Klaipėda Free Economic Zone (FEZ) has received an Excellence award for non-fiscal incentives for investors and an Honourable mention for renewable energy solutions in the annual rankings of FDI Intelligence, a publication of the Financial Times group.

In this year’s FDI Intelligence’s Free Zones of the Year rankings, non-fiscal incentives were given special attention. The publication estimates that, although final decisions have not yet been taken, the OECD’s proposed global minimum corporate tax may soon deprive free zones of the crucial argument for lower taxes. 

Therefore, when awarding the prize, FDI Intelligence evaluated the non-fiscal measures of the Klaipėda FEZ in recent years – the quick launch strategy, an active and cooperative business community, established relationships with key local and national partners, talent development, infrastructure development and other advantages that determine investors’ willingness to set up and expand. FDI Intelligene also pointed to recent surveys conducted by the Klaipėda FEZ and its partners, according to which 80% of the city’s residents have a positive opinion of the reputation of the FEZ, and as many as 9 out of 10 existing investors would recommend their experience in the Klaipėda free zone.

According to Eimantas Kiudulas, the CEO of Klaipėda FEZ Manager, this year’s focus on non-tax benefits illustrates a marked change in investor thinking and behaviour.

“The award from FDI Intelligence is clearly encouraging, but it is also a reminder that businesses, especially those that Lithuania wants the most, are becoming less and less interested in costs – taxes or labour. The most common questions we hear from stakeholders are about the quantity and quality of talent, the fluidity of processes, community and infrastructure. Some of these issues we can address ourselves, but local and national government can also play a role – Klaipėda, for example, is one of the few Lithuanian cities with a green corridor for larger investors. However, having already lost its status as a cheap labour country and the argument of tax incentives disappearing, Lithuania simply has to pay maximum attention to developing, attracting and retaining talent,” comments E. Kiudulas.

In this year’s FDI Intelligence’s rankings, Klaipėda FEZ also received an honourable mention for its green energy solutions – solar power plants on company roofs and even fences, and other energy independence measures that have been in place for many years. Last year alone, the total installed capacity of solar power plants in the Klaipėda FEZ doubled to 4MW, and most of the development decisions were taken before the electricity price crisis hit last year. Also, the majority of Klaipėda FEZ companies are buying green electricity from the grid and investing in a variety of other energy efficiency or generation solutions.

In the past, the Klaipėda FEZ has won main and special awards in FDI Intelligence rankings in areas such as quick launch, sustainability, new technologies or investor expansions.

Last year, more than 45 Lithuanian and foreign investors operating in the Klaipėda FEZ achieved a total turnover of EUR 1.76 billion and exports of EUR 780 million. Purchases of goods and services by Klaipėda FEZ investors in Lithuania in 2022 exceeded EUR 500 million, and VAT, GPM and social taxes paid last year reached EUR 107.3 million. In comparison, state aid granted to Klaipėda FEZ investors in 2022 amounted to only EUR 8.2 million.

American capital biotechnology company Cureline Inc. is investing EUR 3.5 million in the construction of a new biotechnology plant and research laboratory in Klaipėda FEZ. The plant, laboratory and administrative premises will be located in the FlexStart facility. The start of operations is planned for the first half of 2024.

The new plant and laboratory will be managed by Memel Biotech, a subsidiary of Cureline Inc. group, VZ.LT reports.

Its CEO Agnė Vaitkevičienė says that the company will be involved in the production of medical products, including advanced therapy drugs for clinical trials, with direct customers being pharmaceutical companies and medical institutions worldwide.

“We will be the first in Lithuania to be able to develop this level of products for clinical trials. We will also be one of the few in the Baltic States and Poland. This market is not yet widely occupied in the region, but the global demand for such products is huge, so not only we as a company, but also Lithuania as a country has the potential to become a centre of advanced therapeutic technologies,” the company’s announcement quotes A. Vaitkevičienė, CEO of Memel Biotech, as saying.

According to her, Memel Biotech will be equipped with special premises complying with the standards for the production of sterile medical products, where innovative biotechnological products for personalised medicine will be developed and manufactured.

The estimated floor area of the plant with commercial premises is 850 sqm. The company intends to recruit up to 25 highly qualified professionals over the next two years. Until now, Cureline Baltic has had an administrative office and an animal laboratory in Vilnius.

Glassbel Baltic, an architectural glass manufacturer operating in the Klaipėda Free Economic Zone (FEZ), has entered into a strategic partnership with Halio, a designer of the world’s fastest, most beautiful, eco-friendly, and technologically advanced architectural smart glass. This cooperation will allow the Klaipėda-based company to implement Halio’s solutions with light transmittance management systems in its products and distribute them in Europe, Middle East and other markets.

As part of the worldwide challenge of energy efficiency and sustainability in modern architecture, Glassbel, which exports to 30 countries on 4 continents, will now be able to offer smart glass facade solutions using Halio’s intelligent technology. The smart solution consists of glass products with an integrated Halio device that reacts to the changing environment, so that the glass darkens or lightens accordingly in real time, thus reducing air conditioning or heating costs. The American technology, which consists of a sophisticated combination of sensors, switches, chemicals, hardware, software and artificial intelligence, not only ensures human comfort but also makes buildings more energy efficient.

According to Valdas Virbalas, CCO at Glassbel Baltic, the agreement with the American company will allow Glassbel to strengthen its portfolio of innovative products.

“Such smart glass solutions are still a novelty around the world, which the market will have to accept, learn to work with and invest in. But sustainability and energy efficiency have been the dominant themes in new buildings for some time now, so we are delighted to add a relevant innovation to our portfolio and further strengthen our position in the market for innovative architectural glass. We are currently completing our first small real project with Halio technology and exporting it to Silicon Valley in the USA, where the business community is currently the most interested and involved in smart technologies,” comments Virbalas.

According to Bruce Sohn, CEO of Halio, Glassbel’s quality, expertise and wide geography of markets make this partnership highly valuable for both sides.

“This collaboration allows us to market groundbreaking technology to our customers in Europe and the Middle East. We’re proud to jointly offer the fastest, most eco-friendly, energy-efficient solution, and the utmost beautiful and highest-performing smart glass available in the market” says Sohn.

And according to Dmitri Sobolevski, CEO of Glassbel, Halio’s solution is the best on the market for speed, facade integrity and aesthetics.

“We are delighted to partner with the world leaders in smart glass technology. The Halio solution is revolutionary, significantly faster to react to changing environments, aesthetically neutral and durable, and technologically more robust than any alternative,” says Mr Sobolevski.

Eimantas Kiudulas, the CEO of Klaipėda FEZ, also welcomes this partnership, pointing out that Glassbel will be both more sustainable and more competitive with the US company’s technology.

“We are pleased that with this step Glassbel is strengthening several strategic areas of Klaipėda FEZ at once – high value-added manufacturing, application of new technologies, as well as environmental protection and sustainability,” commented E. Kiudulas.

Halio was founded in 2010 in California, USA. The company markets its solutions both on its own and through partners including Glassbel. Halio has raised more than 300 million USD throughout its history, including from SK Holdings, US sustainable investment fund Capricorn Investment Group and other investors.

Glassbel’s revenue last year was 22 million euros, a quarter more than in 2021. The company currently employs around 180 colleagues in Klaipėda.

Glassbel has been operating in the Klaipėda FEZ since 2009. The company exports more than 90% of its production, mainly to Ireland, the UK, the US, Western Europe, Saudi Arabia, Scandinavia and other markets.

Last year, the total taxes paid by more than 40 investors operating in the Klaipėda Free Economic Zone (FEZ) amounted to EUR 107.3 million and reached an all-time record. Purchases of goods and services by FEZ companies in Lithuania also reached an all-time high of more than EUR 500 million.

Last year’s war, as well as the energy, raw materials and inflation crises, and the signs of recession that started to emerge in the second half of the year, distorted the main indicators of Klaipėda FEZ investors. Although the total turnover of companies amounting to EUR 1.76 billion and exports of EUR 780 million are also all-time records, they were significantly affected by the sharp increase in raw material prices related to the pricing of several major investors’ products. Leaving these companies aside, the rest of the Klaipėda FEZ business community has shown moderate growth throughout the past year, but many businesses have faced deteriorating consumer sentiment in the second half of the year.

However, other Klaipėda FEZ business community results continue to show a strong and growing contribution to the regional and national economy. Last year, purchases of goods and services by FEZ investors in Lithuania amounted to EUR 505 million, or 84% more than in 2021. Around one third of this figure is accounted for by the biodiesel producer UAB Mestilla, which buys rapeseed and other raw materials from Lithuanian farmers.

The amount of taxes paid by the Klaipėda FEZ business community also reached an all-time high last year – EUR 107.3 million in social, revenue and VAT taxes were 42% more than in 2021. In comparison, over the past year, the FEZ investors received EUR 8.2 million of state aid, which in the form of taxes alone has paid back several times over.

Last year, existing and new investors in Klaipėda FEZ implemented investment projects worth EUR 45.8 million. The largest investments were made in new REHAU and Finegri factories, while Retal Baltic Films, Neo Group, Orion Global PET, Pack Klaipėda, Lavango Engineering, Glassbel Baltic, Mestilla and other companies invested in the expansion of their existing capacities and infrastructure.

The number of jobs in Klaipėda FEZ investors’ companies increased from 2,300 to 2,800 last year, while the number of employees in the whole FEZ territory was around 5,000 last year.

According to Eimantas Kiudulas, the Klaipėda FEZ CEO, companies in the territory not only demonstrated resilience in a difficult period, but also increased their contribution to the national economy. 

“It is still difficult to talk about large new investments, and the beginning of this year is not easy for business, but we are actively preparing for the expected recovery. A business community that is stable throughout all economic cycles will be one of the factors that will allow us to gain momentum as markets recover,” comments Mr Kiudulas.

Since the inception of Klaipėda FEZ in 2002, Lithuanian and foreign capital companies have invested or plan to invest EUR 778 million in the territory. Since 2011, Klaipėda FEZ investors have paid a total of EUR 591 million in taxes, while the state aid received during this period amounted to EUR 61.3 million.

The Admiral initiative, which brings together 21 partners from 9 EU countries, was officially launched in Espoo, Finland, in May, with the aim of creating a next-generation logistics service platform within 3 years to help reduce the environmental impact of the sector. The project’s Lithuanian partners include the Klaipėda FEZ Management Company.

According to the Admiral team, transport and logistics companies have so far been mainly concerned about their own pollution and energy consumption, but for this reason, less attention has been paid to the indirect environmental impact of the logistics sector. This is precisely the problem that the Admiral initiative will address by developing and promoting sustainable, multimodal, data-driven logistics solutions.

Admiral will focus on a next-generation marketplace platform to manage all supply chains and monitor the environmental impact of each link. The platform will aim to make multimodal logistics chains run more smoothly, make better use of existing capabilities and infrastructure, promote sustainable sourcing and other innovations. At the same time, the Admiral platform will aim to become an innovation hub for software developers who could create and teest new services. Admiral is expected to deliver not only a 20% reduction in the environmental impact of the logistics sector, but also to bring more transparency and resilience to the market.

The Admiral project members in Lithuania will be primarily responsible for generating digital documents and signatures between the different members of the logistics network. The Lithuanian part of the Admiral consortium will also take care of data integration and information dissemination in the logistics sector, and will develop solutions for the automatic calculation and distribution of CO2 footprints.

According to Darius Butvydas, Klaipėda FEZ Client Project Manager, although the transport and logistics sector is digitising, innovation in this business is rather slow and fragmented, the tools used by companies usually do not communicate with each other well, and there is almost no CO2 emissions calculation. The Admiral platform will seek to address all this.

“Klaipėda FEZ is participating in the project as a transport hub, i.e. we will provide our partners with our existing infrastructure (transport monitoring devices, 5G internet, etc.), while the other partner in the project, the logistics company CargoGO, will be testing digital tools in real time. Our data will be used to evaluate the improvements achieved. The pilot project is planned to be up and running within 36 months,” comments Butvydas.

The real outcome of the Admiral project, he says, will be a Europe-wide service ordering platform focused on transport and logistics efficiency and the calculation, assessment and mitigation of environmental impacts. The project will not only provide the ability to measure and understand the CO2 footprint across the entire service chain, but also to actually reduce it.

Admiral’s other project partner in Lithuania, UAB cargoGO Logistics, will provide the project with data and expertise, test solutions, optimise routes, improve driving styles and digitise processes. According to the company’s IT project manager, Lauras Pranckevičius, cargoGO is already testing a separate CO2 emissions calculation and reporting tools, which will enable it to offer customers the least polluting routes and services.

“We could offer customers the most sustainable, environmentally friendly route, with significantly lower CO2 emissions, contributing to a more sustainable future. The project would provide the logistics sector with a system that saves costs, avoids downtime and empty kilometres, and provides a sustainable service. The Admiral project as a whole will contribute to the interoperability of the different logistics chains, thus improving the communication between customer and carrier, to measure and calculate CO2 emissions, and to develop the organisations’ approach to sustainability,” comments Pranckevičius.

A total of 21 organisations from 9 EU countries are participating in the Admiral project. In addition to the Klaipėda FEZ Management Company, the Lithuanian Transport Innovation Association, UAB Cargo Sign, UAB Normalis Tech, CargoGO Group and UAB Trevio have joined the project in Lithuania. The project also includes representatives from business, academia and the public sector from Germany, Portugal, Spain, Italy, Greece, Croatia, Slovenia and Finland. Admiral is funded by the European Union.
For more information on the Admiral project, visit the European Commission’s website and follow its progress on Linkedin.