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GOVERNMENT PROMISES SWIFTER DECISIONS ON AID PACKAGES

New investment rules approved

THE FICO government approved a new set of rules for providing investment stimuli at its regular session on November 29, and vowed to put existing investment projects on a fast-track approval process until the end of the year, when EU investment rules are due to change again.

THE FICO government approved a new set of rules for providing investment stimuli at its regular session on November 29, and vowed to put existing investment projects on a fast-track approval process until the end of the year, when EU investment rules are due to change again.

According to Economy Ministry spokesman Branislav Zvára, about 50 major investment projects worth Sk30-40 billion are still waiting for government confirmation, and many have been held up 12-18 months already by a complicated approval process that involves notifying the European Commission of the aid provided.

However, under a new "Regional Aid Scheme for Large Companies" scripted by the Economy Ministry, these projects will now be eligible for approval by the Slovak government without waiting for EC confirmation.

The cabinet will be making use of a "block exemption" from the EC that means it does not have to notify the European Commission of its regional investment aid if that aid complies with the new EC guidelines and an "aid map" for 2007-2013.

The EC has approved a regional aid map for each member state that identifies the areas eligible for aid and the maximum aid intensities allowed. The major changes in Slovakia include a reduction in the ceiling of support that can be issued in Western Slovakia and the districts of the City of Bratislava.

Zvára said he believed that at least Sk30 billion worth of the projects currently in the pipeline could be approved before the new and stricter EU rules take effect in January 2007.

"The government will be focusing on the largest projects, and the most important in terms of their regional impact," he told The Slovak Spectator.

Projects not approved before the end of this year will have to be assessed from the beginning under the new conditions.

"Some projects could even be excluded from the support program, which would be a bad signal for investors, as many have already been forced to change or reduce their demands for state aid due to the changing conditions," said Dagmar Hlavatá of the Economy Ministry.

The SARIO state investment agency said that the projects in the approval process would lead to the creation of 12,000 jobs, but refused to provide further details of the projects or the aid requested.

Compared to the existing investment stimuli rules, the new scheme cancels subsidies for education, research and development, which now fall under another EU directive. It also simplifies the approval process for projects worth over Sk10 billion, reduces the minimum number of jobs created from 1,000 to 800, and no longer takes into account which region the investor is settling in.

Finally, the new scheme opens up the possibility of investment stimuli for domestic entities, not just foreign companies.

However, as Zvára explained, these new rules will be in force only until the end of the year, when the new set of EC rules are automatically factored in to the ministry's Regional Aid Scheme.

"These changes were made in order to speed up the decision-making process on the amount of stimuli to the maximum extent possible. This process could have been delayed if decisions were made on the basis of various orders and directives," the ministry explained in the preface to its new measures.

The ministry is asking for an extra Sk2.2 billion from the 2007 state budget to support 36 projects approved by the previous government, including auto parts maker Visteon, which is adding a plant in Dubnica nad Váhom to its existing factory in Nitra, as well as another 27 projects expected to be approved under the new rules.

Zvára said that Slovakia was experiencing such interest among foreign investors that it could afford to choose where to send them.

"We're in a situation where investors are flocking to our market," he said.

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