ain shy about putting their money into Slovakia, foreign firms already doing business here say they are happy with the country's cheap labour force and the tax incentives they receive from the government, and are almost universally planning to expand operations in the year 2000.
According to a survey published on November 18 by the SNAZIR agency for foreign investment, fully 91% of the 150 largest foreign firms doing business in Slovakia plan to expand their operations next year.
The agency said that these companies predicted on average that their sales would grow by 10% in 2000. Firms in the automotive industry expected to see sales up by 41%, while chemical sector companies expected 18% growth and engineering firms 17%.
The top five foreign investors in Slovakia are the German Volkswagen and Siemens, the British Tesco stores, the Japanese Sony and the American Motorola firms.
Katarína Mathernová, an advisor to Deputy Prime Minister for Economy Ivan Mikloš, said that the results of the survey proved that the economic policies of the government were bearing fruit.
"Most foreign investors, with a few exceptions, are satisfied with their business in Slovakia, and the largest foreign investor, Volkswagen, has announced that the success of their investment in Slovakia is second only to that in Germany," she said.
Siemens spokesman Peter Kremský agreed that his firm had been happy with its investment (250 million Deutschmarks since 1992), and that it hadn't encountered problems finding buyers for its Slovak-made products, all of which are exported.
Kremský mentioned a recent deal to modernise train locomotives for the state-owned rail company, ŽSR (see economic briefs, page 2), as evidence that the firm coninued to believe in the Slovak market, although he painted a considerably less rosy picture of the Slovak economy than had Mathernová.
"If the business environment had improved, Siemens would be expanding its investment in Slovakia much more visibly," Kremský said.
Another major foreign investor, the American Whirlpool company, has one of its largest European plants based near the northern city of Poprad, producing 800,000 washing machines a year. Whirlpool Slovakia Director Martin Ciran said his company has been satisfied with the economic results it has achieved since settling in Slovakia in 1992, and sees sales only getting better.
"I would say that the current quality of the business environment promises future improvement," he said.
But Ciran, who is also the director of Whirlpool in the Czech Republic, said that Slovakia remained three years behind the Czech Republic, Hungary and Poland in building a comfortable environment for investors.
Kremsky agreed, saying that the governments of neighbouring countries had put their state administrations at the service of investors.
"In these countries, everything goes much quicker and the public sector does everything it can to support investors," he said. "Meanwhile, here in Slovakia they think that the foreign investor is somebody with deep pockets, so they don't always do their best to help them," Kremsky said.
Many potential foreign investors seem to share Kremský's opinion. Direct foreign investments into Slovakia in the first half of this year amounted to only 5.9 billion Slovak crowns ($150 million), 1.7 billion crowns less than in the same period of the previous year.
According to Ján Tóth, a senior analyst with Dutch investment bank ING Barings, most investors are waiting until a new FDI incentive package is approved by the government, which is slated to happen sometime in the first half of 2000. The package is expected to lower the initial investment necessary to make foreign firms eligible for tax breaks.
Tóth also mentioned the likelihood of Slovakia's acceptance into western structures such as the EU, NATO and the OECD as likely to get the attention of investors.
But Siemens' Kremský said that foreign investors looked at more than acceptance of Slovakia by international groups.
"The import surcharge, bad tax laws and certifications are much more important factors," he said. "These are the kinds of things that really disgust investors."
29. Nov 1999 at 0:00 | Peter Barecz