Business environment & FDI opportunities in Slovenia...2009/05/19 · IBM (USA) MOL (H) KBC (B) Oracle PriceWaterhouseCoopers Palfinger Pfeiderer Safilo Group Sandoz (Novartis Pharma)

Business environment & FDI opportunities in Slovenia

Igor PlestenjakDirector

4Qs4UFour Qs For You

SLOVENIA: dynamic EU member

EU countries Slovenia

• Area: 20,273 sq. km

• Capital: Ljubljana

• Population of 2 million

• EU member state - May 2004

• Euro area - January 2007

• Schengen Space - December 2007

• EU presidency - first half of 2008

• Invited to Join the OECD

• GDP – 36.6 billion EUR

• Average GDP annual growth of 4%

in past 10 years; 3.5% in 2008

SLOVENIA – economic indicators

GDP growth in %

4.3

21.7

5.9

3.1 2.9

6.8

2.92.7

3.5

0.9 0.8

-4 -4 -4

1

-0.1 -0.1

-4

-2

0

2

4

6

8

2005 2006 2007 2008 2009 2010

Slovenia EU-27 EurozoneSource: Institute of macroeconomic analysis and development & European Commission, 2009


GDP per capita(current prices in EUR)

Source: Institute of macroeconomic analysis and development, 2009


GDP per capita(in PPS)

18

,70

0

19

,60

0

20

,70

0

22

,20

0

23

,10

0

0

5,000

10,000

15,000

20,000

25,000

2004 2005 2006 2007 2008


GDP per capita in PPS (EU-27 = 100)

86

.4

87

.4

87

.6

89

.2

92

.1

83

84

85

86

87

88

89

90

91

92

93

2004 2005 2006 2007 2008


10.6

2.11.8

12.5

3.43.2

13.8

2 2.43.3

0.6 0.5

-8.6

-5.2-5.5

1.7

-0.1 -0.1

-10

-5

0

5

10

15

2005 2006 2007 2008 2009 2010

Slovenia EU-27 Eurozone

Export growth rate(in %)

Source: Institute of macroeconomic analysis and development & European Commission, 2009


Import growth rate(in %)

6.6

-2.2 -2

12.2

-3.4 -3

15.7

-2.1 -2.1

3.5

-0.6 -0.5

-10.3

4.5 4.3

1.60.3 0.3

-15

-10

-5

0

5

10

15

20

2005 2006 2007 2008 2009 2010



Inflation rate, year average (in %)

2.52.32.2

2.52.32.2

3.6

2.42.1

5.7

3.7

3.3

0.4

0.9

0.4

1.61.3 1.2

0

1

2

3

4

5

6

2005 2006 2007 2008 2009 2010



Unemployment rate (ILO)(in %)

Source: Institute of macroeconomic analysis and development & European Commission, 2009

6.5

8.9 9

6

8.2 8.3

4.9

7.17.5

4.4

77.5

6

9.49.9

7

10.911.5

0

2

4

6

8

10

12

2005 2006 2007 2008 2009 2010

Slovenia EU-27 Eurozone

Macro-Stability of Slovene Economy

-6-4-20246

8Inflation, y-o-y

Economic growth

General government deficit, %GDPCurrent account deficit, % GDP

ILO unemployment

Slovenia 2008

EMU 2008

According to the statistics, Slovenia's main advantages in comparison to other European Monetary Union are ILO unemployment rate and economic growth, meanwhile the main disadvantage is account deficit as a per cent of GDP.


SLOVENIA – The right mix of Qualities

4Qs4U(Four Qs For

You)

Quality of life

• High standardof living

• Low crime rate • Cultural and geographical

diversity• At the intersection of

Roman, German and Slavic culture

• Nestled between Alps and Adriatic Sea

• Mixture of Alpine, continental and

Mediterranean climates• Huge continuous forest

ecosystem – 3rd in Europe after Finland and

Sweden

Quality of workforce

• Technologically-minded (long industrial tradition), innovative spirit• Highly educated: 16% university degree, 62% secondary school• Excellent IT & foreign language skills (English, German, Italian, Serbo-Croatian …)

Not cheap but Not cheap but costcost--effectiveeffective

Minimum gross wage

• € 589.19

Est. monthly gross labour costs:• low skilled € 700• skilled € 1,000• engineer € 1,700

• computer engineer: € 2,200

Source: IMD World Competitiveness Yearbook 2008

Full-time working hoursmay not exceed 40 hours a week

Quality link to regional markets

• Strong export orientation

• Well established links with neighbouring countries and countries of former Yugoslavia

• Hub for foreign companies to serve the EU and Central European markets

• Advantages: Economic and political stabilityKnowledge of circumstances, language,

culture, peopleGeographical location with a strategic edge

• Slovenia is an important investor in the SE Europe

Quality infrastructure

• Port of Koper– ideal as a logistics and distribution centre

– the fastest developing port in the Adriatic basin– the shortest sea connection between Central Europe and Asia

• Well-developed general infrastructure at the intersection of 5th and 10thEuropean transportation corridor

Well-developed

ICT infrastructure

highways planned and built through national development programmehighways planned through additional national development programme

Road infrastructure

railways planned and built through national development programme

Railway infrastructure

Airports

First package

• subsidy for full time employment (assuring short time employment up to 1 year)

• tax reliefs on investments; up to 30% of the amount invested in equipment and intangible long-term assets

• co-financing new technological equipment

• up to 80% guarantee for bank loan assurance

• co-financing R&D projects

• Established risk capital company (financial funds aimed at investments in new companies and in those having fast growth potential)

Anti-Crisis Packages by Slovenian government (1)

Second package

• bank security scheme for company crediting (improving credit offer for companies by credit risks’ reduction of banks)

• individual state securities for company debts

• “de minimis”’ scheme (credits for operational costs)

• Long-term credits for strategic projects (clean-tech and high-tech industries)

• shortening the refund conditions for overpaid VAT


Third package (draft)

• Subsidy for employees ‘on hold’ (employees are entitled to subsidy up to 85% of wage base; 50 per cent financed by the government)

• Programmes of active employment policy (up to 500 EUR per employee when being ‘on hold’)

• Updated help of small value – ‘de minimis’ (credits for operational costs)

• Increasing subsidies for entrepreneurial sector (when exposing loss by crisis)


In preparatory phase.

Taxes

0% on dividends paid abroadProfit repatriation tax

2%Immovable Property Transfer Tax

progressive tax rates: 16%, 27% and 41%Personal income taxes

abolished in 2009Payroll tax

16.1% paid by employer; 22.1% paid by employee Social security contributions

0%Property tax

20% - standard rate; 8.5% - reduced rate VAT (Value added tax)

0 – 20% (depending on a holding period)Capital gains tax

- 20-40% of the amount invested in R&D- tax relief on employment of certain workers - up to 30% of the amount invested in equipment and intangible long-term assets

Tax relief

21% (down to 20% by 2010)Corporate income tax

FDI in Slovenia

Brigl & Bergmeister Danfoss DHLDeloitte & ToucheErnst&YoungGKN DrivelineGfkLafarge PerlmooserMicrosoftMobilkom

2,0

00

3,1

10

5,0

47

5,5

80 6,4

34

6,7

75

9,5

73

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

mio

EU

R

1997 2000 2003 2004 2005 2006 2007

year

Renault (F) Goodyear (USA)Novartis (CH) Johnson Controls (D)San Paolo IMI (I) Bosch-Siemens (D)Reiffeisen Bank (A) Gruppo Bonazzi (I)Lafarge Perlmooser (A) Société Générale (F) IBM (USA) MOL (H) KBC (B)

OraclePriceWaterhouseCoopersPalfinger PfeidererSafilo GroupSandoz (Novartis Pharma)Sun RollerSchenkerS&TTitus International

Source: Bank of Slovenia, 2009

FDI in Slovenia

Source: Bank of Slovenia, 2009

End-year 2007 stock € 9.573 million___________________________

Cyprus

1%

Denmark

1%

Czechia

1%

Belgium

3%

United Kingdom

1%

Croatia

3%Luxembourg

4%Italy

5%

Germany

7%

France

8%

Other

4%

Netherlands

8%Switzerland

10%

Austria

44%

Financial services &

insurance; 41.3%

Retail; 13.2%Chemicals ; 11.7%

Business services &

leasing; 10.0%

Telecoms & transport;

4.0%

Pulp & paper; 3.7%

Engineering; 3.4%

Other services; 4.2%

Other manufacturing;

2.7%

Motor vehicles and

trailers; 2.3%Tyres & plastic

products; 2.8%

Inward FDI by country

Inward FDI by sectors

Interesting areas for FDI

SERVICES & MANUFACTURING• Logistics & Distribution• ICT• Tourism• Shared service centers• Finance

• Chemical & Pharmaceutical• Environmental technologies• Renewable energy • New materials and Nanotechnology• Automotive & Components • Machining & Metalworking Industry• Electronics & Electrical

HIGH TECHNOLOGIES AND R&D

BUSINESS ZONES

TECHNOLOGY PARKS

Business and industrial parks in Slovenia

Resolution projects

PHOENIX

OKO

OREH

JV SLOVENIJAPERSPEKTIVA

IN PRIME

GREGOR

NOORDUNG

TEHNOPOLIS

approx. 30 business and industrial zones across Slovenia (Komenda business zone, Brnik business and logistics zone, Vrbina business zone, Drnovo, Komenda, šenčur etc.)

Financial incentives

5€ 0.5 million R & D

10€ 0.5 millionStrategic services

25€ 1 million Manufacturing projects

NUMBER OF NEW JOBS

VALUE OF INVESTMENT

ACTIVITY

Foreign direct investment (FDI) grant scheme in 2009:

Results in 2008 :

» 11 signed contracts » value 5.643.125 € » 721 new jobs created

Amount of incentives

• up to 30% of the total eligible investment costs• amount of the incentive may be increased by 10 percentage points for medium-sized companies, and 20 percentage points for small companies

Decree on Financial incentives for FDI

ARTICLE 22 -Special procedure for grant incentives without public tender

Terms of project:• investment value higher than € 12 million• 50% more new jobs created than provided for specific activity• significant impact on Slovene economy development (considered after evaluation of the commission).

For any further information, please contact FDI support team:

[email protected]

Bilateral relationsSlovenia - Bulgaria

78.7

23.6

86.3

45.1

98.1 94.3

159.3

186.6179.4

135.7

17.97.6

0

20

40

60

80

100

120

140

160

180

200

2004 2005 2006 2007 2008 2009 (J-F)

Export ImportSource: Statistical Office of the Republic of Slovenia, 2009

Slovenian export and import

from Bulgaria(in EUR million)

Bilateral relationsSlovenia - Bulgaria

Export Import• Vehicles• Pharmaceuticals • Home appliances• Hygiene products

• Crude oil, petroleum• Steel products• Motor parts • Home appliances

324 Slovene companies were exporting to Bulgaria in 2008216 Slovene companies were importing from Bulgaria in 2008

Bilateral relationsSlovenia – Bulgaria

Export Import

JAPTI – Public Agency for Entrepreneurship & Foreign Investments - Divisions

DIVISION FOR FOREIGN DIRECT INVESTMENTS AND INTERNATIONALIZATIONForeign direct investment•Investor services (information, site selection, fact-finding visits etc.)•Investor’s growth and development•Image building•Policy advocacy•Financial incentives support

www.InvestSlovenia.orgwww.business-zones.si

Internationalization promotion•Internet portal for Slovenian companies•Services for foreign buyers of Slovenian goods•Business Delegations•Co-financing Business Clubs

www.Sloveniapartner.comwww.Izvoznookno.si

SME development activities• Business support services for micro and SME’s• Entrepreneurial support environment and culture development

www.japti.si

Network of foreign offices•Milan•Düsseldorf•Istanbul•Bucharest•Shanghai•Kazan•Sao Paulo

Thank you for your attention!

Public Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investments

Dunajska cesta 156, 1000 Ljubljana, Slovenia

www.japti.siwww.investslovenia.orgwww.business-zones.si

[email protected]

Business environment & FDI opportunities in Slovenia...2009/05/19 · IBM (USA) MOL (H) KBC (B) Oracle PriceWaterhouseCoopers Palfinger Pfeiderer Safilo Group Sandoz (Novartis Pharma)

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