Potential for more Swiss investors

THERE are about 70 Swiss companies operating in Slovakia, making Switzerland the number 14 investor in Slovakia. But since Switzerland is the second biggest non-EU country investing in the EU, experts believe that there is a lot of untapped potential for the development of bilateral business relations.

THERE are about 70 Swiss companies operating in Slovakia, making Switzerland the number 14 investor in Slovakia. But since Switzerland is the second biggest non-EU country investing in the EU, experts believe that there is a lot of untapped potential for the development of bilateral business relations.

“Switzerland belongs among those countries which bring Slovakia projects with large added value,” Ľubomíra Gabrielová, spokesperson for the Slovak Investment and Trade Development Agency (SARIO), told The Slovak Spectator.

Alena Brennerová, the head of the Swiss-Slovak Chamber of Commerce regards business cooperation between Slovakia and Switzerland as very dynamic, and points to last year’s visit by Slovak President Ivan Gašparovič to Switzerland, the Swissness conference held last year in Bratislava, as well as active cooperation between SARIO and the chamber.

“Companies are arriving in Slovakia when they see potential for their growth,” Brennerová told The Slovak Spectator.

According to Ján Tyrala from the Slovak Ministry of Economy, Swiss investment in Slovakia is seeing a growing trend. Swiss investors are interested in the automotive industry, steel construction, metal cutting, the machine and electro-technical industry, and in general in processing and manufacturing of products with higher added value. With regard to Slovakia’s regions, Swiss investors are interested in those with suitable infrastructure and available sub-contractors.

Tyrala specified that factors affecting Swiss investment include the investment aid provided by Slovakia’s side to foreign investors, Slovakia’s close proximity to Swiss entrepreneurs, Slovakia’s relatively good infrastructure, an educated and relatively cheap labour force, the euro, positive experiences of Swiss investors already established in Slovakia, the expansion of existing Swiss companies and the strong Swiss franc.

The Swiss Embassy to Slovakia estimates that the 70-odd Swiss companies operating in Slovakia employ more than 9,000 people. The biggest and most well-known are Holcim, Schindler, Nestlé, Rieker, Roche, Novartis and Swiss Re, to mention just a few. But there are signs of an increase in the number of companies, and jobs. According to press reports, lift-maker Schindler launched construction of a new plant in Kostolné Kračany, close to Dunajská Streda, in late 2012, which should lead to the creation of 280 new jobs. Schindler already employs almost 1,000 people in eastern Slovakia.

Based on research by the Swiss embassy, Swiss investors consider Slovakia to be lacking in transparency when it comes to public procurement, and identify problems in the conditions for doing research, the fight against corruption, criminality, access to state subsidies and contributions from the EU. But they list among the advantages of investing in Slovakia its membership of the EU and the eurozone, its central location in Europe, the qualification, performance and language knowledge of its workforce, its tax system and its labour costs. According to the embassy, the outlook is positive, because Swiss investors are still under-represented in Slovakia.

Maria Schill-Szaboová, a member of the board of directors of the Swiss-Slovak Chamber of Commerce, said that the top-quality products with which Swiss companies compete in Slovakia put them at a disadvantageous position in tenders held here, given the stress that is laid on the lowest price.

“Because of this there is a tendency to move production into Slovakia in order that their products could be competitive,” Schill-Szaboová told The Slovak Spectator, adding that the Swiss franc is a very stable and strong currency, making production costs high and disadvantaging Swiss exporters.
According to Brennerová, Slovakia is very interested in attracting Swiss investors, something demonstrated by the visit of President Gašparovič and Slovak businesspeople to Switzerland last year.

“I see potential for cooperation in the import of medical technologies, know-how transfer in several sectors, cooperation in research and development, and in education,” said Brennerová.

SARIO believes that manufacturing of machinery will remain the dominant sectors of Slovakia’s economy attractive to Swiss investors, but it believes that other industrial and service sectors, especially research and development, will also prove interesting in the future. Within industry, it regards the IT industry, manufacturing of electrical and electro-technical products, and production of chemicals and petro-chemicals as dominant, with all of these at a world-class level. It also sees opportunities in tourism as being virtually unlimited. The Swiss Embassy lists services, pharmaceuticals, IT, and mechanical production as potentially rich areas for investors.

So far SARIO has helped five Swiss companies to become established in Slovakia. These projects, with total investments of €82.4 million, have created almost 630 jobs. Currently, SARIO is working on three further investment projects from Switzerland, with planned investments of €24 million and 170 new jobs in prospect, according to Gabrielová.

SARIO cooperates closely with the Slovak-Swiss Chamber of Commerce, the Swiss Embassy to Slovakia and the Slovak Embassy to Switzerland, as well as representatives of important institutions with a Swiss background when presenting the advantages of Slovakia as an investment destination. It says this long-term cooperation has already borne fruit.

“The fact is that is that if Switzerland wants to maintain its competitiveness in the globalised world economy, it must grow globally and trade with EU member countries,” said Gabrielová. “Slovakia, in the middle Europe, is one of the solutions.”

Bilateral trade

Tyrala specified that Switzerland’s export and import policy, as a member of the World Trade Organisation and the European Free Trade Association, is very liberal. As much as 75 percent of Swiss imports arrive from the EU, while it accounts for 56 percent of Swiss exports.

Until 2007 trade between Slovakia and Switzerland increased steadily. During 2008 and 2009, however, the financial and economic crises worldwide affected bilateral trade.

In 2011, Swiss exports to Slovakia amounted to CHF497 million (approximately €400 million at 2013 exchange rates), down by 2 percent compared with 2010. On the other hand, Slovakia’s exports to Switzerland grew by 31 percent, boosted by exports of machine products, to CHF 669 million (€540 million), according to official Swiss data provided by the Swiss Embassy to Slovakia.

This means that Slovakia is one of a handful of countries to report a surplus in its trade with Switzerland. In 2011 this stood at CHF172 million (€140 million). Based on Slovak statistics, bilateral trade with Switzerland made up only 0.6 percent of Slovakia’s imports and 1 percent of the country’s exports.

Slovakia’s main exports to Switzerland comprise machinery (41 percent in 2011), cars (30 percent), plastics and rubber (5 percent), while Switzerland’s exports to Slovakia comprise mainly pharmaceuticals (39 percent), machinery (20 percent) and plastics and rubber (11 percent).

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