LET’S TALK LITHUANIA.

Rugilė Andziukevičiūtė

November 26| 2015

Lithuania‘s Investment

Environment and International

Competitiveness

#1 For GDP/Capita growth in EU2

Population1 2.9 million

Labour Pool1 1.5 million

Capital Vilnius

Official language Lithuanian

Dominant foreign languages

English, Russian, German, Polish

Real GDP growth1 1.9% (2015)* 2.9% (2014) 3.3% (2013)

Unemployment rate1 10.7%

Source 3: Heritage Foundation, Economic Freedom Index, 2015 Source 4: World Bank Doing Business Report, 2015 Source 5: World Economic Forum, Global Competitiveness Index, 2015

* Forecast (Ministry of Finance) Source 1: Statistics Lithuania, 2015 Source 2: Eurostat, 2004-2013

Lithuania – perfect position for operations in Europe

#15

Freest economy in the world3

#11 For ease of starting business4

2

Facts & Figures

For global competitiveness (5 positions up)5 #36

Good track record

3 2 Infrastructure and logistics

Young competence & talent

Lithuania – attractive location

for foreign companies

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Lithuania‘s qualities for investment

#1 Young competence & talent

Source 1: Eurostat, 2013 Source 2: Eurostat, 2013 (age group 25-64) Source 3: Eurostat, 2012 (age group 20-29) Source 4: Eurostat, 2012 (age group 25-29) 4

Lithuania’s qualities

Top 5 in the EU with the highest ratio of young people1

Ambitious young professionals

#1 in the EU or 93% of our population have higher or secondary education2

#1 in the EU for mathematics, science and technology graduates per capita3

16% of Lithuania’s young professionals specializes

in engineering, manufacturing and construction (x2 EU average)4

69% of population aged 18-35 would like to work for an international company2

3-4% attrition rate at manufacturing companies3

~7 000 engineering graduates annually4

Language

80% proficiency in English among young professionals5

50% speak at least 2 foreign languages6

#1 Young competence & talent

Source 1: Ministry of Education and Science, 2014-2015 Source 2: If annual survey, 2012 Source 3: Alliance for Recruitment, HR Agency, 2013 Source 4: Eurostat, 2008-2012

Source 5: National Census, 2011 Source 6: Europeans and their languages, 2012 5

Lithuania’s qualities

34%

21% 13%

12%

12%

8%

ENGINEERING STUDENTS’ STRUCTURE BY MAJOR FIELDS1

Transport Engineering

Electronics &Automatics

Civil Engineering

Mechanics & MetalWorks

Energy & Electricity

Other

Products: Thermo-insulating panels Isothermal transportation

equipment: insulated trucks, trailers and semi-trailers

Employees: 330+

Est.: 1999, Panevezys

Lithuania: Schmitz Cargobull

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#2 Impressive track record

Source 1: Statistics Lithuania, 2014 Source 2: The Financial Times FDI monitoring database, 2014 and Invest Lithuania data

Source 3: Statistics Lithuania; structure by value of industrial production; excluding manufacture of coke and petroleum products Source 4: Statistics Lithuania, 2014; production of Lithuanian origin; excluding manufacture of coke and petroleum products

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Let’s talk Lithuania

Turnover of foreign controlled manufacturing companies doubled since 20091

20% of Lithuania’s GDP is generated by

manufacturing sector1

>67% of all manufacturing production is exported mainly to4:

#1 Germany

#2 Sweden

#3 Poland

#4 Latvia

#5 United Kingdom

30%

20% 18%

16%

7% 9%

MANUFACTURING STRUCTURE | 20133

Food, Beverages & Tobacco

Engineering Goods

Furniture, Wood & Paper

Chmicals & Pharmaceuticals

Textiles and Leather

Other

16%

13%

10% 10% 8%

43%

TOP COUNTRIES INVESTING IN MANUFACTURING 2010-20142

Sweden

Norway

Finland

Germany

United States

Other

International Manufacturing Presence in Lithuania

Manufacturing plant

Products: pet food Headcount: 800 Established: 1993 / Klaipeda region

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Let’s talk Lithuania

Products: industrial woodworking equipment Headcount: 40+ Established: 2015/ Vilnius

Products: electrical distribution systems Headcount: 1,100 Established: 2014 / Panevezys

Products: iso-thermal trucks, trailers and semi-trailers Headcount: 330+ Established: 1999 / Panevezys

Products: electronic circuit boards Headcount: 400 Established: 1993 / Kaunas

Products: Tobacco Headcount: 430 Established: 1993 / Klaipeda

Manufacturing plant

Manufacturing plant

Manufacturing plant

Manufacturing plant

Manufacturing plant

#3 Business friendly environment – tax free zones

* Conditions apply

7 Free Economic Zones (FEZ):

0% corporate tax for the first 6 years*

50% discount on corporate tax over the next 10 years*

0% tax on dividends*

0% tax on real estate*

Industrial Parks (IP)

6-12 months delivery of build-to-suit manufacturing facilities

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Lithuania’s qualities

#3 Fast to connect infrastructure - logistics

Source 1: European commission, 2012 Source 2: www.portofklaipeda.lt Source 3: Girteka Logistics, 2014. Estimates based on two-driver shared shift model

Road & Rail:

25,800 truck fleet in Lithuania in comparison with Germany: 308,078, Denmark: 21,038, Sweden: 15,2481

Rail cargo services direct to Russia, Belarus, Latvia, Poland, Germany, Ukraine and Asia (incl. China)

Air:

4 International Airports, access to major European cities and Moscow within 2-3 hours flight

Sea:

Klaipeda State ice-free Seaport

14.5 m deep port, handling up to 60 million tons of cargo annually, the largest port in the Baltic States2

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Lithuania’s qualities

3

• Current status

• Where do we go

from here

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Competition is increasing across the CEE; as a result, Lithuania has to strengthen its competitive advantage

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Current status

Source: fDi Markets, number of greenfield projects, 2015

The number of projects is decreasing in the CEE; as a result, competition is increasing.

Lithuania is Baltic leader in terms of project volume.

933

917

719

648

599

2010 2011 2012 2013 2014

42

36 39

39

44

14

18

10 12

13

25

26

27

14

9

2010 2011 2012 2013 2014

Lithuania Latvia Estonia

Number of services projects in Lithuania is higher than regional average, while our manufacturing share is slightly lower

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FDI PROJECTS PER MILLION OF POPULATION, 2010-2014

FDI PROJECTS’ ACTIVITIES IN CEE AND

LITHUANIA, 2010-2014

17

46

5

13

20

6

Manufacturing Services Other (construction,energy,

infrastructure, etc.)Lithuania CEE

33%

39%

28%

25%

54%

21%

Manufacturing

Services

Other (construction, energy, infrastructure, etc.)

Current competition for FDI within the CEE and other countries

14

Current Status

Norway Portugal Ukraine

Poland

Czech Republic

Romania Bulgaria

Latvia Estonia

India Finland Sweden

Ireland

Serbia

MAIN COMPETITORS:

OTHER COMPETITORS:

Invest Lithuania priority sectors – for the targeted attraction of investments

Source: Invest Lithuania

Electronic products

Metal products

Industrial machinery and equipment

Consumer goods

Life sciences

Service centres

Technical support centres

Design, development and testing

Data centres

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Target Sectors and Countries M

AN

UFA

CT

UR

ING

S

ER

VIC

ES

Globally, countries and cities promote themselves in similar ways, but there are areas in which we can distinguish ourselves

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Current status

LOCATION SELECTION CRITERIA[1] LITHUANIA’S STRENGTHS AND OPPORTUNITIES

THAT CAN BE USED TO MAKE US A UNIQUE VALUE PROPOSITION

Work force and working atmosphere

Business establishment and tax regulations

Real estate

Business services and infrastructure

Capital investments and related regulations

Government support and incentives

Market potential

Risk assessment

Supply chain and logistics

Work force and working atmosphere

Political support and flexibility

Business establishment, regulations, various incentives

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Future Development

MANUFACTURING

Future Lithuania – a hub for high value added manufacturing and knowledge intensive services

SERVICES

Call centres

Business services centres

Outsourcing

Design and development

Parts’

manufacturing

Components’

manufacturing

Product assembly

New products’

testing, R&D

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Education: Talent pool that meets labour market demand

Quality of specialists‘ preparation

Immigration: Attraction of qualified specialists

Attractive conditions

R&D infrastructure and business collaboration: Universities

Exploitation of open access centres

What do we need in order to reach this? Future Development

Business regulation: Reduction of administrative burden

The main competitive advantage

Rugilė Andziukevičiūtė

A: Jogailos St. 4 / LT-01116

T: +370 5 262 7438 E: info@investlithuania.com

www.investlithuania.com

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Let’s talk Lithuania