THE UNITED Kingdom is a traditional economic partner for Slovakia, with UK companies having established businesses in Slovakia back in the 1990s as well as trade increasing along with direct foreign investments by UK businesses into Slovakia. And in spite of the global economic downturn, there are still many business opportunities waiting to be seized.
“The combined trade reached GBP2 billion in 2008, according to the UK statistics,” Peter Repka, the trade and investment manager at the British Embassy in Bratislava told The Slovak Spectator. “Slovakia is doing very well with over GBP1.5 billion of exports going to the UK.”
The inflow of foreign direct investment from UK totalled €385.9 million and accounted for 1.5 percent of the total foreign direct investments in Slovakia as of December 31, 2008, according to Slovak Investment and Trade Development Agency (SARIO). This was an increase of €7.8 million over the year.
Repka lists Tesco Stores SR, spa facility Slovenské Liečebné Kúpele in Piešťany, Air Slovakia airline, AquaCity Poprad, Shell and Provident Financial as among the largest employers in Slovakia with ownership links to Britain. While Tesco – with over 8,300 employees in Slovakia – is well-known throughout the country, there are many other companies, large or smaller, that are not as well-known for being British-owned. In addition to Tesco, Repka mentioned BAE Systems, GlaxoSmithKline, AstraZeneca, HSBC, Next, Marks & Spencer, Allen & Overy and Tate & Lyle as other well-known British business names.
Since the UK is traditionally strong in the area of services, this is reflected in the structure of British investments and companies.
“There is a strong presence in retail services but there are also many companies active in accounting, financial and legal services. In the area of manufacturing it is mainly automotive component suppliers/manufacturers and defence equipment suppliers leading the way but there are some companies in Slovakia active in other sectors, such as printing and packaging, pharmaceuticals, textiles and clothing,” said Repka.
The crisis does matter
“It would not be true to say that nothing changed and the economic downturn has had no effect on trade or investment relations of the two countries,” Repka said. “Both the UK and Slovakia have been hit hard by the crisis; the UK perhaps more so in the financial sector than Slovakia.”
The trade section of the British Embassy has been seeing some decrease of interest in its services at the moment. During the last financial year lasting from April 2008 to March 2009 its employees significantly assisted 130 UK companies. The target is to help about the same number this year, if not more.
According to Repka, interest of UK investors in real estate development and construction has declined. On the other hand, there has been increased activity or interest in mechanical engineering, plastics, pharmaceuticals, and the education and training sectors.
Slovakia is attractive for UK investors
“Slovakia does remain attractive for the UK,” said Repka. “It has got the euro, a good location and a flexible workforce. The PriceWaterhouse Coopers 2009 Emerging Markets EM20 index, which assesses inward investment risks and opportunities in emerging markets in the world – not only Europe – ranks Slovakia seventh in manufacturing and first in the service area.”
The introduction of the euro to Slovakia has been very positively perceived in the UK both from the aspect of congratulating Slovakia for meeting the hard entry criteria and from the point of business attractiveness.
“UK traders find it much easier to do business here, the currency risk is lower and trade is more stable and secure,” said Repka. “Last but not least, the current exchange rate development of the sterling against the euro motivates British companies to do more exporting.”
But Repka thinks that Slovakia should build up its image as a country which is part of central Europe.
“I have done a series of ‘Think Central Europe’ workshops and held one-to-one meetings in four English regions in June,” Repka said in sharing his experiences with The Slovak Spectator. “Five central European countries, including Slovakia, were presented. They were all very well attended and I brought back a lot of leads to process into real business. I am not so sure that the events would have been as successful if they had only focused on one country.”
Repka sees the largest potential for developing cooperation in the areas of climate change and a low-carbon recovery during the current crisis and he says the UK is a leader in this area, a fact that has been well-recognised by the Slovak Ministry of Environment. The ministry is very keen on pursuing cooperation with UK experts, Repka said, adding that there is a lively dialogue between the Slovak ministry experts and the British Embassy regarding potential cooperation on several environmental projects.
“There are many other areas,” said Repka, listing a few of them: “Opportunities for Slovak companies in the UK linked with the London 2012 Olympics; promotion of leisure and tourism in both countries; exchange of know-how and training skills; and utilising the experiences of Slovak people who had worked in the UK and have now returned home.”