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Experts: Development of Riga Metropolitan Area Needs Radical Acceleration

The municipality, as a coordinator between institutions and businesses, the restructuring of residents' income tax, and greater responsibility for planning regions, would be beneficial instruments for activating entrepreneurship, attracting investments, and overall growth of the capital region, according to participants in the discussion "Priorities of Riga Metropolitan Area Development in Relation to Entrepreneurship."

"Businesses from various sectors would like to see much faster action from Riga, Pieriga, and state institutions for economic development. The feeling that state institutions are a hindrance may be deceptive, but such an assessment exists in the business community. We call on Riga and Pieriga municipalities to take a much more active and radical approach to funding their regional development, both in terms of accessing European funds and restructuring residents' income tax and other taxes. Currently, businesses in Riga and Pieriga, at least to some extent, feel neglected, and this is not beneficial for the capital's metropolitan area, which is the largest economic engine in Latvia," stated the discussion moderator, Armands Gūtmanis, Director of the business consultancy "Meta Advisory."

To promote economic development not only in Riga and Pieriga but also in other regions of Latvia, it would be useful to develop a model of cooperation between municipalities and entrepreneurs. In this model, the municipality would coordinate the actions of involved parties, speeding up the coordination process with various state institutions, thus facilitating faster attraction of investments and development.

Andis Kublačovs, Project Director of the real estate development company "Linstow Baltic," emphasized that new solutions are needed to promote project development: "Our proposal is that the municipality could act as a coordinator, issuing building permits to itself, but financing could be provided by private partners, with the municipality funding only a portion. In such projects, which involve both entrepreneurs and municipalities, such as the improvement of access roads, often various properties owned by different owners are involved, and a number of other issues need to be addressed. Several positive examples of municipalities acting as coordinators already exist in Latvia, but this kind of cooperation model has not been tested yet. The municipality could act as a coordinator, ensuring that all private partners fulfill their obligations and that disputes do not arise. Therefore, it would be essential to consider regulations for such a model."

Participants in the discussion discussed the proposal for restructuring residents' income tax to increase municipalities' interest in supporting and promoting job creation in their respective territories.

Inese Andersone, Chairperson of Riga City Development Committee, explained, "The needs of Riga, including infrastructure for business development, far exceed the available resources. Therefore, we are looking for various sources of funding. The redistribution of residents' income tax would be one fair way to increase the city's budget and obtain funding for problem-solving since many residents live outside Riga but work here. Hence, we support such tax redistribution reform."

One of the conclusions of the discussion was that well-established and functioning planning regions in Latvia should be developed as institutions responsible for business and development planning, not limited to one relatively small district but more broadly.

Andris Miglavs, Advisor to the Minister of Environmental Protection and Regional Development on regional development and economic affairs, explained that the development of the Riga region should be based on three pillars: cooperation, planning, and financial management. Only then can it keep up with the capital regions of the other Baltic countries in terms of development and population growth. "Cooperation is necessary because no municipality in Latvia can solve its challenges by working separately. That's why planning regions have been created, and the position of the Ministry of Environmental Protection and Regional Development is clear and firm – planning, when it comes to business development, education, mobility, should not be carried out at the level of individual municipalities but within the framework of planning regions," emphasized the ministry's representative.

Karīna Miķelsone, Vice-Chairperson of the association "Riga Metropolis" and Chairperson of Ādaži Municipality, emphasized that the capital and Pieriga region have a concentrated potential that is essential for investments and development. In a relatively small part of the country's territory - about 5.6% of Latvia's total area - 60% of state-owned companies operate, 85% of the total number of students study at universities and colleges, and 90% of research institutions are located. The mutual connection of these factors can bring significant qualitative changes.

The discussion "Priorities of Riga Metropolitan Area Development in Relation to Entrepreneurship" was organized by the consulting firm "Meta Advisory," the Irish Latvian Chamber of Commerce, and the Swiss Chamber of Commerce, in collaboration with the Latvian Association of Territorial Planners and the company "Linstow Baltic."


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