a 5g

As Latvians hold their parliamentary elections, incumbent prime minister Māris Kučinskis talks to Jacopo Dettoni about the priorities for any new government, including maintaining its early 5G network advantage.

Q: What are the main priorities for any government emerging from October 6 elections?

A: A new government will have to provide continuity to our target of achieving a 5% economic growth rate. It will also have to make sure we have balanced growth in the long run, focusing on productivity and exports. Concerning this last point, we have to be able to use technology much more skilfully, to maximise the technology dividend, and... these initiatives have to be led by the prime minister. 

As a small country, we are able to take decisions and move forward quicker. We have to use this to our benefit – that would speed up our growth. We have also been implementing reforms in the fields of education and healthcare – a new government should continue them too.

Q: Can Latvia and the Baltic region as a whole become a reference for new generation 5G networks?

A: We are already piloting projects for the introduction of 5G networks. We have all the necessary preconditions to create a regional 5G network. 

We are already doing a lot of brainstorming at our state-owned companies such as telecommunications operator LMT [jointly controlled with Swedish telecommunications firm Telia] and Latvia’s State Forests [which manages the country’s woodlands] to generate new ideas and products. 

We also invite private companies to get on board and streamline innovation.

Q: Baltic countries seem to be skilful in developing cutting-edge technologies but in the financial sphere they struggle to shrug off the reputation of being a backwater channel for money laundering. Latvia is no exception, with ABLV,  the third largest bank in the country, voluntarily liquidated in 2018 for a money-laundering scandal.

A: This government has been handling the issue quite well, cutting the level for foreign deposits in the domestic banking system to about 5% of total deposits – from 40% a couple of years ago – and we even phased out the shell company accounts. [We stopped] the non-resident deposit business altogether, and by doing so we also affected honest banks, which is unfortunate, but eventually some of the banks [will] change their business model, some will probably leave the country, and some will merge. 

But prior to our reforms, there were very poor regulatory controls, and people were thinking of the economic benefit of foreign deposits rather than their origins. Now there are a number of pro-Russian, populist parties that are campaigning in the October elections, saying that we have destroyed an important sector that benefits the country – that non-resident money is good for the economy.

Q: Could this hinder recent reforms?

A: Definitely. There are parties that would like to change our foreign policy, pivoting the country towards Russia in a covert way. Russian cargo reduced in recent years, and they claim that we will get those transit flows back. I’m sure president Vladimir Putin will agree to divert some cargo back to Latvia, but it could be a first step towards strengthening the soft power of Russia in the country.

Q: Regional governance is proving a challenge when it comes to the project for a Baltic railway, Rail Baltica – probably the most iconic ongoing project of the whole region. Its chief executive, Baiba Rubesa, has just resigned, criticising all three Baltic countries for poor governance. Is Latvia still committed to Rail Baltica?

A: This project will be implemented, and will have all the necessary political support. The three prime ministers are discussing the project frequently, trying to smooth all the wrinkles. It’s the work of the chief executive to bring the three countries together and strike a consensus.

This article is sourced from fDi Magazine
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