Is Slovakia a suitable Is Slovakia a suitable investment target ?investment target ?
It certainly is!It certainly is!
March 2002
SummarySummary
The presentation of the French-Slovak Chamber of Commerce and the Slovak Rating Agency
General information on the Slovak Republic
The Governmental Program for the Support of Foreign Investments
Macroeconomic data
Microeconomic data
The most important French investors in the Slovak Republic
The presentationThe presentation of the of theFFrenchrench-S-Slovak Chamber of Commercelovak Chamber of Commerce
Year of foundation February 1994Member of l’UCCIFE since December 1995Number of members 184Mission of the Chamber
the support of mutual activities of Slovak and French companies the organization of common communication platformsthe support of both parties in the area of collection and evaluation of informationthe administrative and organizational support of the members
Contacts :Address: Bratislava, Mierová 23, postal code 824 62Phone/Fax: 421 2 5024 4274, 5557 2757E-mail : [email protected] site: www.uccife.org/slovaquie
The presentation of the The presentation of the Slovak Rating AgencySlovak Rating Agency, a.s., a.s.
member of the French-Slovak Chamber of Commercemember of the French-Slovak Chamber of Commerce Mission:
to materialize and standardize the risk of Slovak companies and transactions for needs of foreign investors
Products: rating of communes and cities rating of production subjects and subjects of services rating of projects and transactions analyses of macroeconomic environment and individual economic sectors analyses of entrepreneurial subjects
Member of the French-Slovak Chamber of Commerce since 2001Contacts:
Address: Bratislava, Ursulinska 3, postal code 811 01 Phone: 421 2 5464 5151 Fax: 421 2 5464 5152 E-mail: [email protected] web site: www.slovakrating.sk
General information on the country I.General information on the country I.
Geographical position:
Middle of the Europe
Area: 49 035 km2
Population: 5 402 547
Borders: Hungary, Poland, Czech Republic, Austria, Ukraine
Religion: Catholic – 70 %
Ethnic structure: Slovaks – 85,7 %
Hungarians – 10,8 %Others – 3,5 %
Time zone: GMT + 1 hour
General information on the country II.General information on the country II.
Social system : Republic
Official language : Slovak
President : Rudolf Schuster
Coalition government : SDK, SDKÚ, SDĽ, SMK, SOP
Electoral system : proportionate
Electoral term : 4 years (next election in 2002)
General information on the country III.General information on the country III.
Capital city : BratislavaSelf-governing structure: 8 regions
The Governmental Program for the The Governmental Program for the Support of Foreign InvestmentsSupport of Foreign Investments
The minimum volume of investments in a region with the rate of unemployment bellow 10 % - 400 mil. SKK (approximately 61.255 mil. FRF)
The minimum volume of investments in a region with the rate of unemployment above 10 % - 200 mil. SKK (approximately 30.627 mil. FRF)
Tax holidays
Allowance for retraining of workers
Allowance for the creation of jobs – its value is fixed depending on the rate of unemployment in the regions
GDP – Restoration of higher growthGDP – Restoration of higher growth
In spite of reforms Slovakia avoided a recession. In the past, the driving force of the growth was export, in this year it shall be domestic demand too.GDP per capita in Slovakia corresponds to 11 260 USD (PPP).The region of Bratislava already achieves the EU average (GDP in PPP).Restructuring of economy is at its final stage.
In 2002 the growth of GDP should exceed 3%.
0
1
2
3
4
5
6
7
19941995
19961997
19981999
20002001F
The price level is stabilizedThe price level is stabilized
The inflation was stabilized on a one-debit value.
The core inflation was stabilized between 4 to 5 per cent.
The price level in the Slovak Republic still reaches less than 40% of the level in Germany.
The Central Bank intends to decrease the inflation within a medium-term horizon bellow 4%.
Slovakia need not to fear a two-digit inflation.
23,2
13,5
9,95,8 6,1 6,7
10,6
12,0
6,5
4,5
0
4
8
12
16
20
24
Average inflation in %
Internal and external deficitInternal and external deficit
The external imbalance has been successfully decreased.The situation in public finance has also stabilized.With the growth in domestic demand we expect a growth in current account deficit, but actually we have no problem to finance this deficit.Public finance is the Achilles´ heel of the Slovak economy.
A macroeconomic stability was restored but this balance is still fragile.
-10,6
-9,6 -9,7
-5,0
-8,5
-3,4-3,7 -3,7-3,6
-4,6-4,4
-12
-10
-8
-6
-4
-2
0
1996 1997 1998 1999 2000 2001F
Current account/GDP(in %)
Public financebalance/GDP (in %)
A strong offer on labour marketA strong offer on labour market
The rate of unemployment reaches values close to 20 %.
Good news:
The labour productivity grows.
More good news:
The over employment decreases.
A foreign investor has no problem to find a qualified and cheap labour force.
10
11
12
13
14
15
16
17
18
19
20
%
Rate of unemployment(NUP, available)
The most part of FDI was absorbed by The most part of FDI was absorbed by privatisationprivatisation
The most part of FDI was linked to the privatisation. Almost 50% of capital comes from Germany (France is on the 7th place).There are two areas, which have absorbed more than 90% of FDI: industrial production and telecommunications.Other significant investments were made in finance and trade.
In 2000 Slovakia succeeded to achieve the highest growth of FDI from the V4 countries.
0
500
1000
1500
2000
2500
3000
3500
4000
1994 1995 1996 1997 1998 1999 2000
FDI
mil.
USD
(cu
mm
ulat
ive)
The Slovak currency is relatively stableThe Slovak currency is relatively stable
System of rates: floating
Reference currency: 100% EUR
Macroeconomic stability has brought relatively high stability of the Slovak currency.
The Central Bank dispose of volume of finance large enough to protect the Slovak currency.
1 EUR = 41,725 SKK (1.3. 2002)
The exchange risk has decreased in the recent period.
41
41,5
42
42,5
43
43,5
44
44,5
45
45,5
46
I.99
IV.99
VII.99
X.99
I.00
IV.00
VII.00
X.00
I.01
IV.01
VII.01
X.01
I.02
EURSKK
Macroeconomic summaryMacroeconomic summary
Economic stability was restored
Slovakia faces a higher growth of GDP
The price level and the rate of crown were stabilized
Foreign direct investments are accelerating
The problem area: public finance
Opportunity: cheap and qualified labour force
Microeconomic data I.Microeconomic data I.
0%
5%
10%
15%
20%
25%
Share of individual regions in the formation of GDP
Microeconomic development II.Microeconomic development II.
Share of individual industries in the formation of GDP
0%
10%
20%
30%
40%
50%
A B C D E F
Legend
A Agriculture, forestry, fishing
BMining, industrial production, power, gas and water generation and distribution
C Building industry
DTrade, restaurants, transport, posts, telecommunications
EBanking, insurance business, other commercial services
FOther market and non-market services
Structure of labour market I.Structure of labour market I.
Average monthly wages in Slovak enterprises with more than 20 employees : 11,864 SKK (approximately 284 EUR)
Average monthly wages in individual sectors
in SKK
0,0
5 000,0
10 000,0
15 000,0
20 000,0
25 000,0
Agriculture Total
industry
Construct. Trade Hotels,
restaurant
Transport Posts and
telecom.
Banking,
insurance
Tenement anot.
sectors
Structure of labour market II.Structure of labour market II.
Economically active population – 2,696.341 ten.
Number of registered unemployed – 533.652 inhabitants
Structure of unemployed by sex
- women – 44.7 % - men – 55,3 %
Number of unemployed graduates – 23,659 (4.4 %)
Comparison of the rate of unemployment and average monthly wages in individual regions
0,00
5 000,00
10 000,00
15 000,00
20 000,00
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
Averagemonth. w ages (in SKK)
Rate of umenploym.(in %)
Structure of labour market III.Structure of labour market III.
Qualification structure of unemployed
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
Legislative environment I.Legislative environment I.
High level of approximation of law to EU legislation
Double Taxation Treaty concluded
Treaty on the Support and Mutual Protection of Investments concluded
Option of free export of capital
Unallowed acquisition of immovable property by foreign entities
The most frequent legal forms of enterprising entities – limited liability company and joint-stock company
Average duration of the foundation of a company – 2 months
Obligation to apply double entry bookkeeping
Obligation to audit financial statements for turnover exceeding SKK 40 mil. (941.842 EUR) and assets exceeding SKK 20 mil. (470.921 EUR)
Average duration of commercial litigation – 18 to 36 months
Legislative environment II.Legislative environment II.
Joint-stock companyMinimum amount of stock capital – SKK 1,000.000,- (23.546 EUR)Option of monetary or non-monetary contribution It is headed by a Board of Directors – at least three membersObligation of members of the Board of Directors to have a sojourn in the territory of the Slovak Republic Obligation to establish the Supervisory Council – at least three members
Limited liability companyMinimum amount of registered capital – SKK 200,000,- (7.709 EUR)Option of monetary or non-monetary contributionIt is headed by an agent Obligation of the agent to have a sojourn in the territory of the Slovak Republic Obligation to establish the Supervisory Council –– not imposed
Upon foundation of a company we recommend to contact a local lawyer.
The most important investorsThe most important investors
Crédit Lyonnais Bank
Dexia Kommunalkredit Holding
Danone
Alcatel
Rhône – Poullenc
France Télécom
Lafarge
Carrefour
This presentation was prepared by the French-Slovak This presentation was prepared by the French-Slovak Chamber of Commerce in collaboration with the Chamber of Commerce in collaboration with the
Slovak Rating Agency, member of FSOK.Slovak Rating Agency, member of FSOK.
FRANCÚZSKO-SLOVENSKÁ OBCHODNÁ KOMORA
Miletičova 23, P. O. BOX 4
824 62 Bratislava 2
Slovakia
Tel./Fax: 00421 2 502 44 274, 555 72 757, 555 73 129 e-mail: [email protected]
http: //www.uccife.org/slovaquie
Ing. Igor SCHMIDT, director of the Office of FSOK
SLOVENSKÁ RATINGOVÁ AGENTÚRA
Uršulínska 3
811 01 Bratislava 1
Tel.: 00421 2 54 64 51 51 e-mail: [email protected]
Fax: 00421 2 54 64 51 52 http://www.slovakrating.sk
Rudolf AUTNER, chairman of the Board of Directors and executive manager of company