaipedos Energija (Klaipeda Energy) are going to look for a new partner that could guarantee them constant supply of natural gas.
Last year, Itera Lietuva was obliged to supply natural gas to Klaipedos Energija for a 5-year period; the company had only two shares in Klaipedos Energija and belonged to the consortium that acquired Klaipedos Energija last year. Itera Lietuva supplied some 60 percent of gas needed by the company, yet in November last year relationships between Itera and Gazprom got complicated and gas supply was stopped.
The German investors say they would seek to sign long-term agreements and are presently negotiating with Dujotekana and Lietuvos Dujos (Lithuanian Gas)
(Lietuvos Zinios)

Next year, both prices and income are likely to grow
The coming year will not bring any major changes to the Lithuanian economy, as there are no essential tax reforms on the agenda, while the anticipated wage growth should offset the forecast rise in goods and service prices, Finance Minister Dalia Grybauskaite says.
A further excise tax should boost diesel fuel prices by some LTL 0.16, and petrol by LTL 0.07 per litre while cigarette prices should grow by average LTL 0.4 per pack. Lifted VAT rebate on heating is estimated to increase household costs by some LTL 13 (3.7 euros) per household member annually.
"In our judgement, this growth should be somewhat eased particularly in view of the expected minimum wage increase from LTL 430 to LTL 450, which means extra yearly LTL 160 income per capita. Wages next year should grow by average LTL 67," the chief finance official said.
Grybauskaite believes that the Lithuanian residents should not see any major financial shock in 2004.
(Kauno Diena)

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