Danish investors worry about the euro and corruption

DANISH business circles remain interested in Slovakia, but the introduction of the euro has made the labour force in Hungary and Poland cheaper than in Slovakia. Corruption and the legal system do not make Slovakia more attractive in the eyes of Danish investors either.

DANISH business circles remain interested in Slovakia, but the introduction of the euro has made the labour force in Hungary and Poland cheaper than in Slovakia. Corruption and the legal system do not make Slovakia more attractive in the eyes of Danish investors either.

But there are already some success stories of Danish investments in Slovakia such as Velux, Falck and Danfoss, to mention a few.

The Danish multinational company Velux opened a production plant for roof windows, Partizánske Building Components-SK, in Partizánske in April 2009. Velux is the first major investor in the Partizánske region and the first established investor in the local industrial park. Velux invested over €36.5 million in the project that was to employ some one hundred people by the end of 2009. An additional one hundred jobs should be created by the end of 2010, the SITA newswire wrote at that time.

Falck Záchranná provides health emergency services across the country particularly in eastern and northern Slovakia. Danfoss, a global producer of components and solutions for refrigeration and air conditioning, heating and water and motion controls, operates in Zlaté Moravce and manufactures components for compressors.

The most important areas of economic cooperation between Denmark and Slovakia include outsourcing projects and agriculture – mainly pork production. The exchange of know-how in green energies is also a further prospect for future cooperation between Denmark and Slovakia.

“When society reaches a certain living standard, environmental issues start to become more of a priority,” Igor Paule, commercial advisor at the Embassy of Denmark in Bratislava told The Slovak Spectator, adding that this is a worldwide trend.

According to Paule, the euro in Slovakia disheartens investors from Denmark which has not adopted the euro.

“Danish business circles are still interested in Slovakia but less than they were a couple of years ago,” he said. “Introduction of the euro increased the hourly rate. Hungary and Poland are now cheaper.”

Moreover, Slovakia has a bad image within Danish business circles mainly due to corruption and the legal system, according to Paule. Regarding the impacts of the global economic crisis on Danish companies, Paule said that some Danish companies have moved their production from Denmark to Slovakia.

Slovakia is funding the inflow of foreign direct investments from Denmark through the Slovak Investment and Trade Development Agency (SARIO).

“With Danish companies, SARIO has so far registered 19 successfully completed projects with the assistance of SARIO FDI project managers,” Jozef Marušík, project manager for direct foreign investments at SARIO told The Slovak Spectator.

At the end of 2008, total foreign direct investments in Slovakia from Denmark amounted to €180 million. The inflow of foreign direct investments for the first nine months of 2009 amounted to €68 million, according to preliminary data compiled by the National Bank of Slovakia.

Slovakia’s trade balance with Denmark is positive. In 2008, exports from Denmark to Slovakia amounted to €242 million while exports from Slovakia to Denmark were at €445.3 million. According to the Danish statistics office, there have been increases in both categories over the past three years.

“As Velux only started production of roof windows in Slovakia in the second half of 2009, their increased production this year should considerably change these figures,” said Paule.


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