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Slovenia Business Week no. 36/2004:Slovenia Making Progress in Attracting FDI, Kovac Says

Slovenia should be able to attract foreign investors as long as there is sufficient will in Slovenia to do so

Slovenia should be able to attract foreign investors as long as there is sufficient will in Slovenia to do so, head of Slovenia's Trade and Investment Promotion Office (TIPO) Matej Kovac has told STA.

From the three main factors influencing how attractive the country is for foreign investors, Slovenia has an advantage only in the quality of its labour force and even that applies only to some sectors, Kovac assessed.

These are mostly capital-intensive sectors, such as pharmacy, the chemical industry, electronics, information technology and telecommunications, as well as the car industry and the services sector, Kovac explained.

As far as taxes are concerned, the country has no major advantages nor drawbacks, it ranks somewhere in the middle. Meanwhile, in terms of the third and final criterion, access to markets, Slovenia has quite strong connections with the EU and SE Europe, Kovac said.

"Slovenia had not seen any greenfield investment in production until 2000; in 2002, there were two such cases, in 2003 none, while we expect at least two this year," Kovac said, but refused to disclose what these expected greenfield investments were.

Reports recently indicated that German automotive company Schefenacker was on the verge of building a production plant in Zagorje, central Slovenia. Kovac confirmed that Schefenacker has made a bid for funds for the promotion of foreign direct investment, as well as for land.

The Economics Ministry has earmarked SIT 600m (EUR 2.5m) for the promotion of FDI this year, with the same amount set down for next year as well.

The amount of funds currently available to companies interested in investing in Slovenia is suitable given the current interest in smaller projects, Kovac said. However, he believes more funds will have to be set aside for bigger projects in the future.

"This sum will surely not suffice in the future if we want to retain the same level of aid as now, i.e. between 4,000 and 6,000 euros for each job created by the investment."

Kovac underscored that his agency was heavily involved in the drafting of the act on the promotion of foreign direct investment and internationalisation of companies, which entered into force on 20 August.

One of the features of the act is that it envisages studies to gauge the usefulness of opening investment promotion agencies abroad. It has not been determined yet how many agencies will be established, but they will certainly be opened in places that are investment-oriented and where Slovenia does not have diplomatic missions. "The first such branch could open in 2005," Kovac said.

Answering a question on the EUR 40m grant given to Revoz, the Renault-owned car maker from Novo mesto, Kovac said that state aid of this kind was nothing unusual and was a tool employed by other countries, particularly in the automobile industry.

"We must keep in mind that without this grant it would be highly likely that (Renault) would not have chosen Revoz to build its new model, which would mean that Revoz's fate after the production of the Clio has ended would be uncertain."

Source: Slovene Press Agency STA

Author: Branka Murn