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I would like to start by thanking Chris Butler, Chairman of the British Chamber of Commerce in Lithuania for organizing this meeting and gathering here such a diverse group of friends and partners <representing the BCC, American Chamber of Commerce, French Chamber of Commerce, German-Baltic Chamber of Commerce, Swedish Chamber of Commerce in Lithuania and European Business Network.> Since a country’s competitiveness can only discussed against a broader background, allow me to my speech with a reference to globalization. We are, after all, citizens of a tightly interconnected, flat and crowded world.   

In spite of the present downturn, I believe that Lithuania continues to be an attractive country for doing business, thanks to its liberal business environment and open economy. Thus, for example, the World Bank Group report “Doing Business in 2009” ranked Lithuania 28th  in the world based on the ease of doing business. While the Heritage Foundation report “Index of Economic Freedom 2009” ranked Lithuania as the world’s 30th freest economy.

Of course, this global economic crisis is a serious challenge to Lithuania. However, it also provides opportunities for renewal that we should be quick to grasp. In this respect, our Government’s programme is very clear, forceful, and success- oriented.

The Sunset and Sunrise Commissions are among the tools the Government is using to tap into the transformative potential of the crisis. By the way, the European Bank for Reconstruction and Development assessed Lithuania‘s economic stimulus package worth EUR 1.6 billion as one of the best in Central and Eastern Europe.

Our ability to compete and advance the prosperity of our people will   depend on how successful we are in streamlining and optimizing government operations as well as improving overall conditions for ideas and businesses to develop and flourish. On the other hand, our competitiveness will also be defined by our successes in achieving a number of practical priority goals, such as introducing the euro, ensuring energy supply diversification, and building energy and transport connections between the Baltic states and the wider world. Allow me to dwell now on these and a few other points.

The euro. Introduction of the euro is a key priority of Lithuania’s European policy. Participation in European economic and monetary union is a basis for creating a stable investment and business environment, and will provide for more rapid and sustainable economic growth. Introduction of the euro would increase our macro-financial stability and greater foreign investor and lending confidence in Lithuanian‘s economy.

The Government has already started working on a relevant strategy. A target date for the introduction of the euro will be set. Prudent budgetary and fiscal policies as well as structural reforms in healthcare, education and social security will be geared to support that strategy.

Innovations. The latest Information Technology and Innovation Foundation’s (ITIF) study shows that Lithuania is one of the leading countries (following China and Singapore) in terms of competitiveness dynamics among 40 European, Asian and North American most innovative countries. 

Lithuania is keen to build regional innovations networks by promoting deeper cross-Baltic cooperation and integration of universities, science and research centres, and improving knowledge mobility. This would enable us to enhance the competitiveness of the region and to strengthen the EU’s competitive edge on the global market.

At present, we have  a number of companies making high value-added products, such as telecommunications company Teltonika, mobile software and game portal GetJar, biotechnologies companies Fermentas, laser production group Eksma,  IT company ALNA, and others.

Our Government has approved a number of measures promoting research and innovations, such as introduction of tax reliefs, allocation of 17 per cent of EU structural support to finance R&D and innovations, and creation of integrated Research, Education and Business Centers (“valleys”). We hope that these measures will boost our potential, increase the integration between research and business, and add to our country’s overall competitiveness.

Looking into the future, we shall work to make sure that the next EU financial perspective is duly focused on the long term competitiveness of the EU, strengthening of socio-economic cohesion, facilitating the creation of an integrated European Research Area, and promotion of world- class skills and innovation.

Energy security. How can we offer a competitive business environment or respond to the concerns of common energy consumers if we function at the mercy of an external energy supply monopoly? We must be able to offer consumers the possibility to choose a supplier and minimise the dominance of vertically integrated monopolies.

Our goal is a well-functioning and integrated European internal energy market; strengthening the external energy policy dimension by implementing the principle of solidarity; ensuring the transparency of external supplies, and developing alternative supply sources.

The European Parliament has recently approved the so-called third energy package, which requires separating the production of electricity and gas from transmission networks. This will facilitate a further liberalization of the energy market and create additional incentives to the integration of EU energy grid and diversification of supplies.

We commend the initiative of the European Commission to elaborate the Baltic Energy Market Interconnection Plan (BEMIP). This plan has been completed and will be signed tomorrow in Brussels. It should contribute to addressing the issue of the remaining isolated energy markets in Europe as well as the creation of a viable and integrated common EU energy market.

Transport infrastructure. A couple of months ago I received a group of Polish students who told me it took them sixteen hours to get from Cracow to Vilnius. One could get from Vilnius to New York, Chicago or Bangkok within the same amount of time.

Examples like this best illustrate the high urgency of a transportation overhaul in the region. Due to its geography, Lithuania has huge potential as a prime transport centre linking the EU with the East. However, for this potential to be fully tapped, we need to urgently implement such projects, as Rail Baltica, East-West transport corridor, development of the port of Klaipeda, establishment of public logistical centres, Viking, TRASECA, and others.

 Air connections, too, must be improved significantly and urgently as businesses simply won’t invest in a country which boasts to be the geographical centre of Europe and yet is separated from Europe by long hours of costly flights.

In the context of the tasks ahead of us, Lithuania welcomes the EU’s Baltic Sea Strategy, the first of its kind in the EU. The Action Plan of the Strategy will provide an opportunity for our region and the countries concerned to promote competitiveness and to accelerate economic development. Lithuania will work actively to become a lead country in implementing the Action Plan, with a focus on transport, Baltic-Nordic energy interconnections, and innovations clusters, as well as improving  cooperation  with the region‘s neighbours. 

By the way, Lithuania will host the first Asia-Europe (ASEM) Ministerial Meeting on Cooperation in Transport, to be held on 19-20 October 2009 in Vilnius. This event will provide a good opportunity for a business-driven approach towards the development of transportation between Europe and Asia.

Trade policy.  We are a small and open economy, a nation of traders. In 2008 Lithuania‘s external trade turnover amounted to 116 per cent of the country‘s GDP. In this respect we are among Europe‘s leaders, ahead of such export- oriented countries like Germany and Sweden. The past five years saw a threefold increase in Lithuania‘s exports. Given the impact of trade on our economy so far, we are fully aware that the surest way out of the economic crisis for Lithuania is through trade.

Lithuania is therefore very firm about the need to resist protectionism in all its manifestations and to ensure fair competition and a level playing field to all EU companies and businesses. Strengthening of the internal market and free trade is the best strategy to overcome the current economic downturn and to reap the benefits of globalisation.

We should work towards establishing free trade relations with our Eastern neighbours. In fact, we would like to extend the area of the application of EU’s internal market rules to Ukraine and other countries of Eastern Partnership Initiative, as this would significantly improve the stability and predictability of our trade environment.

We should be vigilant and firm in ensuring that our trading partners do not violate or restrict free trade. Tackling government interventions, violations of intellectual property rights and non-tariff barriers is key to success in our trade relations with international partners. Since my Ministry is directly responsible for Lithuania’s trade policy, I can assure you that the trade policy we pursue will contribute to enhancing competitiveness of all the companies working in Lithuania.   

  Secure environment. In today’s global village, what is happening on the Pakistani-Afghan border, in pirate-infested international waters, in Georgia or in Darfur, affects us all.

Lithuania’s EU and NATO membership has given us a new responsibility for the world’s developments. Thus, for example, Afghanistan is and will continue to be among our foreign policy priorities, reflecting our readiness to share this responsibility with our partners.

However, it is only natural that our prime area of interest and activity is our immediate neighbourhood. Earlier this year the EU adopted the Eastern Partnership Initiative. Lithuania has consistently supported the goals pursued by this Initiative, including free trade agreements and visa liberalisation with Belarus, Ukraine, Moldova, Georgia, Armenia and Azerbaijan. 

Lithuania also supports closer cooperation of these countries with the European Union in the field of energy and urges the countries concerned to continue with structural reforms, to promote good governance, democratic reforms and human rights.

We are interested in promoting constructive and business- oriented relations with Russia, which, due to its geographical proximity and the size of the market, is of great interest to our businesses. Regionally, we should build on the existing interest in the Kaliningrad Region to improve cooperation, by extending cross border activities, promoting greater people-to-people and youth exchanges, and facilitating visa procedures which could one day lead to visa free travel. This, by the way, will be one of the key priorities of Lithuanian chairmanship of the Council of the Baltic Sea States which will start in July this year.

Ladies and gentlemen,

Today I touched upon a number of issues related to improving the competitiveness of Lithuania, stressing the importance of introducing the euro; improving our energy and transport connectivity with the rest of the region and Europe as a whole; promoting free trade; focusing on innovations and the need to secure a stable and secure environment.

I also indicated that in spite of an economic downturn, Lithuania continues to be an attractive country, thanks to its liberal business environment, innovations- oriented approach and highly skilled local labour. By way of illustration, let me mention a few recent arrivals on Lithuania’s business scene that are creating high value-added products and services. Yesterday Barclays and the Lithuanian Government signed a letter of intent regarding the opening of an IT and engineering centre in Vilnius which will create up to 400 highly skilled jobs.

Barclays will join the ranks of international IT companies present in Lithuania, such as Computer Science Corporation (CSC), which has recently celebrated its first year of successful operations in Vilnius, American IBM and Microsoft, and Swedish Tieto Nator. Other new entrants into the service sector include German Dematic which opened an engineering office in Kaunas in 2007 and British Rentokil which entered the Lithuanian market this year.

On this positive note, I would like to conclude my presentation. Thank you for attention. I will be happy to take your comments and questions now.