AUSTRIAN investors in Slovakia are not immune to the effects of the economic crisis and companies are sceptical about the future, according to a recent survey. Reforms to the tax system, measures to strengthen legal certainty and the efficiency of the state administration as well as infrastructure expansion are vital to safeguard Slovakia’s appeal to investors, the respondents suggested.
Although over two-thirds of the surveyed Austrian companies rated the current business climate satisfactory, 95 percent expect their business to take a turn for the worse during 2009.
However, the respondents’ predictions for their own company were less bleak. Just under 40 percent of those surveyed expect business conditions to remain the same or they expect improvement.
Nevertheless, difficult trading conditions for a significant proportion of foreign companies, 39 percent, mean that redundancies are in the cards. Furthermore, over half of the surveyed companies plan to scale back investment costs.
“Slovakia remains an interesting location for foreign investors,” said the Austrian Trade Commissioner for Slovakia, Konstantin Bekos.
Companies gave credit to the value of Slovakia’s EU membership, the availability of local suppliers, access to the relevant markets in the region and the supply of highly motivated workers at moderate wage levels.
But this should not detract from the fact that Austrian investors have expressed dissatisfaction with a wide range of legislative issues, Bekos said.
Companies feel there is much work to be done with regard to the implementation of legal entitlements as well as in regard to the burden of taxation and duty rates. The companies are demanding relief in order to safeguard the region’s attractiveness in the long term, he added.
A further important point is, according to the survey, an increase in the efficiency of the state administration.
“For investors in these difficult times, grants are of great importance,” Bekos said. “Up to now agencies working for the ministries have applied the formal criteria too strictly.”
A missing tick mark, a date in the wrong format, or the use of the wrong stamp - these were often grounds for not even reviewing an application – with no further chance to clarify or put things right. This was the case with many meritorious projects submitted to various agencies and Slovakia lost many good projects as a consequence, observers suggest.
Notwithstanding these requests and suggestions, almost all Austrian companies, 94 percent, would choose Slovakia as an investment location again today.
“For two small neighbouring countries like Austria and Slovakia, which have great - in many cases complementary - potential, it is natural, in difficult times such as these, to move closer together to overcome the effects of the economic crisis,” said Bekos. “A single entity can achieve nothing in the face of a worldwide phenomenon. Protectionism is not the answer for two countries so dependent upon exports.”
According to Bekos, a resolution to the global crisis can only be achieved through nations working together.
“We not only possess a common currency, but also a common goal, to come through the economic crisis,” he concluded.