Over the past months, the Government has engaged major reforms within all the different sectors of the economy. Within this framework, can you give us your evaluation of the investment climate in Slovakia as compared to its neighboring countries?
There has been a significant change when it comes to the investment climate in Slovakia in recent years. The image of the country has changed dramatically, and I consider this to be an important factor to attract the (supp) investors. I would like to point out that the change in the legislation is not enough, we have to create a friendly business atmosphere at the same time. When it comes to legislation, there are two major steps that have been taken. A few incentives have been introduced including the tax holiday and a new law allowing the foreign investors to own a property. Slovakia has also changed the policy because of the acceptance into the OECD and we are also planning to change the conditions for entrepreneurs in Slovakia. The proof that these steps have been correct is that Slovakia has been accepted into the OECD. For a country to become a member of the OECD, not just a certain economic level has to be achieved, but also the laws should match with those of the member countries. We can say that the climate here is not strange for a foreign investor. There is one important fact that even legislation cannot influence, it is the question of social peace. Slovakia, when compared to all the neighboring countries, is the country with the smallest level of strikes, and this is very important for businessmen. The nature of people here in Slovakia is that they do not like to enter a conflict. Another relevant issue is that we will not be able to keep on this level in the long run as Slovakia still has very low labor wages. These low wages contrast with the high quality of workers, technicians and managers.
Obviously these huge wage differences cannot remain for a long period of time. There is a big risk that we already came across with, especially our businessmen. There are some sectors that have experienced free labor movement. For example the German Government is very careful about allowing foreign labor force into Germany, but are glad about our software engineers to come over and work there. This creates two problems for us; our software specialists leave Slovakia for a better paid job in Germany and we have to raise the salaries of the software engineers here in order to keep them in the country. It is impossible to keep the wages difference in a long run. Slovakia is in the middle of Europe and we cannot prevent anybody to leave because a better paid job. In order to keep our position we will have to move into more sophisticated ways of production, including more mental than physical work.
How do you evaluate the potential impact of the EU accession?
We think that every foreign investor in Slovakia must be aware of the fact that the main goal of Slovakia is to be a proper member of the European Union. That means that Slovakia will have to accept the Aquis Communutaire just as the other member countries. A lot of investors come from the EU and are aware of the fact that even when the tax holiday and other incentives are over, there will still be some major advantages from investing in Slovakia. I would like to mention that the best investment in Slovakia came from Volkswagen. Volkswagen in Bratislava is ranking very high among all other Volkswagen factories. The cost of a Volkswagen produced here is low even if you do not consider all the incentives we offer. But the car is still sold for German prices. (Motivation is still here and is very strong.)
Where are the foreign investments mainly coming from?
Definitely the German companies are the leaders in foreign investments in Slovakia, they are concentrated in major industry investments, mainly machinery, car industry, chemical and pharmaceutical industries. Second biggest investments come from Austria. They invest into middle and small sized companies and food stuff industry. They are also probably the strongest ones when it comes to the banking sector. Netherlands businessmen have a quite good position on our market in insurance sector, food stuff sector. The brewery Heineken is the largest investment in its sector in Slovakia. France plays an important role here as well, partially in banking and chemical industries, and they have a fine position in the small and middle-size companies sector. When it comes to other continents, the strongest investments comes from the USA, primarily the steel sector is represented by US Steel and partially in the insurance business. There is also Sony from Japan and a few more Japanese companies mainly in the electronics sector. The privatization of the banking sector is still going on, and we expect further investments from abroad. This should be completed by the first half of next year. We also expect a huge competition in the gas and electricity sectors. We are already in the process of choosing an investor for SPP.
The SCCI is very much involved in creating contacts with international investors. Could you just give us the steps that accompanied the creation of the Chamber of Commerce and what exactly the Chamber provides to the investors seeking new opportunities in Slovakia?
The Chamber was created ten years ago. There
was a Chamber during the Socialist Government,
but the function and structure were completely
different. This was because there was no competition
at all and it belonged to the Ministry of
Foreign Trade. The present Chamber has been
founded after the rules of the German Chamber,
it is a completely independent institution,
a public law Chamber. The tasks the Chamber
deals with are identical to those in France,
Germany and other European countries. The
variety of services is identical, because
we are a member of Euro Chambers and the CCI
in Paris. |
How is the Chamber funded and is it through compulsary membership or voluntary?
When we got started in 1992, the membership was compulsory. During the Government of Mr. Meciar, we were considered to be too independent and we did not want to become politically engaged, so the system was changed into voluntary system in 1996. Despite the fact that membership is voluntary, the Chamber represents 86% of the business activity in the Slovak Republic.
Don't you plan to make it compulsory again?
There is a law planned by the Government regarding the membership in order to make it obligatory again and a register of Commerce. The Register of Commerce is not in the hands of the Chamber and we want it to belong to us. We want to finish this process before the next election, as long as this Government is still in power. The Chamber has got 9 regional chambers in Slovakia at the moment and also 22 field sections. The Chamber is trying to get as close to the place of business as possible, that is why we have the regional structure. We also consult and represent our members in every business field. Every field has its own interest that needs to be taken care of, including the legislation and protection of customers.
Through these regional Chambers, the entrepreneurs get the support they need when they get to the region. We offer help in customs, taxes, duties, looking for labor and partners. The Chamber is very much involved in creating new laws, this is a difference when compared to other countries. Our Government passes hundreds of laws in a year and we are still in the process of developing, this is why we try to influence the government as much as possible.
How would you actually describe your cooperation with other foreign Chambers of Commerce?
We have about 64 bilateral cooperation agreements. We also have either common chambers or cooperation chambers in partnership countries. When it comes to international structures, last week we had a 9th International Euro Chambers Congress in Bratislava, the first one in a former socialist country.
What were the main issues raised during that Congress?
When it comes to the Congress main theme, it was very valuable for us, because the theme was "Enlarging Europe and Enhancing Businesses". This was very popular among post-socialist countries, including Slovakia. Emerging conditions from businesses are important for all the 15 awaiting countries. The Congress was considered to be one of the best organized events so far, there were 426 delegates from 34 European countries, even countries like Switzerland and Norway, which are not member countries of the EU, plus Israel. There has been a slight change in the rules, because the countries waiting for acceptance became proper members of the Euro Chambers. This was a motivating moment for us.
From the point of view of the businessman that you are, which sectors in Slovakia have the best potential for growth?
When it comes to the industry, I see a significant potential in everything that moves, that includes cars, buses, agriculture machinery, boats building, railway wagons. These sectors already have quite a reputation and tradition and I think they are going to keep on growing. The chemical industry is also very good and operates with the best technologies. Even if we don't have oil and gas here, we are strong in the petrochemical industries, production of the agro chemistry, chemical threats and pharmaceuticals. Slovakia is very rich in wood and every kind of production and processing the wood, like paper, furniture, just everything you could think of when it comes to wood. The glass production has established itself very well, not just every day use glass, also the technical glass. Two promising areas in Slovakia, that are just being developed, are the optoelectronics and biotechnologies.
You became Vice President of the Euro Chambers for 2 years on October 19, 2001. Do you believe this new position will impact significantly on the activity of your Chamber and the realization of your main goals?
I definitely would like to use this position to profit the Slovakian economy. I consider the fact that Slovakia got a position like this, means a huge promotion for the country and I will do my best to fulfill the expectations. I am also a Vice president of the World Chamber Federation of CCI in Paris, that represents a world wide institution. It is a challenge for me but I try to use it for Slovakian economy as much as possible.
Note: World Investment News Ltd cannot be held responsible for the content of unedited transcriptions. |
V.I.P. INTERVIEWS 
