| Overview:
The
Latvian Cabinet of Ministers adoption of the National Program
"Informatics" in 1999 was a major step toward development of the
ITT sector. It defines Latvia’s interpretation of the concept of
the Information Society – a way of life and work for the whole society,
as well as for each individual separately. The Information Society is a
process and a direction of development, in which a community of highly
educated individuals is established and developed, with a focus on
education, knowledge and know-how23. However, Latvia still
faces many slow-downs and barriers to achieving all of the goals set forth
in that program outline.
|
According
to the EU's ESIS23:
In
1999 the Cabinet of Ministers of Latvia adopted a National Program for the
development of the information society, "Informatics". It defines
Latvia’s interpretation of the concept of the Information Society – a way
of life and work for the whole society, as well as for each individual
separately. The Information Society is a process and a direction of
development, in which a community of highly educated individuals is
established and developed, with a focus on education, knowledge and know-how.
There will be a shift in the national economy, which will be based on
knowledge-intensive products and services with high added value and on
effective processes of innovation. Information and knowledge will be made
available to every member of society, and everyone will be able to use them
for work, education and social life. It is the state’s obligation to provide
these issues to the society.
According
to Contreras and Kasemaa2, The idea behind is to create a “portal” that integrates all
sets of
national
information systems and that will be common for all functional applications like
education,
administration and informative services. Although there are some ambitious plans, there
are also often mentioned barriers for economic development in Latvia2:
-
Bureaucracy
as the biggest barrier and a base for corruption.
-
The
legislation still need a lot of improvements: there are overlaps and gaps that
lead to
interpretation
difficulties.
-
Lack of skills and/or motivation of the public sector.
-
Government is too involved in the business sector (trying to protect its own
interests).
-
Lack of a clearly stated strategy for liberal economy, tax incentives, support
to start-up
companies
(funding).
-
For the telecom development the Lattelekom’s monopoly is a major barrier.
There
is an immediate need for a better regulatory environment (Lattelekom exclusive
rights,
complicated
shareholder structure, bad interconnection agreement- operators have to fight
over it
continuously).
The political issues are difficult to forecast – i.e. there is too much noise
about
deregulation.
The postponement of the issue of the third license has been justified with
political discussions as to whether three operators were not too many for such a
small market, the low purchasing power of the majority of the population and the
agreement of exclusivity before the second license (5 years). The 3 rd license
issue together with the New Law in telecommunications
– that was expected to be passed at the end of March 2000 and still has not
– and a final agreement between the government and Lattelekom to finish the
monopoly rights, have been hindering the development of the telecommunications
sector in Latvia.
When
studying the secondary data we found lots of positive promotional material
published by
institutions
like the Latvian Development Agency (LDA). When reading some other reports and
considering
the reasons why, for example, the Foreign Investors’ Council (FICIL) was set
up in
1999,
we realized the importance of understanding the role of different institutions.
The
LDA works with export promotion and investment attraction activities under the
state
supervision
(presenting the best of the country with an optimistic view). The agency has an
Euro
info centre, official representatives in Germany and the UK as well as voluntary
representatives –people working at embassies abroad. They have had close
co-operation with the FICIL in
designing
the action plan for the development of the business environment. The delays
observed in implementing this plan are due to the conflicting interests of
private business and the
government
(e.g. on the government side there is the concern about state revenues). The same reason
hinders the enforcement of
relevant
laws and regulations. Countries are competing for foreign direct investment and
have to offer more than other countries with similar diamond conditions to
attract the investment. To increase FDI, effective January 1, 2001, there has
been a reduction of income tax for companies that produce high-tech goods . The usage of
certified local suppliers gives 70% tax credit on initial investment. Initially,
the plan was similar to the Estonian plan - no corporate income tax on reinvested or
retained earnings- but it was considered to be a too heavy burden on the state
budget.
Latvia has almost no dialogue with Estonia and Lithuania when it comes to the
promotion and development of the Baltic countries as a region.
In
regard to e-government in Latvia, there is currently a low level of e-government
usage (From
ITS report: Government Online: An International Perspective, 2001 Benchmarking
Research Study). Level
of gov’t online use in 2001 in Latvia=% 8% of the Latvian population used government online
services in 2000 (as compared with the country average of 26% in a study of 27 countries).
Please
also refer to other sections of this report, especially "Legal
Environment" for extensive additional information.
Last
updated December 13, 2001