IRELAND and Slovakia are countries similar in size with very open economies, a high share of foreign direct investment in their GDP and membership of the eurozone. These conditions create a framework for successful business relationships and further growth, and make Slovakia an appealing option for Irish investors.
“Slovakia has an attractive geographical location and a favourable business climate,” Ladislav Müller from the Prague-based Enterprise Ireland Representative Office for the Czech Republic and Slovakia told The Slovak Spectator. “The country is part of the eurozone, but has lower costs of doing business than others in central Europe. We should also not forget that a number of young Slovaks have worked or are still working in Ireland. This mobile and usually well educated group of people represents quite a unique link between Ireland and Slovakia. Actually, quite a lot of Irish companies established their sales offices in Slovakia because they had a Slovak employee who could help build their business in this part of Europe.”
The most widely known Irish investment in Slovakia so far is probably the Eurovea development in Bratislava by Ballymore Properties, worth around €250 million.
“Its publicity in Ireland encourages further Irish development as well as other companies to invest in Slovakia to diversify their commercial-investment portfolios,” Martin Hlaváčik from the Slovak Economy Ministry told The Slovak Spectator, adding that Opus Land Ltd is interested in constructing a modern mixed-use centre in Bratislava worth about €250 million.
Müller estimates the number of Irish companies with sales or manufacturing facilities in Slovakia at over 20. These include Silcotec Europe, Kingspan, PPI Adhesive Products, Trend Technologies, PM Group, RealTime Technologies, Salmon Software, Cylon Controls, Irish Archaeological Agency, Height for Hire, LLC Clothing, Hi-Spec Engineering, Grafton Recruitment, CPL Jobs, Faveo Healthcare, Maurice Ward & Co. and others.
The Slovak Investment and Trade Development Agency (SARIO) has registered a decrease in interest in Slovakia among Irish investors, but it attributes the decline in part to close business contacts and a decreasing need to turn to official offices to obtain information about the business environment.
“In spite of positive indicators from SARIO, interest in Slovakia by Irish companies is decreasing,”
Ľubomíra Gabrielová, spokesperson for SARIO, told The Slovak Spectator, explaining that the agency registered this decline solely on the basis of a set of inquiries answered by project managers with regards to the business environment and related issues. A partial explanation for this may be that Irish businesspeople no longer rely on aid and information obtained from official sources, but rather through other business contacts with experience in Slovakia.
When presenting Slovakia as a potential investment destination, SARIO cooperates closely with a number of organisations, including the Irish Chamber of Commerce, representatives of significant financial institutions with an Irish background, Slovakia’s representative bodies in Ireland, as well as with the Irish Embassy. This cooperation has contributed to several investment projects.
In this respect Gabrielová stressed that if Ireland wants to maintain its competitiveness in the globalised world economy, it must grow globally, and that Slovakia, being in the middle of Europe, is one of the solutions.
“This is the reason why SARIO continues to endeavour via its social contacts to keep itself known among the Irish business community,” said Gabrielová, adding that SARIO is contemplating organising an Irish investment seminar this year.
Gabrielová considers all sectors to be of potential interest to Irish investors, but says Slovakia’s economy might benefit the most from experiences in the automotive and electro-technical industries, as well as R&D and tourism.
So far SARIO has helped three Irish companies that chose Slovakia as a suitable destination for their investments. These projects, with total investments of €2.2 million in the machinery and services industries, have created around 155 jobs.
According to Hlaváčik, a concrete demonstration of the strengthening of the Irish business community in Slovakia was also the launch of the Slovak Irish Business Network, which is a Bratislava-based organisation to support trade and investments, and the Irish Chamber of Commerce in Slovakia.
“The specific feature of large Irish investors in relation to Slovakia in the recent past, i.e.
before the global financial crisis, was the interest in investing especially in the property market with a focus on new construction projects,” said Hlaváčik. “Another strategic field for Irish companies, as well as international corporations with Irish participation, is the IT sector, especially software companies, with a focus on global financial services markets, the public and hi-tech sectors, e-learning and e-commerce, digital media as well as education, design and commercial consultancy."
Hlaváčik specified that an important element for the growth and development of the hi-tech sector, supported by the government agency Enterprise Ireland, are innovation and investments in R&D.
Müller also considers the concentration of multinational investors in Slovakia to be very important.
“These investors are constantly looking for new, high-quality and innovative suppliers and this is where Irish companies have an added value,” said Müller. “Every new international investment leverages Slovakia’s attractiveness to suppliers, service providers and channel partners. Hopefully the presence of international investors will also stimulate a new breed of small and medium-sized indigenous Slovak companies with ambitions to grow.”
Müller admitted that the financial crisis had a negative impact on trade between Ireland and Slovakia as well as on the investment plans of Irish companies.
“However, with the exception of real estate investments that were scaled back, an overwhelming majority of Irish companies stayed in Slovakia,” Müller said. “Now with the easing of the financial crisis, we see an increased interest from Irish SMEs.”
He stressed that Irish exports have been growing throughout the financial crisis – Ireland is the largest net exporter of pharmaceuticals in the world, the second largest exporter of computer and IT services (behind India but ahead of Germany, Britain and the USA) and the fifth largest exporter of beef.
“Ireland has a very high volume of business start-ups and a strong entrepreneurial culture,” said Müller. “ It is only a question of time when these new companies or established companies with new products will start looking at overseas expansion.”
The trade between Slovakia and Ireland is again seeing an upward trend. Especially in 2011, Slovakia’s exports to Ireland increased significantly, up 35.3 percent. That year Irish exports to Slovakia grew 17.7 percent. Available data for 2012 also indicate improvement when Slovakia’s exports for the first ten months grew 29 percent on an annualised basis. Contrary to this, Irish exports to Slovakia decreased by 12 percent, according to Hlaváčik.