Latvia considers Saudi Arabia a high-priority market, says Baltic state’s minister for economics

Speaking after the conclusion of the Saudi-Latvian Business Forum in Riyadh earlier this month, Indriksone emphasized the need to expand economic cooperation, boost bilateral trade, and increase investment in research, development and technology.  “The establishment of the joint economic committee will not only be the execution of this specific bilateral agreement (signed in Riyadh) but will also develop different connections not only between the businesses but also between ministries,” she said.

On June 7, the Federation of Saudi Chambers and the Investment and Development Agency of Latvia signed an agreement establishing a joint economic committee designed to improve information sharing and foster cooperation between Saudi and Latvian companies. The agreement focused on several sectors, such as trade, investment, finance, transport and logistics, tourism, agriculture and the food industry, as well as on high-value areas in cutting-edge technologies.

The forum was attended by representatives of government entities, members of the local business community, and 20 Latvian companies. Speaking about the recent forum, Indriksone said Latvian companies had shown great interest in a range of Saudi sectors, including biomedicine, pharmacy, construction, information and communication technologies, and the creative industries.

Saudi Arabia and Latvia first established diplomatic relations on March 21, 2003, at the Permanent Mission of the Kingdom of Saudi Arabia to the UN in New York. The signatories were the ambassador and permanent representative to the UN at the time, Gints Jegermanis, and former Saudi ambassador Fawzi Bin Abdul Majeed Shobokshi.

Following the signing of the protocol, both ambassadors expressed hope that the establishment of formal relations would be followed by concrete steps to foster understanding and mutual trade between the two countries. Since then, Saudi-Latvian ties have developed into a prosperous relationship, enhanced by cooperation and partnerships in various sectors.

Latvian exports to Saudi Arabia were estimated at $149.35 million in 2022, while the Kingdom’s exports to the country totalled $1.41 million in 2021, according to the UN Comtrade Database. Latvia’s exports to the Kingdom include cereals worth $131.6 million; mineral fuels, oils and distillation products worth $5.6 million; electrical and electronic equipment worth $2.8 million; and pharmaceutical products worth $1.2 million.

The recent forum agreement identified 10 priority sectors for cooperation, which included agriculture, logistics, education, and tourism — areas undergoing rapid expansion in Saudi Arabia thanks to the Kingdom’s Vision 2030 agenda to diversify revenues away from hydrocarbons.

Saudi Arabia and Latvia are now exploring opportunities for cooperation in high-value sectors, such as information and communication technology, digital solutions, smart technologies, smart cities, pharmaceuticals and medical tourism. This is not the first time that Latvian business delegations have visited the Kingdom.

In 2021, Khaled Al-Yahya, then secretary-general of the Federation of Saudi Chambers, welcomed an official trade delegation from Latvia to discuss the development of mechanisms to exchange investment opportunities through private sector institutions and increase the number of reciprocal trade delegations and joint exhibitions.

Officials also travelled from Riga to Riyadh in February this year to attend the second LEAP conference — an annual tech event that was founded in 2022 by the Saudi Ministry of Communication and Information Technology, the Saudi Federation for Cybersecurity, Programming and Drones, and events organizer Tahaluf. According to Indriksone, the delegation that attended the Saudi-Latvian Business Forum last week was much larger and more diverse than previous outings, with interests in a far wider range of industries.

“The business delegation was much bigger, and companies were from various sectors including biomedicine, pharmacy, and medical equipment. There was also a big representation of construction companies, ICT, and the creative industries,” she said.

In 2022, the economy in Latvia, like many countries across Europe, was still emerging from the turbulence of the COVID-19 pandemic when it suffered the fresh blow of surging inflation off the back of Russia’s invasion of Ukraine in February that year.

However, 2023 saw strong growth in gross domestic product, largely driven by consumption.

Latvia is also benefiting from a significant amount of support from the EU’s Cohesion Fund, worth $4.5 billion over the 2021-to-2027 period, representing around 1.4 percent of GDP annually on average.

Thanks to rising business confidence, Latvian companies have shown a readiness to establish their presence in Saudi Arabia, considering it a high-priority market in the Gulf Cooperation Council area.

They are also eager to cooperate with their Saudi counterparts to help them expand into Europe by leveraging Latvia’s strategic location, EU membership and strong logistics infrastructure.

“When coming to the region, (companies) consider establishing not only their representative offices but even manufacturing and operative offices (in Latvia),” said Indriksone.  Although Latvia is a small country, it has “a very strong reach” into EU markets, making it an ideal partner for outside investors, she said. “We are famous for our three ports and our international airport,” she added.

Asked about specific strategies to bolster ties between Saudi Arabia and Latvia, Indriksone highlighted the role of the Investment and Development Agency of Latvia, which is actively working in the region.  She said her government plans to organize trade missions, disseminate information about special business and investment regulations, and promote some of the most developed sectors in her country, such as pharmaceuticals.

Education and the exchange of information are considered vital to fostering cooperation between the two nations, she added. Describing the latest agreement as a catalyst, Indriksone said she was optimistic about the prospects for further trade and investment.

Indriksone said her country has built a reputation as a friendly country for investors and startups. She said Latvia’s well-established business ecosystem and special economic zones, in particular, had attracted interest from around the globe. Another development is Latvia’s “Green Channel” initiative, which offers efficient tools for foreign companies operating within bureaucratic spaces and provides the necessary education and support to help businesses grow.

The main purpose of the initiative, launched by the Ministry of Economics and the Investment and Development Agency of Latvia, is to relieve administrative burdens for high-value-added investments. Priority sectors include ICT, bioeconomics, smart materials, photonics, biomedicine and smart energy, as well as construction, transport and logistics linked to these smart industries.

“We have developed the Green Channel (initiative), which attracts a lot of investors from different countries, especially the US, Scandinavia, Europe, and they appreciate it” for its speed and efficiency, Indriksone said.  Saudi firms are now well placed to benefit also, streamlining their access to European markets.

Indriksone said a Saudi delegation plans to visit Latvia in July to follow up on the developments at the Riyadh forum and to take steps to establish a business council to deepen cooperation.