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Location makes the region competitive

EASTERN Slovakia is the only region in Slovakia that borders a non-EU country - Ukraine - and it is also one of the ten poorest regions of the EU. Yet one of its greatest assets is its closeness to the eastern markets, including the Russian Federation. While the main strengths of the region are its location, its industrial and tourism potential, and a rich pool of available labour, its major drawback is a weak transport infrastructure, said Peter Mihók, Chairman of the Slovak Chamber of Commerce and Industry (SOPK).

EASTERN Slovakia is the only region in Slovakia that borders a non-EU country - Ukraine - and it is also one of the ten poorest regions of the EU. Yet one of its greatest assets is its closeness to the eastern markets, including the Russian Federation. While the main strengths of the region are its location, its industrial and tourism potential, and a rich pool of available labour, its major drawback is a weak transport infrastructure, said Peter Mihók, Chairman of the Slovak Chamber of Commerce and Industry (SOPK).

As the European Union has developed regions adjacent to non-member countries, those countries have reaped numerous advantages in business contacts with these regions, resulting in their intense development, Mihók said.

"I believe that eastern Slovakia will be able to use this potential to its benefit in such a way," he told The Slovak Spectator.

Traditionally, eastern Slovakia's potential has been in metal and steel production, machinery and the chemical industry. The natural beauty and rich history of eastern Slovakia make the development of services and tourism another promising area, said Mihók.

However, the machinery and chemical industries are not alone in driving the regional economy; recently, Košice has been attracting the highest number of IT projects in the whole country, said Jana Murinová, spokeswoman for the Slovak Investment and Trade Development Agency (SARIO). Overall, the volume of investments in the eastern part of the country has been increasing, especially in Košice . The region has already started talking about an emerging IT valley, she added, referring to California's IT-dense Silicon Valley.

"Košice's advantage is that there is an international airport and good railway connections," Murínová told The Slovak Spectator. "The presence of the Slovak Technical University, which produces well-trained labour, is also an advantage."

The east is interesting also in terms of investments in the logistics sector, which will become more evident after the completion of highways, she said. Čierna nad Tisou is the home of railway cargo reloading for the broad-gauge track to Ukraine and the Russian Federation.

"Access to Southern Europe through Hungary is also good," she said. "So the region is equally strategically important for producers who want to export to the European Union and the Russian Federation."

However, SARIO expects that the machinery industry will continue dominating the region and that investments into the electro-technological industry will increase as well, since these investments have higher added value. In 2007, SARIO assisted in the completion of 64 projects of which 16, worth €250 million, were located in the Košice Region. The investments created 1877 jobs, with planned expansion to 2,242 jobs, said Murínová.

The projects were mostly in the electro-technology, machinery, and chemical industries, with some in the production of plastics and rubber and the automotive industry. One of the projects was in IT technology.

In the Prešov Region, SARIO assisted four investors with projects worth €40 million. These projects, in the machinery, pharmaceutical, automotive and textile industries, are set to create 628 new jobs, with a planned expansion to 748 jobs, according to Murínová.

In addition to the above industries, tourism is also believed to have great potential.

"I personally think that this area [tourism and services] should be given more weight in the activities of regional governments as well as the business activities of foreign and domestic investors," Mihók said.

However, authorities should limit the number of industrial parks in places where tourism potential is high, since they might devalue this potential, he said.

Eastern Slovakia definitely suffers from the lack of a highway infrastructure, which is certainly reflected in the sluggish growth of business activities in the region. In turn, the lack of opportunity in the east causes increasing migration of people from this region, which may result eventually in its intellectual, social and cultural decline, according to Mihók.

Unemployment in eastern Slovakia has traditionally been high, at about 20 percent. The unemployment rate is influenced not only by businesses, but also by the structure of the labour force, their education and the average wage, said Mihók.

"On one hand there is still relatively high unemployment, but, on the other hand, prospects for employers are unattractive due to a lack of candidates in the necessary educational or professional categories," Mihók said. "This is why the regional government, which oversees the secondary vocational schools, must structure the educational system in response to the needs of the labour market, because otherwise it becomes one of the barriers to further regional development."

Košice and Prešov: eastern gates to Central Europe

Eastern Slovakia is divided into two regions: the Košice and Prešov Regions.

Košice is divided into 11 districts, stretching over 6,753 square kilometres, accounting for 14 percent of Slovakia's territory, and is home to over 766,000 inhabitants. Košice has 440 villages and 17 towns. The Košice Region has one of the highest unemployment rates in Slovakia, according to the Statistics Office of the Slovak Republic. In 2006, unemployment in Košice stood at 20.3 percent, second only to the Banská Bystrica Region. Košice generates 12.7 percent of Slovakia's GDP.

The Prešov Region has the highest number of inhabitants in Slovakia, with over 800,000 people. Geographically, Prešov is the second largest region, at 9,000 square metres. Prešov also has the highest number of districts, 13, and with 642 villages and 23 towns, the region also leads in terms of the number of municipalities. Even so, Prešov accounts for only 9 percent of Slovakia's GDP. Its unemployment rate was 18.1 percent in 2006.

The largest investors in eastern Slovakia

Prešov Region
Inestor Country of Origin Industry
South Africa BreweriesAustriaFood
ZVA ItaliaItalyAutomotive
GFT TorinoItalyTextiles
Rhodia Industrial YarnsFranceChemicals
Kronospan ANCyprusFood, Processing
Nylstar ItalyFranceChemicals
RaniplastFinlandChemicals
Abital CofezioniItalyMachinery
BF InvestmentLuxembourgMachinery
Tex West BVBABelgiumTextiles
MHolding MorsmanThe NetherlandsTextiles
Whirlpool CorporationUSAMachinery
Julius Schüle DruckgussGermanyMachinery
LorenzAustriaShoes
Source: Prešov Region
Košice Region
Inestor Country of Origin Industry
US SteelUSAMetalurgy
EmbracoItaly,BrazilMachinery
Siemens, AG - YazakiJapanElectrotechnical
Panasonic AVC Networks JapanHome Appliances
Getrag-Ford TransmissionsGermanyAutomotive
MolexUSAElectrotechnical
BSH Drives and PumpsGermanyElectrotechnical
ValeoFranceAutomotive
UnomedicalDenmarkMedical
SCA Hygiene ProductsSwedenPaper
TriplusMalaysiaPlastics
Fromageries Bel SAFranceFood
CRWBrazilPlastics
CFMSingapourMetal
Source: Košice Region

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