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Slovenia Business Week no. 06: Government to Encourage FDI That Creates New Jobs

The government adopted a new decree on financial incentives for foreign direct investment on Thursday, 1 February in what Economy Minister Andrej Vizjak said was an attempt to attract investment that would bring new jobs. According to him, EUR 8m is allocated in the budget for that purpose for the next two years.

Vizjak told the press that the new directive would provide a basis to award incentives for FDI following the European Commission's guidelines on regional state aid for the 2007-2013 period.

"Above all, we want investment in high value added industries," Vizjak said at the press conference following the cabinet's session. According to him, investment should encourage the transfer of expertise and technology as well as contribute to a more even regional development.

New FDI are also expected to increase the synergies gained from partnership between foreign investors and Slovenian companies and institutions, mainly with regard to the exchange of new technologies and know-how.

While admitting that FDI in Slovenia had been modest, Vizjak pointed out that the country competed against the broader European area, new EU members and third countries in the neighbourhood. "This means that we must accustom subsides to the competitive environment so as to attract high-quality FDI."

The decree envisages incentives for investment in manufacturing, services targeting the international market and research and development. Financial incentives cannot be awarded for investment projects exceeding EUR 50m because European Commission guidelines call for a special state aid scheme in such cases.

Incentives can furthermore not be given out for investment in industries that are governed by special rules of the European Commission: agriculture, fisheries, mining, steel industry, transport, ship building, synthetic fiber industry and the arms industry.

Requests for incentives need to be submitted by foreign investors, while funds are granted to domestic companies with at least 10% foreign ownership. The condition is that the investor or the beneficiary are not under receivership or bankruptcy protection or in liquidation.

The lowest value of investment in manufacturing that is eligible for incentive is one million euros, while threshold in the services and R&D sectors is EUR 500,000. The limit may be raised considering the development level in a statistical region, a provision that is to contribute to a balanced economic development of statistical regions.

The incentive award procedure will be run by the Public Agency for Entrepreneurship and Foreign Investment, as a rule on the basis of a public call for tenders. According to Vizjak, foreigners are interested mainly in investment in logistics and car parts industries.

Source: Slovenian Press Agency STA

Author: STA, Slovenian National Press Agency