FACTS AND COMMENTS
BISLAN ABDULMUSLIMOV ON CAPITALISM
HOW TO BECOME OPEN TO NATIONAL CAPITAL?
Every time a foreign company announces of its entering Latvia’s market or investments in a local company, people read about it in the media and are delighted – there will be investments, it sounds very good. But hardly anyone knows that not every investment is good, especially for a small country. Any investment from abroad, if it is not know-how, is a threat to the local capital as new investors will oust someone who has less money from the market.
The result can be already seen. There is only one area where it could be said that about 80-90% of it is in local capitalists’ hands – the fishing industry. The sector that turns over LV 150 million a year could be described as national business – it has so far remained in the hands of local people, 95% of its production is exported, and it even buys raw materials from abroad in some cases. In our country, there are three more industries that account for almost 30% of Latvia’s GDP together with the fishing industry: wood processing, meat processing and dairy industry. I know meat industry better, so let’s talk about it.
Once there was local factory Rigas miesnieks in Riga. Fifteen years ago, when it belonged to local people, the market share of Rigas miesnieks exceeded 70% in separate product groups, which is very impressive. Then this production unit was bought by Rakvere’s investors from Finland. It is logical that they had no need to manufacture the same products in Estonia and Latvia, so Riga’s production unit, where around 800 people used to work, now imports most of the products from Rakvere, and the number of employees has decreased considerably.
However, the only thing the people who sell their businesses and strong brands could be reproached for is lack of patriotism and healthy impudence. By patriotism I mean love for one’s work, profession and only then – for the state as a whole. Let’s look at the Caucasus countries! Mountains inspire people of this region, just like the land does with the Latvians. A Latvian – owner – is able to do everything in his land, so I believe in the revival of agriculture and food sector.
At the moment, there are such circumstances in Latvia that only patriots and romantics, like my competitors Nakotne, are able to keep the business in their hands. Why? It is a family business, so each person is dear. Unlike a foreigner, the head of this family has to look in each employer’s eyes feeling responsibility for him before dismissing. And these familiar relations with the products made with their own hands have very high value, and also patriotism is part of it. However, speaking about healthy impudence in business, I must confess – we can borrow it from the Lithuanians. The southern neighbours say their milk is better than ours, and move their products in the market. As a result, 90% of dairy industry in Lithuania is in the hands of local capitalists, not like it is here, where Rigas piensamnieks even belongs to a player out of this sector – the U.S. real estate fund, although Latvia is in the third place in Europe after France and Switzerland by the quality of dairy products. Lack of ambitions is one of the reasons why Latvians are selling their businesses. One has to dream not about how to become a millionaire, but even further – how to earn billions, get in the Forbes list.
What to do? In 1995, when different financial structures entered Latvia, people had to pledge everything they had to keep production in their hands, so I admire those businessmen who managed to retain their business. However, it is very difficult to become such patriots overnight, so let us return to economic processes.
First, the law on lobbying has to be finally adopted. I know that protectionism in the European Union is banned, but it actually works in all countries. I cannot imagine that a Latvian company could win a public procurement on supplying children in France with dairy products, and not, say, Danone, and it is logical. Secondly, there must be a bank or a fund that would adhere to this national direction so that that local people would have the possibility to buy a factory before selling it to a foreigner. When it comes to the transactions of millions, no Scandinavian bank would lend a million to a small Latvian company to expand. Hipoteku un zemes banka had to assume this mission, but it has already been sold. Meanwhile, Citadele goes in the right direction, but we plan to sell it as well. The third option – the small ones can merge with the large ones and work with one brand. The large will grow and the small will grow with it.
Moreover, the Latvians must get rid of Soviet stereotypes. Let us remember that a rich person is kind and happy, but poor – furious. Therefore, each capitalist means one more satisfied person.
BISLAN ABDULMUSLIMOV, THE OWNER OF AB HOLDINGS
Forbes, May 2013, p. 10
