Illustrative stock photo (source: TASR)
This is proved by the interest of several companies, and even the Korean trade agency, to establish operations here.
“Slovakia has many advantages such as its great geographical location, political and economic stability, a skilled labour force, and a warm welcoming spirit of its people,” the Korean Embassy in Slovakia told The Slovak Spectator.
Another important factor which attracts new Korean investors, especially smaller suppliers and subcontractors, is success stories of existing Korean companies in Slovakia, such as Kia and Samsung, the embassy added.
Space for improvement
At the end of 2012 foreign direct investments from Korea to Slovakia amounted to €1.7 billion, according to the National Bank of Slovakia, the country’s central bank.
Between 2002 and 2014, the Slovak Investment and Trade Development Agency (SARIO) helped with 48 projects bringing more than €1.910 billion, which resulted in creating 17,900 new jobs. Most of the Korean investments are channelled to the automotive and electro-technical industries.
The biggest Korean investor in Slovakia is Kia, employing some 4,000 people. Samsung places second, providing work for about 3,500 employees, according to SARIO.
In addition, SARIO is currently working on another three projects worth €100 million, with the potential of creating 520 new jobs, the agency’s spokesperson Richard Dírer told The Slovak Spectator.
On the whole, Korean investors consider the business environment in Slovakia favourable. However, since there is fierce competition for foreign investments among neighbouring countries, there is still room for improvement, especially regarding the Labour Code and tax system, the embassy said.
“It is generally regarded by foreign investors including Korean ones that some of the recent legislative changes in these areas have negative impacts on the business environment in Slovakia,” the embassy added.
Imports keep falling
As for foreign trade, the Republic of Korea has been reporting a trade surplus with Slovakia, with the latter’s imports being several times higher than its exports. Despite the relatively high values of Slovakia’s imports from Korea, they have been decreasing over the past three years, from 9.6 percent of its total imports in 2012 to 7.3 percent in 2014. On the other hand, though exports from Slovakia to Korea were decreasing in 2012 and 2013, amounting to only a 0.1-percent share of the total exports, in 2014 they increased slightly, to 0.2 percent of total exports, according to the Slovak Statistics Office.
In 2012, Slovakia imported goods and services worth €5.6 billion from Korea, which dropped to €5.17 billion in 2013 and further down to €4.38 billion in 2014. Slovakia’s exports to Korea also kept decreasing, from €91.5 million in 2012 to €83.5 million in 2013. They, however, increased to €108.8 million in 2014.
Slovakia’s trade balance amounted to -€5.46 billion in 2012. It increased to -€5.09 billion the next year but fell to -€4.27 billion in 2014, according to the Statistics Office.
Boosting economic ties
When presenting Slovakia as a potential investment destination to Korean investors, SARIO cooperates with the Korea Trade-Investment Promotion Agency (KOTRA), the Korean Embassy in Slovakia, and also the Slovak Embassy in Korea, which has already resulted in launching several projects, Dírer said.
Another element towards developing the cooperation between the two countries was last November’s visit of former economy minister Pavol Pavlis to Korea.
The Korean embassy considers the visit successful and beneficial for both countries. Pavlis did not only meet with high government officials, but also hosted an investment seminar at KOTRA and met with representatives of Kia and Samsung, the major Korean investors in Slovakia.
“During his visit, new investment plans to Slovakia were announced by several Korean companies,” the embassy added.
Moreover, KOTRA will open its office in Slovakia by the end of this year, which is “definitely a step in the right direction towards bolstering our economic cooperation even further”, according to the embassy.
