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ECONOMIC COOPERATION DEVELOPS IN SPITE OF ECONOMIC CRISIS

Trade growth slow but steady

THE NETHERLANDS remains one of Slovakia’s key economic partners even though the economic crisis in recent years has not left bilateral cooperation unaffected. While bilateral trade continues growing, investors are being more careful about where they invest. Dutch investors like Slovakia for its cheap and qualified labour force, low taxes, central location, political stability and eurozone membership.

THE NETHERLANDS remains one of Slovakia’s key economic partners even though the economic crisis in recent years has not left bilateral cooperation unaffected. While bilateral trade continues growing, investors are being more careful about where they invest. Dutch investors like Slovakia for its cheap and qualified labour force, low taxes, central location, political stability and eurozone membership.

The Netherlands, which is similar in size to Slovakia but whose population is three times bigger, is the biggest investor and the ninth most important export territory of Slovakia.
“The bilateral economic cooperation between the Netherlands and Slovakia has always been strong,” Ivan Vereš, economic and trade officer at the Dutch Embassy in Bratislava, told The Slovak Spectator. “It is important in our view, that in times of economic setbacks we do not go back to protectionist policies.”

“A good investment climate – which means first and foremost transparency and predictability – is the best way to preserve employment,” Vereš added.

In recent years, both countries have been looking for new areas of joint interest. As a result of intensified and increased cooperation on water management issues, on November 18 a memorandum of understanding on water-related cooperation was signed between the two governments. From 2016, the European Union presidency trio will be the Netherlands, Slovakia and Malta.

“This upcoming presidency also widens up the scope and importance of our bilateral discussions,” Vereš said.

Investment

Based on data of the National Bank of Slovakia, the Netherlands is the number one investor in Slovakia with its aggregate direct foreign investments amounting to €9.39 billion as of the end of 2011.

After an initial significant investment period through 2009 which saw primarily institutional investors, things have shifted toward small and medium-sized enterprises, Ján Tyrala from the Slovak Economy Ministry told The Slovak Spectator.

Richard Dírer from the Slovak Investment and Trade Development Agency (SARIO) specified that over the last year the interest of Dutch investors in investing in Slovakia was similar to the previous year, adding that Dutch investors are exploring new markets, and in particular they are looking for new clients and along with this, they are also extending their production to these markets. Both Tyrala and Dírer said that Dutch investors remain interested in Slovakia.

When discussing the most important Dutch companies investing and doing business in Slovakia, Tyrala listed Heineken Slovensko, Philips Bratislava, Unilever Bratislava, Probugas Bratislava, ING Bank N.V., Bratislava, Inalfa Roof Systems, Krakovany, AEGON, LEAF, Brinkers Food, Royal Dutch Shell, Royal Ahold, TPG and UPC Slovensko Bratislava.
For the time being SARIO is working on two projects with Dutch investors with a total volume of €4 million and a possibility to create 150 jobs in the fields of shared services centres and wood processing. Since SARIO’s launch in 2002, seven Dutch investment projects were completed successfully with an aggregate volume of €122 million, resulting in 422 jobs.

SARIO cooperates closely with the Slovak Embassy in The Hague, as well as with the Dutch Embassy in Bratislava and the Netherlands Chamber of Commerce in Slovakia. SARIO considers all the sectors as potentially interesting for Dutch investors, but the automotive industry, electrotechnics, and research and development are among those worth singling out.
Both Slovakia and the Netherlands are open, export-oriented economies, which are prone to be influenced by fluctuations in the global economic situations, Vereš said.

Tyrala added that in addition to being open and export oriented, the service sector has a dominant position in the Dutch economy.

“Compared with Slovakia’s economy, the Netherlands’ economy is more linked with re-export of goods,” said Tyrala. The main sectors of the Netherlands’ economy with good prospects for future government support abroad are “water management, transport and logistics, environment, machine engineering, clothes and textiles, electronics, chemical industry, construction and infrastructure.”

Vereš added financial and business services and logistics as other sectors offering good chances for further cooperation.

With respect to the signed memorandum of understanding on water related cooperation, Vereš said that both countries look forward to working together.

“We want to learn from one another’s experience,” said Vereš. “Sharing our know-how is a first step. Dutch water experts will visit Slovakia and vice versa very often. This memorandum signature should boost business opportunities on both sides. At the Dutch Embassy, we expect these efforts can lead to mutually beneficial projects, where Slovak infrastructure can be improved dramatically.”

With regards to the automotive industry, a number of Dutch suppliers for Slovak car producers are already active in the market.

“But there is still potential for enhancing these activities,” said Vereš. “We have noted strong interest from the Netherlands in relation to the Slovak automotive sector.”

The Netherlands is strong in the field of financial and business services and thus once the economy picks up, Dutch experiences in this field can be a plus for the Slovak economy, which is more geared towards industrial production, according to Vereš.

Logistics is one of the strongest sectors of the Dutch economy. Whereas in the past this meant transportation, nowadays it is a much broader sector, including warehousing, logistical planning and the use of artificial intelligence. For a country exporting industrial products, like Slovakia, this opens lots of opportunities to cost effective planning, said Vereš.

Vereš added that during the crisis, most EU countries changed their national legislation on economic activity. Many of these changes had a strong impact on decisions made. Thus, investors carefully monitor these developments, not just in one market, but much more in comparison with other, similar markets.

“It is not easy to adapt to new rules and it is even more difficult to invest in a business environment that changes frequently,” said Vereš. “Frequent change can create opportunities, but equally it may threaten an established position in a given market.”

Vereš specified that in the last two years Dutch investment in Slovakia is growing, but slowly. One of the larger Dutch investors in the Slovak economy is currently under pressure as a result of proposals to change Slovak regulation.

“One cannot predict the effects of a negative impact on overall investment, but it is clear that regulations that render it impossible to execute activities in a proper way are not conducive to attracting similar or other investments,” Vereš said.

Since the beginning of this year the embassy registered two Dutch investors that entered Slovak market. The specialised steel producer Stawi Steel recently opened its production facility near Košice and currently employs about 100 people. The logistics company Heisterkamp recently opened its regional office in Košice and is hiring truck drivers.

Trade

Over the last four years the trade between Slovakia and the Netherlands has grown. Slovakia’s exports were rather stable when it increased from €1.17 billion in 2009 to about €1.4 billion during the next three years. Slovakia’s imports grew from €416 million in 2009 to €622 million in 2012. The turnover increased from €1.588 billion in 2009 to €2.028 billion. The trade balance was positive for Slovakia exceeding €750 million with the exception of 2010, when it amounted to €901 million, according to data provided by the Economy Ministry.

Slovakia exports TV boxes and cars, followed by boilers, machinery and apparatuses, iron products, tools and optical apparatuses. Slovakia exports in smaller quantities plastics and plastic products, raw rubber and rubber products as well as paper products.

Topic: Foreigners in Slovakia


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