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Brits and Slovaks plan business Euro-style

SLOVAK businesses could learn a lot from their British counterparts in the run-up to EU entry, particularly in the areas of public-private partnerships and access to capital, according to British trade and industry officials.
The comments were made at a recent conference in Bratislava, at which experts from British industry met with more than 250 Slovak business and government representatives to discuss challenges relating to Slovak membership in the single European market.
Organised by the British Embassy in Slovakia, the Confederation of British Industry (CBI), and the British Department of Trade and Industry, the one-day conference was part of a series designed to widen knowledge of the EU in candidate countries' business communities. Business leaders in Slovakia recently expressed apprehension that Slovak enterprises may not be fully prepared for the changes EU accession will bring.


DIGBY Jones says Slovakia can learn from Britain's mistakes.
photo: Courtesy of the CBI

SLOVAK businesses could learn a lot from their British counterparts in the run-up to EU entry, particularly in the areas of public-private partnerships and access to capital, according to British trade and industry officials.

The comments were made at a recent conference in Bratislava, at which experts from British industry met with more than 250 Slovak business and government representatives to discuss challenges relating to Slovak membership in the single European market.

Organised by the British Embassy in Slovakia, the Confederation of British Industry (CBI), and the British Department of Trade and Industry, the one-day conference was part of a series designed to widen knowledge of the EU in candidate countries' business communities. Business leaders in Slovakia recently expressed apprehension that Slovak enterprises may not be fully prepared for the changes EU accession will bring.

Lucy Neville-Rolfe, director of corporate affairs for the supermarket chain Tesco and a member of a European industrial taskforce on enlargement, noted four challenges that Slovak businesses will face in the European Union: increased competition, keeping pace with changes in the market, staff development, and creating relationships with suppliers.

Despite the challenges, she said that competition would provide "a great opportunity for innovation and a great opportunity for trade," noting the growth in the economies of Ireland, Spain, and Greece following their accessions to the EU and predicting a similar outlook for Slovakia.

Some Slovak business leaders expressed concerns that there had been many changes in laws affecting business as the country approached EU accession, including recent changes in VAT and income-tax rules. Neville-Rolfe responded that "constant communication between government agencies and business is vital to overcoming the challenges in this area".

Legislative change and poor communication were also seen as potential problems in the area of public-private projects. Christopher Brown, a partner in the international law firm Norton Rose noted that Slovakia could learn from Britain's experience.

After privatisations in the 1980s and '90s, Britain introduced public-private partnerships, a system whereby the private sector delivers public services in on behalf of the public sector. In Britain, such partnerships can be seen in municipal waste collection and public transport.

Brown described it as "quite an adaptable method of public procurement" that allows savings by reducing overspending of between 20 and 30 per cent on average. However, the governor of Slovakia's Eximbank, Ladislav Vaškovič, said that the Slovak public sector had to be quite clear about how it intended to proceed with such projects.

Brown warned that certain "building blocks" would need to be in place, such as long-term financing for companies to bid for projects that could last 25-30 years.

"It's noticeable that there have been some recent developments in the capital markets, providing long-term finance. However, for a sustainable programme there need to be significant developments in the finance sector," said Brown.

"You need investors - people with risk capital to finance projects - and last of all you need people with technical skills who can both allocate risks and manage those risks," he added.

Responding to concerns raised by Slovak delegates on their negative experiences in accessing EU grants, CBI director-general Digby Jones said the Britain had had similar difficulties initially, admitting that many British bids had "left a lot to be desired".

"But Britain's experience could possibly help [Slovakia] so that the same mistakes aren't made and everyone goes forward more effectively," he said.

Jason Mogg, from the Slovak offices of the British law firm Linklaters, said that Slovak businesses would need to "look increasingly to Brussels and need to make sure that they understand the rules on state aid. They will need to understand how to play the system in Brussels."

Mogg also said that as Slovakia continues with the privatisation of regulated and network industries, it should bear in mind the model pioneered in the UK in the 1980s, which has worked well in other countries and "is probably the best model to take forward here in Slovakia".

"With the upcoming privatisation in the [Slovak] water sector, it's probably a good thing that the Slovak Office of Network Industries has already been making visits to the UK water regulatory people," said Mogg.

Although Ján Liška from Slovak Pulp and Paper Mills said transparency remains a major concern for Slovak industry in terms of regulation, Mogg saw ongoing regulation changes in Slovakia as a potential advantage that could allow for close partnerships between business and government.

"There is a lack of experience and that creates an opportunity for the regulated industries in this country to participate in their own regulation. That means being in contact with the regulators, understanding the rules, and, indeed, if you play the game well, you can use it to your advantage," he said.

While some concerns over the details of integration still remain, Slovak businesses feel ready for Europe, said Juraj Majtán, president of the National Agency for the Development of Small and Medium-Sized Enterprises. According to Majtán, only a small percentage of Slovak SMEs were feeling anxious about entry to the EU.

Similarly, Jones told The Slovak Spectator that he was optimistic about the future participation of Slovakia in Europe, and future cooperation between Slovak and British enterprises.

"I can see that the opportunity of the single market is there for [Slovak businesses]," he said.

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