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Rule of law remains problematic

Belgian and Dutch firms talk about advantages of doing business in Slovakia, the problems they see in Slovak business environment, and factors that affect Belgian and Dutch companies to launch a business in Slovakia.

Law enforcement is one of the main problems in the Slovak business environment. (Source: SME)

Though much of Slovak business is dominated by companies from the neighbouring Czech Republic, Hungary and Austria in terms of numbers, Belgian companies lead the ranking in the volume of capital owned by foreigners, as deposits of 940 entities account for more than €5 billion. Belgium also placed among the top 10 in that ranking with 606 companies operating in Slovakia.

The Slovak Spectator spoke with representatives of two Dutch companies – Peter Brudňák, CEO of NN Life Insurance and pension companies in Slovakia; Hana Šimková, corporate relations manager of Heineken; and representatives of three Belgian companies – Bart Waterloos, partner with VGD Slovakia tax and accountancy audit company; Viviane Huybrecht, spokeswoman of KBC group, parent company of ČSOB bank; and Gerdi Vanfleteren, owner of Relax hotel Sojka in Liptov Region, about advantages, problems and opportunities in the Slovak business environment.

The Slovak Spectator (TSS): What are the advantages of doing business in Slovakia?
Peter Brudňák (PB):
Slovakia is a safe country with a relatively simple tax system, a healthy economy and stable financial institutions which helped to overcome the consequences of the economic crisis in a better way than many economically more advanced countries. In addition, there is an educated and relatively inexpensive labour force with favourable ratio of price and quality.

Hana Šimková (HŠ): We have been a leader on the Slovak beer market over the long term. Doing business on a traditional but developed market where consumers understand beer and where beer belongs to the long-term traditions is certainly an advantage and a great challenge. Our customers move us further in the creation of innovations and development of our services. Another advantage is the qualified and high-quality workforce. We always say with pleasure and pride that we have the best people who keep us at the top of brewing companies in Slovakia on a long-term basis.

Bart Waterloos (BW): I think there are multiple advantages such as being a member of the EU for many years already (the laws are very much in line with the laws of other EU countries), being strategically located in the middle of Europe (easily reachable and well-positioned for logistics) and having adopted the euro (no exchange rate risks) to name the top three. Further, there are still several industrial zones available to expand business and certainly outside of the Bratislava region one can also apply for various subsidies and compensations. 

Viviane Huybrecht (VH): Slovakia is a solid member of the EU with a stable and growing economy and a high quality, entrepreneurial business environment. In general the working population is well educated, trained and motivated. This presents a lot of opportunities for local companies as well as companies from our other core markets – Belgium, the Czech Republic, Hungary, Bulgaria and Ireland. It enables us to support our customers with our local and professional knowledge and our full range of products and services. 

Gerdi Vanfleteren (GV): The reason why I have my business here is more specific. I wanted to open a hotel that understands the needs of tourists from western Europe, that gives them all information they need. Therefore, they can explore and enjoy Slovakia 100 percent.

TSS: What are problems in the Slovak business environment in your view?
PB:
The main problems include law enforcement, cronyism, and corruption in the public sphere. From the perspective of pension-fund management companies, I perceive negatively frequent legislative interventions into the system of pension savings. Another problem is the fact that education in Slovakia no longer goes hand in hand with the needs of the business environment, whereby many investors have a problem filling vacancies with high-quality workers. This relates also to low mobility of the labour force.

HŠ: There are areas that businesses keep talking about – mainly weak law enforcement, instability of the legal environment, cronyism, and the high administrative burden.

BW: We start to see a lack of qualified workers, especially in western Slovakia as the result of strong economic development over the last few years but also because Slovaks are not so mobile and not that eager to travel or relocate for work. The payment discipline of Slovak entities belongs among one of the worst in Europe, thus extra measures should be taken in that respect. Unfortunately, the judicial system will not assist as it moves too slowly and sometimes the outcomes are surprising.

VH: At times the business environment can be challenging because of changing rules and regulations which can create a lack of clarity and uncertainty for business communities. We try to limit and manage these issues by working closely together with local authorities as well as with our business partners and customers. In some areas language may also bring challenges, though a growing part of the population in Slovakia speaks English or German. 

GV: High VAT on food, hotel stays and so on are our problems. A lower tax burden has not been really important for me. Because of investments and depreciation I hardly make a profit.

Which factors affect the decision of Belgian and Dutch firms to launch a business in Slovakia?

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Topic: Foreigners in Slovakia


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