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LUČENEC SITS ON A TREASURE CHEST OF SILICATES. THE KEY: INDUSTRIAL PARK LEGISLATION

Lučenec investment park: a seven-year itch

Lučenec mayor Jozef Murgaš works 700 metres above ocean water that was trapped in the earth's crust 12 million years ago. The ocean was covered during an epoch of dense volcanic activity, which over millennia deposited a rich vein of silicates unrivalled in central Europe.
Murgaš and local entrepreneurs say they completed a plan over two years ago to exploit the silicates and draw massive investment into the Lučenec area, where unemployment hovers around 30%. They even have investors waiting to move in. But they lack one important tool: laws allowing the building of industrial parks.
"We're all very frustrated," says Murgaš. "We started working on this seven years ago, and have been waiting for the laws ever since."


Deputy PM Ivan Mikloš (left), PM Mikuláš Dzurinda (middle) and Economy Minister Ľubomír Harach. Could they do more for Lučenec?
photo: TASR

Lučenec mayor Jozef Murgaš works 700 metres above ocean water that was trapped in the earth's crust 12 million years ago. The ocean was covered during an epoch of dense volcanic activity, which over millennia deposited a rich vein of silicates unrivalled in central Europe.

Murgaš and local entrepreneurs say they completed a plan over two years ago to exploit the silicates and draw massive investment into the Lučenec area, where unemployment hovers around 30%. They even have investors waiting to move in. But they lack one important tool: laws allowing the building of industrial parks.

"We're all very frustrated," says Murgaš. "We started working on this seven years ago, and have been waiting for the laws ever since."

The wait may soon be over, though. The Slovak government sent an industrial parks bill to parliament February 28 which would allocate 500 million crowns ($10 million) for the support of industrial parks in Slovakia, and would solve the annoying process in which firms must find their own land and haggle with local governments over who should pay for infrastructure. It is expected to be passed next month and take effect June 1.

The Lučenec project has attracted six foreign investors, who will put six billion crowns ($120 million) into the park, creating 2,400 new jobs by 2007, according to Avant Investment and Design, the firm co-ordinating the park's construction. The investments would cut seven percentage points off the region's unemployment rate. Avant officials would not name the six overseas investors involved, but did say American firm General Electric would build a steam-gas electric generator to supply factories.

While the plan looks good on paper, it can't be implemented without the right legislation.

"We can't break ground until the law is passed. The potential investor wants to know exactly how long everything will take, what administration he has to deal with and what the infrastructure will be like," said Avant marketing consultant Tibor Papp.

"Right now, Slovak law is unclear, making the investment process difficult and non-transparent. An investor is forced to wait months to arrange his investment, without being sure of how the process should work."

Analysts and investors have repeatedly drawn attention to shortcomings in current investment legislation. Among the greatest bugbears is the fact that little land is easily available to investors: Large plots of land are often in the hands of many hundreds of owners, not all of whom are willing to sell.

Industrial parks should not only go some way to eliminating this problem, by making the state and the municipalities sole owners of the land wanted by investors, but should also relieve investors of the current requirement that they cover most of the costs of infrastructure at parks.

Under the proposed law, the government would pay 70% of infrastructure costs at industrial parks such as that in Lučenec, with local governments footing the outstanding 30%. If the law goes into affect June 1, infrastructure construction in Lučenec could begin this summer, and factory construction could start early next year, officials say.

Avant officials are adamant that the central government should finance the lion's share of infrastructure construction. Land has been secured for the Lučenec park since 1999, but 250 million crowns ($5 million) will have to be invested into railroads, highways, and utility networks before factories can be built.

An industrial park bill given to parliament in 1994 during the government of Jozef Moravčík was never passed, and was ignored during the four-year reign of Vladimír Mečiar that followed. When the ruling coalition came to power in October 1998, those involved with the Lučenec project thought an industrial park law would be enacted immediately, but hammering out the details took more time than expected, said Economy Ministry spokesman Peter Benčúrik.

In the meantime, those in Lučenec have watched as industrial parks have fuelled economic development in neighbouring countries. "In Hungary, where they have had an industrial parks law since the mid-1990s, there are over 130 industrial parks," said Avant's director of silicate projects, Alexander Molnár. "The largest 20 of those account for half the country's exports."

Slovakia has no industrial parks yet completed, although seven are in various stages of construction. An automotive park in the village of Lozorno, north-west of Bratislava, is due to be completed this summer.

The construction of the 60-hectare Lučenec industrial park is part of a wider plan to exploit the region's wealthy silicate stock. A study in the early 1990's revealed that the area, which already had factories in traditional silicate industries such as glass and brick, was also rich in rarer silicates.

The mineral wealth has led to 14 firms expressing interest in the park's second phase - which would see it expand by 140 hectares - and prompted Avant to develop plans for five industrial parks in other towns within a roughly 900 square kilometre radius of the deposits. Companies planning to invest in Lučenec will be mining basalt fibres, sorbents, ceramics, materials for roof tiles, and chemicals for film development and water treatment.

Those heading the government's drive to attract foreign investment admit that the absence of the industrial parks law has hindered the potentially lucrative exploitation of Slovakia's natural resources, particularly those at Lučenec.

Head of government investment agency SARIO Alan Sitár said that it was important for Slovakia to exploit natural resources such as those at Lučenec, and that failure to pass industrial park legislation had held back Slovakia's economic growth.

"All of the remaining Visegrad Four countries [Poland, Hungary and the Czech Republic] offer investors an efficient system of industrial parks.

"The absence of such a law in Slovakia has made Slovakia less attractive as an investment environment," he said.

Papp is equally sure of the economic value of the Lučenec area. "It's crazy for us not to be able to use this because of a law. Nobody else has these resources."

"Not passing the law sooner has affected our whole region. This law should have been passed long ago. We've lost at least two years for nothing," said Murgaš.

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