Despite the fact that in 1999 Foreign Direct Investment (FDI) to Slovakia was lower than last year, several major international companies launched sizable investments while many foreign firms already operating in the country poured additional resources into increasing their output.
Still, foreign investment came far below expectations, amounting to 5.9 billion Slovak crowns ($150 million) in the first half of 1999, 1.7 billion crowns less than in the same period of last year and a fraction of the $500 million that former Economy Minister Ľudovít Černák set as a goal for 1999.
Most foreign investors said they were satisfied with their business in Slovakia, and pointed to the country's cheap but qualified labour force and government tax incentives as reasons why. Though bureaucracy remains a barrier to smooth operations, over 91% of these foreign companies said they were planning to expand their activities in the year 2000.
The year in FDI started out well, as two huge investments were anounced by German companies. The central Slovak tire producer Matador Púchov and its German equivalent Continental agreed to form a joint venture on January 7. The joint-company expects to generate a turnover of three billion crowns ($70.5 million) this year while making a total investment of four billion crowns.
Then the German car giant Volkswagen, the biggest foreign investor in Slovakia, announced on January 13 that it was building new construction facilities at its existing factory site in Devín outside Bratislava. VW said it needed the new plant to reach their goal of doubling the production of cars to 250,000 by the year 2000. The company announced that the cost of construction would be $237.5 million.
Judging by the number of new factories being built, one of the most attractive regions in the country for foreign investors in 1999 seemed to be central Slovakia. Lucrative investments have been drawn by the region's moderate unemployment levels of around 15%.
In mid-March, the large United States producer of automobile seats and interiors, Johnson Controls and the Slovak company Auto Martin signed an agreement for the construction of a new factory to produce car passenger compartment linings in the town of Košťany nad Turcom, about 20 kilometres south of Martin. The new facility was to improve unemployment figures in the Turiec region by creating about 670 jobs. Johnson Controls plans to invest $20 million into the new factory and expects to produce one million passenger compartment linings per year.
Another large investment project announced in central Slovakia was that of the Danish shoe company Ecco, which set up a branch factory in Martin in mid-1998 and now intends to build three more production premises and employ 1,300 people. The company plans to invest $15 million in its Slovak operations.
Another Danish producer, the furniture company Lind Mobler, signed an agreement with officials in the southern Slovak town of Krupina, near Lučenec, on the building of a factory for the production of upholstered furniture. The firm plans to employ 330 people.
In mid-April, officials at the American-based Motorola company announced a plan to revitalize a former Piešťany factory to produce high-tech electrical components. Motorola promised to create about 1,500 jobs and invest $90 million in the next five to seven years. After achieving full production capacity, the new Slovak branch of the company is expected to turn out $60 million worth of goods annually.
On July 21, Prime Minister Mikuláš Dzurinda laid the first stone for the foundation of a new factory being built by the German roller bearings company INA in the town of Kysucké Nové Mesto in the north-west corner of the country. The new factory represents an investment of some 180 million German marks ($94 million) and will employ 1,600 people in a region with 3,800 unemployed.
The year 2000 is shaping up as a banner year for foreign direct investment. The Austrian gas giant OMV, German-based Siemens, US Steel and American dashboard maker Textron all are looking to make investments in Slovakia. The privatization of Slovak Telecom, some Slovak banks and possibly pipeline operator Transpetrol and gas utility SPP are also sure to attract Significant FDI inflows.
20. Dec 1999 at 0:00