Slovenia

Slovenia – the newest
member of the euro area

Despite being small in size, the eastern Alpine country is criss-crossed by some Europe’s major transit routes and its short coastline on the Adriatic is the gateway for cargo that is reloaded in the Port of Koper

The Alpine climate of the mountainous regions bordering on Italy and Austria becomes the continental climate with not-too-hot summers and crispy, snowy winters as the landscape changes into rolling hills and fertile valleys with numerous rivers to the east. As to the country’s population, there is a labour force of some 920,000, some 56% of jobs are in services, followed by some 36% in manufacturing. The GDP structure is practically the same, with services leading with over 60% of GDP and accounting for the bulk of Slovenia’s economic growth of some 4% to 5% over the past few years, and shored by other key economic indicators such as debt levels, interest rates and inflation levels that have earned it the reputation of a mature and stable economy.

Bright economic outlook

Meeting Brussels standards for membership of the EU in everything from public administration to food hygiene and the Maastricht criteria to join the euro on 1 January 2007, is a confirmation of Slovenia’s success in curbing inflation, sorting out public finances and industry restructuring. Since Slovenia’s growth has been substantially export-led, the fact that it is the first state from east-central Europe to join the euro zone makes it a safe bet even for the most conservative and risk-averse foreign investors. Slovenia’s presidency of the EU starting on 1 January 2008 will certainly put the country in the limelight beyond the borders of the 27 Member States.

Speaking about human resources, Slovenia has been successful dispelling common concerns that low-cost locations are stealing the country’s remaining manufacturing jobs. Coupled with advantages that range from the country’s pivotal location with good road, rail and sea links for reaching regional markets, high-quality labour with enviable IT and foreign language skills, high levels of productivity, and high quality of life, the sectors to benefit from further deregulation and the government’s withdrawal from corporate boardrooms include the energy sector, the country’s second largest bank, as well as environment, healthcare, ICT and tourism.

Slovenia is seen by many foreign investors building cross-border operations as the best place to make things or provide services as the formula containing costs, risks, customers and logistics proves. Hiring and retaining technical and other staff are facilitated by the fact that Slovenian workers are loyal and committed with average wages for a skilled worker, combined with social security costs, coming to around $1,250 per month. With no local currency risk, low crossborder transaction costs and EU standards in place, there is no risk of disregarding a high-tech investor’s intellectual property rights and finding local companies churning out identical goods to their own, but under a different brand. Add the quality of infrastructure, suppliers and industry clusters and the size of the EU market and the fast-growing regional market to the equation and you will understand why Slovenia is an attractive place to invest for export-based manufacturers and services.

Nevertheless, Slovenia’s solid history of attracting sophisticated manufacturing that calls for strong technical skills and often involves extensive research and development and its successes in moving into higher-value manufacturing are not widely known. The new tax legislation in effect from 1 January 2007 is the promise delivered by the government to promote entrepreneurship and direct foreign investment. The FDI Grant Scheme for 2007-2008 of the Public Agency for Entrepreneurship and Foreign Investments (JAPTI) is addressed at foreign investors with greenfield investment projects, such as building a new manufacturing facility or making substantial changes to the production or the production process within the framework of the existing operations in Slovenia in the manufacturing, service or R & D activity.

Acting on a mandate from Slovenia’s government to assist foreign investors in identifying opportunities for investment in Slovenia and to facilitate all phases of the investment process, JAPTI’s staff, with expertise in the investment process, provide information and an advisory service for foreign investors free of charge.

Conctact details:
JAPTI – Public Agency of the Republic of Slovenia
for Entrepreneurship and Foreign Investments
Division for FDI, Dunajska 156, 1000 Ljubljana
Tel: +386 1 5309 817
Fax: +386 1 5309 850
E-mail: fdi@japti.si
Website: www.investslovenia.si

 

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