New investments target disadvantaged regions

FOREIGN investments keep flowing into Slovakia. During the first half of 2014 the Slovak Investment and Trade Development Agency (SARIO) in cooperation with the Economy Ministry mediated 15 investment projects, mostly creating job opportunities in regions suffering from high unemployment.

FOREIGN investments keep flowing into Slovakia. During the first half of 2014 the Slovak Investment and Trade Development Agency (SARIO) in cooperation with the Economy Ministry mediated 15 investment projects, mostly creating job opportunities in regions suffering from high unemployment.

“We are very glad that we are succeeding in placing projects into regions with high unemployment rates,” said SARIO CEO Robert Šimončič. “Thanks to the new investments the residents of these regions will have the opportunity to find jobs.”

Most of the projects are going to the regions of Trenčín, Žilina, Prešov, Košice and Bratislava. Out of the 15 projects, eight account for new operational units, while in seven cases existing plants will be extended. The investments, totalling €100 million, will go into the production of components for the automotive industry, machine engineering, the production of medical aids, IT centres and shared services centres. These investment projects assume the creation of about 2,500 new jobs. During the same period of 2013, SARIO mediated eight projects with total investments of €320 million, with 1,835 jobs planned to be created.

“My ambition is in cooperation with SARIO to make the environment more dynamic to actively search for additional, new investors, for which Slovakia has much to offer, but also to create conditions such that investors who have established themselves here are interested in expanding their production and thus creating more new jobs,” said Economy Minister Pavol Pavlis, in a statement.

Šimončič added that the Economy Ministry and SARIO managed to set the right priorities that bring results. “Potential investors perceive Slovakia as a stable country,” he said.

Analysts share the delight of Pavlis and SARIO over the inflow of investments, but point out that investment stimuli deform the market.

“Each investor is an acquisition for the economy,” Martin Vlachynský, analyst with the economic think tank INESS, told the public broadcaster STV. “Without new investments economic progress could not go ahead.”

He sees investment projects as a way to solve the high unemployment in Slovakia, but in this case much more are needed.

“We have to talk about a much bigger set, and not only about new investors but also about whether existing companies manage to keep or extend their production,” Vlachynský told STV.

With respect to the sectors into which the mediated investments should flow, Róbert Kičina, executive director of the Business Alliance of Slovakia (PAS), agrees with efforts of the state to attract more investments with added-value, but he is not a fan of special support for investments.

“We should not create even more advantageous schemes of support for such a kind of investments,” Kičina said in an interview with the Hospodárske Noviny daily. “More measures are needed to benefit the [general] business environment. I’m convinced that if the quality of Slovakia’s business environment were amongst the most highest in the world, investments, including those with higher added-value, would arrive also without stimuli.”

Milan Bílek, senior manager of the consultancy company TPA Horwath shares the opinion that stimuli deform the market, as they give a specific advantage to a specific company.

“On the other hand, this is the government’s tool to support [the fight against] unemployment, the economy and competitiveness,” Bílek told Hospodárske Noviny.

Slovakia competes for investments mostly with other countries of the Visegrad Group – the Czech Republic, Poland and Hungary. Compared with the Czech Republic, Slovakia is less successful in attracting investments, Hospodárske Noviny wrote. CzechInvest, the Czech counterpart of SARIO, managed to attract between January and mid-May 2014 100 investors, which will create as much as 10,000 jobs. But the agency sees the deadline for submitting applications for subsidies under softer conditions as partly behind this extreme interest among investors.

SARIO is working on almost 50 investment projects worth a total of €1.3 billion as of June 30 with the potential to create 14,000 jobs. Most of the investors came from Germany, Austria, the United States, South Korea, Belgium, France and Italy with the processing of metals, production of electric appliances and electro-technical products dominating in terms of sectors.

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