Construction of the new Mestilla plant officially began in Klaipėda free zone

On Friday, an official start was given to the €60 million investment by the biodiesel producer Mestilla in the Klaipėda free economic zone (FEZ). The company started developing a new rapeseed processing plant, as well as an advanced biofuel technology within its current manufacturing infrastructure. With the completion of these projects by the end of 2025, Mestilla will become a significant competitor to major European companies and address the issue of residual odor.

Mestilla has begun constructing an entirely new rapeseed processing plant adjacent to its current infrastructure on Kretainio street in Klaipėda. Upon the completion of this €50 million project, the company’s rapeseed processing capacity will increase to 500,000 tons per year, biodiesel production will rise to 200,000 tons, and rapeseed protein additive production will reach 300,000 tons annually. These capacities will be 2-3 times greater than the current plant allows, enabling the company to compete more robustly with the largest biodiesel market players in Northern and Western Europe due to efficient technologies and economy of scale.

The current production lines, operating for almost two decades, will undergo substantial modernization to facilitate the processing of used cooking oil (UCO) and the production of advanced biofuels. This €10 million project will enable the extraction of 20,000-30,000 tons of advanced biofuels from used oil, which will be blended with conventional biodiesel.

The expansion of Mestilla will include various proven and new odor management technologies, such as two new 70-meter-high chimneys. These are expected to significantly improve odor dispersion and minimize its impact on the residential environment. Although Mestilla had already exceeded official odor standards, the new development phase aims to definitively resolve this issue.

During the capsule-laying ceremony for future generations, Mestilla’s CEO Arūnas Zubas stated that this step strengthens Lithuania’s strategic energy and environmental goals, the agricultural sector and the overall economy.

“Over our operational period, the amount of rapeseed grown in Lithuania has increased 4-5 times, and purchase prices have risen 2-3 times. Today, every car tank contains 7-10% of renewable Lithuanian energy, providing work for thousands of farmers, replacing imported raw materials, and keeping money in Lithuania. I am pleased that our business goals align with the country’s most important interests, and Klaipėda residents will soon be able to take pride in another strategic energy independence project,” said Zubas.

“It is gratifying that more and more industrial companies are turning to environmentally sustainable technologies and implementing them in production. These investments are no exception, and I hope many Klaipėda city and district residents will feel their impact. What delights me the most is that Mestilla’s multimillion-euro investments, including the construction of two 70-meter chimneys and technological changes, will reduce odor dispersion, and I believe that upon project completion, we will receive fewer complaints about the ‘pancake’ smell. This is a good example for all companies that take residents’ concerns into account, create added value for the city and invest in sustainable technologies,” said Klaipėda mayor Arvydas Vaitkus.

“Other responsible businesses in our country could learn from Mestilla’s ideas of sustainability and environmental friendliness. The problem of disposing of used oil will be solved, and we will have more eco-friendly fuels such as biodiesel. This plant is an excellent example of a circular economy, and the biodiesel it will produce in the future will help Lithuania strengthen its energy independence. I wish this company great and beautiful ideas. And I wish everyone to create sustainable businesses and the prosperity of Lithuania,” said the Environment Minister Simonas Gentvilas.

And according to Agriculture Minister Kęstutis Navickas, this plant is an excellent example of a bioeconomy, where high value-added products such as biodiesel and protein additives are made from raw materials grown by farmers.

“It is very important that the added value remains in Lithuania. The processing of used oil into second-generation fuel is particularly relevant – it’s a great example of circularity. All this will gradually allow us to move away from fossil fuels. We hope that the biofuels produced in this plant will be used in Lithuania,” said Minister Navickas.

The technologies of global leaders in their fields – Desmet, Cimbria and Alfa Laval – will be implemented in the Mestilla plant. The project is carried out in collaboration with companies such as Eika Development, Sweco, Budrių Statyba, Fern Group, Dotnuva Baltic, Vilniaus Rentinys, Daimena and Pajūrio Šaltinis. Swedbank is the financial partner of the project, and the logistics partner is Vakarų Krova – a subsidiary of BLRT Grupp.

100% of Mestilla shares belong to the shareholders of Akola Group (formerly Linas Agro Group), the largest agricultural and food production group in the Baltics. The company has been operating in the Klaipėda FEZ since 2005, and during 2005-2007 it developed the current €45 million plant, which was one of the largest greenfield investments in renewable energy in Lithuania at the time.

In 2023, Mestilla’s revenue exceeded €200 million. The company sells its products in Lithuania and the Baltic region, as well as in Scandinavia, Western Europe, and other countries. The company employs about 60 people.

Construction of the new Mestilla plant officially began in Klaipėda free zone

On Friday, an official start was given to the €60 million investment by the biodiesel producer Mestilla in the Klaipėda free economic zone (FEZ). The company started developing a new rapeseed processing plant, as well as an advanced biofuel technology within its current manufacturing infrastructure. With the completion of these projects by the end of 2025, Mestilla will become a significant competitor to major European companies and address the issue of residual odor.

Mestilla has begun constructing an entirely new rapeseed processing plant adjacent to its current infrastructure on Kretainio street in Klaipėda. Upon the completion of this €50 million project, the company’s rapeseed processing capacity will increase to 500,000 tons per year, biodiesel production will rise to 200,000 tons, and rapeseed protein additive production will reach 300,000 tons annually. These capacities will be 2-3 times greater than the current plant allows, enabling the company to compete more robustly with the largest biodiesel market players in Northern and Western Europe due to efficient technologies and economy of scale.

The current production lines, operating for almost two decades, will undergo substantial modernization to facilitate the processing of used cooking oil (UCO) and the production of advanced biofuels. This €10 million project will enable the extraction of 20,000-30,000 tons of advanced biofuels from used oil, which will be blended with conventional biodiesel.

The expansion of Mestilla will include various proven and new odor management technologies, such as two new 70-meter-high chimneys. These are expected to significantly improve odor dispersion and minimize its impact on the residential environment. Although Mestilla had already exceeded official odor standards, the new development phase aims to definitively resolve this issue.

During the capsule-laying ceremony for future generations, Mestilla’s CEO Arūnas Zubas stated that this step strengthens Lithuania’s strategic energy and environmental goals, the agricultural sector and the overall economy.

“Over our operational period, the amount of rapeseed grown in Lithuania has increased 4-5 times, and purchase prices have risen 2-3 times. Today, every car tank contains 7-10% of renewable Lithuanian energy, providing work for thousands of farmers, replacing imported raw materials, and keeping money in Lithuania. I am pleased that our business goals align with the country’s most important interests, and Klaipėda residents will soon be able to take pride in another strategic energy independence project,” said Zubas.

“It is gratifying that more and more industrial companies are turning to environmentally sustainable technologies and implementing them in production. These investments are no exception, and I hope many Klaipėda city and district residents will feel their impact. What delights me the most is that Mestilla’s multimillion-euro investments, including the construction of two 70-meter chimneys and technological changes, will reduce odor dispersion, and I believe that upon project completion, we will receive fewer complaints about the ‘pancake’ smell. This is a good example for all companies that take residents’ concerns into account, create added value for the city and invest in sustainable technologies,” said Klaipėda mayor Arvydas Vaitkus.

“Other responsible businesses in our country could learn from Mestilla’s ideas of sustainability and environmental friendliness. The problem of disposing of used oil will be solved, and we will have more eco-friendly fuels such as biodiesel. This plant is an excellent example of a circular economy, and the biodiesel it will produce in the future will help Lithuania strengthen its energy independence. I wish this company great and beautiful ideas. And I wish everyone to create sustainable businesses and the prosperity of Lithuania,” said the Environment Minister Simonas Gentvilas.

And according to Agriculture Minister Kęstutis Navickas, this plant is an excellent example of a bioeconomy, where high value-added products such as biodiesel and protein additives are made from raw materials grown by farmers.

“It is very important that the added value remains in Lithuania. The processing of used oil into second-generation fuel is particularly relevant – it’s a great example of circularity. All this will gradually allow us to move away from fossil fuels. We hope that the biofuels produced in this plant will be used in Lithuania,” said Minister Navickas.

The technologies of global leaders in their fields – Desmet, Cimbria and Alfa Laval – will be implemented in the Mestilla plant. The project is carried out in collaboration with companies such as Eika Development, Sweco, Budrių Statyba, Fern Group, Dotnuva Baltic, Vilniaus Rentinys, Daimena and Pajūrio Šaltinis. Swedbank is the financial partner of the project, and the logistics partner is Vakarų Krova – a subsidiary of BLRT Grupp.

100% of Mestilla shares belong to the shareholders of Akola Group (formerly Linas Agro Group), the largest agricultural and food production group in the Baltics. The company has been operating in the Klaipėda FEZ since 2005, and during 2005-2007 it developed the current €45 million plant, which was one of the largest greenfield investments in renewable energy in Lithuania at the time.

In 2023, Mestilla’s revenue exceeded €200 million. The company sells its products in Lithuania and the Baltic region, as well as in Scandinavia, Western Europe, and other countries. The company employs about 60 people.

Survey: 84% of coastal region residents hold Klaipėda FEZ in high regard

According to a new survey by the consulting firm Civitta, 84% of Klaipėda county residents rate the reputation of Klaipėda Free Economic Zone (FEZ) as good or very good. Additionally, 75% of respondents have positive opinions about the business community within the zone and its reliability. All these metrics have improved over the past three years.

The survey data shows that 70% or more of the respondents who expressed any kind of opinion view positively or very positively the Klaipėda FEZ business community as an employer, business partner, client or service provider.

Among the most frequently mentioned attributes of Klaipėda FEZ’s reputation by the residents were its significant contribution to the city and state budgets, its role in enhancing Klaipėda’s visibility, business growth and potential, attractiveness to professionals from various fields, good organization, innovativeness, transparency and professionalism, as well as proper maintenance of the area. This year, respondents most wished for Klaipėda FEZ companies to continue their social activities, use natural resources responsibly and further invest in employee well-being.

Klaipėda FEZ CEO Eimantas Kiudulas commented that residents’ feedback is one of the key indicators of the business community’s success. This feedback is crucial for current and potential investors: both for expanding activities and attracting talent.

“I believe that good and continuously improving reputation metrics are the result of the consistent integration of the FEZ into the city. For some time now, we have seen ourselves not as a manufacturing area but as an integral part of the city an a community of product development, innovation and services. It is not surprising that regional residents see us not only as a workplace but also as a source of modern management, progress and other inspirations. However, expectations are constantly growing, so we must continue to develop areas and opportunities relevant to residents,” said E. Kiudulas.

Rūta Gaudiešienė, a partner at the firm Civitta that conducted the survey, noted that Klaipėda as a city stands out with the best reputation among Lithuania’s major cities. According to her, the growing metrics of Klaipėda FEZ over several years reflect the ability of the city’s resident and business communities to adapt and strengthen their positions even under challenging conditions. For comparison, a similar survey conducted at the end of 2020 recorded an 80% positive reputation rating for the Klaipėda FEZ.

“Klaipėda FEZ is seen by regional and city residents as an attractive employer for representatives of various professions, and a promising, rapidly growing business community. FEZ companies are distinguished by their reputation for being well-organized, well-managed and innovative, which helps strengthen the region’s economic development,” stated R. Gaudiešienė.

In her assessment, for Klaipėda and any other region aiming for growth and competitiveness, it is important to engage young people, promote career growth for young talents, and foster more active collaboration with municipalities and educational institutions.

According to Civitta’s data, Klaipėda FEZ’s overall reputation index would rank 15th in Lithuania, placing it among business leaders: second only to a few startups, financial and biotechnology companies, and ahead of well-known retal, telecommunications and service companies.

Among the best-known Klaipėda FEZ investors, respondents most frequently mentioned Neo Group, Orion Global Pet (Indorama), Espersen, Skuba, Glassbel Baltic, AD REM LEZ, and Lavango.

Civitta conducted the survey in April 2024 using the CAWI method, polling 500 respondents aged 18-74, primarily from Klaipėda city and Klaipėda district, as well as Kretinga, Palanga, Skuodas and Šilutė districts.

Additionally, a customer survey conducted at the end of 2023 with the consulting firm Smart Continent LT showed that 94.3% of investors would recommend Klaipėda FEZ.

Currently, about 2800 employees work in Klaipėda FEZ investor companies, with around 5000 across the entire territory. More than 45 foreign investors operating in Klaipėda FEZ paid over EUR 107 million in personal income tax, VAT and social security contributions in 2022, and purchased goods and services worth more than EUR 500 million in the Lithuanian market. Since its inception in 2002, companies with Lithuanian and foreign capital in Klaipėda FEZ have implemented or planned investments totaling EUR 778 million. The total tax contribution of Klaipėda FEZ companies to the city, state and social security budgets over the past 10 years has been nearly EUR 567 million.

The Baltic FEZ – an attractive location for the defense industry

Simonas Petrulis, the CEO and Chairman of the Board of the Baltic FEZ, and new President of the Lithuanian Association of Free Economic Zones (LAFEZ), emphasized the significant potential of the country’s FEZs. He highlights that FEZ management companies create attractive conditions for investors by quickly adapting manufacturing, storage, and logistics facilities to meet their needs. S. Petrulis also notes that the Parliament’s decision to allow defense industry companies to establish operations in FEZ territories is an important step that could significantly boost the development of these zones and help achieve an economic breakthrough.

The territory of the Baltic FEZ is located near the future European railway “Rail Baltica,” and it is in this area that a dual-purpose loading and unloading platform will be installed. “This upcoming infrastructure of European importance justifiably allows us to expect that the Marijampolė FEZ will become an even more attractive location for the defense industry,” states Povilas Isoda, the Mayor of Marijampolė Municipality.

The Baltic FEZ, located near the upcoming European railway “Rail Baltica”, plans to construct a manufacturing facility that will meet the highest energy efficiency class, A++. This building will be adapted to individual manufacturers’ needs with minimal costs. Moreover, the building will be divided into three sections, each with external accesses and driveways designed for trucks, and additional ramps can be installed if needed. A solar power plant is also planned to be installed on the roof, the energy from which will be used for the building’s needs.

The manufacturing facility in the Baltic FEZ is being constructed on a 1.1 ha plot. It will have a height of up to 12.5 meters and will be equipped with all necessary utilities, including electricity and natural gas.

This project aims to attract manufacturers and exporters of higher and medium-value products. 

The construction of the manufacturing facility in the Baltic FEZ is partially financed by INVEGA through the incentive financial instrument “Installation of Typical Manufacturing Facilities in Free Economic Zones, Industrial Parks, and Other Industrial Areas.” The project is funded by the budget funds of the Republic of Lithuania through INVEGA.

Klaipėda FEZ received construction permit for the third FlexStart iteration

Flex Start Three, a real estate development company established by the Klaipėda FEZ, has received a construction permit for a 8.8 thousand square meter area production building, divided into six segments, designed for rapid adaptation to the needs of tenants. This marks the third building in the internationally acclaimed FlexStart family, facilitating businesses to launch production within weeks or months.

Construction itself is scheduled to commence in the near future, with completion expected in the first half of 2025. Approximately EUR 8.5 million will be invested in the building, of which EUR 5.12 million constitutes a loan from INVEGA.

The total area of the building complex will be around 8.8 thousand square meters, developed on a 1.7 hectare site.

FlexStart 03 will distinguish itself from its predecessors with greener spaces, more natural daylight and recreational areas. Additionally, in line with Klaipėda FEZ’s aim to promote the local economy, many of the building’s structural solutions will be sourced from local manufacturers.

The new facility will meet A++ energy efficiency standards, featuring smart heating and cooling systems utilizing heat generated during the production process. Furthermore, solar panels will be installed to fulfill part of the energy requirements, and both indoor and outdoor areas will be equipped with LED lighting and electric vehicle charging stations. The architectural design of the new FlexStart project was developed by the WALL architecture studio.

Darius Urbonas, Head of Real Estate Development Projects at Klaipėda FEZ, states that the third FlexStart building will become the most modern continuation of a successful strategy for rapid investor establishment and expansion. In the coming period, the FEZ management company intends to initiate negotiations with potential tenants from Lithuania and abroad.

“Swift investor establishment and expansion are relevant at all times. During prosperous market conditions, companies seek to commence production quickly to secure stronger initial positions or swiftly enter attractive sectors. However, speed and flexibility prove beneficial even in cooler economic climates: the first two FlexStart buildings have been utilized for existing investor expansion, temporary or permanent relocation of production lines, and various other scenarios. Both the FlexStart building family and other processes or decisions made by our team have long been associating Klaipėda FEZ with extraordinary speed and flexibility throughout the region,” affirms D. Urbonas.

Asta Gladkauskienė, Head of the Customer Service Department at INVEGA, previously noted that typical production purpose buildings are favorable for production expansion, as investors or manufacturers can establish themselves in an already constructed building and commence operations in a very short time.

“The existing Flex Start Two building, standing and operational within Klaipėda FEZ, was the first building financed by INVEGA’s managed funds, for which INVEGA provided a loan at the end of 2022, and which is currently fully leased to investors. This clearly demonstrates the need, benefits and importance of such buildings, not only in attracting investors who receive fully prepared building infrastructure but also in creating new job opportunities. We are pleased to finance the new Flex Start Three building which will further alleviate the shortage of such buildings in the market and undoubtedly attract new investors, directly contributing to the growth of the Lithuanian economy,” comments A. Gladkauskienė.

For some time now, the first two FlexStart buildings have been home to investors such as Werner Wirth Baltic, Etman, Glob-El, Pod Furniture, Memel Biotech, Albright, Retal Baltic Films and others. In 2017, the first FlexStart won the first-ever Quick Launch award from FDI Intelligence.

Klaipėda FEZ received construction permit for the third FlexStart iteration

Flex Start Three, a real estate development company established by the Klaipėda FEZ, has received a construction permit for a 8.8 thousand square meter area production building, divided into six segments, designed for rapid adaptation to the needs of tenants. This marks the third building in the internationally acclaimed FlexStart family, facilitating businesses to launch production within weeks or months.

Construction itself is scheduled to commence in the near future, with completion expected in the first half of 2025. Approximately EUR 8.5 million will be invested in the building, of which EUR 5.12 million constitutes a loan from INVEGA.

The total area of the building complex will be around 8.8 thousand square meters, developed on a 1.7 hectare site.

FlexStart 03 will distinguish itself from its predecessors with greener spaces, more natural daylight and recreational areas. Additionally, in line with Klaipėda FEZ’s aim to promote the local economy, many of the building’s structural solutions will be sourced from local manufacturers.

The new facility will meet A++ energy efficiency standards, featuring smart heating and cooling systems utilizing heat generated during the production process. Furthermore, solar panels will be installed to fulfill part of the energy requirements, and both indoor and outdoor areas will be equipped with LED lighting and electric vehicle charging stations. The architectural design of the new FlexStart project was developed by the WALL architecture studio.

Darius Urbonas, Head of Real Estate Development Projects at Klaipėda FEZ, states that the third FlexStart building will become the most modern continuation of a successful strategy for rapid investor establishment and expansion. In the coming period, the FEZ management company intends to initiate negotiations with potential tenants from Lithuania and abroad.

“Swift investor establishment and expansion are relevant at all times. During prosperous market conditions, companies seek to commence production quickly to secure stronger initial positions or swiftly enter attractive sectors. However, speed and flexibility prove beneficial even in cooler economic climates: the first two FlexStart buildings have been utilized for existing investor expansion, temporary or permanent relocation of production lines, and various other scenarios. Both the FlexStart building family and other processes or decisions made by our team have long been associating Klaipėda FEZ with extraordinary speed and flexibility throughout the region,” affirms D. Urbonas.

Asta Gladkauskienė, Head of the Customer Service Department at INVEGA, previously noted that typical production purpose buildings are favorable for production expansion, as investors or manufacturers can establish themselves in an already constructed building and commence operations in a very short time.

“The existing Flex Start Two building, standing and operational within Klaipėda FEZ, was the first building financed by INVEGA’s managed funds, for which INVEGA provided a loan at the end of 2022, and which is currently fully leased to investors. This clearly demonstrates the need, benefits and importance of such buildings, not only in attracting investors who receive fully prepared building infrastructure but also in creating new job opportunities. We are pleased to finance the new Flex Start Three building which will further alleviate the shortage of such buildings in the market and undoubtedly attract new investors, directly contributing to the growth of the Lithuanian economy,” comments A. Gladkauskienė.

For some time now, the first two FlexStart buildings have been home to investors such as Werner Wirth Baltic, Etman, Glob-El, Pod Furniture, Memel Biotech, Albright, Retal Baltic Films and others. In 2017, the first FlexStart won the first-ever Quick Launch award from FDI Intelligence.

Klaipėda FEZ selected among SDG Model Zones

The Global Alliance of Special Economic Zones (GASEZ) has selected Klaipėda Free Economic Zone (FEZ) among the top 50 global Model Zone Partners that best reflect global sustainable development goals.

The objective of the SDG Model Zone list and initiative is to raise awareness of the contributions of special economic zones to sustainable development, recognize the efforts of zones that are leading the way in this space and to share best practices which can serve as an inspiration for other zones.

The United Nation’s SDG Summit in September 2023 called for immediate measuresto scale up efforts to achieve the 2030 Agenda, including through SDG investments. In line with this aspiration and GASEZ objectives, the Alliance launched its SDG Model Zone initiative on 18 October 2023 during the UNCTAD World Investment Forum in Abu Dhabi. The GASEZ founding members have jointly identified 50 SEZs from across the world that are SDG model zone partners for sustainable development.

The criteria used to select the SEZs nominees for SDG Model Zones were derived from UNCTAD’s World Investment Report 2019. These criteria are: (i) Commitment to sustainable development; (ii) promotion of investment in the SDGs; (iii) levels of social, environmental and governance standards and compliance; and linkages and spillovers. Only 10 free zones from the EU made it to the top fifty, with a considerable number of nominations going to special economic territories in South America and the UAE.

Eimantas Kiudulas, the CEO of Klaipėda FEZ, states that this recognition reaffirms the relevance of the strategy the management company pursued for some years. And for Klaipėda, it will create additional advantages in negotiating with new investors.

“Over a decade ago, we realized that high-value-added investments require harmony with residents and the environment, integration into the city, as well as an active and transparent business community with which everyone would like to work, exchange ideas, or collaborate. In order to the best talents, businesses must be interesting, innovative, modern, and respectful- this soon begins to attract new investors willing to work together with like-minded companies and individuals. For us, this approach is primarily important for competitive advantages, but it is gratifying that it also aligns with the UN’s SDGs and helps Klaipėda become more visible,” says Kiudulas.

Previously, Klaipėda FEZ has earned awards for sustainability, innovation implementation, contribution to regional and national economic development, renewable energy development, and other areas from FDI Intelligence, Investment Monitor and other international organizations.

Currently, approximately 2,800 employees work in investor companies in Klaipėda FEZ, and about 5,000 across the entire territory. More than 45 foreign investors operating in Klaipėda FEZ paid over EUR 107 million in personal income, VAT, and social security taxes. They also procured goods and services worth more than EUR 500 million in 2022.

Since its inception in 2002, Lithuanian and foreign capital companies in Klaipėda FEZ have implemented or planned investments totaling EUR 778 million. The total tax contribution of all Klaipėda FEZ companies to the city, state, and social security budgets over the past 10 years amounted to almost EUR 567 million.

The average salaries in investor companies in Klaipėda FEZ exceed the overall average of the Klaipėda region and the local manufacturing sector by 20-30%. At the end of 2023, according to survey data from the consulting firm Smart Continent LT, 94.3% of investors recommended Klaipėda FEZ.

PonBike completes construction of a new factory in the Kedainiai FEZ

Pon.Bike, one of the largest bicycle manufacturers in the world, began construction of a factory in Kėdainiai in February of last year. Construction was completed in one year. The size of the facility is impressive – almost 40,000 m2, with an A++ energy efficiency classification. The building was constructed by UAB YIT Lietuva and was designed by UAB 2L Architects.

Bicycle assembly and painting workshops are part of the new building, along with a warehouse and administrative offices. It is noteworthy that the facility uses underfloor heating in a floor area of 20,000 m2, providing comfortable working conditions for employees. 2,500 solar panels are installed on the factory’s roof to supply electricity to the factory. A large car park (parking lot) has been built, including electric vehicle charging stations. The old trees surrounding the factory were preserved, and new greenery has been planted as well.

Led by Algimantas Gedvilas, Pon.Bike Lithuania already has 68 employees and plans to create about 600 jobs as production accelerates. This will be the eighth Pon.Bike factory in the world, which, when operating at full capacity, will be able to assemble up to 450,000 bicycles per year. The factory will produce bicycles for the Gazelle, Kalkhoff, and Focus brands. The factory will also produce electric bicycles.

94% of investors recommend Klaipėda FEZ

The absolute majority of investors operating in the Klaipėda Free Economic Zone (FEZ) would recommend their experience to other businesses, according to the latest client satisfaction survey conducted by the strategic management consulting company Smart Continent LT.

According to the survey conducted at the end of 2023, the Klaipėda FEZ is highly rated by 94.3% of investors, with an additional 5.7% rating their experience positively. There were no so-called “detractors” among the respondents – dissatisfied or non-recommending clients.

Therefore, the Net Promoter Score (NPS) index, indicating the level of organization’s customer recommendation and loyalty, currently stands at 94.3%.

“A very good NPS index is considered to be 70%, while a result of 80% or higher indicates that the company meets the highest standards and customers gladly recommend it to others,” comments Ieva Girdvainienė, Managing Director of Smart Continent LT.

According to the survey, Klaipėda FEZ investors rate most highly the image and communication of the FEZ management company, the physical environment of the territory, the business community and municipal services. In the opinion of FEZ clients, the most effort should currently be put into improving transportation and accessibility, as well as socialization and green spaces.

In the survey, the majority of respondents positively commented on the conditions in Klaipėda FEZ for progressive business development and employee safety, as well as the friendly, collaboration-oriented business community. The Klaipėda FEZ management company itself received almost the highest possible scores from investors in terms of service quality, transparency, reliability, and professionalism.

Among the desirable aspects, Klaipėda FEZ investors most frequently mentioned the need for more diverse catering, transportation, leisure, and other services. Childcare, daily goods trading, equipment rental, sports, and even accommodation and other services are becoming increasingly relevant for FEZ companies and employees.

Eimantas Kiudulas, the CEO of Klaipėda FEZ, states that the very high satisfaction of current clients creates opportunities for both the expansion of existing companies in the territory and new investments. In turn, the increasing need for social environment development illustrates the ongoing transformation of the FEZ into a vibrant and multifunctional high-value-added territory.

“Even in the challenging year 2023, expansion projects were implemented or initiated by such longstanding residents of our territory as Klaipėda Business Park, Retal Baltic Films, Albright Lithuania, Mestilla and other companies. We also attracted several new investors, and continued our FlexStart projects. None of this could happen without high satisfaction of existing clients, ensuring the resilience of our business community in the face of challenges and laying stronger foundations for even greater breakthroughs in the future. The FEZ territory continues to transform into a high-value-added community that requires appropriate functions and services,” says E. Kiudulas.

According to him, companies operating in the FEZ are increasingly interested in the well-being of their employees, so they need diverse social and recreational opportunities near workplaces, and they increasingly value a quality and comfortable environment.

“Therefore, we will strive for Klaipėda FEZ to become not only a good place to work but also to be and spend time. In the near future, we hope to announce several pieces of news related to active lifestyle in the FEZ territory, we also working on more retail and social service diversity. Our vision for the near future is a deeper and higher quality integration into the urban fabric,” says E. Kiudulas.

According to Arvydas Vaitkus, Mayor of Klaipėda, investments creating added value for the city and its residents are important and necessary not only for Klaipėda or the coastal region but also for the whole of Lithuania.

“I often communicate with investors in Klaipėda FEZ, and I don’t know of anyone who is not pleased to be located here. It is gratifying that in Klaipėda, companies using the latest technologies are emerging, we increasingly observe companies paying more attention to ecology, and FEZ activities are building trust among investors. This is the result of long-term and consistent work, which brings benefits to the entire region,” says Arvydas Vaitkus, Mayor of Klaipėda.

According to Marius Stasiukaitis, Strategy Manager at Invest Lithuania, the country has taken several important steps in recent years to improve the investment environment for existing and potential investors.

“Laws have been proposed to expand the corporate income tax exemption and increase land supply for investors, defense industry projects have been allowed in FEZ areas, a financial instrument has been created to encourage the construction of typical production buildings in FEZ and industrial park areas, a risk-sharing model has been agreed to expand flight offerings, and more. In such an environment, it is critically important for Lithuania to discover and exploit new growing sectors and areas, such as MilTech, green technologies, micromobility, and pay more attention to the East Asian region, where countries are increasingly investing globally and in Central and Eastern Europe,” says M. Stasiukaitis.

The customer satisfaction survey was conducted in October-November 2023, with 34 executives – directors, their deputies, department heads, or human resources managers of 34 Klaipėda FEZ investor companies being directly surveyed.

Currently, about 2800 employees work in Klaipėda FEZ companies, and about 5000 throughout the territory. More than 45 foreign investors operating in Klaipėda FEZ paid over EUR 107 million in personal income, VAT, and social security taxes in 2022, and purchased goods and services worth more than EUR 500 million in the Lithuanian market. Since its inception in 2002, Lithuanian and foreign-capital companies have implemented or planned investments of EUR 778 million in Klaipėda FEZ.

Klaipėda FEZ: half a billion in taxes for the city and the state

Over the last 10 years, investors operating in the Klaipėda FEZ have paid EUR 66 million in personal income tax, the majority of which has gone to the city budget. During this period, FEZ investors also paid EUR 500 million in VAT and social security taxes for the state budget.

In 2022 alone – the latest year for which detailed data is currently available – Klaipėda FEZ investors paid EUR 12.9 million in personal income tax. As the majority of Klaipėda FEZ employees are Klaipėda residents, the majority of this tax went to the Klaipėda City Municipality budget.

In addition, in 2022 alone, Klaipėda FEZ investors paid EUR 80 million of value added tax and another EUR 14 million of social security taxes to the state budget. The total tax contribution of Klaipėda FEZ companies to the city, state and social security budgets over the last 10 years amounted to almost EUR 567 million.

In comparison, the total state aid to Klaipėda FEZ companies over the last decade amounted to EUR 53 million. In other words, the direct tax value of investors’ activities alone has exceeded state support by more than 10 times over this period. And in 2022 alone, Klaipėda FEZ investors have paid twice as much tax as they have received in support over the last decade.

According to Eimantas Kiudulas, the CEO of Klaipėda FEZ, free economic zones are a great example that investments made by the state and the cities in the creation of businesses and new jobs pay off several times over if such projects are implemented professionally. According to him, another interesting detail in the Klaipėda FEZ figures is the consistently improving ratio of support received to taxes paid. For example, in 2016, FEZ companies paid EUR 32 million in taxes and received five times less, i.e. EUR 6 million in state aid. In 2021, the ratio was already 8 times and in 2022 it was 13 times. In other words, while Lithuania and the municipality continues to provide various subsidies to FEZ investors, the “return” on these investments in the form of taxes constantly improves.

“High and growing taxes, which outstrip state support by a factor of several times, prove that establishing and maintaining free zones was the right choice for Lithuania. On the other hand, tax incentives have not been a priority for investors around the world for some time now – they are looking first and foremost for talent, expertise, infrastructure and business community. Lithuania is no longer a country of cheap labour, and the fact that investors still choose to create and grow value here is a great achievement for the state, our city and for each and every citizen of Klaipėda,” comments E. Kiudulas.

The claims regarding the labour cost factor are also illustrated by the latest detailed wage statistics, according to which the average salaries in the FEZ investors’ companies in 2022 were 26% higher than in Klaipėda County as a whole and 17% higher than among the county’s manufacturing companies. Moreover, the average salaries of Klaipėda FEZ investors were even a few euros higher than the overall average in Vilnius, Lithuania’s capital and business hub.

E.Kiudulas also points out that the figures mentioned above refer only to direct taxes of FEZ investors, although the real impact of the territory’s business community on the economy and the state is even greater. For example, in 2022 alone, FEZ investors purchased more than EUR 500 million worth of goods and services on the Lithuanian market, and as much as EUR 2.7 billion in the last decade. All of this translates into orders, wages and taxes for hundreds of other businesses in the coastal region and across the country – suppliers of a wide range of goods and services to the FEZ companies.

“Klaipėda FEZ’s ongoing transformation from a traditional manufacturing area to an ecosystem of R&D, product development, innovation and high added value is yielding obvious results for the city and the country. But the biggest challenge of this development is further nurturing, attracting and retaining talents. Over the last decade, we have seen a number of established FEZ companies start innovative activities, and we have also attracted some high value-added companies, but it is the supply of talent and the quality of life in Klaipėda that will determine whether we will be able to maintain a similar pace in the next decade”, says Kiudulas, noting that the Klaipėda FEZ is home to investors from both foreign and Lithuanian capital.

Reducing the value-added gap

Attracting new investment remains critical to the country’s development – the Lithuanian economy is still 2-3 times behind the leading EU countries in terms of both gross domestic product per employee and salaries. Therefore, free economic zones, which help to attract higher value-added industries than the overall national average, are important to narrow this gap as soon as possible, says Marius Stasiukaitis, Head of Strategy at Invest Lithuania, the national FDI agency.

“Klaipėda FEZ is one of the longest and most successful industrial territories in Lithuania, with a concentration of high value-added industrial businesses. The chosen direction of developing an ecosystem based on advanced manufacturing competences and innovation is also important for Lithuania’s overall competitiveness. Competing on low costs alone is a road to nowhere. There is more than one country in the CEE region that can offer significantly lower costs than Lithuania.

Klaipėda’s strategic position is also important, as it has great potential to be one of Lithuania’s green technology hubs. This is due both to the strategic position of the seaport and to the potential of the Baltic Sea for renewable energy development. However, this requires decisive steps by both the state and the region – a clear vision and strategy on how we plan to become a centre of green competences. The country’s generic strengths – infrastructure, talent or business environment – will not be enough to attract innovative, strategic green technology and manufacturing companies,” comments M. Stasiukaitis.

Arginta Engineering UAB operations in the Panevėžys Free Economic Zone

According to Arginta Engineering UAB’s estimates for 2023, consolidated income of its factories in Vilnius, Lithuania and Outokumpu, Finland would reach EUR 61 million, and EBITDA (earnings before interest, tax, depreciation and amortisation) would be EUR 4.5 million. 

In 2024, the company will focus on its new factory in Panevėžys FEZ the opening of which will take place in March. It plans to employ and train over 50 people at the enterprise in the free economic zone. According to Tomas Jaskelevičius, Arginta Engineering’s CEO, in recent years the company increased its production volumes considerably including the largest order in its history – an equipment sale to a major liquefied gas project at the shores of Western Australia. 


Tomas Jaskelevičius notes that the last year also saw significant challenges due to rising interest, which has had a direct impact on the company’s development.

  
In January 2024, the company moved to new premises within Panevėžys LEZ after investing over EUR 8 million in the first construction phase and employing over 60 people. 

Upon split-up of Arginta Group in April 2023, Arginta Engineering became an independent group with operations in Vilnius, Panevėžys and Finland. Tomas Jaskelevičius is positive that 2024 will bring even better results, with the projected EBITDA growth of about 10%, and an approx. 15% increase in value added.

The year of resilient Klaipėda – Eimantas Kiudulas

Dear colleagues and friends,

A year ago, many of us rightly feared 2023: while the energy and inflation crises had already peaked, the interest rate and geopolitical environment that restricts business and consumption were and still are worrying. The challenges are far from having disappeared over the year, but I venture to cautiously welcome the fact that we are entering 2024 with a little more good energy. And this is not only due to slightly more positive global economic forecasts, but above all, because of the people of Klaipėda.

We do not yet have the final business figures for 2023, so I can only speak about early indications: we will probably not post new records. But in such periods, resilience, continuity and sticking to the long-term strategy are the real strengths and victories that lay the foundations for the future.

In the Klaipėda FEZ business community, resilience meant not only retaining jobs or increasing average salaries, but also investing in advancements, including developments by companies such as Klaipėdos verslo parkas, Retal Baltic Films, Albright Lietuva, Mestilla. We even welcomed several new investors. Also, the Klaipėda FEZ management company was true to its long-term strategy: we have officially completed the second FlexStart building, started the development of the third one and are even gradually preparing for the fourth one.

From the outside, all this may sound like not a huge deal – just a few names, steps and facts. But each step forward further strengthens the economic resilience of the Klaipėda FEZ and the city. And this has real results for everyone. For instance, in the middle of last year, we announced the record-breaking taxes paid by Klaipėda FEZ investors, or the half-billion annual purchases on the Lithuanian market. And recently we received numbers showing that the average salaries paid by investors in the Klaipėda FEZ surpass the Klaipėda county statistics by as much as 26%. Moreover, this “good” gap has only been widening over the last few years. Also, our analyses show that although Klaipėda FEZ investors’ companies employ about 3% of Klaipėda city workers, they generate four times more, i.e. about 12% of the city’s added value.

All this shows that in more than two decades of operation, we have managed to attract not “just anyone” to the FEZ, but high value-added enterprises. Therefore, even if we have not been able to enjoy the largest new investments in a rather difficult year, every investor retained or, even more so, expanding under such circumstances is a great victory for the whole city.

By the way, at the end of last year we conducted a new survey of investors and tenants of Klaipėda FEZ. We will share the data separately, but I would like to point out now that our investors give the highest scores to their experience, which is in many cases determined by the people of Klaipėda themselves: employees, partners, municipality, as well as the academic, resident and other communities. Simply put, Klaipėda FEZ businesses are happy and proud to operate in Klaipėda, recommend and trust our city and want to continue to contribute to its success and growth. Although this is not directly reflected in business indicators, the opinion of investors at such a time is also a victory for me, creating both real value today and the preconditions for new great success stories in the near future.

For me personally, the past year has also been marked by constructive dialogues – with the new city government, the port, the business, academic and resident communities. The biggest needs of residents and businesses are known and addressing them requires an often difficult consensus on priorities. I am pleased that we all agree that Klaipėda has distinct strengths that have shown their resilience to various challenges.

So this year, I will first and foremost wish our business community and every citizen of Klaipėda courage. 2023 proved that we have a lot to be proud of and a lot to stand up to, and I wish that 2024 will be a year of bold, strong, determined and new steps.

Eimantas Kiudulas and
Team Klaipėda FEZ

© LAFEZ visos teisės saugomos 2021