ECONOMY Minister Ľubomír Jahnátek has said he is determined to win a planned Sk16 billion (€430 million) investment by the South Korean electronics company Samsung for Slovakia over competing sites in Romania and Bulgaria, and visited the Asian country at the beginning of November to take his case directly to Samsung's top brass.
"It is my personal ambition to convince the company's management that Slovakia is the best destination for their investment," said Jahnátek for the Hospodárske Noviny daily.
The Economy Ministry is currently preparing an updated version of the Act on Investment Stimuli, and tax-breaks and other state aid for the potential investor will likely play a major role in the final decision, which is expected within the next month.
Samsung Digital already has a plant in Galanta in central Slovakia, where it has made consumer electronics products since 2002, as well as a logistics centre for Central and Eastern Europe that it opened in the same town this past August. It employs about 3,150 people at the two operations.
Jahnátek said that Samsung had already picked out a suitable site for its new factory for making LCD monitors, but declined to say where it was. However, Hospodárske Noviny cited information from the Slovak Environment Agency, claiming the site was in the municipality of Voderady near Trnava in western Slovakia.
The 300,000 square-metre greenfield location is near the Bratislava-Žilina freeway, and is currently undergoing an environmental impact study. According to documentation that Samsung Electronics Slovakia has already submitted to a local environmental office, construction could begin in the spring of 2007.
Before his departure for Seoul, Jahnátek said the firm had also been offered an alternative site in the Nitra-Sever industrial park in southwestern Slovakia, which is also to be the location of a new LCD television factory being built by Sony. The Sony plant is envisaged to take one-sixth of the production of Samsung's new factory.
"We want to convince the South Korean investor to consider the possibility of investing near Nitra," the minister said.
One of the advantages of the Nitra site is that the infrastructure is complete, while it would still have to be introduced at Voderady. The supply of available labour is also much higher in Nitra, whereas the Trnava area is under pressure from other large FDI projects like the PSA Peugeot Citroen plant, which came on line last month.
While Samsung would likely require that the state foot the bill for infrastructure, if it took the Nitra site, the money saved on investment stimuli could be used for other purposes, such as buying technology.
Anton Ondrej, the director of operations for Samsung Digital in Galanta, would not comment on how the firm was likely to decide. "Premature statements are counter-productive, and with such important talks it is important that the mutual trust of the partners is not disturbed," he said.
Geesung Choi, the president of Samsung's digital media business division, warned minister Jahnátek during a visit to Slovakia in August not to count his chickens before they hatched.
"Be careful, there are many other countries trying to win our investment," he said. "Full support for our plans will be rewarded in future."
Choi said Samsung wanted to expand by 30 percent annually on the European market, and to double its LCD TV sales in Europe to four million units in 2006.
Samsung has invested about Sk4 billion so far Slovakia, and recorded a turnover of Sk35.3 billion in the first half of 2006, an 84 percent increase over the same period last year.
The electronics firm has joined a wave of investment by South Korean corporate giants abroad. Hyundai-Kia Motors, for example, has spent $2-3 billion annually since 2003 in building new plants abroad, and is to spend more than $10 billion on new production lines or expansion in the US states of Alabama and Georgia, Slovakia, the Czech Republic and China by 2009.
Samsung Electronics' flagship factory in Suwon, South Korea, may even be closed in three or four years, as production lines for major home appliances such as refrigerators, washing machines and microwave ovens have been moving overseas since 2000.
6. Nov 2006 at 0:00 | Tom Nicholson