Latvia has lagged behind Estonia and Lithuania by about five years in the development of the capital market, the chairman of the board of the asset management company “INVL Asset Management” Andrejs Martinovs admitted in an interview with the LETA agency.
The data of the Bank of Latvia show that the pension capital accumulated in the investment plans of the state-funded pension scheme, i.e. the 2nd level of pensions, increased by 24.4% last year, amounting to 7.06 billion euros at the end of the year, but only 8.5 billion euros were invested in Latvian assets from pension funds. %.
Martinovs pointed out that this is largely related to the size of Latvia’s capital market relative to gross domestic product (GDP), which is one of the lowest in Europe and OECD countries. Although there have been some improvements compared to the situation ten or even five years ago, the problem as such is still not solved.
“Yes, growth in the capital markets has taken place, but if we compare it with more than seven billion euros, which is the second level of pensions, then it is not enough. Therefore, if you answer the question whether 8.5% of investment in Latvia is enough, then it is not much, and as a local pension manager, I would definitely like to have more. But if we maintain the same ratio or achieve a small increase, it will already be a good result, because the money in the pension system is increasing and this rate is much higher than the investment growth of opportunities in Latvia,” Martinov described the situation.
Commenting on the fact that even after the review of the report of the Ministry of Finance on the inclusion of state and local government companies in the capital markets, specific decisions have not followed in the government, the head of “INVL Asset Management” admitted that from the point of view of the progress of the process, criticism can certainly be expressed, as it should finally move forward.
At the same time, he pointed out that, on the other hand, you can also understand politicians, because there are still a lot of myths and stereotypes in society, which are based on the privatization process of the 90s. Therefore, it is very difficult for politicians to be decisive, and the reluctance to talk about it out loud is also understandable.
“However, as I have already said, we are at least five years behind our neighboring countries in the development of the capital market, and in order to even catch up with them and be at the common level of Baltic development, these things must be arranged as soon as possible. We will gain not only by state and local government companies, when listed on the stock exchange, will have the opportunity to attract alternative financing, not only from the fact that pension fund managers will have additional opportunities to invest in local assets, but the management of these companies will also benefit from this, as many companies are currently not managed qualitatively,” said Martinov .
As for the management of state-owned enterprises, he also criticized the proposal of the government-forming coalition that civil servants will be able to combine the position with only one other position in the boards and councils of capital companies.
Martinov pointed out that it is not clear who, as a result of these changes, will end up on the councils and boards of state enterprises – whether they will be business professionals or simply other civil servants who were not previously appointed to them because they had lower qualifications than those who worked in several administrative institutions.
“In general, my opinion is that civil servants have nothing to do in works councils. In my opinion, everyone should do their job and civil servants should work in their field of activity, but people whose professional qualifications are related to business should work in works councils,” said Martinov.
“INVL Asset Management” is a manager of alternative assets in the Baltic States and is part of the “Invalda INVL” group.
