SLOVAKIA NEEDS AN AMBASSADOR TO SWITZERLAND TO ENCOURAGE ECONOMIC COOPERATION

A missed chance

SLOVAK BUSINESS links with Switzerland lag behind those of other European countries. Insiders say that Slovakia has missed its best chance to attract multinational Swiss companies. The country will have to work hard to make up for the delay and win investments from the cautious Swiss.
Switzerland does not belong among the top 10 investors in Slovakia, which means that it stands somewhere in the 5.5 percent market share inhabited by the remaining international investors.

SLOVAK BUSINESS links with Switzerland lag behind those of other European countries. Insiders say that Slovakia has missed its best chance to attract multinational Swiss companies. The country will have to work hard to make up for the delay and win investments from the cautious Swiss.

Switzerland does not belong among the top 10 investors in Slovakia, which means that it stands somewhere in the 5.5 percent market share inhabited by the remaining international investors.

However, according to the National Bank of Slovakia, during the first nine months of last year Switzerland invested Sk432 million (€10.42 million) in Slovakia's non-financial sphere. It made Switzerland the eighth biggest investor in Slovakia in this particular period.

Slovakia does not have visibility in Switzerland, insiders agree. Additionally, the country had a poor image during the government of former Prime Minister Vladimír Mečiar and now, though foreign perceptions of the country are improving, there is not much opportunity left for Swiss capital.

"Multinational Swiss firms that were interested in the region are already in Slovakia through representative offices, although their presence here is substantially smaller than in neighbouring countries. The Swiss have already established headquarters in Poland, the Czech Republic, and Hungary and they do not plan to expand their investments," said Katarína Somogyi, the secretary general of the Swiss-Slovak commercial chamber.

Dagmar Repčeková, the Slovak commercial attaché in the Swiss city Berne, added: "About 95 percent of Swiss companies are small- and medium-sized businesses. They typically make decisions after a long period of thorough analysis; they place their investments very cautiously."

Somogyi thinks that the remains of Swiss distrust in Slovakia further hinder the development of business relations. "The Swiss are not used to government and legislation changing so quickly. In Switzerland there is a system of clerical governments. Everyone knows ahead of time who will be the finance or economy minister."

The fact that there has not been a Slovak ambassador in Switzerland for more than a year does not support mutual cooperation and the development of the relationship either.

"It is a conservative country. It takes quite a long time for someone to build a database, contacts, and surroundings. It always takes one or two years," added Somogyi.

Zoltán Demjan, chairman of the supervisory board of Holcim Slovensko, a company producing construction materials in Slovakia with Swiss capital, said his experience showed that even though the image of Slovakia is improving, the country is not adequately promoting itself.

"The Swiss are cautious investors. They must be confident that their investments will pay off. Finally, now, as they are hearing about the improving business conditions in Slovakia, most of the opportunities have already been taken. For example, in the traditional Swiss branch - banking - the Austrians are prevalent," he added.

Swiss firms already operating in Slovakia are represented by the pharmaceutical industry, construction, business and personnel consulting, insurance, food, and shoemaking. Most firms work through commercial representative offices.

Somogyi thinks that there is still opportunity to develop mutual business in the automotive industry. Vast investments by French and Korean carmakers PSA Peugeot Citroen and Hyundai/Kia motors, respectively, will create opportunities for Swiss producers of car components.

"The commercial department of the Slovak Embassy in Switzerland has already approached the six biggest car-component producers in Switzerland and asked them to consider expanding their production into Slovakia. Production costs in Switzerland are high, so it could be advantageous for them," she said.

The Swiss-Slovak commercial chamber also considers machinery, metallurgy, energy, electronics, pharmaceuticals, and the wood industry as possibilities for future cooperation. Additionally, two big Swiss companies, Glas Trösch and Sky Media Manufacturing, recently announced their intention to invest in Slovakia for the production of construction glass and CDs and DVDs, respectively.

The chamber and the commercial attaché emphasised that the two countries closely cooperated on projects in which Switzerland provided technical help - like the construction of a waste incinerator in Bojnice (western Slovakia) and the Centre for Nuclear Safety in Central and Eastern Europe in Bratislava.

According to Repčeková, it is difficult for Slovak entrepreneurs to enter the Swiss market. "It is a very conservative market oriented to western European countries and the US. A possible way would be to create commercial representative offices there and then gradually penetrate the market".

In 2003, Slovakia imported €231 million in Swiss goods - only about 1 percent of overall imports. Almost 37 percent of that number represented chemicals, mainly pharmaceutical products. Machinery and electronics made up about 27 percent of Swiss exports to Slovakia.

Cars dominated Slovakia's exports to Switzerland, reaching a 64 percent share. Other significant commodities exported to Swiss consumers were products of the textile industry (11 percent), and machinery and electronics (27 percent).

Last year Slovakia exported €213 million in products to Switzerland, which equals about 1 percent of Slovakia's overall exports.

The interviewed representatives consider Slovakia's entrance to the European Union a positive impulse for further development in the mutual relationship, even though Switzerland itself is not an EU member.

"Membership in the EU is proof for Switzerland that the partner is reliable and has a high quality of production," said Repčeková.

Demjan expects that the EU will help to remove the psychological barrier and will make it possible to present Slovakia, with its positive economic performance, as a convenient business partner.

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