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EDITORIAL

Global worries and Slovakia

IN A GLOBALISED market, enterprises in all countries, including Slovakia, face strikingly similar risks. There is therefore a lesson to be learned from the worries of today's business elite.
What are the greatest fears of the movers and shakers of the world's business community? A survey of nearly 1,400 CEOs done by the consulting firm PricewaterhouseCoopers and released in January at the World Economic Forum, held annually at the Swiss ski resort of Davos, tried to find an answer to just that question.

IN A GLOBALISED market, enterprises in all countries, including Slovakia, face strikingly similar risks. There is therefore a lesson to be learned from the worries of today's business elite.

What are the greatest fears of the movers and shakers of the world's business community? A survey of nearly 1,400 CEOs done by the consulting firm PricewaterhouseCoopers and released in January at the World Economic Forum, held annually at the Swiss ski resort of Davos, tried to find an answer to just that question.

The CEO survey collected data from interviews with 454 Europeans, 313 North Americans, 258 South Americans, 50 Africans, and 319 business leaders from the Asia-Pacific region.

Unfortunately, there was, again, no official Slovak representative to hear the answer to this and many other crucial questions of our times at the forum.

Although President Rudolf Schuster received an invitation to attend the prestigious event, he declined, instead visiting Egypt and later focusing on domestic events and his soon-to-be-confirmed presidential candidacy.

The Foreign Ministry also received an invitation, back in September 2003, but no one went. Finance Minister Ivan Mikloš is the one who would perhaps be glad to go, but he wasn't invited.

The study found that the top concern of CEOs, cited by as many as 63 percent of respondents, is increased competition.

It should be even more so in Slovakia. EU entry, for all its advantages, could bring collapse to many Slovak firms, who will have to compete for customers with EU companies with greater work efficiency and products of better quality.

Moreover, many of them will need to invest much money in new technology to comply with EU environmental and production standards. All of this while trying to sell to the Slovak market, where unemployment is high and households do not have an abundance of cash - and will have even less after EU entry.

The Slovak government is currently not doing much to help these firms get ready to face tougher competition, and are instead hoping to score with voters by focusing on attracting foreign investment.

The public has little chance to see what kind of incentives these foreign corporations are being offered and whether it is worth it for them to come to Slovakia.

The next worry is over-regulation, feared by 59 percent of global CEOs. The current Slovak right-wing and pro-reform government seems to be trying its best to make doing business in Slovakia as simple as possible. This is documented by the introduction of the flat tax rate, designed among other things to simplify the tax system, or the new regulation on corporations under which a company can be established in Slovakia in only five days, compared to the several-month process that was the rule until now.

However, this is another key area where the EU comes into place. The union regulates a huge number of areas directly related to business, and their number is unlikely to decrease. On the contrary, businesses in Slovakia have to get ready to watch the decisions of regulators not only in Bratislava, but also in Brussels. If over-regulation is to be prevented, Slovak officials have two choices. One is to push for more transparent decision-making in Brussels, with clearly distributed authority between the national government and the union.

However, given the current mood in Europe and Slovakia's strength in international affairs, it seems unlikely they can do much in this respect.

The other option is to be cautious about any deeper European integration, especially at a time when the impacts of the country's accession into the European club still remain to be seen.

On the other hand, top Slovak representatives have so far been failing the test and have unwisely been pushing for speedier integration, declaring their preparedness to join the first-speed Europe.

The good news is that Ján Figeľ, former negotiator with the EU, was selected as Slovakia's representative in the European Commission. Figeľ is known for his careful and conservative attitude towards integration, which is exactly what Slovak businesses need to keep over-regulation in check.

These concerns are followed by currency fluctuations, troubling 48 percent of the world's top managers. This is one area where joining the EU, and more importantly the Euro-zone, can ease Slovak executives' worries.

From January through November 2003, as much as 48.3 percent of all imports came from countries of the Euro-zone and 54.8 percent of Slovak exports headed to those countries, according to the data of the Statistics Office.Over the same period, as much as 21.2 percent of imports and 22.3 percent of exports were exchanged between Slovakia and the neighbouring Czech Republic, Poland, and Hungary.

All these countries, including Slovakia, are expected to introduce the euro at the end of the decade, making currency fluctuations between them a matter of the past. The only significant Slovak trading partner that will not have the euro as its currency is Russia.

The loss of key talent ranks number four on the list of business threats in the survey. It is natural that after EU entry, brain drain will be a concern not just of individual companies, but society as a whole.

Global problems obviously have a very clear reflection in Slovakia. Let's hope that next year Slovakia will send someone to find out what they are.

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