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Investment and real estate highlights

NOVEMBER 2011 A new 46-kilometre dual carriageway, dubbed Pribina after a historical Slav, was added to Slovakia’s highway network. The stretch of the R1 road connecting Nitra with Tekovské Nemce is the first tangible product of a public-private partnership (PPP) project. It was constructed over 26 months and carried a price tag of €800 million.

The car industry has been a motor of economic growth in Slovakia. (Source: SITA)

NOVEMBER 2011


A new 46-kilometre dual carriageway, dubbed Pribina after a historical Slav, was added to Slovakia’s highway network. The stretch of the R1 road connecting Nitra with Tekovské Nemce is the first tangible product of a public-private partnership (PPP) project. It was constructed over 26 months and carried a price tag of €800 million.

Bratislava was ranked 32nd among 36 European cities in an assessment made by Cushman & Wakefield’s European Cities Monitor 2011 for ease of doing business in the city. Bratislava performed worse than other regional cities in the survey: Warsaw was ranked 21st, Prague 25th, Bucharest 27th and Budapest 29th.

GTS Slovakia opened its new data centre in Bratislava with over 3,000 square metres of space, including two server halls occupying 1,100 square metres. Although the alternative telecom company did not reveal details about the costs of the project it said the centre was its largest investment in 2011.

FlexMedical, an important employer in Nitra Region that produces medical supplies, announced its departure from Slovakia by June 2012, resulting in the loss of 250 jobs in Vráble.

Four Slovak companies, Studentive, Monogram, Nicereplay and WorkInField, were selected for a three-month programme at the Plug and Play technological centre in the Silicon Valley, California.

Eustream, a subsidiary of Slovakia’s primary gas utility, SPP, completed a project that enables natural gas to be pumped west-to-east in a standard operating mode. The project was initiated in January 2009 after natural gas supplies flowing from Russia to Slovakia were halted completely because of a dispute between Ukraine and Russia.

The government approved investment support for nine foreign investors, Secop, Aspel Slovakia, Plastiflex Slovakia, Celltex Hygiene, Behr Slovakia, Gallai & Wolff, Johnson Controls, Continental Matador Rubber and Sungwoo Hitech Slovakia, which are expected to create 1,500 new jobs in Slovakia. The firms should receive €45.8 million in tax breaks and state assistance and are expected to invest €245 million. The assistance offered to Austrian firm Gallai & Wolff prompted objections from a domestic company (Oceľové Konštrukcie, part of construction group Doprastav) which said that the state support would harm its business.

DECEMBER 2011


The outgoing cabinet of Iveta Radičová changed the rules for granting investment incentives, linking them mainly with the unemployment rate in a given region as well as the sector the investors intend to support, preferring those with higher added value. The new regulations were approved on December 7.

Volkswagen Slovakia announced plans to invest up to €1.1 billion in its Bratislava automobile plant to expand the facility’s welding and body building capacities as well as to upgrade its research capabilities. The investment is expected to increase the factory’s production of car bodies by 1,100 pieces a day and open 1,200 new jobs in a four-shift operation.

The government of Iveta Radičová devised a strategy called Minerva 2.0 that it said would build a knowledge-based economy, an economy based on locally-grown ideas and innovations that will create stable, quality workplaces and generate economic growth in coming years.

JANUARY 2012


A new combined-cycle power plant was planned for the town of Strážske in eastern Slovakia. It is to be built by CPP Zemplín at a cost of €54 million. Its installed capacity should be 70 megawatts. According to an investment proposal submitted by the company for environmental impact assessment, the plant should generate 500,000 megawatt hours of electricity a year.

Several new investors might establish plants in Slovak regions with high unemployment rates and provide jobs for about 900 people. “We are negotiating with three companies, Belgian, French and German,” said Dany R. E. Rottiers, chief executive of Eastern Investment Centres, the consulting company which represents the state in negotiations with possible investors.

FEBRUARY 2012


Slovakia’s Nuclear and Decommissioning Company (JAVYS) is set to build an integrated storage facility for radioactive waste near the V2 nuclear power plant at Jaslovské Bohunice (Trnava Region). The facility, due to be built between October 2013 and 2015, will be used as a temporary storage location for radioactive waste from the plant until a permanent storage site becomes available.

Only one month after international credit rating agency Standard & Poor’s downgraded the country’s long-term sovereign debt rating in January 2012, its counterpart Moody’s on February 13 also knocked Slovakia’s rating down one notch from A1 to A2, while changing its outlook from stable to negative.
The German steel giant ThyssenKrupp postponed its decision to invest heavily in Slovakia, the media reported in late February. “We were looking for a production site in the automotive business in the region of eastern Slovakia,” Cosima Rauner, from the press department of ThyssenKrupp, said.

“Because of the current economic situation we have re-assessed this. We have put off the final decision for the next few months.”

The cabinet of former prime minister Iveta Radičová postponed a decision whether to award new state aid of €28 million to Galanta-based Samsung, explaining that the company does not plan to create any new jobs. A request by Samsung for investment assistance does not comply with the criteria for such aid, Radičová said after a government session on Wednesday, February 22.

MARCH 2012


The Penta financial group said on March 7 that its return from its investment in the Combined Steam-Gas Cycle (PPC) facility in Bratislava since 2004 will be €113 million at the end of 2013. Penta’s analysis states that its overall investment in PPC has amounted to €150 million, with a total yield over 10 years consisting of dividends from long-term contracts until 2013 and the assumed residual value of PPC leading to a return of €263 million. Penta released its analysis in the wake of Interior Minister Daniel Lipšic stating earlier in the week that the privatisation of PPC in 2004 was unlawful and that the state had lost €500 million from the sale.

Volkswagen Slovakia’s plant in Bratislava launched its production of the five-door version of the Volkswagen Up! on March 21; this particular vehicle will represent around 50 percent of the overall Up! production at the factory.

Four thousand new jobs and investments worth €350 million are under discussion in talks between the Slovak Agency for Investment and Trade Development (SARIO) and 15 US companies. The interest of potential investors from the US seems to be greater than interest of investors from Europe for the first time ever.

Regular scheduled flights between Bratislava and the Norwegian capital, Oslo, were launched on March 28. It is the first direct connection between the two cities. “The airline company Norwegian Air Shuttle will operate flights between Bratislava and Oslo two times per week, on Wednesdays and Saturdays,” said Tomáš Kika of M. R. Štefánik Airport in Bratislava.

APRIL 2012


Piano Media, an online subscription-based content payment system for media publishers, was launched in Slovakia just a year ago. Despite initial doubts about the viability of a paywall that covers popular (and previously free) websites, the project has been attracting investors and expanding abroad. The company announced that it has secured a €2-million investment from regional venture capital firm 3TS Capital Partners, to be used to continue Piano’s expansion and development.

MAY 2012


An international arbitration tribunal on April 23 rejected all claims made against the Slovak Republic by Dutch citizens A. J. Oostergetel and T. Laurentius in an investment dispute. The litigation began in 2006 over an alleged violation of an agreement signed by former Czechoslovakia and the Netherlands on support and mutual protection of investments. The initiators of the arbitration claimed that Slovakia’s idleness and other activities caused a well-known factory producing thread in Bratislava to go bankrupt, costing them €298 million.

After successful sales of bonds denominated in Czech crowns and Swiss francs earlier this year, Slovakia offered the country’s first US dollar-denominated bond issue on May 10, selling $1.5 billion (approximately €1.15 billion) of 10-year bonds. Demand was as high as $3.0 billion.

JUNE 2012


Swedspan Slovakia, a member of the Ikea group, launched construction of a new complex in Malacky in western Slovakia with an investment worth more than €100 million. The new plant will produce wooden panels using innovative technology and an energy-saving production process.

Up to €880,000 might have been spent improperly on building a factory for the production of vaccines against pandemics that was originally to be built in Šarišské Michaľany in eastern Slovakia and was later moved to Malacky near Bratislava. The decision to move the site resulted in increasing the price of the project by €426,000. The investment in June totalled about €10.7 million.

It is likely that Funderia Condals, a Spanish company, will build a plant in the IPZ Záborské industrial park in Prešov. The firm operates in the metallurgy industry and could employ up to 400 people.

JULY 2012


Hopes that a new factory operated by the Belgian company PDC Brush would open in Nová Ves, a village in the Veľký Krtíš district that has a 25-percent unemployment rate, were dashed. The plan for the plant to produce cleaning tools fell apart after there was a sudden change in the ownership of the Belgian company. Furni Finish, a Belgian company that operates two furniture companies in Slovakia, had constructed the building for the use of PDC Brush. The owner of the building is now seeking a new investor.

A criminal investigation into the collapse of a new five-storey building on Plynárenská Street near the centre of Bratislava was launched on Sunday, July 1. The building was to be a parking facility with a wellness centre on top but it collapsed before it had started the construction approval process. The investor alleged flawed calculations as the reason, arguing that calculations did not account for the more than meter layer of soil on the roof of the building. Its developer, the Nadlan company, went bankrupt in October.

The Hungarian-based oil refiner MOL signed a contract with the European Bank for Reconstruction and Development (EBRD) on July 3 for a loan of $150 million (€120 million) over an 8-year term with a view to construct new facilities at the Slovnaft refinery near Bratislava. The loan will be used to finance capital expenditures linked to the construction of a new polyethylene unit and the reconstruction of the ethylene unit at Slovnaft, a subsidiary of the MOL Group.

Volkswagen Slovakia laid the foundation stone for a new body shop at its factory in Bratislava, which came with a price tag of about €600 million and will cover about 110,000 square metres. The new shop will make innovative car bodies for SUVs from steel and aluminium. When the body shop opens it should have about 550 employees.

A new departure terminal at the Sliač airport in Banská Bystrica Region was opened on July 9. The new terminal was set to boost the airport’s capacity as well as secure comfortable, high-quality and safe flights for travelers.

M. R. Štefánik Airport in Bratislava launched the second section of its new terminal building on July 13, which will handle both arrivals and departures. The new hall is connected to another terminal which has been in operation for two years, enabling the largest Slovak airport to handle an estimated 5 million passengers per year. Building costs for the new section of the terminal reached €33.2 million while interior and technological costs came to €13.4 million.

The entrepreneurial environment in Slovakia further deteriorated in the second quarter of 2012, with businessmen complaining in particular about planned changes to the tax and payroll deductions burden and the lack of certainty about government measures in the sphere of economic policy.

AUGUST 2012


Slovakia currently ranks 35th in the ‘M&A Maturity Index’ which assesses the quality and maturity of investment environments in 148 countries around the world, thereby improving its position by one place when compared to 2011. The chart was prepared by the Mergers and Acquisitions Research Centre (MARC) at Cass Business School by City University London in co-operation with Ernst & Young in Slovakia.

The Slovak Anti-Monopoly Office (PMÚ) greenlighted the entry of Czech businessman Petr Syrovátko into SkyToll, the company operating the electronic highway toll collection system in Slovakia. Syrovátko bought a 90-percent stake in Ibertax, which is the majority shareholder of SkyToll, via his Netherlands-based company Sevenra N.V. in May. The ruling has been valid since August 13.

SEPTEMBER 2012


Ružomberok-based paper mill Mondi SCP requested a state stimulus of €25.4 million, as part of the investment to increase its production. The investment stimulus will not help the company to create new jobs, but is intended to preserve those that would otherwise have to be cut. The Economy Ministry has already approved the aid in the form of tax relief. Thanks to the investment, which will cost the company €90 million altogether, Mondi SCP will increase the production of cellulose by 25,000 tons a year.

Slovakia slipped to a new low in a global list which compared countries’ economic competitiveness since 1997. It came 71st out of 144 countries evaluated in the Global Competitive Report 2012-2013, published by the World Economic Forum (WEF).

Penta investment group is increasing its share in Dôvera, the largest private health insurance company on the Slovak market, to become the only shareholder in the company. Penta has agreed with the company Prefto Holding Limited to take over its 50-percent stake.

One of the largest investment projects in Slovakia, an electronics plant owned by Taiwan’s AU Optronics in Trenčín, is in serious trouble and the investing firm has decided to quit production of LCD modules. AU Optronics was reporting a lack of orders, according to Slovak media. AU Optronics could face sanctions from the Slovak Republic, since it pledged to create 519 job positions this year in exchange for state investment aid of over €38 million, but has not done so.

The mayor of the southern Slovak town Rimavská Sobota, Jozef Šimko, and representatives of the firm Oil Production and Trade OPT Sk, have signed an agreement for the construction of a new plant for oil processing. The company’s investment could reach $1 billion. The construction of the plant, which will produce polymers, should be finished in 2.5 years and provide jobs for about 500 people.

Investors operating in Slovakia will receive investment stimuli amounting to almost €4.6 million.

The cabinet of Robert Fico approved the amount to be transferred from undrawn capital expenses. The government pledges to support investment projects that will help to lower the unemployment rate in the regions where it is highest.

Continental Automotive Systems Slovakia wants to invest an additional €25 million into its Zvolen-based plant to extend its local production of braking systems. The Slovak Economy Ministry announced that the investment, for which the company has already asked for state support, should create 500 new jobs. The German investor has already applied for €4.5 million in aid, in the form of a tax holiday.

For now, Energetický a Průmyslový Holding (EPH) is the only company to have expressed an interest in purchasing the 49-percent stake in Slovak natural gas utility SPP, currently held jointly by Germany’s E.ON Ruhrgas and Frances’ GDF Suez.

OCTOBER 2012


The government will provide 10 companies backed by foreign investors with state aid worth more than €121 million in the form of tax relief; but the cabinet approval came after Economy Minister Tomáš Malatinský accepted a proposal from Finance Minister Peter Kažimír to postpone most of the aid to 2014 and beyond. The aid will be provided to 10 companies: Bekaert Slovakia in Hlohovec; Delta Electronics in Dubnica nad Váhom; Magneti Morelli based in Kechnec; Mondi SCP in Ružomberok; Muehlbauer Technologies in Nitra; Samsung Electronics Slovakia based in Galanta; ZKW Slovakia in Krušovce; and Continental Automotive Systems Slovakia in Zvolen; Elkotech in Fiľakovo; and Fagor Ederlan Slovensko in Žiar nad Hronom.

German carmaker Volkswagen is considering producing modern ecological plug-in hybrid cars in Bratislava. Member of VW Board of Directors Michael Macht said that if they decide to go ahead with the plan, the production of these cars in Bratislava will begin in 2014 at the latest. The investment would create hundreds of new jobs in Slovakia.

The shopping and leisure centre Central in Bratislava opened on October 18, with a price tag of €200 million, offering four floors of 150 shops and restaurants within an area of 36 000 square metres.

The general assembly of Slovak gas utility SPP on Monday, October 29, rejected a proposal of the company’s board to raise gas prices for households in 2013. The board of the SPP sought a hike at 18 percent, or alternatively by as much as 25 percent. The assembly’s decision came after the call of Prime Minister Robert Fico for a “zero percent price hike”.

Parliament passed a crucial revision to the Labour Code. The adopted changes, drafted by the Labour Ministry of the government of Robert Fico to redress the balance in relations between employees and employers, which it believes was significantly harmed to the detriment of employees by the previous cabinet of Iveta Radičová, will become effective as of January. Luboš Sirota, head of Trenkwalder in Slovakia and vice-president of the National Association of Employers (RÚZ), said that the new code will result in layoffs.

NOVEMBER 2012


At the beginning of November, the construction of the first phase of One Fashion Outlet in the locality Jozefov Dvor near Voderady (Trnava Region), worth €30 million, was launched. By October 2013, 70 fashion and sports shops within an area of 15,000 square metres should be finished. In the final phase, there should be about 130 shops. The first phase is expected to create almost 300 jobs. The total worth of the investment is €65 million.

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