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SLOVAKS AND POLES EXPECT NEWS ON THE LOCATION OF A HYUNDAI-KIA PLANT IN MID MARCH

Two states on the edge of their seats

SLOVAKIA is tensely anticipating the decision of South Korean carmaker Hyundai-Kia on the location of its new central European plant.
News stories claiming to know the company's final word are becoming more and more frequent, but the carmaker executives have said they are still collecting final data.
The decision is due to be announced in mid March.
Koreans are now surveying Žilina - Slovakia's offered site for the $1.5 billion (€1.18 billion) investment, unofficially and "on their own initiative", the news wire TASR reported.

SLOVAKIA is tensely anticipating the decision of South Korean carmaker Hyundai-Kia on the location of its new central European plant.

News stories claiming to know the company's final word are becoming more and more frequent, but the carmaker executives have said they are still collecting final data.

The decision is due to be announced in mid March.

Koreans are now surveying Žilina - Slovakia's offered site for the $1.5 billion (€1.18 billion) investment, unofficially and "on their own initiative", the news wire TASR reported. They have recently visited local foreign firms to learn more about their business experiences in the country. This is a common practice among major investors and Hyundai is doing the same in Poland.

The Slovak Finance Ministry is ready to propose additional financial aid for the South Korean carmaker's investment, ministry spokesman Peter Papanek has confirmed.

However, officials were not able to tell at this point whether the ministry would come up with the funds by freezing some existing spending commitments.

"If Slovakia succeeds in the Hyundai project, the Finance Ministry will have to find Sk2 billion (€49.42 million) in the 2004 state budget," said Finance Minister Ivan Mikloš when appealing to parliamentary deputies to think economically when approving measures with an effect on state coffers.

After Hyundai executives visited Slovakia in mid-January, Slovak Economy Minister Pavol Rusko said both Poland and Slovakia would probably offer the maximum amount of investment aid allowed by European Union rules - 15 percent of the total investment value, the financial daily Hospodárske noviny wrote.

However, Slovakia's offer of investment stimuli for Hyundai-Kia does not include any tax bonuses.

"Incentives for investors are important in initial stages, but later on during the actual production process they should start paying taxes," Rusko told the news wire SITA.

Slovakia's incentive package includes subsidies for procuring investment property, retraining courses, and employment support.

Late last year, Slovakia and Poland were shortlisted by Hyundai for the site of the Kia Motors production unit, which will have an estimated annual output of 300,000 cars, beating out the Czech Republic and Hungary in a battle for the major greenfield investment.

On January 15, a 12-member group of Hyundai executives briefly visited the Žilina region, which has been seriously affected by the reduction of arms production during the 1990s.

Experts say that the region, which shares borders with the Czech Republic and Poland, has a favourable geographic location and a developed infrastructure. The 270-hectare site is crossed by a railway route only five kilometres from the fifth pan-European railway corridor, and lies only 13 kilometres from Dolný Hričov airport.

Žilina mayor Ján Slota has been confident that Slovakia will win the competition.

According to Ján Mišura, director of the Žilina branch of the Slovak Chamber of Commerce and Industry, up to 450,000 working people live within 50 kilometres of the proposed site.

Mišura stressed that the labour productivity in the region is higher and labour costs one-third lower than in Poland.

Poles also believe that they lead the race for the Hyundai investment and the Polish government has rejected speculations that the company has already opted for Slovakia, according to the Polish online daily Warsaw Business Journal.

On January 20, the Korean daily The Korean Herald wrote that Hyundai Motors had ambitions to grow into the fifth biggest carmaker in the world and planed to sell 2.15 million cars worldwide in 2004.

The new plant would strengthen Hyundai's position in Europe.

According to experts, the construction work would take about two years, giving the region 7,000 new jobs.

During the first half of 2003, the company boosted its European sales by 34.5 percent year-on-year.

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