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Interview with Mr. Arunas Karlonas

Adv. Len Judes interviews Mr. Arunas Karlonas, Commercial Attache at the Embassy of the Republic of Lithuania in Israel

Thank you, Mr. Karlonas for making time to speak with me, on behalf of the Chamber/Hub and for sharing your insights with respect to 2021, the outgoing year and your projections pertaining to 2022;

1. How would you describe the impact of Covid-19 on the economy of Lithuania as a whole? Especially during 2021? This in respect of trade volumes, investments and sectors?

With respect to the impact of Covid-19 on the Lithuanian Economy, the recovery of the Lithuanian economy was extremely rapid. According to the Euromonitor’s Recovery Index, Lithuania was one of the only three European countries, the Economy of which recovered and reached the pre-pandemic level in 2021, this already at the end of the first quarter. The Economy recovered at a record pace despite the fact that in 2020-2021we had strict quarantine measures. Exports reached pre- pandemic levels in the second quarter of last year.

The World is short of raw materials and their prices are rising, the Pandemic effect is still here, however, the value of exports of goods produced in Lithuania continues to grow rapidly. This is mainly due to the increased economic activity of the EU and the USA, as the main trading partners of Lithuania. Lithuania's export growth potential is not diminished by the fact that international institutions have recently worsened the economic outlook for some of Lithuania's important trading partners. It is expected that in 2021 export growth will rise by a double digit percentage. In the first three quarters of 2021 (compared to the corresponding period in 2020), the value of exports of goods manufactured in Lithuania increased by 23.9%. The main Lithuanian export sectors are chemical products, engineering industry, furniture, wood and paper industry, agriculture and the food and beverage industry.

Israel is ranked 36th amongst the Lithuanian export markets, with EUR 87M of total Lithuanian export of goods in 2020. We see huge potential of growth of exports in the areas of food and beverages, chemicals and pharma, laser and photonics and the furniture industries.

2. Lithuanian trade and exports/imports as well as investment have no doubt been affected by recent geopolitical developments. We are witnessing political tension between Lithuania and China which is affecting trade. On the one hand growth in trade with Taiwan, whilst a decrease in trade with China which has withdrawn “Country of Origin” status from Lithuanian manufactured goods. How would you describe the overall impact on the Lithuanian Economy?

China's actions in suspending trade relations with Lithuania are in clear violation of international trade rules and are unprecedented. Together with our strategic partners and other countries in the India-Pacific region (Australia, Japan, South Korea, etc.), various new alternatives for Lithuanian business are being sought, which will develop into sustainable cooperation based on mutual economic benefit. We also invite Israeli companies to strengthen cooperation with Lithuanian companies or invest in Lithuania. Lithuania has repeatedly assured China that it adheres to the "one China" policy and at the same time wants to develop cultural and economic relations with those countries and regions with which it chooses to, as a sovereign state. We and our partners have no doubt that China's sharp reaction to restricting trade with Lithuania contravenes two key principles of the World Trade Organization (WTO): non-discrimination and transparency. The Lithuanian government (Ministry of Foreign Affairs) immediately called on the European Commission, which is responsible for implementing the European Union's trade policy, to use all available EU instruments to address the issue, including in the World Trade Organization. The European Union, its members and Lithuania's other strategic partners express solidarity and support for Lithuania and recognize that China's economic pressure on Lithuania is wrong and inappropriate. The EU's internal market is and will remain indivisible. Responding to China's economic violence against one of its EU members is a European matter, as it affects the EU's single market and the EU's common commercial policy.

3. What are the priorities of Lithuania with respect to growth areas? This in respect to industry/manufacturing, services, tourism etc? Are there any specific incentives now offered to foreign investors?

Lithuania's goal is to export more high-tech goods and services. The recent years have been particularly successful for the technological, electronic and optical products sector and the life sciences sector, the exports of which in 2020 grew by as much as !62% Tourism is also a very important sector. We are working hard at re-staring this activity and growing tourists volume flows to pre-pandemic levels. Tourism from Israel is very important to us and we are planning many activities to promote Lithuania and to attract youngsters and young families with children, city breakers etc to visit our lovely and dynamic Country. As for the specific incentives to investors – Lithuania has a special unit, “Invest Lithuania” which supports and guides investors. Lithuania offers many such attractive benefits as published at The Team at Invest Lithuania is highly skilled and helps investors in finding the best solution for their desired projects or investments.

4. Could you give us an overview summary of the current trade relations between Lithuania and Israel? What are the obvious trends in the past years and what is your vision for the future? What message would you like to put forward to Israeli investors and importers?

Israel ranked 36th among the Lithuanian export of goods markets, with EUR 87 M of total Lithuanian export of goods at 2020. Israel was also ranked 29th amongst the Lithuanian export of services markets, with EUR 28 M. We see huge potential in the areas of food and beverages, chemicals and pharma, laser and photonics, furniture industries as well as in the telecommunications, technology and information services. Lithuania is open for business! We are keen to cooperate, trade and offer attractive incentives to Israeli investors. I am ready and available to meet, speak and answer all the questions of Israeli businessmen!

​Mr. Arunas Karlonas, Commercial Attache Embassy of the Republic of Lithuania to Israel

​Adv. Len Judes President of the Israel-Lithuania Chamber of Commerce and Israel- Lithuania Technology Hub

January, 2022


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