COUNTRY REPORT - LITHUANIA
BASED ON THE MISSION TO VILNIUS, LITHUANIA
21-23 OCTOBER 2003
Table of Contents
Table of Contents......
1. Political system of Lithuania......
2. Economic development......
3. ICT Policies......
4. Lithuania’s ICT Industry......
5. Mission Report......
5.1 Mission Programme......
5.2Mission Objective......
5.3Presentations and Meetings......
5.3.1. Infobalt Conference – Plenary Session Presentations
5.3.2 Meeting 1 – Infobalt Association
5.3.3 Meeting 2 – Infobalt Association
5.3.4 Meeting 3 - Information Society Development Committee under the Lithuanian Government
5.3.5 Meeting 4 – Vilnius University
5.3.6 Meeting 5 - Kaunas University of Technology
5.3.7 Meeting 6 - Committee of the Development of Information Society, Parliament of Lithuania
5.3.8 Meeting 7 – ALNA Company
6.Conclusions and Proposed Measures......
Annex 1 - major IT research topics of Informatics Department of the Kaunas Faculty of Humanities
Area No. 1 – Speech processing and recognition......
Area No. 2 - Knowledge-based information systems engineering......
Area No. 3 - Application of neural networks for financial markets......
1. Political system of Lithuania
Lithuania, with its 65,200 sq km and 3.5 mil people is the largest of the so-called Baltic States (also Latvia and Estonia). It is bordering with Belarus, Latvia, Poland and Russia.
Lithuania (Lietuvos Respublika) is a parliamentary democracy with its capital Vilnius. President of Lithuania is Rolandas PAKSAS. The President on the approval of the Parliament appoints the Prime Minister. Currently it is Algirdas Mykolas BRAZAUSKAS (Social Democratic Coalition). Next presidential elections are to be held in late 2007. Lithuania has an unicameral Parliament (Seimas) which after last elections has evolved into a number of fractions, each made up of members of several parties. Next elections are to be held in October 2004.
Independent between the two World Wars, Lithuania was annexed by the USSR in 1940. On 11 March 1990, Lithuania became the first of the Soviet republics to declare its independence, but this proclamation was not generally recognised until September of 1991 (following the abortive coup in Moscow). Lithuania subsequently has restructured its economy for eventual integration into Western European institutions. It was invited to join NATO and the EU in 2002 and will join EU on 1 May 2004.
2. Economic development
Lithuania, the Baltic State that has conducted the most trade with Russia, has slowly rebounded from the 1998 Russian financial crisis. Unemployment remains high, still 12% in 2002, but is improving. Growing domestic consumption and increased investment have assisted recovery. Trade has been increasingly oriented toward the West. Overall, more than 80% of enterprises have been privatised. Foreign government and business support have helped in the transition from the old command economy to a market economy. Currently, the raise of GDP is accompanied by the raise of unemployment.
Table 1.1The main macroeconomic indicators for 1993-2001
1993 / 1994 / 1995 / 1996 / 1997 / 1998 / 1999 / 2000 / 2001Growth of GDP,% / -16.2 / -9.8 / 3.3 / 4.7 / 7.3 / 5.1 / -3.9 / 3.8 / 5.9
GDP per capita, US$ (1000s) / 0.7 / 1.2 / 1.7 / 2.2 / 2.7 / 3.0 / 3.0 / 3.2 / 3.4
Unemployment,% / 5.8 / 6.5 / 6.1 / 7.1 / 5.9 / 6.4 / 8.4 / 11.5 / 12.5
Inflation (end of the year) / 188.7 / 45.1 / 35.7 / 13.1 / 8.4 / 2.4 / 0,3 / 1.4 / 2.0
Foreign direct investment,
US$ million (end of year) / 0.2 / 0.3 / 0.4 / 0.6 / 1.0 / 1.6 / 2.1 / 2.3 / 2.7
Current account balance compared to GDP, % / -3.2 / -2.2 / -10.2 / -9.2 / -10.2 / -12.1 / -11.2 / -6.0 / -4.8
Sources:Statistical yearbook of Lithuania, 2001; Economic and Social Development in Lithuania,7/2002
The structure of cumulative Foreign Direct Investment (FDI) in 2002 by country may be seen in the figure below:
In 2002, Denmark provided the largest cumulative Foreign Direct Investments (19.1%) followed by Estonia (10.3%) and Germany (9.40%).
3. ICT Policies
The Government of Lithuania has declared the development of information society to be a top priority, as the creation of the conditions necessary for the development of the information society is one of the key factors of a modern state’s welfare.
Currently, there are several state bodies dealing with information society related issues at different levels:
- The Council of Knowledge Society under the office of the President is a consultative body, which provides proposals on state knowledge policy formation and implementation.
- The Information Society Development Committee of the Seimas[1] (the national parliament) is the body that prepares and discusses draft legal acts regulating information society issues, conducts the parliamentarian control of state resources usage and investment projects and provides related proposals, etc.
- The Governmental Information Society Development Commission chaired by the Prime Minister is in charge of providing proposals about improvement and update of the part “Information and Knowledge Society” of „Measures for implementation of the Programme of the Government of the Republic of Lithuania for year 2001-2004“). Besides, the Commission co-ordinates the implementation of these means and activities of governmental institutions in this field.
- The Information Society Development Committee under the Government[2] is the body assigned to contribute to shaping of state policies related to the development of information society and to co-ordinate their implementation, focuses in its activities on four main objectives:
- raising Lithuanian people’s competence in the field of use of information technologies,
- modernisation of public administration by means of information technologies,
- development of business based on knowledge and new technologies and
- promotion of the linguistic and cultural inheritance of Lithuania in information society.
Other main bodies participating in these processes are: the Ministry of Internal Affairs which is responsible for information technologies policy issues, and the Ministry of Transport responsible for policy related to the telecommunications sector; Other ministries are involved in the issues of information society in a sector specific manner: for example, the Ministry of Education and Science is dealing with issues related to the competence of Lithuanian population in the IT area, the Ministry of Economics is in charge of electronic business development, etc.
There is a number of non-governmental organisations that are actively involved into processes of information society development and participating in various projects and initiatives dedicated to its development:
- Association of Information Technology, Telecommunications & Office Equipment of Lithuania “Infobalt”,
- Knowledge Economy Forum,
- Lithuanian Computer Society.
The main policy documents on the Lithuanian Information Society are two:
1) The Conceptual Framework of the National Information Society Development of Lithuania[3], approved by the Government on 28 February 2001, which sets the key objectives and priorities in processes of the information society development, and
2) Lithuania’s Strategic plan for the Development of Information Society, passed by Government on 10 August, which defines concrete goals and institutions responsible for implementation of priorities set in Conceptual Framework for years 2001-2004. The Strategic plan is implemented through annual Detailed Action Plans, which are prepared by Information Society Development Committee.
The long-term economic policy document, the Long-term Economic Development Strategy of Lithuania until 2015, approved by the Government in 2001, is aimed at making information and communications a dominant sector accounting for 25% of Lithuania’s GDP and not less than 50% of its IT product exports by the year 2015. It also visualised the use of IT in the economic structure of the country to stimulate the development of other sectors and improve productivity. The main thrust of the policy was to establish Lithuania as an e-society, by developing the infrastructure and the regulatory framework, as well as enhancing the capability and competence of IT users.
4. Lithuania’s ICT Industry
Lithuania, prior to its breaking away from COMECOM, was considered to be “the Silicon Valley of the USSR”. The industry base was technology and knowledge-intensive. It was the major producer of electronics, machine tools, chemicals and military equipment. Vytautas Magnus University, Vilnius University, Vilnius Gediminas Technical University and Kaunas University of Technology were the major knowledge centres producing highly skilled IT manpower.
Following independence in 1991, only a few Lithuanian companies could survive the transition period. Some have transformed themselves into successful world-class production facilities. Other IT companies could not keep pace with developments in technology and are also facing increasing competition from developed countries. Those state companies that were not taken over were closed, and the state-owned property sold. Some of the larger state organisations were split into smaller enterprises often led by employees that wanted to develop niche products.
Approximately 20 companies developed software applications in such areas as high-tech services, cardiologic and other medical fields. Other major industry sectors were telecommunications equipment, radar searchers, syringe pumps, computers, the assembly of television sets and PCBs. Some 20 companies produced lasers and other related optical and medical equipment. There were developments in the area of business process outsourcing, such as call centres. Businesses in system integration mushroomed and over 40 companies provided installation, consultancy and after-sales services. A healthy trend was observed in that many Lithuanian IT specialists, having gained experience and knowledge overseas, were starting to return to set up their own IT operations. Many companies were beginning to develop overseas markets by acquiring companies abroad in order to strengthen their presence and enhance their IT market shares. Over 2000 – beginning of 2002 the number of IT companies surged from 459 to 742.
Table 5.1 Manufacturing of electronic equipment in Lithuania (in million USD)
1998 / 1999 / 2000 / 2001*Electronic Data Processing / 5.7 / 6 / 7.8 / 12.4
Electronic components / 84 / 88.1 / 134.7 / 140.3
Telecommunication / 10.8 / 9.1 / 5 / 4.7
Other Component / sub assembly / 24.7 / 32.5 / 38.3 / 36.5
Office Equip. / 0 / 1.1 / 2.4 / 4.1
Other miscellaneous products / 14.8 / 18.7 / 24.4 / 33.2
Total / 140 / 155.5 / 212.6 / 231.2
* preliminary data
It may be noted that the electronic equipment industry grew by 8.7% in the year 2001 over the previous year. Vingis, Ekranas, Venta and Eksma were some of the major Lithuanian companies in assembly, contract manufacturing and electronic components for the international markets. The main software developers were Alna, Informacines Technologijos, Algoritmu Sistemos, Sintagma, Baltic Amadeus, Technogama and Elsis. Companies in system integration included Sonex, Blue Bridge, Compservice and Ogmios & Optimus. In telecommunications, the main local companies were ELSIS Fima, Belam and Cygate. The majority of firms were located in the cities of Vilnius and Kaunas with a few operating in Klaipeda. Apart from the ten companies that employed 100 employees or more, the remainder employed on average just 10 to15 professionals.
Lithuanian ICT market size in 2002
Source: UNCTAD/WTO – ICT Coutry profile, Geneva, 2002
5. Mission Report
5.1 Mission Programme
Date: 21. 10. 200309.00 / Plenary Session at the Infobalt 2003 Conference
13.30 / Infobalt 10th Anniversary Dinner
14.00 / Meeting with the president of the Infobalt Association
15.00 / Round table discussion at the Infobalt 2003 Conference
17.00 / Round table with representatives of Infobalt
Date:22.10.2003
9.00 / Meeting with representative of the Government Committee for Information Society Development A. Matulis and ISTC Member Prof. Gudauskas in the Prime Minister’s Office
11.00 / Meeting with academics – Vilnius University
16.00 / Meeting with academics II – Distance Education Centre of Kaunas University
Date: 23. 10. 2003
11.00 / Meeting with parliamentarians – representatives of the Committee of the Development of Information Society
13.30 / Meeting with representatives of Lithuanian IT company Alna
5.2Mission Objective
This mission is part of a set of meetings with the main actors in the field of Information and Communications Technologies (ICT) from the New Member States. The overall objectives are listed below. These objectives are to be achieved in two phases: (1) a “listening phase” and a “review and proposal phase”. The meetings reported in this document are part of the “listening phase” of the activity. The aim was to meet the representatives of state administration, academics and businesses who are dealing with 6FP/IST.
Part of the mission has been also used to attend the Infobalt 2003 Conference and to present there a 10 minute introductory speech.
Objectives of the project are:
- To review the IST activities in Lithuania both in the public and private sector in order to:
1.Establish level of participation in the 6th FP/IST
2.Identify potential areas of strengths and weaknesses regarding the 6th FP
3.Identify barriers and opportunities for the participation of Lithuanian actors in the 6th FP/IST
- To identify proposed mechanism for accelerating the integration of the new Member States in general and Lithuania is particular, in the 6th FP/IST.
5.3Presentations and Meetings
5.3.1. Infobalt Conference – Plenary Session Presentations
General remarks:
The international conference and exhibition on Information Society Technology – “Infobalt 2003” was organised by the Association of Information Technologies, Telecommunications and office equipment companies of Lithuania “Infobalt” (see next page).
The first Infobalt exhibition was organised in 1994. Back then it mainly involved participation of foreign companies.
Lithuanian companies were dissatisfied with the very high rental cost of an exposition area, while organisers of the exhibition refused to reduce it. This encouraged companies to form an association among themselves and to organise such exhibitions. This was how the Association INFOBALT came into being bringing along an alternative exhibition which soon became the only of such kind in Lithuania and the largest among the Baltic States.
At this stage the most important element was the fact that Lithuanian companies, regardless of tough competition on the local market, managed to find common ground and to form an alliance. 43 companies, forming the Association’s structure, signed an agreement on the establishment of the Association.
Throughout the years of its existence, the INFOBALT exhibition would attract more and more participants, whose number grew from 64 to 204 companies (in 2002), while its exposition area expanded from 3,500 to 11,900 square metres (in 2002). It became one of the most popular exhibitions in Lithuania – last year the INFOBALT exhibition was attended by 64,285 persons. The poll conducted during the exhibition showed that over 86 per cent of the INFOBALT visitors gave the exhibition a positive evaluation, 79.9 per cent of visitors said the exhibition lived up to their expectations, while 66 per cent were planning within the 3 coming months to buy or order something from the products or services presented during the exhibition.
Apart from the exhibition itself, an international conference entitled “Information Society” was started to be organised. Last fourth conference attracted 150 presenters and approximately 600 listeners. (For more information see
Points made:
The welcoming speech was presented by the President of the President of the Republic of Lithuania, Rolandas PAKSAS.
During the plenary session, speeches were also given by:
- President of “Infobalt” Association V. VITKAUSKAS about IST in Lithuania
- Dr. Vadim David LEVITIN, the Chief Executive Officer of EU Commerce Institute in San Diego on Lithuanian opportunities in the world ICT market.
- Cristine DIAMENTE from the association of the European ICT and electronic industry onEICTA’s recommendations on eEurope
- Alvydas VITKAUSKAS, the manager of the „MicroLink“ group in Lithuania on the future of the advanced technologies’ industry in the Baltic states
- Andrius KUBILIUS from Knowledge Economy Forum on Knowledge economy, regional policy and structural fundS
- Prof. V. SNITKA on Innovation system in Lithuania: potential obstacles for the economic growth
- Vlassios VENNER, European Commission DG INFSO on the Baltic State and the Information Society
- Stephan PASCALL from DG INFSO on participation of Accession Countries in the 6th Framework Programme – Information Society Technologies
5.3.2 Meeting 1 – Infobalt Association
Participants: V. Vitkauskas,President of the Infobalt Association; Vilma Misiukoniene, Infobalt Association
General remarks:
Infobalt is an association of companies and educational establishments in ICT area in Lithuania The mission of the "Infobalt" Association is to represent and defend the interests of the ICT industry in Lithuania and abroad. Aiming to fulfil this mission, the INFOBALT pursues creation of optimally favourable conditions for the growth of the IST industry, which would be of benefit to the Lithuanian population, public sector and business world in the improvement of the quality of life.
The Association INFOBALT unites Lithuanian ITT companies, which in 2002 accounted for approximately a 4.5-billion-litas-worth (approx. 1.3 bil. EUR) share of the local market (and employed around 13 thousand highly qualified specialists).
Infobalt could act in the future as regional focus point for Baltic States ICT industry.
For more information please see
Points made:
1.Infobalt is an industrial association closely co-operating with the Parliament.
2.Lithuanian weakness concerning the 6FP/IST is a lack of know-how of the bureaucratic framework.
3.Pushing authorities to accept a broadband policy is important.
4.Consolidation and interconnection of the various governmental broadband networks is needed.
5.Complicated structure for ICT administration (see picture below), poor coordination and overlapping of functions in some entities brings lack of transparency and slowing down of the processes for the development of the Information Society in Lithuania.
5.3.3 Meeting 2 – Infobalt Association
Participants: R. Krukauskas, Infobalt Board member; Vilma Misiukoniene, Acquis technical officer for Infobalt Association
General remarks:
The Infobalt is the rightholder of the brand name “Infobalt” which is linked to association’s ownership to the trade Fair for ICT industry (celebrating it’s 10 year anniversary this year). This Trade Fair is the biggest one for ICT industry in the region and highly attended by specialists and public not only from Lithuania but also from neighboring countries.
There are satellite events on ICT issues around the Infobalt Fair the whole week, while the main one is the annual Conference on Information Society which is opening event of the so called “Infobalt Week”.
Last year several trade missions for members companies the Baltic region countries like Latvia, Russia, Ukraine, Belarus, Sweden, Germany (CeBit) were arranged by Infobalt. Several of their national coordinators bring their ICT companies to the Infobalt Fair where special facilities for National Delegations were provided by hosting party – Infobalt.
The number of the participants of the annual competition on the “Best Lithuanian ICT product of the year” which has started year before increased nearly twice.
Competition on “Best IT media” and “Best IT journalist” particularly stimulate media to monitor and review hot issues from and for the ICT industry whole year.