Lithuania is an off shoot of the USSR disintegration in the 1990s. Rising above the turmoil of transition from a state to a country, Lithuania is proud to take over as the Presidency of the Council of the European Union with effect from 1st July 2013 for a period of six months, the first of the Baltic states to do so. The newly appointed Ambassador of the country in India, Laimonas Talat-Kelpsa feels that it is a very opportune moment to take charge. The embassy in India was established in 2008 and to promote the vision of the Ambassador, the Indian Baltic Chamber of Commerce (IBCC) was opened recently with Jitendra Sodhi appointed as Vice President of IBCC India office to facilitate companies looking at Lithuania.
In an exclusive one-o-one, soon after he took charge, Laimonas shares with Team Apparel Online what the country can offer to Indian garment exporters, as the ‘Gateway to Europe’.
AO: How has the journey of transition been for Lithuania?
Laimonas: Although it looks like a smooth transition, for ordinary people it wasn’t that smooth. Part of our success comes from the inescapable circumstances that Lithuania separated in from Russia in the 1990’s. There was a drop in the standards of living so we looked around for other markets, establishing new contacts and economic relations with other countries. This was the turning point. In 1999, Russia was our biggest market for energy, but with the crisis there, we were forced to look for better markets and in one year the trade with Russia went from 13% to 6% and we had established trade relations with UK, Germany and Spain, which are now our major markets.
Again in 2008, we almost had a collapse; the real estate sector that was booming started to collapse; banks were dealing with solvency issues, looking for money in international markets which was not available. So we cut the Government expenses, public sector people like diplomats had salary cuts of 40% and other public servants of around 20%, while even retirement pensions were reduced by 5%. We have sailed through all difficult times and look forward to a bright future.
AO: Today, you are promoting Lithuania as a business gateway to EU, what is the edge that you have?
Laimonas: We have a strong economy, unemployment rate is now dropping from 15% last year to 12% this year and prediction is that it will drop to 11% as per EU statistics. Also we are trying to transform and make our economy fit for the 21st century by looking at the trends in global economy. We in Lithuania have three basic segments of production. One is traditional – food, agriculture, wood processing and furniture. Then we have other modern manufacturing facilities like oil refinery and chemical industries. For that again we don’t have natural resources like oil and gas even though we are the largest exporters of refined oil products like petroleum that gives us a lot of profits but makes us dependant.
We have a pool of quality citizens; statistically we are the most educated nation in the world and 60% of people speak at least two foreign languages that are mostly Russian and English. We have a lot of companies coming to Lithuania or relocating their regional offices from countries like Germany and Denmark because level of education is very good, the cost of living is almost 5 times less which increases the cost-effectiveness of the companies.
AO: What are the opportunities Lithuania can offer to a country that is exporting its textile products to your country?
Laimonas: There are two major opportunities: First, we are a well developed and traditional manufacturing base for textiles. There was a time when we were supplying most of Zara’s fabrics and readymade products, but cost of production changed and we got competition from Romania and Bulgaria. The general trend is that we collaborate with international brands or focus on high technology fabrics because that is a part of future economies. We can offer finished products at much cheaper cost than most European countries, so exporters can avail the advantage of ‘made in Europe’ tag for high-end products for ‘luxury’ prices.
We are also producing furniture that is exported to Scandinavian and German markets for which again textiles is important – getting good quality and cheap prices is a challenge; Indian producers can explore this opportunity. Further, exporters can use our ports and transport network, the cost of which is much lower than the same in the western part of the EU. In addition to sea ports and well developed infrastructure, we have four international airports and less crowded air space than the rest of EU.
We have three million people living in an area larger than the entire NCR of Delhi, so Lithuania itself is not a very sizeable market, and companies who aim at 100, 500 million consumers might not notice Lithuania, but being a part of the European Union the laws and standards are the same like Germany or France or any other EU nation and setting up an office or warehouse to market in Europe is an option.
AO: What is the retail scenario in Lithuania?
Laimonas: Zara, M&S and all similar big brands are there in the malls, they started coming 10 years back. Before that we used to go to Poland or Germany for shopping. Home Furnishing brands like Ikea are also opening up. In addition to that we have local producers. The prime area of expertise is sportswear with 70-80 odd companies producing sportswear for Lithuania and several other countries. We have individual designers that have their own shops (haute couture). There is sea change on the streets; it’s more glamorous and colourful and we can see the evolution especially in the younger generation.
AO: Lithuania joined the EU in 2004 and today you have taken over the presidency, how does it feel?
Laimonas: Though we are excited and honoured, it is also a big responsibility. In the EU, it is very crucial to coordinate the effort between 20 countries and arrive at a certain consensus towards the end of meetings. However, the consensus is just a political decision and for it to work in the EU, it has to translate into legislation-strategies and programs. Starting January 2014, we have to adopt 70 plus legislative acts in the EU for the long-term budget. That’s where we have to organize and be responsible. We are holding this position for six months and then Greece will take over. As the president of the EU, we also have to promote our national agendas and promote mutual interests especially when it comes to energy and security issues in order to be competitive in the global market, to be self-sufficient.
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