Key note speech by Prime Minister of Latvia Mr. Valdis Dombrovskis to BICG graduates on May 29, 2010 Good afternoon ladies and gentlemen, Let me start with excerpt from one of definitions of corporate governance that you can find in your folders, which states the following: „Sound corporate governance practices inspire investor and lender confidence, spur domestic and foreign investment...
Key note speech by Prime Minister of Latvia Mr. Valdis Dombrovskis to BICG graduates on May 29, 2010
Good afternoon ladies and gentlemen,
Let me start with excerpt from one of definitions of corporate governance that you can find in your folders, which states the following:
„Sound corporate governance practices inspire investor and lender confidence, spur domestic and foreign investment and improve corporate competitiveness.”
This definition contains almost everything that my country, Latvia, is looking for at this moment.
As all of you probably know, Latvia faced the sharpest GDP contraction in Europe in 2008. Minus 18% of GDP in peacetime is dramatic. This, coupled with unseen FDI contraction and flight of capital as a result of the run on PAREX Banka, created life-threatening situation to our State. We were heading towards default. Two out of three main international rating agencies have downgraded Latvia to junk category with all the consequences that it had on Latvian enterprises.
To stabilize the situation, one of the first tasks after my government took power in March 2009 was exactly to regain investor and lender confidence.
As a result of radical budgetary consolidation, which in 2009 and 2010 amounted to 1 billion Lats or around 10% of GDP the situation is improving. Nevertheless, these measures were economically and socially painful. Although there are some downward movements, unemployment in Latvia is still among highest in the EU. To create jobs we badly need domestic and foreign investment.
And finally, to overcome the crisis and warrant sustainable growth, my Government undertook radical structural reforms in economic, social and public sectors with aim to regain competitiveness of Latvian economy in medium term.
As you can see, all three components of the corporate governance are also crucial for the country in general, which means that you in this room and we at the Government are working in the same direction.
Almost 20 years since Baltic states re-gained their independence where marked with sign of always deeper integration into global processes. Be it WTO, NATO or EU, organizations in which all three Baltic states are members now, membership is the proof of constant willingness of our countries to become fully fledged members of international community.
At the same time, Latvia was integrating the international community economically. In modern global economy the terms “integration” and “competition” stand very close to each other. Countries compete to attract know-how, capital and talent. To be competitive, country needs to be attractive for businesses and people.
There are many ways to conduct business in modern world, each country, each region have their business history, culture and practice, nevertheless there are some trends that are commonly used as reference. Here I think of OECD Principles of Corporate Governance adopted in 2004 and serving as benchmark for businesses around the world.
I warmly welcome the creation of the Baltic Institute of Corporate Governance and re-assure that the work done by the Institute is absolutely critical to improve the business environment in Latvia and Baltic region in general. In particular, I would like to praise the BICG for issuing the Baltic Guidelines for Corporate Governance of the State -Owned Enterprises. They are very timely as at present my Government is evaluating which State – owned enterprises it will keep, which ones have to be restructured into public agencies and which enterprises will be privatized.
And to finish, let me address one very important issue. And this is leadership and how it goes together with corporate governance. This quote belongs to Mark Goyder, Director of Tomorrow’s Company, and, in my mind, reflects very well the link between leadership and corporate governance:
“Governance and leadership are the yin and the yang of successful organizations. If you have leadership without governance you risk tyranny, fraud and personal fiefdoms. If you have governance without leadership you risk atrophy, bureaucracy and indifference.”
Leadership – that’s the other thing that Baltic business needs. Money does not have nationality, leaders do. That is the reason why I full – heartedly support this initiative and executive training for business leaders is the best and most practical way to implement what BICG is after.