Business calls for assessing the negative effects of the state of emergency on the economy

Photo of Judita Grigelyts (V).

As September 16 approaches, when the Seimas resolution on the state of emergency will expire and its implementation will be considered, business organizations seek to draw attention to the negative consequences caused by the state of emergency.

In the appeal of the Business Council to the Seimas and the Government, it is emphasized that the decision-makers must be informed about the consequences of the state of emergency in the territory of the country.

V is already there, that the extraordinary situation is starting to signal to Lithuanian business partners and investors that the business environment in our country is risky. Orders are changed, moni acquisitions are stopped.

The extraordinary situation informs foreign partners about the risky business environment in Lithuania. When Russia started a war in Ukraine, Lithuania’s business partners abroad identified the whole region as having greater risks both due to the economic consequences of the war and security concerns. In addition, due to an extraordinary situation in Lithuania, when the foreign partners of Lithuania’s neighboring countries did not do this, it became a reason to read the indicators of the riskiness of their orders and investments. It is clear that the indicators are read to the detriment of Lithuanian business, Vidmantas Januleviius, president of the Confederation of Lithuanian Industrialists, is quoted in the report.

Based on their riskiness calculations, some Lithuanian business partners abroad cancel or significantly change the production orders submitted in Lithuania. In some cases, this requires a significant change in production volumes and a domino effect for customers, who noticed that the production partners in the Lithuanian manufacturing industry change their orders due to increased risk, and decide to change their orders as well.

The Business Council records the current flow of foreign investments. Contrary to those who see security risk management internally, foreign investors make decisions based on defined criteria and calculations. When certain indicators signal a possible risky investment, it is refused to take an action that is risky for the economy. As a result, both green field investments and the acquisition of money in Lithuania are being stopped. It can be seen that some mons are becoming not only less attractive, but also cheaper than before, comments Rolandas Valinas, chairman of the board of the association Investors Forum.

According to the representatives of the organizations that applied, the negative effects are also felt for foreign investments, in some cases they even refuse to choose Lithuania. Foreign investors evaluating the possibility of investing in Lithuania also rely on measurable indicators and calculate risks. The business council emphasizes in the appeal that foreign investments are very necessary today.

In addition, it is not clear to the partners of the Lithuanian business community why the state of emergency has been declared in Lithuania, and the partners are worried that the threat is more real in Lithuania than in other countries of the region. This is used by Lithuanian business competitors abroad to escalate their risks and entice customers.

The Business Council draws attention to the fact that the effects of small investments, company acquisitions, changes in production orders will be diverse: lower exports, less income from uncollected business taxes will be received by the state budget, possible downtime.

Businesses are currently trying to deal with several crises at the same time: energy costs are rising without precedent, supply chains are balanced, oil prices remain high, some businesses are still dealing with the post-pandemic situation in a difficult way, the impact of China’s economic policy remains negative, inflation, although low, but it is still boiling at 20%. Lithuanian business has been the most accessible in the last decade, so any measures that could have a negative impact on business should be carefully analyzed and well weighed, points out Sigitas Gailinas, acting president of the Lithuanian Trade, Industry and Professional Association.

The appeal was signed by R. Valinas, Danas Arlauskas, president of the Confederation of Lithuanian Employers, V. Januleviius and S. Gailinas.

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