03-04-2024

EIMIN Proposes to Facilitate the Manufacture of Armament in Lithuania

The Government has approved amendments to the law initiated by the Ministry of the Economy and Innovation, which propose to facilitate major projects that meet urgent national security and defence needs.

“In the light of the changing geopolitical situation, we are constantly looking for opportunities to ensure the rapid development of the defence and security industry. We are already seeing that the production of products in this sector in Lithuania has increased by one and a half times in recent years. Since last year, companies in this sector have been allowed to set up in FEZs, and this year we have initiated changes to enable Lithuania to manufacture its own products for the defence of Europe. Potential investors such as Rheinmetall and other Lithuanian and foreign capital producers will be able to take advantage of the proposed amendments in the regulation of major projects,” says Aušrinė Armonaitė, the Minister of the Economy and Innovation. 

For major projects, which are intended to meet urgent national security and defence needs, the amendments to facilitate the procedures related to spatial planning, land plot formation and construction are proposed. The aim is to enable such defence industries to start operations in Lithuania in the shortest possible time.

“The provision of armament is becoming the key priority for the defence of Lithuania. Under the current regulation, the construction timeframe for major production projects can take 2-2.5 years, whereas the amendments would reduce it to around half a year. This would enable the defence and security needs of the country to be met in a significantly shorter timeframe,” says Karolis Žemaitis, the Deputy Minister of the Economy and Innovation.

The regulation would apply to all major projects that meet the requirements of the law and that are deemed by a government decision to meet urgent national security and defence needs. According to the Law on Investment, one of the mandatory conditions for a major project is an investment in Lithuania of at least EUR 20 million (in the case of investments in Vilnius, EUR 30 million).

To date, Lithuania has been acquiring most of its armament on international markets, which inevitably leads to dependence on foreign suppliers. In order to ensure that the Lithuanian Armed Forces have uninterrupted access to the arms and ammunition required for the needs of the State, it is necessary to ensure that the essential needs of the State are met by economic entities operating in the territory of Lithuania.

The adopted amendments will have a positive impact on business conditions and business development. They will create favourable conditions for the implementation of high value-added projects in Lithuania and will significantly improve the investment climate in Lithuania.

The initiative for major investment projects, also known as the Green Corridor projects, developed by the Ministry of the Economy and Innovation and launched in 2021, makes it much easier and quicker to settle, while at the same time granting the status of a project of national interest and a 0% rate of the corporate income tax for up to 20 years.

New requirements for major projects will also come into force on 1 July, requiring a large enterprise to create between 20 and 149 new jobs, or between 20 and 199 jobs for investments in Vilnius, and a wage of at least 1.25 times the average wage of the municipality in which the investment is made.

The amendments were drafted in cooperation with the Ministry of National Defence, the Ministry of Environment and the Office of the Government. It is expected that these draft laws will be discussed in the spring session of the Seimas.