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Silicon valley takes shape in Slovakia

A massive industrial park is being planned between Malacky and Lozorno (30 kilometres north of Bratislava) designed to lure international technology firms to Slovakia. Working together, the Ministry of Economy, the American Chamber of Commerce and the Slovak Electrotechnical Industry Association envision a three square kilometre high tech zone developed by foreign investors that would rival other European technology centres within the next 10 years.
Ground breaking on the project is slated for June 1 this year; the park in the end will bring an estimated $952 million of foreign direct investment to the country and create over 5,000 jobs. The industrial park's boosters are targeting firms involved in micro-electronics, optical-electronics, telecommunications, computers, IT technologies and perhaps biotechnology. One of the aims behind the idea was to create highly skilled job opportunities that would keep some of Slovakia's brightest minds in the country.


Malacky already has heavy industry such as a parts factory for the Škoda automaker; now, the region hopes to draw high-tech investors to create a Slovak version of Silicon Valley over the next decade.
photo: TASR

A massive industrial park is being planned between Malacky and Lozorno (30 kilometres north of Bratislava) designed to lure international technology firms to Slovakia. Working together, the Ministry of Economy, the American Chamber of Commerce and the Slovak Electrotechnical Industry Association envision a three square kilometre high tech zone developed by foreign investors that would rival other European technology centres within the next 10 years.

Ground breaking on the project is slated for June 1 this year; the park in the end will bring an estimated $952 million of foreign direct investment to the country and create over 5,000 jobs. The industrial park's boosters are targeting firms involved in micro-electronics, optical-electronics, telecommunications, computers, IT technologies and perhaps biotechnology. One of the aims behind the idea was to create highly skilled job opportunities that would keep some of Slovakia's brightest minds in the country.

"In Europe, if you look at the countries that have a lot of power in the new technology, Sweden, Finland and Italy, they were really left behind in the old days like Slovakia is today," said Leighton Klevana, director of the American Chamber of Commerce and one of the masterminds behind the project. "But I think Slovakia can also be at the forefront of the technology industry."


The Malacky development site (red circle) is close to major roads.
photo: Courtesy of Peter Weber

Taiwan connection

Though the Malacky-Lozorno project is still in its initial stages, with no technology firm having officially committed to building in Slovakia, a trade delegation made up of 20 representatives from Slovakia visited Taiwan this past month to drum up interest among Taiwanese technology companies and banks.

The reason for the visit was that a group of Taiwanese investors in software and IT businesses had expressed interest in Slovakia. "One of the forces pushing this project forward is a group of Taiwanese - a group of investors from people in the software and IT business in Taiwan that want to make use of the knowledge base that we have here in Slovakia," said Klevana.

Peter Weber, General Manager of Compaq computers in Bratislava and a board member of both the American Chamber of Commerce and the Electrotechnical Industry Association (a group of around 60 members representing high-tech companies in Slovakia) was part of the delegation to Taiwan. He described the visit as a fact-finding trip, where initial contacts were also made with several Taiwanese banks.

"We are now creating a framework for the project. The Taiwan visit was the first serious mission of people representing Slovak industries and advisors to the government. There had been only low-level business contacts up to this point, and the trip was an attempt to break through to the next level," he said.

Despite the Asian initiative, Weber stressed that the industrial park was not designed exclusively for Taiwanese firms. "Some of them are from Taiwan, some of them are from Austria and some of them are from the United States," he said. "This is not a Taiwanese project - this is what I stress whenever I talk about this. This is a Slovak national project open to investors from all over the world. It would be stupid if it were based on one investment territory."

High-Tech zone

AmCham boss Klevana hoped to use his connections back in the United States to rally technological interest in the region, and cited high-tech software and hardware suppliers and military suppliers as prospective investors. Bringing in these kinds of companies, he said, would also be a key factor in keeping the country's intellectual resources in Slovakia. "Instead of people getting a good education here and running to Germany or the United States for a good job, they will be able to find the same thing here," he said.

To finance the high-tech zone's initial stages, Weber explained, a co-operative effort had been launched between the Economy Ministry and a special foundation created by the Electrotechnical Industry Association. He estimated that 600,000 Slovak crowns ($14,700) had already been committed to the project, enough to get the industrial park rolling. The final cost of the zone remains unknown, but according to Milan Vaškor, Chief Executive Officer of the Malacky region, the first phase of the park will cost one billion crowns ($23.8 million).

Weber said that in the project's conception, the bulk of the financing for the park was to fall to private developers.

Klevana didn't foresee problems rallying support from private investors. "There's no question in my mind that in time, this thing is going to develop its own momentum, its own financing and its own core group of people interested in moving it forward."

He also anticipated ground-breaking to take place as soon as June 1 on 40 acres already set aside for the project. The ultimate development area is projected to encompass approximately 1,200 hectares, or about three square kilometres.

Vaškor said government approval was expected in June or July, while the passage of necessary legislation would come between September and December. Issues for the government to solve included property ownership in the zone, the effect on the adjacent military base and environmental concerns. Vaškor predicted large-scale construction to begin sometime in February to March of 2001.

Bratislava's Spiller Farmer real estate consulting company heads the land development issues surrounding the project. Managing Director Laurie Farmer explained that the project was in its "very early stages," and that its ultimate completion could be as far off as a decade.

"There's no way that you could fill up an area of 1,000 hectares with factories within the next year. It would take maybe five to ten years to do it - it's a long term project. At this point, I don't even think its totally clear who owns the land, so there are a lot of things that need to be looked at," Farmer said.

But he did say that the project was gaining momentum. "We're a lot further ahead than I think a lot of people think we are. We have prepared money for it, we have developers for it and we have end users for it. We are working on it quite well."

Ultimately, project planners anticipate enough interest to create spin-off businesses that would add facilities and infrastructure to accommodate the needs of the workforce.

"There will be restaurants, pubs, hotels, housing, a commerce centre, trucking companies, all sorts of things. You end up with a catalyst from so many people and those people needing so many different things." Farmer said. "It's lots of money, it's big numbers."

The initial idea for a technological park had been discussed as far back as 1994 when a study by a German analytical company, Empirica, named Bratislava and the surrounding area as the best production site out of more than 400 locations throughout Europe. Empirica used seven criteria in its evaluation, including location, labour costs, education of the workforce and proximity to roads, rail and air. Interest in the project became serious during the fall of 1999, when the idea was revisited.

The Malacky region is fast becoming Slovakia's 'development capital', with foreign investors like Pepsi, Volkswagen and Swedwood all having started projects in the past few months.

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