Slovenia Capital Ljubljana Currency Euro (EUR) Language Slovenian Population 2.01 million EU status member GDP 2006 $37.64 billion Employment 90.4% Exports $21.85 billion f.o.b. (2006 est.) Imports $23.59 billion f.o.b. (2006 est.)

setting up business Number of days to start business 60 Cost (% of income per capita) 9.4% Nonwage labor cost (% of salary) 16.6% Total tax rate (% profits) 39.4%

Slovenia

Slovenia: an enviable position

The mix of qualities widely associated with the small Alpine-Adriatic state includes a unique position at the intersection of the west-east and northsouth European transport corridors, workforce of a world class, ICT infrastructure, excellent links with the emerging economies in the region and more.

FUTURE FIRMLY ON TRACK

It is conventional wisdom that economic stability goes hand in hand with political stability (or is it the other way round?) and leads to wider international engagement and outward direct investment.

Slovenia’s strong macroeconomic figures have earned it entry into the eurozone on January 1st, 2007. Its economy grew at the rate of 4% in 2005, with GDP per capita at PPP already 80% of the EU-15 average and ahead of the EU-10. The annual average rate of HICP inflation was down to 2.3% in 2005, and unemployment (by ILO standards) is 6.3%. The indicators of fiscal stability (fiscal deficit at 1.8% of GDP, the general government debt-to- GDP ratio at 29.1%) have always been in line with the Maastricht requirements, and with a number of major investment projects on the table, foreign investors will have ample opportunities through public-private partnerships.

A breakdown of Slovenia’s economy shows that services (retail, transportation, communications, real estate and other business activities) account for around 60% and the share of manufacturing industry (electrical equipment, chemical products, textiles, food products, electricity, metal products, wood products, transportation equipment) for some 36% of GDP in 2006. Machinery, transportation equipment, electrical and optical equipment, basic metals and fabricated products made up Slovenia’s exports in 2006. Major trading partners are Germany, Italy, France, Austria and Croatia.

opening up opportunities

Slovenia’s ability to meet its growth rate objectives will largely depend on the state of the world economy and its vulnerable export markets. On the other hand, FDI inflows are set to increase as the government’s divestiture programs are being finalized and state-owned equity holdings in the telecommunications, financial, and energy sectors are put on the selling block. In addition, as the national FDI policy has been revisited, measures are in place for attracting foreign direct investment and reviving investors’ interest in the country.

Investors seeking a platform to support expansion into southeastern Europe and those who operate distribution or logistics centers (or for that matter any other service center) will find Slovenia, situated half -way between the East and the West and with the Koper marine port that significantly shortens cargo delivery time, to be a perfect spot. A high quality of life enjoyed by residents and expats alike is yet another advantage of relocating or off-shoring operations.

Encouraging competitiveness

Slovenia’s position with respect to other new EU member states may already be seen as enviable, but the government is working on a set of measures expected to shore up the country’s competitiveness through a development breakthrough which has to be socially sustainable. Creating a more favorable and dynamic business environment is one of the goals of the pending reforms and a way to build confidence of all stakeholders in the proposed measures. Relatively low levels of unionization in Slovenia can be attributed to safeguards provided in collective agreements and employment contracts for an indefinite period of time typical of Continental Europe. The drafts of more flexible labor laws are in the parliamentary procedure as a tool to bolster Slovenia’s competitiveness, encourage hiring and motivating people to acquire and maintain skills.

Tax reform boosts business

In practice, the new Corporate Income Tax Act transposes the provisions laid down in the relevant Council Directives and is aligned with tax policy guidelines endorsed in official papers of the leading international organizations. Specifically, the tax rate will decline from 25% to 23% in 2007 and then fall by a percentage point a year until it falls to the standard rate of 20% of the taxable amount in 2010, in an effort to promote entrepreneurship and direct foreign investment. Although the “hawks” voiced support for a deeper cut with immediate effect, the shortfall in tax receipts would be impossible to bridge overnight and gradual cuts won over dramatic effects. In addition to the Corporate Income Tax Act, the tax reform package includes changes to the Personal Income Tax Act, the Tax Procedure Act, the Value- Added Tax Act, Property Tax Act and the Inheritance Act.

The American Chamber of Commerce in Slovenia is deeply involved in advocating its own ideas and concrete proposals – compiled by experts on the different Working Committees – for the success of the reforms. AmCham’s view is that they are badly needed.

 

Contact Information

American Chamber of Commerce in Slovenia
Pod Hribom 55
1000 Ljubljana
Slovenia
Tel: +38 61 581 6285
E-mail: office@amcham.si
Website: www.amcham.si

 

Useful websites

ljubljana.usembassy.gov	US Embassy in Slovenia
www.investslovenia.org	Government investment advice
www.sloveniapartner.com	Business news, investment oportunities, business partner search facility
www.bsi.si	Bank of Slovenia
www.gov.si/zmar	Institute of Macroeconomic Analysis & Development
www.stat.si	Institute of Statistics
www.rtd.si/eng	Research and technology development

 

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