Vice-Minister of Finance L. Jakubonis: “In order to attract large investments in the defence industry, the State must do everything to make the process smooth and fast”

On Thursday, the Ministry of Finance-led working group responsible for the development of the defence and security industry had the second meeting. During the meeting, the working group reviewed the progress of major defence and security industry investment projects developed by the private sector that require the State engagement, also the initiatives of state-owned enterprises regarding the projects in this area, the appropriateness of improving the procedures for the recognition of investment projects as ensuring the immediate needs of national security and defence and the regulation of special land use conditions.

"The main objective of the working group is to calibrate and fully assess the developed strategically important defence industry projects, to identify priority initiatives that require the State engagement and public investments. In order to attract large investments, the State must do everything to make the process smooth and fast. The working group helps to respond more quickly to emerging disruptions and to coordinate parallel processes", Vice-Minister of Finance, Head of the working group on defence and security industry development, Lukas Jakubonis says.

During the meeting, the members of the working group reviewed the progress and current status of potential large defence and security industry investment projects developed and planned by the private sector, which provide for the State participation through joint ventures. Possible initiatives and projects of state-owned enterprises in defence and security industry were also presented in order to assess potential and realistic prospects of their implementation.

The meeting also discussed the appropriateness of improving procedures under which investment projects are granted the status that ensures the immediate needs of national security and defence (the status granted by the Government's decision allows to accelerate territorial planning, permit granting and other administrative procedures, ensuring the expeditious implementation of projects) and the changes required for the implementation of defence industry projects in the regulation of special land use conditions. It has been decided to invoke the authorities responsible for these issues.

Currently, the State is represented in major projects by EPSO-G Invest, 51% of which is held by UAB EPSO-G and 49% - by UAB Valstybės investicinis kapitalas, which is subordinate to the Ministry of Finance. The financing of the currently needed investments is secured through EPSO-G Invest, and the company itself has a mandate to negotiate with potential defence industry investors on projects that will require public capital and State engagement.
UAB EPSO-G Invest is currently implementing a 155 mm artillery ammunition factory project together with Rheinmetall. By 2028-2029, these investments are expected to be taken over by the company(ies) managed by the Ministry of Finance, therefore a long-term and specialised governance mechanism for investments in the defence industry - the holding - is needed.

Today, the Ministry of Finance acts as the main financial and strategic partner of the defence industry. The Ministry of Finance participates in strengthening the defence industry by investing in local production capacities, developing financial instruments such as defence funds, defence bonds, state guarantees, developing the concept of a defence industry holding uniting strategic companies and investment flows, cooperating with global partners on technology transfer and investments.

Additional information:

The formation of a working group on defence and security industry development is the first step in the implementation of paragraph 322 of the Government Programme, which provides for the establishment of a state-controlled defence industry holding company. The newly created holding will consolidate public investments, enable more efficient management of major defence industry projects and ensure coordinated State engagement in attracting private investors to strategic capabilities.

The working group analyses and coordinates defence industry investment projects in which the State or its controlled companies would be partners in the establishment of joint-capital legal entities, contributes to the implementation of industrial cooperation agreements when armament suppliers in Lithuania build technology, equipment or component production capacity, prepares a defence industry holding business model - feasibility, governance structure, investment policy and operational plan.

The working group on defence and security industry development, led by the Ministry of Finance, consists of the representatives from the Ministry of Economy and Innovation, Ministry of National Defence, Ministry of Foreign Affairs, Ministry of Energy, Government Office, AB Giraitė Armament Factory, Defence Resources Agency, UAB EPSO-G and PI Invest Lithuania.