Being an entrepreneur often means choosing to take a deliberate risk in order to gain an edge over competitors or to win new market segments.

Lately, however, there is good reason to think that being an entrepreneur in Latvia is every bit as risky as gambling. And yet, even when you sit down at the gaming table, the rules are clear to all the players. In Latvia's business environment, the rules of the game can change unexpectedly in the middle of a move, and with no explanation of what to do next.

A telling example of this is the Constitutional Court's decision to annul the regulations on the felling of younger trees, in effect assuming the powers of the legislator and regulating the business environment in Latvia. According to the Constitutional Court's ruling, when the Cabinet of Ministers adopted the regulations on the felling of younger trees in 2022, it did not sufficiently assess the consequences of that decision. Specifically, it is said to have disregarded the principle of sustainability enshrined in the Constitution, which requires that decisions be assessed comprehensively, balancing the interests of public welfare, the environment and the economy. To put it somewhat simply, the court ruled that the regulations adopted by the government are substandard. But has any thought been given to the fact that, on the basis of these “substandard” rules, decisions have already been taken, investments have already been made and, yes, both people's lives and business plans have been put at stake? What becomes of the principle of sustainability when the court takes its decisions?

The Constitutional Court's ruling was followed by more than a week of an information vacuum: how are forest owners supposed to proceed now? The Ministry of Agriculture has just published its explanation, but even that sheds little more light on the rules of the game from here on. According to the Ministry of Agriculture's figures, 5874 forest stands are to be assessed. Felling permits that have been issued have not lost their validity, but the State Forest Service will now assess each of them individually. In other words, there is still no clarity about what will happen to the forest properties for which felling permits have been issued.

A forest, and caring for it, is an investment. Buying a forest property is a sufficiently expensive decision that it requires a clear purpose for what you will do with the property you acquire. On the basis of the regulations adopted in 2022, residents and businesses made investments underpinned by clear objectives about where and when to put the proceeds from felling sites to use. Those plans have now been put on hold indefinitely.

The forest is Latvia's green gold, and forestry is one of the drivers of economic growth. Lately, however, this sector of the economy has taken blow after blow: the rules dictated by the European Green Deal, the unclear expansion of nature reserves, and now the Constitutional Court's ruling.

This is a story about the kind of business environment we want to create. If the state cannot provide even its own domestic entrepreneurs with clear rules of the game and predictable conditions in which to build their businesses, then what signal does that send to foreign investors? Let the figures speak for themselves: in the recently published “Foreign Investment Environment Index 2023”, Latvia's investment climate was rated at its lowest level to date — 1.9 points out of five. One of the reasons for the low score is ill-considered regulation.

To foster Latvia's growth and raise the level of public welfare, our own companies need to run their operations successfully and to export, and foreign investment and foreign companies need to come here. But if the rules of the game in the business environment change not merely with every new government but now almost every season, they turn into extraordinarily unpredictable conditions in which to risk one's capital. Yes, business is risky, but in the present circumstances the risks are beginning to look reckless.
https://www.db.lv/zinas/azartspeles-ar-mezsaimniecibas-nozari-516177