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Avulis proposes to establish a state bank and an investment fund
Arvydas Avulis, Chairman of the Board and entrepreneur of the real estate company Hanner, spoke at the Lithuanian Business Forum on Thursday that while some are hard to survive, others have new business opportunities. For example, during quarantine, there was an additional need for services and goods that could be traded. The best example is how to deliver food home during quarantine, as a new niche has emerged that entrepreneurs have quickly filled. The same happened with the production of disinfectants and masks.
A. Avulis is convinced that a quick recovery after the crisis requires easy access to capital, which requires less bureaucracy.
“We can compare that we are after the war, when the rules that were in force before do not apply. It is necessary to create new rules quickly. If we step on it for a long time, we will stay in line,” he emphasizes, adding that today we need several things: speed, capital and money.
The businessman points out that there are currently opportunities in Lithuania to expand production, invest in digital technologies, but this requires access to capital. The easiest way, according to A. Avulis, would be to establish a state bank. It is said that the state may take a little more risk and finance many projects.
As another measure, he cites a public investment fund that could invest in new business stocks.
“Banks would be the simplest tool, but funds created with state aid could also be established. The state could borrow more and more boldly right now. Such funds could support ideas and buy corporate bonds, provide capital to those who have good ideas.
Both in the field of infrastructure, where projects can arise very quickly. It may take a year or two to develop projects like moving production from China to Lithuania. I think there are quick solutions. “A. Avulis assures and clarifies that these could be transportation and social infrastructure projects, in terms of building hospitals, schools or social housing.
Sinkevičius proposes to establish a state innovation fund
European Commissioner Virginijus Sinkevičius agrees that access to capital is a constant problem, especially for regional companies. However, he is skeptical of the idea of a state bank.
“I know the banking culture in principle, and it is very conservative. According to the ministers of France, Germany and Poland, non-bank companies finance new companies. They will always see how it is better for them, depositors, how to protect their interests,” emphasizes V Sinkevičius.
According to him, there is a simple solution: venture capital funds. As Minister of Economy and Innovation, he proposed the idea of a state innovation fund, which is now the best time to implement it.
The European Commissioner gives the example of Israel: “It is not the politicians who make the decisions, but the business, education and innovation explorers who value new companies. The state receives a portion of those investments, but with state aid, it’s a much easier way to grow and grow. “
Virginijus Sinkevičius
Speaking of quick fixes today, V. Sinkevičius distinguishes between guarantees and subsidies.
“The European Union has completely” opened “its hands to use structural funds, EU investment funds that will not be returned to the Union budget and to provide state support, which has increased to 120 thousand Eur, and states can easily use this money, ”he says.
The European Commissioner points out that the EU champion is Germany, which is the fastest and most specific way to save business.
He cites Fintech companies as another opportunity for faster access to capital: “This is another alternative and opportunity to access capital with quick evaluations and commercial support.”
Cat: We have received a billion dollar factory request.
During the conference, the head of “Invest in Lithuania”, Mantas Katinas, presented the trends that international business has been talking about in recent months. According to him, these trends are very favorable for Lithuania.
“The economic tectonic plates in the world are being redrawn. The main problem is that all of Europe and the US suddenly realized that China no longer wanted to have as a major factory and wanted to break supply chains China and Asia. “Not only because of the COVID-19 crisis, but also because of the Sino-US conflict,” he says.
According to Katin, Central and Eastern Europe is a good place for Europe to recover some of its production, especially that which has traveled to distant Asia, to make Europe safer and its supply chains closer to each other. Here you notice a considerable opportunity for the Lithuanian industry.
“We are still weakly integrated in the Nordic countries, Germany and England. This would require the efforts of the state and companies to invest much more boldly in new export channels, new products. Even in the field of construction, participate in the systems of Scandinavian public procurement so that we do not depend only on our small market ”, gives an example.
M. Katinas hinted that “Invest in Lithuania” had received a request for a billion dollars from the factory, but said it could not reveal its details.
“One of their demands and questions, whether the state could contribute to the common good, whether to share risk or invest in securities. We know that Lithuania does not currently have an exact instrument. But this is the best indication that the need for such bold instruments it is very necessary ”, he emphasizes.
Katinas blankets
According to him, in such crisis situations, only the brave can be the winners. This means that passivity has no chance of creating a competitive advantage. M. Katinas emphasizes that in Lithuania, both in the public sector and in business, the desire to experiment intelligently, but also to move forward, should be encouraged.
“The main problem is that the state and companies need to connect speed together, and both structural funds, liquidity facilities, government funds that amortize risk in the long term. All this can create a good feeling for companies that they can run risks and that the environment is safe enough, ”he said at the Lithuanian Business Forum, adding that a lot of experience is needed in the public sector.
Sinkevičius: the biggest mistake is to restore status quo
According to European Commissioner V. Sinkevičius, the biggest mistake for states is to throw a record amount of public finance into the economy. The United States and the EU have announced around 2 billion. sums
“It would be a mistake to restore the previous status quoBecause there will be a lot of mistrust, the world will be different, “he points out.
According to him, the main directions in Europe will be digitization and the green course. V. Sinkevičius gave an example: “Yesterday I carried out a social experiment, checking the delivery of goods to homes from various stores in Germany, France, Belgium and the Netherlands. Until now, there is no better alternative than the “Barbora” created by the Lithuanians: we are very advanced, in other places we are just beginning such things. “
V. Sinkevičius says that Lithuania forgets government procurement and state orders: “I think Lithuania has a tool to regulate and help companies with state orders.”
The Commissioner also hinted that the culture of the offices would change dramatically: “I doubt that there are as many people in the offices as before. I think a lot of things won’t go back to their seats after this experiment. Companies will strongly reconsider their operations. Meetings in cyberspace, your security, communication and infrastructure will be crucial. “
Not only that, a big blow will be for aviation, which will have to find fundamentally another mode of operation, at least before the coronavirus vaccine. V. Sinkevičius predicts that for the first or second quarter of next year.
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