Economy Minister Juraj Miškov (source: SITA)
THE BEST brands don’t give discounts. Slovak Economy Minister Juraj Miškov believes this is also the case with countries and economies, and argues that with a more attractive business environment the state would need to provide fewer investment incentives to bring business expertise, new jobs and capital to Slovakia. Miškov lays out some ambitious goals for the country, saying he would like to see Slovakia gradually evolving into the Singapore of central Europe. The Slovak Spectator spoke to Miškov about the current investment environment in Slovakia and his ideas for attracting foreign investment, reducing government bureaucracy and helping SMEs.
The Slovak Spectator (TSS): Some analysts say that Slovakia has reached the stage where firms with lower added value should be replaced by firms or business units with higher added value. Yet there are regions in Slovakia which suffer from astronomical jobless rates and offer a less-qualified workforce. How will your policies to attract foreign investment respond to this dilemma?
Juraj Miškov (JM): We are now working on an amendment to the law on state stimuli and we do wish to address both areas that you mentioned: to help investments that would flow into regions with high unemployment, but also to attract investments with higher added value, which is research and development (R&D). We aim to inter-link investors with academia, and we also plan to look into ways to support investment other than through cash or direct financial support – such as with the Ministry of Labour supporting employment by using money from the EU’s Social Funds.
In a simplified way: if an investor tells us that they want to build an R&D centre in Trnava in western Slovakia we will not reject that idea even though they have picked a region with a lower unemployment rate, because it is exactly the type of investor we welcome here. On the other hand, if an investor wants to produce, for example, cables in a region with high unemployment, we will not reject that investor either. We will be aiming for a good balance.
Slovakia is no longer in a position in which it has to want every investor under any circumstances and we are slowly getting to the situation in which we can afford to pick investors and say what we are interested in. This is crucial in terms of diversification of our economy so that in the future it is standing on several foundations. We, of course, have some space to make the business environment here even more attractive for investors.
TSS: The most serious complaints regarding Slovakia’s business environment are about corruption, poor public procurement and an ineffective judiciary. None of these issues are within the jurisdiction of the Economy Ministry, so what are the priorities for improvements that fall within your authority?
JM: It is a paradox in some respects that the ministry is seen as fully responsible for the business environment while in managing this field we are completely dependent on the good cooperation of other ministries. Most of these negative influences on the business environment do not emanate from within the Ministry of Economy but from other ministries – be it the ministries of labour and social affairs, justice, finance, interior or even agriculture. So our operation is being assessed in terms of the quality of the business environment but we simply do not possess all the tools to directly influence this environment.
Nevertheless, we can influence it indirectly. The way it works in practice is that we are creating inter-departmental working groups; specifically there is such a joint working group with the Ministry of Labour through which we are working on amendment of the Labour Code, driven by the goal of making it more flexible and up-to-date. It is also necessary considering the new trends that are flowing from western Europe in which simpler, new employer-employee relationship models are emerging in terms of working hours or types of employment contracts. Based on the information I have, this amendment will exactly take into consideration the changing dynamics of relationships between employers and employees.
A similar working group will also operate with the Ministry of Justice with the goal to reduce the level of corruption and improve the enforcement of laws, especially regarding the experience of businesses with Slovak courts.
TSS: Which are the areas where the ministry is able to directly impact the quality of the business environment?
JM: One of the direct areas is our effort to reduce the bureaucratic burden on businesses. We have included quite an ambitious plan in the government’s programme statement: a reduction of the administrative burden by 25 percent, which is more than what the European Union is demanding. Currently, we are now assessing all the laws and regulations because so far only the 48 main laws have been assessed – but most of those burdensome regulations are hiding within sub-law norms such as guidelines and directives. Sometime at the beginning of 2011 we should be able to look at the scale of the administrative burden and then prepare a plan for reducing it.
TSS: How do you envision your communication with the business environment given that you need to be sympathetic to the needs of businesses but also resist potential pressure from lobbying?
JM: Open dialogue. Perhaps this is what characterises the change that came. We have a tendency to discuss all the prepared changes and proposals and we invite all the involved groups to engage in an open dialogue. Specifically, I could say that perhaps for the first time in our history we have opted for an open dialogue in the field of energy. We have launched a professional, open debate over the issue of the future of energy policies of Slovakia. If you visit www.dialogoenergetike.sk there are about 50 questions divided into several topic groups and we are simply calling on all stakeholders and those involved in this field to contribute to the debate. We will be evaluating the suggestions and many of these might become part of the energy strategy. This is where I see a huge difference. We do not want to make decisions behind closed doors or under the influence of lobby groups and we are not rejecting open dialogue. So yes, the challenge is to hear what the business community is saying but not to yield to their interest groups. We need to be able to evaluate what is meaningful and what is purposive.
TSS: The ministry has been toying with the idea of merging SARIO, Slovakia’s one-stop foreign investment agency with the unit that supports small and medium-sized businesses, NADSME, and creating a ‘super agency’. You are also thinking about unifying and better coordinating Slovakia’s presentation abroad. Tell us about these ideas.
JM: Of course, given my background in the promotion business, this is my favourite topic. The problem, as I see it, is that we have had perhaps four different players in charge of Slovakia’s presentation. There has been a so-called council working under the Foreign Affairs Ministry to develop a unified presentation of Slovakia, but rather formally, with no measurable results. Then we have SARIO and also Slovakia’s tourism board SACR. But the Economy Ministry has also been in charge of certain activities, for example the EXPO [in Shanghai, China] was part of our agenda. Now imagine that these four institutions are each presenting Slovakia in their own way without any unifying concept while the funds end up scattered about without delivering a visible result. I think Slovakia’s presentation should be done from only one place – that is the first thing that needs to be changed. Yes, by merging SARIO and NADSME we might get what media have termed a ‘super agency’ and have this presentation under its wing. But first we need to agree on the competencies within the ruling coalition.
TSS: What are the plans of the ministry regarding NADSME? How will support for small and medium-sized businesses be handled?
JM: Once the concept of transformation that we addressed earlier goes through the cabinet there will be feasibility studies conducted to see whether what we are proposing is doable, and under what circumstances, and what the eventual impacts would be. But the most important thing is that by merging NADSME into a super agency the operational functions that support the small and medium-sized businesses that NADSME currently handles will not disappear; these will continue functioning, but perhaps under a different name: be it the micro-loan programme or advisory centres, these will all continue working. Moreover, perhaps some other tools to support small and medium-sized businesses will be added; for example we are considering the creation of some
innovation start-ups.
(For the full version of this interview with Economy Minister Juraj Miškov, please see the Investment Advisory Guide 2010/2011)
