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 : fskomora@nextra.skweb 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: contact@slovakrating.sk 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: fskomora@nextra.sk

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: autner@slovakrating.sk

Fax: 00421 2 54 64 51 52 http://www.slovakrating.sk

 

Rudolf AUTNER, chairman of the Board of Directors and executive manager of company