RIGA — Baltic Reports caught up with Latvian Minister of Economy Artis Kampars at the launch of a new scheme intended to make it easier for entrepreneurs to set up small companies.
From January 1, 2010 starting in business will be easier and cheaper, with the most eye-catching change being a reduction in the amount of start-up capital required from 2,000 lats (€2,821) to just 100 lats (€141).
Other incentives include the possibility to access “seed money” from the European Union and state-owned Latvian Mortgage and Land Bank plus a general reduction in time-consuming bureaucracy.
Baltic Reports: What’s the main objective of this initiative?
Artis Kampars: The main objective of micro-support is to reduce unemployment and stimulate economic development by creating special conditions for direct creation of micro enterprises. From Jan. 1, people will be able to start their own businesses much more easily and cheaply. I’d encourage everyone to use their time, ideas and skills to start their own businesses.
BR. Is the future of Latvia’s economy going to be based on small businesses rather than the overseas investors that fueled the economic boom and bust?
Artis Kampars: Not necessarily. The goal in the first year is to reduce unemployment. That way people who are currently receiving money from the state budget can stand on their own two feet instead of asking for state help.
We are also hoping to discover new ideas and innovations from new companies who can lead the way in future and actually ‘heat’ the economy again.
BR: You talk a lot about priority areas for the Latvian economy and Latvian industry, but it sometimes seems as if everything is included as a ‘priority?’ Can you narrow it down a bit and tell us the two or three real priorities?
Artis Kampars: First is wood processing, which is a main and traditional parent industry. The second area is chemicals and pharmaceuticals, third is food production, particularly with value added products.
BR: There are a lot of companies operating in the “gray” economy at the moment who don’t pay taxes or declare wages and so on. Do you think this scheme might encourage some of them to register and enter the mainstream, legal economy?
Artis Kampars: It’s difficult to answer, because unfortunately there’s a psychological problem in Latvia right now. We hope that by making this step from the government side, by opening the door to small businesses and other business activities we are extending a hand to our entrepreneurs. We’ll have to wait and see if they respond from their side and start what might be virtuous circle.
BR: So you need to tackle this mentality first? A lot of people say they don’t pay taxes because they wouldn’t see the benefits of it even if they did.
Artis Kampars: Unfortunately a lot of people do have this attitude that you mention. But we are trying to change that.
BR: You’re coming under quite heavy fire from some of your political rivals and even colleagues within government, particularly the People’s Party. They say you haven’t come up with enough concrete plans. Does that bother you?
Artis Kampars: We have many plans — this is one of them. We all understand this is really just politicking. This ministry is very interesting from a People’s Party point of view because of course they include some notable business people among their members. It doesn’t bother me personally.
