Prime Minister Mikuláš Dzurinda, along with several of his cabinet colleagues, offered many promises to foreign investors at a conference in Bratislava from February 18 to 19. Despite the rosy picture and welcoming words, however, investors said that they would have appreciated a few more details.
The conference, which was paid for by the EC through its PHARE grant program, gave Slovak officials a chance to present a hopeful, if somewhat vague vision of the future to about 200 guests. Top EC officials used their speeches to reassure Slovakia that it is on the path towards EU membership and could still be considered for first-round entry along with Hungary, the Czech Republic, Estonia, Poland and Slovenia.
"If Slovakia continues to move forward at a rapid rate there is no reason it can't become a member of the first group. It may happen that a country currently in the first group could be relegated to the second group," said Martin Bangemann, the Member of the EC responsible for Industry, Telecommunications and Information Technology.
The Slovak government has said it is in the midst of preparing a package of financial incentives with an eye towards encouraging foreign investment. The package will include things like tax holidays and additional bonuses to investors who chose to put their money into underdeveloped regions where unemployment is high.
However, specific information on the incentives was not ready in time for the conference. "By March, these details will be published," Prime Minister Mikuláš Dzurinda said.
The EC officials pointed out problems in the Slovak economy, such its unstable banking sector and administrative red tape. But they focused on foreign investment as an engine which could help fuel positive changes.
"What is needed is direct investment. It is very effective and has so far been insufficient," said Wolfgang Roth, vice-president of the European Investment Bank, which recently announced its intentions to loan 200 million euros to Slovakia this year.
Foreign investment is key
Up to September 1998, a total of $1.8 billion in foreign direct investment arrived in Slovakia, 20% of which was from Germany and Austria. Of that, a full 50% has been in the field of manufacturing, Finance Minister Brigita Schmögnerová said.
Slovakia's aim is to "develop an export-oriented, international economy that can compete with others," said Economy Minister Ľudovít Černák. "We realize that a stable government, political and financial situation is necessary."
The ministers spoke of their desire to attract a strong investor to the troubled giant steelmaker VSŽ, which is currently responsible for 10% of all Slovak exports. Schmögnerová spoke of the need to address corruption openly, and to end the "non-equal treatment" of foreign investors. The nation is striving to improve its legal system, especially its arbitration and bankruptcy laws, she said.
"We have a highly liberal economy, but something still needs to be done in the coming months" Schmögnerová said.
While they did not offer concrete solutions, government ministers did not completely gloss over Slovakia's significant shortcomings, an honesty which impressed Catherine Day, the European Commission's Director for Central and Eastern Europe.
"The message coming out of this conference is that Slovakia needs a stable framework and much more transparency, and that the administrative side of things must be simplified. We are impressed that people are working and willing to be honest about the real problems confronting them," she said.
Day added that Slovakia's progress would likely have a positive influence on the country's bid for EU membership at the Helsinki European Union summit, which will be held next winter.
Both Bangemann and Day cited the change in political leadership as the most important change made in Slovakia recently, and said they approved of the current government's steps to investigate and in some cases nullify the privatisations of companies where the law was not followed.
"Of course we are more than enthusiastic about the change and progress in democratic life... Now that that is done we are focusing on the situation in Slovak industry," Bangemann said.
"We still have most of this year to see how today's conference and other initiatives of the Slovak government translate into concrete reality. No one can make predictions, but [Slovakia's inclusion in the first round of new EU members] is a rational hope," Day said.
The tone of the conference was decidedly positive. While investment is still lacking, a recent survey by the Slovak National Agency for the Promotion of Foreign Investment (SNAZIR) showed that 90% of the investors already in Slovakia wish to expand their operations. In support of that finding, numerous investors spoke warmly of their experiences in Slovakia, including mobile telephony operator Globtel's General Director Bruno Duthoit.
Duthoit cited Slovakia's "human resources" as its strongest selling point.
"Its something in their blood. They always receive the foreign investor well," he said of the Slovak people.
Perhaps the largest vote of confidence came from European Investment Bank Vice-Director Wolfgang Roth. While he had concerns about Slovakia's weak banking sector and the rapid changes in management personnel, Roth said, he had "no problem" in lending Slovakia the $200 million euros it has been promised for infrastructure improvements.
"I wouldn't invest in Russia, but I have no problem investing $200 million euros in Slovakia next year,'' he said.