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Country Commercial Guides FY 2000: Latvia Report prepared by U.S. Embassy Riga, released July 1999 Note*

CHAPTER V. Leading Trade Prospects for U.S. Business

Best Prospects for Non-Agricultural Goods and Services

1. Computers & Peripheral Equipment (CPT)
2. Telecommunications Equipment (TEL)
3. Computer Services
4. Pollution Control Equipment (POL)
5. Forestry/Woodworking equipment (FOR)

Sector Rank: 1
Sector Name: Computers & Peripheral Equipment
ITA Industry Code: CPT

Information technology is the most dynamic and most rapidly developing industry in Latvia. The development of Western-style information society has been a vital part of Latvia's strategy prior joining the EU. Computer hardware segment covers approximately 50% of the Latvian IT market. Personal computer sales accelerated in 1997 and 1998, increasing by between 30% and 80%. The number of personal computers sold in 1998 was 180 000. Best prospects for U.S. computer hardware exports to Latvia are personal computers with Pentium III processors, small and medium multi-processor servers and multimedia equipment.

Sector Rank: 2
Sector Name: Telecommunications Equipment
ITA Industry Code: TEL

The telecommunication sector has been growing rapidly in Latvia since the establishment of Lattelekom in 1994. This joint venture between the state and a consortium of European Telecom companies is still in the process of modernizing the fixed public telecommunications network, including pay phones. Lattelekom is also in the process of establishing fibre-optic links to the neighboring Baltic States and to Sweden and Finland, and planning to establish one also between Latvia and Belarus.

The best growing sub-sectors of telecommunications are digital lines, mobile telecommunications and paging services. Latvia has one of the highest mobile phone penetration rates in CEE with 10% of the population using mobile telephony. Both mobile and paging operators are eager to keep in pace with the latest technology and network infrastructure.

Sector Rank: 3
Sector Name: Computer Services
ITA Industry Code: CPS

One of Latvia's priorities since regaining independence has been to update the outdated tele- and data communications network, and large investment have been made both on telecommunication and high-speed data transmission networks.

Y2K compliance has been one of the main factors increasing the need for computer services. Also, the majority of Latvian companies, government institutions and financial institutions have commenced the development of their IT systems, including back office systems, LANs, accounting and financial control systems. Both electronic commerce and Internet are rapidly penetrating the Latvian market, increasing the need for computer related services and support. Best prospects for U.S. exports in the computer services sector are: Internet/intranet, systems and networks implementation, education and training, and support services.

Sector Rank: 4
Sector Name: Pollution Control Equipment
ITA Industry Code: POL

The Soviet era left behind heavy polluted large industrial areas, transportation crossroads and abandoned Russian army bases. Latvia is eager to invest funds and resources in environmental protection in order to meet the EU and other international convention requirements. Both Latvian Ministry of Environmental Protection and the municipal governments have implemented several environmental projects ranging from wastewater treatment to landfill.

Best prospects for U.S. exports in the environmental sector are counseling services, wastewater treatment technology, ozone-friendly technologies on industry level, pollution control equipment for oil and transportation industries and water supply and sewerage development. Sector Rank: 5
Sector Name: Forestry/Woodworking equipment (FOR)
ITA Industry Code: FOR

Forestry and wood processing industry has a long tradition in Latvia. Some 45% of the land area is classified as forest out of which approximately 7 acres are available for commercial forest operations. The approximate amount of annual timber harvest is 8.3 million cubic meters. The local saw mill industry has potential for expansion but the existing mills are in need of technology and machinery upgrades and the new establishments both managerial and marketing know-how. Timber and saw mill industries have potential for foreign investment. Both raw materials and labor are available at low cost.

Best prospects for U.S. exports are saw mill equipment, woodworking machinery, plant technologies and training.