“A ridiculous amount of money…” Businessman Bergs is critical of the funding offered by the Ministry of Defense for innovation

Defense industry representatives today expressed a critical position at the meeting of the Saeima Innovation Ecosystem Development Subcommittee on insufficient state funding for innovations in the field, lack of appropriate orders and bureaucratic obstacles caused by outdated regulatory framework.

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At the beginning of the session, the chairman of the subcommittee, Andris Kulbergs (AS), referred to what he heard from the representatives of the defense industry, that the extent of involvement of local companies in providing military needs has not increased in the last seven years.

The president of the Latvian Industrial Development Confederation, businessman Normunds Bergs, said that the 600,000 euro grants offered by the Ministry of Defense for the creation of prototypes are a “ridiculous amount of money”, as such works require at least one to three million euros.

According to Berg, it takes one and a half to two years to develop a prototype of a device or system, and it can require 1.2 million euros in wages alone. Commenting on the industry’s cooperation with banks, the entrepreneur emphasized that there is no reason to talk about the possibility of getting a bank loan before the state order is guaranteed.

Juris Binde, the representative of the entrepreneurs’ organization and the president of “Latvijas mobilā telefona”, mentioned as a problem that certain experts of the Ministry of Defense (MoD) do not succeed or it is difficult to convince them that the defense product they have noticed abroad can be produced in Latvia cheaper, more conveniently and better.

The biggest problem for the transition from prototype to production is the outdated, out-of-date regulatory framework, said Binde. He urged that the MoD together with the Ministry of Economy develop a concept of defense industrialization.

On the other hand, acceptance tests of new products and other stages should be systemic, Binde emphasized. For example, in order to receive certification for a newly created vehicle, it is necessary to drive it a certain distance on public roads, which can only be done with the permission of the Road Safety Directorate (CSDD). However, CSDD does not grant such a permit, because the vehicle does not have the relevant certification, said the representative of the company organization, emphasizing that the active intervention of the legislature and the executive power is needed to remove bureaucratic obstacles in regulatory acts.

Another entrepreneur stated at the commission meeting that ten can be provided with the amount available for the grant, but in practice 500 to 1000 engineers need to be employed.

At the same time, businessmen pointed out the positive things done by the state in the field of defense industry.

Deputy Kulbergs stated at the beginning of the session that Latvia has provided Ukraine with support worth more than one billion euros, but the fact that many of the supplied goods are bought abroad is not a good solution. The “United List” politician drew attention to the fact that the USA is acting differently, because the aid money it has given to Ukraine is being injected into the US industry.

The head of the subcommittee emphasized that it is important for Latvia to have the necessary ammunition and drones available on site at “X hour”, but signals are being received from the industry that this is not the case. If the MoD does not offer contracts in the necessary volume, then we will “send away” businessmen from the Latvian market, which can lead to dangerous consequences in wartime, argued the opposition politician.

Kulberg asked those in charge to provide information on the road map from innovation to the MoD order, the situation with the availability of bank loans and state guarantees.

The parliamentary secretary of the MoD, Saeima member Atis Švinka (P) and other representatives of the MoD, as well as several MPs, also expressed their vision at the meeting.

Opposition parliamentarian Jānis Dombrava (NA) emphasized that Latvia should finally show a drone in connection with the drone coalition we have created. Deputy Ināra Mūrniece (NA) stated that she would wait for the new State Secretary of the Ministry of the Interior or Minister Andris Sprūdas for the next meeting, so that there would be more clarity about what will be done.

At the end of the session, Kulbergs pointed out that the members of the MoD road map for finding solutions regarding the operation of the defense industry.

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