Two years ago, the Kaunas Free Economic Zone (FEZ) announced that it attracted its first billion of investments. Currently, the amount of investments is approaching the second billion, amounting to €1.56 billion. This investment will create almost 10,000 high-skilled jobs in the near future.
Vytautas Petružis, CEO of the Kaunas FEZ, says that the FEZ is as successful as the businesses operating here, and Aušrinė Armonaitė, the Minister of Economy and Innovation, notes the importance of the development conditions created for businesses.
“We are consistently helping the Kaunas FEZ to grow, and we are already seeing the results of our joint work: developed infrastructure, growing investment, and job creation. Last year, on the initiative of the Ministry, it was decided to expand the Kaunas FEZ from 534 to 1,054 hectares, and we also allocated funding for the development of its infrastructure. This is particularly important in improving the investment environment of the Kaunas region and strengthening the economic competitiveness of the whole country,” says Minister Armonaitė.
Development potential, speed of establishment, and infrastructure — key factors for growth
“Our success is determined by the fact that we can provide the conditions for businesses to grow in the Kaunas FEZ. The growth of businesses dictates the development strategy of the zone — we cannot lag behind the growth rates of investors and must ensure opportunities for companies to physically expand in the vicinity,” says the CEO of the Kaunas FEZ.
During 2023 and the first months of this year, the Kaunas FEZ subleased 21 hectares of land to new investors, and the amount of investments over that period exceeded €205 million. “The companies operating here and starting operations are planning to invest another €300 million,” Petružis shares the nearest investor plans.
He says that now that the FEZ 1 area is almost full, infrastructure is being planned and implemented in the FEZ 2 area to ensure the availability of large plots for new investors. A project to connect the FEZ 1 and FEZ 2 areas is also being carried out in cooperation with the local government.
The CEO notes that tax incentives, although important, are not the main factor determining the choice of large foreign capital investors. First of all, it is necessary to ensure the supply and infrastructure of large greenfield plots. “Investor needs are exclusively atypical, requiring intensive engineering infrastructure capacity and large areas of land. Labour supply is also another key criterion when talking to foreign investors,” says Petružis.
“We share the challenge of labour supply with Kaunas city and district municipalities. High-value-added businesses also create competitive jobs that require industry-specific knowledge. The educational institutions located in Kaunas city prepare the necessary highly qualified specialists, who easily find work in the companies located in the FEZ. Investors appreciate that the labour supply in the Kaunas region is of high quality, and it seems that this resource will be sufficient to support both growing companies and new investors for a long time.,” Petružis believes.
Two-thirds of employed persons are highly qualified professionals
Currently, the Kaunas FEZ has more than 130 companies with more than 7,100 employees. The full implementation of the development plans will create 9,500 new jobs.
More than 80% of the total investment of €1.56 billion in the Kaunas FEZ are manufacturing sector companies that create high-value-added jobs, and even two-thirds of all manufacturing sector employees are highly qualified specialists.
“We are pleased that more than 40% of all jobs created are in high-value-added industries. For example, there are 2,600 employees in the electronics and automotive industries, and 950 in medical technology and pharmaceuticals,” shares Petružis, CEO of the Kaunas FEZ.
According to him, the investments of companies from the electronics and automotive industries as well as medical technology and pharmaceutical sectors account for more than 40% of the total investments attracted by the Kaunas FEZ and are dominated by such well-known foreign capital companies as Esco Medical Technologies, Hollister Lietuva, Continental Lithuania, Hella Lithuania.
“As many as 73% of the companies working in these sectors are employees of foreign-owned companies and their salaries are on average 16% higher than those of Lithuanian-owned companies. Thus, the share of taxes paid in the employment relationship is significantly higher,” Petružis notes.
During 2023 and the first half of 2024, Kaunas FEZ companies generated €109 million in employment-related taxes, and in 2023, the average salary of Kaunas FEZ companies exceeded the average salary of Kaunas County by 15%. “The average salary here was equal to the average salary in Vilnius,” the head of the Kaunas FEZ shares impressive statistical data.
Although manufacturing and service companies operating in Kaunas FEZ can benefit from corporate tax relief, not all of them do so. During 2023, the companies operating here paid more than €5 million in corporate income tax.
Source: Kaunas IN
