Download Slide 1

Economic and Business Environment
of SLOVAKIA
Presented by Ján Kuderjavý, Ambassador
Embassy of the Slovak Republic
October 2012
Country Profile
Establishment:
Official name:
Area (km2):
Population:
Capital:
Member of:
Official currency:
Official Language:
Government:
Election term:
Neighbours:
Time zone:
1st January 1993
Slovak Republic
49,035
5,437,126
Bratislava
OECD, WTO, NATO,
EU, Schengen area
EURO
(since January 2009)
Slovak
Parliamentary democracy
4 years
Austria, Czech Republic,
Poland, Ukraine, Hungary
GMT + 1hour
Strategic Position with Export Potential
300 million
of consumers in
radius of 1,000 km
Moscow
London
Berlin
Kiev
Paris
600 million
Rome
of consumers in radius of
2,000 km
World Resources Institute
Istanbul
Why Invest in Slovakia: Top Reasons

1. Strategic Location in Europe

2. Membership in all Recognized International Organizations

3. Economic Stability and Safe Investment Environment

4. Interesting Tax System

5. Great Potential of Workforce

6. High Share of Secondary and Tertiary Education within the Population

7. Low Labour Costs vs. High Labour Productivity

8. Official Currency- Euro

9. Attractive Investment Incentives

10. Steadily Growing Infrastructure Network

11. High Potential for R&D Projects

12. Bright Variety of Real Estate for Investors

13. High Adaptability of Labor Force to Different Management Style
GDP Prediction for 2012
Macroeconomic Overview
12
GDP growth
EC
1.2%
OECD
2.6%
National Bank of SR 2.1%
10
8
IMF
2.4%
MF SR
1.1%
WB
3%
6
4
GDP Prediction for 2013
2
IMF
0
-2
-4
-6
2002
2003
2004
2005
European Union
2006
2007
2008
2009
2010
National Bank of SR 3.1%
2011
Slovak Republic
2008
2009
2010
2011
1.-6.
2012
Real GDP growth
6.4%
-4.7%
4%
3.3%
2.9%
Labour productivity growth
3.8%
2.7%
2.2%
-
-
HICP Inflation
4.6%
1.6%
0.7%
4.1%
3.7%
Unemployment
7.7%
11.4%
14.4%
13.5%
13.9%
723
744,5
769
786
781
Average monthly gross salary
(€)
3.1%
Source: International Monetary Fund, Eurostat, Slovak Statistics Office, Central office of Labour, Social Affairs and Family
WB
1.5%
OECD
3.0%
MF SR
2.7%
OECD
4.4%
Euro Zone €
1st January 2009
• financial stability
• limitation of foreign exchange risk
• lowering transactions costs
• growth in foreign trade
Slovak Koruna (SKK) Exchange rate (Annual average)
Development of exchange 1999 -2009
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
44,115
42,589
43,309
42,694
41,489
40,022
38,599
37,234
33,775
31,262
30,126
€
Source: National Bank of Slovakia
Simple and Fair Taxes
Flat tax rate






Corporate & Personal Income Tax - 19 %
Value Added Tax (20%, 10 %)
Dividend tax - 0 %
Inheritance and Gift Tax – 0 %
Real Estate Transfer Tax – 0 %
No limits on the Repatriation of profits
Ratings & Outlook
COUNTRY RATINGS
(Sovereign foreign currency
ratings)
OECD
Country risk
SLOVAKIA
CZECH
REPUBLIC
AA-
AA-
BBB-
A-
stable
stable
negative
stable
HUNGARY
POLAND
A2
A1
Ba1
A2
negative
stable
negative
Stable
A+
A+
BB+
A-
stable
positive
negative
Stable
0
0
0
2
Source:www.standardandpoors.com, www.moodys.com, www.fitchratings.com, www.oecd.org
1st Rank in Central Europe in DOING
BUSINESS 2012
Methodology
Starting a business
70
62
60
48
50
Construction permits
Registering property
Paying taxes
51
40
30
20
10
0
Enforcing contracts
64
1
Singapore
Slovakia
Hungary
Poland
Czech Republic
Protecting investors
Closing business
Trading across borders
Getting credit
Source: World Bank Group – Doing Business Report 2012
The Doing Business project
provides objective measures of business
regulations and their enforcement across 183
economies and selected cities at the
subnational and regional level.
Map of Shared Services Centrums & Call Centrums
Success Stories
Over 48 SSCs & CCs
…employing > 25 800+ professionals
I Unique clustering of shared services and IT support
creates a fast-paced, enthusiastic IT environment
I Advanced wireless technologies – Flash-OFDM,
WiMAX, HSDPA – covering large majority of the
population
I High population density and low deployment costs
making development and experiments easier than ever
Top 5 Export Products in 2011
1.
Vehicles and
Transport (21,5 %)
2.
Electrical machinery and
equipments (21 %)
3.
Base metals (7 %)
4.
Mineral products (6,4 %)
5.
Plastics and rubber
(3 %)
Source: Slovak Statistics Office
Top 5 Export Destinations in 2011
20%
14%
8%
7%
7%
Austria
France
Source: Slovak Statistics Office
Germany
Czech
Republic
Poland
Top 5 Investors by Countries in 2011
1
2
3
4
5
Italy
Source: SARIO
Austria
Germany
South
Korea
France
Research and Development
R&D and
Design in
Automotive
I ICT and
Software
Development
I R&D in
Nuclear
Power
I R&D in
Renewable
Energy
I R&D in
Electronics
Source: SARIO
STATE AIDS
Investment Incentives
- To encourage direct investments in less developed regions and create
new jobs
- Act on investment aid – new rules from August 2011
Minimum investment:




Industry (EUR 14 mil.)
Research and Development (EUR 1.33 mil.)
Shared service centers (EUR 1.16 mil.)
Tourism
If the unemployment rate of the particular region is at least 50 % higher than
the Slovak average, the minimum amount of investment into the fixed assets
is 50 % of above stated.
Basic Features
 Objective
 Targeted
 The
of the aid: to encourage investments in Slovakia
on regions with high rate of unemployment
aid can cover part of investment costs
 Eligible
projects: industry, R&D centres, shared service centers,
tourism
 Legal
framework: Act no. 561/2007 Coll. on Investment Aid
Investment Incentives: Industry
Current Legal
Framework
Act 561/2007 on Investment Aid
Minimum
investment
14 / 7 / 3.5 mil. EUR
(costs of the assets only)
out of that at least
7/3.5 /1.75 mil EUR to be covered by own equity
Eligible costs
land, buildings, machinery & other manufacturing
equipment, licenses or patents
Machinery,
technology
- at least 40%, 50% or 60% (depending on the
unemployment rate) of the eligible costs
- new, not depreciated, not used before
Min. new jobs
created
no limitation
Maximum incentives
up to 50%
Investment Incentives: R&D Centers
Legal Framework
Act 561/2007 on Investment Aid
500 000 EUR
Minimum investment
at least 250 000 EUR to be covered by own
equity
Eligible costs
land, buildings, machinery & other equipment,
know-how, licenses or patents
Minimum newly
created jobs
- no limitation
- at least 60% of newly created jobs for
employees with university education
Maximum incentives
up to 30%-50% depending on the level of
unemployment
Investment Incentives: Shared Service
Centers
Center
providing services with a high added value
employs qualified experts in
•
Software development center
•
Expert solution center
•
High-tech repair center
•
Customer support center
•
HQs of multinational corporations
Legal Framework
Act 561/2007 on Investment Aid
Minimum
investment
400,000 EUR
(costs of the assets only)
out of that at least
200 000 EUR to be covered by own equity
Eligible costs
land, buildings, technological equipment,
software, licenses or patents
Min. new jobs
created
no limitation
Other conditions
at least 30% employees with university
education
Maximum
incentives
up to 30% - 50%
(depends on further examination)
Regional GDP per capita in the EU 27
Leading regions in the ranking GDP per capita (PPS)
(among 271 regions)
Region
GDP
1.
Inner London (UK)
332%
2.
Luxembourg (LU)
266%
3.
Bruxelles - Capital (BE)
223%
4.
Hamburg (DE)
188%
5.
Bratislavský kraj (SK)
178%
6.
Ile de France (FR)
177%
7.
Prague (CZ)
175%
8.
Stockholm (SE)
172%
9.
Groningen (NL)
170%
10. Åland (FI)
Source: Eurostat
166%
Forms of State Aids
Cash grant
- partial refund of costs on the acquisition of long-term assets
Corporate income tax relief
- drawing during 5 tax periods
- starting not later than 3 years after approval of aid
- amount up to 80-90% of the due tax depending on the eligible costs and
equity
Contributions on newly created jobs
- a partial refund of employee salaries during 2-year period
- the % depends on the particular region up to 40-50%
Transfer of real estate for a discounted price
- depends on the existence of suitable public or municipal property and
agreement with its administrator
Forms can be combined, but the total amount cannot exceed
the maximum intensity
Procedure for Getting State Aids
Submission of the investment plan – Ministry of
Economy
Evaluation of the investment plan
< 30
days
Standpoints of other relevant authorities
Preliminary announcement by the Ministry of Economy
< 30
days
Investment aid offer
< 30
days
Investment aid application
< 60
days
Final decision on aid - Government (Average time)
5-6
months
Bilateral Co-operation
Belgium – Slovakia
In mil. euros
2008
2009
2010
2011
1.-5.2012
(Index12/11)
Export to
Belgium
867,7
662,4
778,2
942,1
425,2
(101,3)
Import from
Belgium
590,1
374,8
500,7
522,9
223,1
(103,4)
Balance for
Slovakia
+277,6
+287,5
+277,5
+419,1
+202,2
(99,1)
Total turnover
1 457,8
1 037,2
1 278,9
1 465,0
648,3
(102,0)
Source:
Slovak Statistics Office
Main Traded Commodities (Slovakia–
Belgium)
Export:
 Cars and non-railway cars
 Electric machines and equipment
 Plastics and products of thereof
 Rubber and products of thereof
 Iron and metallic manufactures
 Wooden products and furniture
 Paper and paperboards
 Glass and products of thereof
 Chemical products
 Textiles, clothes, shoes
Import:
 Plastics and products of thereof
 Iron and steel
 Cars and non-railway cars
 Electric machines and equipment
 Pharmaceutical products
 Textiles
 Chemical products
 Aluminium and products of
thereof
 Carpet
New Possibilities for Co-operation:
Belgium-Slovakia






Machinery, Engineering, Metal working
Automotive Industry
Wood processing industry – furniture and other wooden
products
IT technologies and products
R & D, Renewable Energy
Construction Business
The best to find subcontracting
Belgian Investment in Slovakia
 Belgian
 FDI


FDI Stock in Slovakia: 1 325,829 M EUR
Inflow from Belgium to Slovakia
2010: 7,495 M EUR
2011: 85,852 M EUR
SOURCE: National Bank of Slovakia, data as of August 7, 2012
 SARIO




finished Belgian projects (2002 – 2011):
16 investment projects in all sectors, predominantly rubber & plastic
production, electric equipments, metal products, warehousing
1 518 new jobs created with potential expansion to 1 992 jobs
Total investment volume of 117,82 M EUR
BEKAERT, GILBOS, TEAM Industries, VMA Infra Industries, CE Sam, Gia
Catars, Fremach, Aspel Slovakia, Plastiflex, Topcom etc.
SOURCE: SARIO, data as of August 7, 2012
Top Reasons to Remember Slovakia










Central European Hub and favourable geographic
location
Political & economic stability
19 % flat taxation and 0 % dividend tax
Availability of highly skilled workforce
Low labour costs vs. high labour productivity
EUR as an official currency from 2009
Large selection of industrial lands and offices available
for purchase/lease
Infrastructure that is growing steadily
High innovation potential of R&D projects
Satisfaction of already established investors
Small Country of Great Opportunities
Visit the mysterious caves
Wellness
Skiing opportunities
Beautiful mountains
Charming Castles
Golf opportunities
A place where history meets future
Spa resorts
Rafting
Aqua parks
Delicious Slovak Food
Source: SARIO, 2010
Ministry of Economy
Coordinating trade policies and export
promotion
 Awarding investment incentives
 Main state authority for utilities,
tourism, and innovation



The Slovak Tourist Board SACR created in 1995 =
presentation of tourism in Slovakia on the international
tourism market
Slovak Investment and Trade Development Agency
SARIO created in 2001 = promoting investment and trade
SARIO Services – All Free of Charge
Foreign Trade Section
 Identification of potential
suppliers and subcontractors
 Monitoring free production
capacities
 Facilitation in establishing JVs
 Online databases
SARIO´s services:
www.sario.sk
FDI Section
 Assistance in investment
implementation
 Database of available real estate
 Consultancy on state aid
Slovak Investment and Trade
development Agency
[email protected]
Thank You For Your Attention!
Contact:
Embassy of the Slovak Republic, Brussels
[email protected]
Tel.: 02 3401460