Klaipėda – among Europe’s most appealing investment destinations

fDi Intelligence, a service from the Financial Times, has released its annual European Cities and Regions of the Future 2023 study. Klaipėda, the biggest Baltic seaport located in Lithuania, was ranked 9th in the small cities category based on its attractive and powerful foreign direct investment (FDI) strategy.

An annual study benchmarks the most promising investment destinations across Europe, grouping over 300 cities by population size into five categories: major, large, mid-sized, small, and micro cities.

Experts rank cities based on economic potential, business friendliness, connectivity, human capital and lifestyle, and cost-effectiveness.

This year, a new notable entrant is Klaipėda, ranked 9th in the small cities category. This biggest port in the Baltic Sea is the second in Lithuania in terms of attacking FDI per capita. Why are the businesses eyeing Klaipėda?

“Our strategy to attract foreign investment is well-diversified and corresponds to the needs of modern businesses. We are determined to expand the network of our foreign partners so that every company currently operating in Klaipėda, as well as newcomers, could benefit from it,” said Diana Manko, Head of Investment and Business at Klaipėda ID, a non-profit city investment promotion agency.

Foreign investors praise Klaipėda for its consistent city strategy “Klaipėda 2030”, a pool of multilingual and well-educated talent, fast and effective business solutions, incentives, perfect location, and infrastructure well-fitted for export businesses, among other things.

Location

Klaipėda is the only port in Lithuania – a country widely recognized in Europe for its business-friendly environment. According to the latest study by the Blacktower Financial Management Group experts, Lithuania is a top destination for entrepreneurs, and Fraser Institute puts it among the top 10 countries globally for economic freedom.

The biggest of the Baltic states is also recognized for its female workforce – nearly 60% of scientists and engineers are women, and that’s the highest proportion in the whole European Union. Moreover, it ranks 8th in the Global Gender Gap report.

The economy, which declined by a mere 0,8% during the COVID-19-induced crisis, demonstrating resilience, has a well-developed IT and telecommunications infrastructure.

It has one of the best fiber coverage worldwide, ranks among the top 10 in the International Telecommunication Union’s Global Cyber Security Index, and is recognized globally for its technological skills availability as per IMD’s World Competitiveness Yearbook 2022.

Klaipėda, a vital part of the Lithuanian economy, is the second top destination in the country when it comes to attracting FDI per capita. Klaipėda attracted 32 FDI projects in the last five years with nearly a billion euros of investment.

Companies from over 50 different countries have set foot in the city, with Cyprus, Denmark, the Netherlands, and Germany being the largest investors.

Klaipėda executes an ambitious strategy Klaipėda 2030 in an attempt to become a top destination for both investors and top talents by offering sustainable opportunities to invest, work, and, of course, enjoy the work and life balance surrounded by the unique and breath-taking nature of this Baltic pearl.

Transport hub

Klaipėda offers a perfect location for manufacturing since key markets in Northern Europe, Western Europe, the US, and Asia are easily and affordably accessible.

Klaipėda has five international ferry routes to Kiel, Karlshamn, Trelleborg, Travemunde, and Rostock.

Companies are also attracted by the fact that Klaipėda is the biggest Baltic seaport when it comes to cargo. Recently, Klaipėda was included in new international routes and is now connected to the US East Coast via Gdynia, Gothenburg, Bremerhaven, New York, and Philadelphia.

Another sea route connects Klaipėda with the Dominican Republic, Costa Rica, Peru, Columbia, and other ports in South America.

Investors in Klaipėda enjoy a well-developed infrastructure for business travel – Palanga International Airport is just half an hour away. It offers many destinations to business hubs in Scandinavia, London, and Riga, among other geographies.

Investors eye FEZ

Many newcomers choose Klaipėda’s Free Economic Zone (FEZ), recognized as the fastest FEZ in Europe to launch businesses. Established over 20 years ago, it covers over 412 ha and is well connected to main national and international road, rail, and sea corridors.

It is the largest plastics and chemicals industry hub in Northern Europe and also accommodates companies leading in electric automotive and components, offshore and large metal structures production, and a number of other industries.

fDi Magazine voted Klaipėda’s FEZ the number one free economic zone in the world for fast business launch since it offers tailored solutions such as providing business sites or premises with ready-to-use infrastructure and hands-on assistance to help companies set up.

“We can provide customized products for your company that can have your operations up and running as fast as within three days of your initial inquiry,” its homepage reads.

Newcomers enjoy the so-called green corridor that helps companies to get all the necessary documents faster and, depending on their investment, even gives an exemption from corporate taxes.

By the way, Financial Times experts have praised Klaipėda’s FEZ for its energy independence – Lithuania is the first country in the EU to suspend Russian gas imports entirely.

Investors also eye the 700MW offshore wind park in the Baltic Sea. With construction planned to be finished in five years, the park presents a new excellent business opportunity that will further strengthen Lithuanian energy independence.

“This zone is pitching itself as a location that offers investing companies a resilient energy supply, thanks to its proximate liquefied natural gas (LNG) terminal and electricity link to Sweden,” Alex Irwin-Hunt, global markets editor at fDI Intelligence, said.

Talent pool

While businesses worldwide struggle with the skills shortage, Klaipėda is proud to say it has an attractive supply of well-educated and multilingual talents (nearly 80% of its residents speak at least one foreign language.) Klaipėda’s youth have mastered the English language like their mother tongue.

There are 12 educational institutions with over 10,000 students in the city. Not only are they multilingual – students have deep knowledge of IT and engineering fields. 10 different study programmes have received Investor’s Spotlight badge by the Lithuanian Investors’ Forum, signifying the institutions’ flexibility, adaptability to the labour market needs.

That is a direct result of Klaipėda’s strategy to build a sustainable education value chain: the city leads and supports different programs in collaboration with businesses, from IT classes for primary school teachers and their pupils to engineering, ecology, environmental technology, and entrepreneurship, among many other subjects, classes for gymnasium students.

Klaipėda is also recognized for its strong informal education with nearly a dozen robotics, STEAM-oriented, and programming classes for school children.

To help companies attract even more talent to Klaipėda from other Lithuanian cities or foreign countries, the municipality has introduced financial incentive for the settlers – professionals can apply for a 2000 euro rent and a 400 euro grant for Lithuanian language courses.