Just over half a year ago, the Kaunas Free Economic Zone (FEZ) announced some good news – it had attracted one billion in investments, and today this figure has already grown by almost a fifth: a further €233 million in direct investments have been attracted and an additional 1,600 jobs created or are planned to be created, in addition to the 6,200 jobs already in place or soon to be.
The Kaunas FEZ, which makes use of Kaunas’ name as a city of technologies, is growing not only with new investors and its tenants, but also with the development projects of the companies already operating in the FEZ − especially since over the past years there has been no shortage of either.
As Vytautas Petružis, CEO of the company managing the Kaunas FEZ, notes, the territory is also distinguished by the number of foreign direct investments attracted: in the Kaunas FEZ, such investments account for about 70%.
New projects and expansion of existing ones
In total, 11 new companies were added to the Kaunas FEZ business community during the period of 2021−2022. Among them were well-known names such as SIRIN, EIKA, Press Glass, Brolis Timber, and Vici logistika.
In 2021, seven projects were contracted, creating six new businesses and expanding one existing business in the area. Meanwhile, in the first half of this year alone, four agreements with new investors and one development agreement have already been signed.
This year also saw a brownfield sale to a new client − Elinta Motors: the company, which is planning serial manufacturing of products for sustainable mobility solutions, acquired and adapted for its own needs 3,500 m2 of production and administrative premises.
In total, the company managing Kaunas FEZ announced that it subleased over 50 ha of land in 2021−2022.
Attractiveness is enhanced by doing the “homework”
Although among the main criteria for the attractiveness of Kaunas FEZ is its convenient location, excellent transport links in all directions, and employees with the necessary technical competences, the final “yes” from investors is also influenced by the infrastructure of the territory, which facilitates settlement and operations. In recent years, the Kaunas FEZ has received a lot of attention and investment.
In 2022, the first phase of Gamybos street was completed − a total of 0.951 km with street lighting, sidewalks, domestic and rainwater sewage network and water supply. The second 0.6 km phase of the street has already started. Once completed, it will conveniently connect the territories of FEZ 1 and FEZ 2.
Over this year, a 1.2 km long extension of Aviacijos street, with a rainwater and domestic sewage network will be completed; an additional segment of Veterinarų street will be built, and 2.64 km of sidewalks and lighting installation in FEZ 1 will be finished. Over this year, the infrastructure networks in Jėgainės street will be completed.
“Infrastructure is one of the key criteria for the rapid establishment of new investors and the expansion of existing ones. We are improving the existing infrastructure and introducing new ones so that we can offer a complete and attractive product to our customers,” says Mr Petružis. After the completion of these projects by the end of the year, Kaunas FEZ will be able to offer investors as much as 40 ha of additional land plots with the infrastructure in place.
Increases the socio-economic attractiveness of Kaunas as a whole
According to the calculations of the Kaunas FEZ management company, their clients have paid €47.4 million in 2021 in employment-related taxes, while the tenants paid €9 million. In total, this share of taxes paid amounts to €71.7 million over 2021−2022.
“In recent years, the Kaunas FEZ has been probably the fastest developing industrial zone in the Baltic states, attracting the highest concentration of investments. The figures for 2021 show that the pace of development is being maintained and the overall importance of the location is growing,” says Andrius Veršinskas, Head of the Business Division at Kaunas IN.
As this specialist notes, the development, further improvement and success of the Kaunas FEZ is inseparable from Kaunas.
“The Kaunas FEZ does not function on its own − it is an integral part of Kaunas district and the city, as well as being one of the main engines of its development, so both challenges and successes are common. For this reason, the jobs created by new businesses in the Kaunas FEZ also contribute to the overall formation of a more attractive labour market, the growth of the salaries of Kaunas’ residents, newly arriving residents and the positive economic cycle, as well as to the overall growth of the socio-economic attractiveness of Kaunas.”
Naturally, shared growth is accompanied by shared challenges, the main one being how to attract more engineering students or experienced professionals and other related workforce that can ensure the continued growth of business incumbents and newcomers.
Kaunas IN specialists, who monitor the business environment, underline that the arrival of new investors, especially large ones, and their involvement in the Kaunas ecosystem has already changed the higher education programmes and continues to improve them, as the content of specific programmes is being revised, and investments are being made in laboratories. This way, the Kaunas FEZ, through the businesses operating there, contributes to the growth of the attractiveness of universities and colleges in Kaunas and the overall attractiveness of the city as a study location.
Currently, the Kaunas FEZ has attracted 47 foreign and local investors operating in the services and manufacturing sectors, applying advanced technological solutions and creating innovative products. Since the first investor arrived in 2005, more than 7,800 jobs have been created in the territory of the Kaunas FEZ, more than 100 companies are operating, and more than €1.23 billion in direct investments have been attracted.