FOREIGN direct investment is – and will continue to be – one of the core drivers of economic development in Slovakia. Therefore, it is crucial that Slovakia is vigorously pro-active in its efforts to attract foreign investors to all regions of the country. The American Chamber of Commerce in Slovakia (AmCham) has developed, in close cooperation with members of both the Slovak and international business communities, its foreign direct investment (FDI) strategy, which it presented in December 2011.
AmCham regards the future of Slovakia as extremely bright and aspires for Slovakia to be the favoured, premium FDI destination in Europe for international companies by 2020. Between 2002 and 2010 Slovakia was already able to attract €22 billion in foreign direct investment out of the aggregate €200 billion FDI that flowed into central Europe. Thanks to this investment, along with state incentives of €1 billion, 137,000 new jobs were created.
Within its strategy, AmCham outlines 10 of the most important actions that it believes Slovakia should perform in order to take advantage of the FDI opportunity at hand. To facilitate the implementation of these recommendations, AmCham also recommends that a comprehensive 2020 FDI strategy, embraced by all stakeholders, be created.
AmCham sees creation of an FDI Team Slovakia as the first action. In this way key stakeholders from both state and commercial circles, who can lead the effort to implement the 2020 FDI vision, can be brought together, as the strategy will require close and sustained cooperation between all key stakeholders in the Slovak economy.
Then Slovakia should create Brand Slovakia, an internationally recognised and inspirational brand tag line. It should also appoint FDI ambassadors. The latter should be selected from next-generation sectors including the information, communications and technology sector; the financial sector; European operations centres; regional headquarters; global services; and high-end manufacturing.
As education is at the heart of Slovakia’s economic future, Slovakia should invest in education: a workforce with the relevant skills across all sectors, and one that supports innovation, is a necessity. AmCham believes that the future needs of business must be aligned with the education children receive in future and that a focused investment in education oriented towards next-generation FDI areas will play an essential part in securing FDI.
AmCham recommends that Slovakia become what it calls “customer centric” because global economic trends are reducing multinational expansion and at the same time, competition among rival FDI locations is growing fiercer. As a result, attracting FDI has never been more challenging. To counter these forces, a customer-centric approach – in which value-adding propositions are proactively brought to customers through a key accounts programme – is needed.
Since incentives are at the core of the strategy used by competing nations to attract FDI, they have become an entry-level requirement for multinationals seeking investment destinations. Thus incentives must be flexible, transparent and focused in order for them to win FDI.
Slovakia should, apart from attracting new investment, also work with existing investors.
Indigenous companies need to be supported by way of seed capital and innovation programmes and, when expanding, through export-support programmes. As these local firms prosper and deliver results, they will attract the attention of acquisitive multinationals either for direct investment or lucrative partnerships.
The country should also take advantage of Slovaks living and working abroad. Some of them are in senior positions with multinationals and can assist in communicating the Slovak value proposition. AmCham recommends the creation of a forum to garner their support in attracting FDI.
On the other hand, Slovakia, in order to win premium FDI, must demonstrate that it has a premium workforce. In sectors where Slovakia is currently not able to demonstrate this ability among the local workforce, the solution is to recruit the talent required from abroad. It should facilitate this by making the process for acquiring foreign talent simpler and more streamlined.
Last but not least, FDI needs to be made “apolitical” since it is a platform upon which short, medium and long-term economic benefits are generated for all through employment and taxes. The driving force of FDI in Slovakia should come from the commercial leaders of Slovakia; it is therefore essential for FDI to be separated from the political and governmental sphere as far as possible, AmCham believes.
Slovakia is a young country, having achieved independence only 19 years ago. However, the Slovak people have a long history going back hundreds of years. The first generation of children since independence will soon be starting university. AmCham wants to ensure that this generation, and their children, will continue to enjoy the economic success that this country has enjoyed over the last 19 years. A strong FDI strategy is one way to achieve this continued success.
Kenneth Ryan is a partner with KPMG in Slovakia
This column is prepared in cooperation with the American Chamber of Commerce. www.amcham.sk
