L. Kuzavas. Why Is Poland Attracting Industry While Lithuania Is Losing Investors?

The new reality is harsh: investment is not a matter of patriotism or sympathy. Global capital flows are shrinking, and businesses choose countries that operate an innovation-driven economy, have modern infrastructure, and an ecosystem of industrial parks. Poland, a leader in the logistics sector, is an example showing that competitive advantage goes to those who can offer a predictable environment and long-term potential.

Logistics real estate developer “SIRIN Development”, actively operating in Lithuania, Latvia and Estonia, constantly monitors differences across regions. Conversations with investors show that Poland today offers a better capital return – about 15%. Meanwhile, in the Baltic states such returns are increasingly difficult to achieve, and in Lithuania in particular they are hindered by a stagnant and inconsistent government approach.

Moreover, Lithuania is becoming more expensive – in 2024, GDP per capita already accounted for 88% of the EU average, while in Poland it was 79%, meaning our neighbours have more room for growth than we do. Investors notice this as well. According to “Invest Lithuania”, foreign direct investment in Lithuania shrank 16 times during the first half of this year – a painful signal that we are becoming less competitive to investors who pay attention to every percentage point. What steps must we take to stop this trend?

Through an investor’s eyes: where Lithuania is losing

As an entrepreneur, investor and citizen, I care about seeing investment grow in Lithuania. The logistics and industrial real estate sector is directly linked to jobs, exports and economic resilience. And today, anyone driving to a neighbouring country notices – while Lithuania deliberated, Poland built – roads, railways, industrial parks, ports and logistics hubs. EU funds there were used in the most practical way: not for facades, but for economic corridors that today act as oxygen for industry and exports.

Poland’s road and rail network connects major regions so efficiently that freight moves faster than in much of Western Europe. The Port of Gdańsk has become the main container hub in the Baltic Sea. In addition, near Warsaw, the largest transport hub in Central and Eastern Europe – the “Centralny Port Komunikacyjny” – is being developed, which will further strengthen Poland’s position as a logistics centre.

Lithuania’s situation is the opposite. The country’s main axis Vilnius–Kaunas–Klaipėda is overloaded. The cross-route Kalvarija–Kaunas–Riga is under reconstruction, transport capacity is increasing, but too slowly. Industrial parks develop at their own pace due to bureaucratic obstacles, infrastructure often fails to meet investor needs, railway network development is stalling, and port capacity is not increasing.

On top of transport issues, we are losing competitiveness in the energy sector as well. Today, the price of electricity for businesses in Lithuania is almost twice as high as in Poland (1.88 €/kWh and 0.98 €/kWh). It seems that blindly following green trends leads to expensive electricity, while long-term strategic decisions continue to falter.

Industrial specialisation – part of the strategy

Poland has a clearly defined industrial development strategy that works in practice. In Silesia, near Germany, the automotive industry is concentrated, in the Poznań region – logistics and warehousing, in Rzeszów – defence industry, in Gdańsk – maritime transport and technology, in Łódź – textiles and fast-moving consumer goods.

Regional centres function as ecosystems: suppliers, subcontractors, logistics companies, competence centres and educational institutions establish themselves near factories. Investors see a clear specialisation map and know that whichever region they choose, they will find all necessary infrastructure from day one.

Lithuania has no such map. Industrial zones appear in municipal strategic plans only formally – with no direction, no infrastructure, no strategic decisions. Kaunas district is perhaps the only notable example where a structured movement similar to Poland’s model can be seen: clearly planned zones, secured energy infrastructure, adequate road capacity and real development. As a result, the outcomes are clear.

Klaipėda is entirely dependent on the port, which still lacks a clear development vision. Panevėžys and Šiauliai, despite significant potential, often remain overlooked – industry is scattered, electricity capacity is insufficient. In Vilnius the situation is even more complicated: city planning logic still relies on Soviet-era schemes – no one knows where industry is supposed to be or what infrastructure it needs. The Liepkalnis junction case showed what happens when strategic decisions are made half-heartedly – only after construction was completed was it realised that it cannot handle actual traffic flows.

Where there is no strategy, obtaining construction permits also becomes a challenge. Previously it took 6 months, now – 9 months, while in Poland the process can be two to three times faster. Industry requires electricity, water, access roads, railways and timely connection of utilities. In reality, connecting electricity to industrial plots in Lithuania can still take 2–3 years. The result is paradoxical: we can build a modern, high-quality facility very quickly in Lithuania, but connecting it to networks or transport corridors – not always.

It must be understood that no investor wants to be the first to “dig their own way”. They choose a place where the ecosystem is already functioning, risks are minimal, and industry is part of a strategic plan. Today Poland provides such conditions, and Lithuania, Latvia and Estonia must learn these valuable lessons.

Time to change business culture

Another difference clearly seen by investors is business culture. In Poland it developed in a large, competitive market, so businesses there are more aggressive, dynamic and learn quickly. Brokers bring up to 90% of business, negotiations are more intense, standards are higher because companies are used to competing on a large scale.

Lithuania is different. With smaller markets and often oligopolistic structures, we tend to rely on comfortable, familiar models rather than aggressive competition. Lithuanian companies trying to enter Poland often experience a shock – price pressure is higher, commercial processes are faster and competition is global. But such an environment generates productivity and attracts investors to a country where business moves quickly.

Poland today attracts not only traditional investment from Germany, Scandinavia or the US. A large share of capital comes from companies that left Ukraine after the war began, or from suppliers in other Eastern countries who do not want to operate near Russia’s border. Capital is being redistributed, and our neighbours absorb it successfully because they have what’s needed – infrastructure, people and a business culture that allows companies to operate immediately.

In theory, Lithuania could also attract relocating capital, but an unpredictable tax environment plays a major role. Taxes are changed for short-term political goals, so investors worry less about tax burden and more about constant uncertainty. It seems we must stop experimenting and decide which business sectors are priorities and base tax decisions on that. Investors want certainty, otherwise they look elsewhere.

Investors in Lithuania also increasingly face additional financial burdens, especially in Vilnius, where on top of standard infrastructure fees municipalities impose various additional local taxes and requirements, increasing project costs by millions. In contrast, the situation in Poland is essentially the opposite: the country actively competes for investors, offers incentives through the “Polish Investment Zone” and other special economic zones, reduces tax burden, simplifies regulations and lowers the real cost of starting an investment. The result – in Lithuania, a developer often starts a project with extra costs, while in Poland – with incentives that directly improve investment returns.

There is also a labour market trap – worsening demographics, signalling that we are becoming an ageing society whose competencies do not meet current expectations. We say we need technology specialists but at the same time plan to abolish the mandatory mathematics exam. We say we want to be competitive but discuss a 4-day workweek and working from home. We will not drastically change demographics, but we can change immigration policy, education and work culture. Discussions about a 4-day workweek, half of it from home, do not encourage building factories or planning new investments – this needs to be understood clearly.

Thus, Poland essentially wins due to its entrepreneurship and its view of industry and logistics as the backbone of the economy. Lithuania also needs a few clear, quick and implementable decisions. First – stability. The tax regime must be fixed for a long period, because any industrial investment is planned 10–20 years ahead.

Second, infrastructure must be prepared in advance. We need a regional map, a strategy and clarity on where industrial zones will develop – factories, IT and data centres, defence industry facilities. In Lithuania the common practice is still this: a plot is provided and only then it is decided how to bring electricity to it. It should be the opposite, because investors expect not promises, but a location they can move into quickly and without disruptions.

Third: if Lithuania wants to realistically compete with Poland, it must prove it is a reliable and consistent state. For investors, the most important thing is a country that keeps its word, does not change rules mid-game and has a long-term, cross-party strategy – from demographics and immigration to roads, education and industrial direction.

Once we sought the European average and achieved it, but now we must answer a more important question: where will we be in 20 years? Will we move in Ireland’s direction, or remain on Portugal’s trajectory? What high-value industrial sectors do we want to see in Lithuania? If there is no clear course, capital naturally moves to countries where the rules do not change.