Illustrative stock photo (source: TASR)
Nevertheless, American companies are still willing to invest in Slovakia. There are still some areas that have the potential to boost cooperation.
Currently, there are around 125 US companies active in Slovakia. Their experiences have been mostly positive, said US Ambassador to Slovakia Theodore Sedgwick.
“But we want to continue to partner with the Slovak government to make the business climate here even better,” he told The Slovak Spectator.
The fact, however, is that in 2012 and 2013 Slovakia did not register any new foreign direct investments from the US. This information may, however, be distorted, as it includes only the investments by the parental company in the US, Richard Dírer, spokesperson for the Slovak Investment and Trade Development Agency (SARIO), explained.
Some problems occur
Since 2002, when SARIO was established, there have been altogether 30 successfully realised investments from the US amounting to €462.7 million which were to create 7,310 new jobs.
IT companies like AT&T, Dell, IBM, Cisco, and HP initially came to Slovakia because of the high-quality educated work force here, and Slovakia’s central location in Europe. To keep these companies growing here and hiring more talented and hard-working Slovaks, Slovak universities and the private-sector need to intensify and deepen their collaboration, according to Sedgwick.
“Slovakia needs more graduates trained and tested in project management, analytical thinking, team operations, conflict management, and public communication,” the ambassador added. “If Slovak students can receive an education that corresponds to the needs of employers, then they’ll have better prospects for finding a job, either abroad or at home here in Slovakia.”
Though the US companies consider the business environment in Slovakia “fairly positive and quite stable”, there are areas where there should be some improvement, like payroll taxes, electricity prices, labour code issues, especially in terms of flexibility of working times and agency employment, according to Jake Slegers, executive director of the American Chamber of Commerce in Slovakia (AmCham).
Moreover, investors have expressed frustration with a general lack of transparency and predictability in the Slovak business and legal environments, Sedgwick added.
“Investors need to know that proposed legislative changes are considered carefully, and that when change is necessary, the process is transparent and inclusive,” he said. Another factor that hinders the economic cooperation is corruption, the ambassador added.
TTIP may help
SARIO is currently working on four investment projects with the US, with the potential to employ 2,412 people, Dírer added.
Moreover, Slegers points to a significant across-the-board expansion of the vast majority of investors who are already established here.
“Unfortunately, these ongoing investments are somehow not fully recognised and publicised very much as the significant investments they are,” he said, adding that these involve the expansion of business service centres like Dell, Johnson Controls, AT&T, IBM, and also companies like Honeywell.
The major project to boost economic relations is the Transatlantic Trade and Investment Partnership (TTIP), which US President Barack Obama identified as “one of the most important remaining priorities of his remaining term”, Sedgwick said. Currently, the US is seeking to reduce costs, eliminate duplicative testing requirements, and to set a model for third countries.
“It is hard work, but it is worth it,” Sedgwick said, adding that Slovakia should be among the countries that profit the most from the deal.
It is, however, hard to predict now what impact TTIP will have on the interest of US investors in coming to Slovakia, according to Dírer. On the other hand, when signed it will remove barriers and also secure the mutual balance of investment in competition and harmonise their protection on both sides.
“Thus we can expect that when the TTIP is signed, thanks to harmonisation of the rules the interest of US investors in putting money into Europe will increase,” Dírer said, adding that this can impact the influx of the foreign direct investments to Slovakia, but also enable Slovak firms to enter the US market.
The Slovak companies willing to launch a business in the US can now use, for example, the Select USA programme. It helps potential foreign investors obtain all necessary information and statistics over the specific market not only on the local, but also the federal level, Sanford Owens, commercial officer of the US Embassy in Slovakia, told the Pravda daily in late June.
Potential for entrepreneurs
The US investments in Slovakia often go to various spheres, especially the metallurgy, automotive, electronic, and food industry, as well as financial services and the strategic service centres.
“The automotive sector and strategic service centres can be considered the most prospective areas for US investments, in which there is the biggest interest,” Dírer said, adding there is also potential in the field of venture capital, when the US companies may put money into start-ups.
In this respect, Sedgwick praised the government’s promotion of start-ups, technology, and innovation, in particular the “Framework for Support of Start-ups” reform package, authored by the Finance Ministry.
“Slovakia is currently investing in a transition to a knowledge economy, and there are already some exciting partnerships between Slovak and American entrepreneurs,” the ambassador added.
Moreover, there is still potential in energy, particularly nuclear energy and natural gas, Slegers said. He would also like to see some US automobile manufacturers here.
“There is a very attractive network of existing infrastructure available for manufacturers,” he added.
