Smart Questions and Smart Solutions in the Field of Economic Cooperation and Foreign Investments in Slovenia
SDS, together with a prestigious international NGO, the Institute for Cultural Diplomacy (ICD) organized an open forum, within which the discussants could talk about methods and solutions regarding foreign investments for the next term.
The forum started with a greeting from the President of SDS Janez Janša and ICD Director and Founder, Mark C. Donfried. Other participants in the discussion include; mag. Marjan Hribar (Director of Foreign Investment in the Economic Ministry), Minister, Dr. Peter Groznik (assistant Professor at the University of Ljubljana and the owner of NorthGrant), Dr. Bostjan badger (former member of the Bank of Slovenia and the IMF advisor for the Central Bank of Kosovo), mag. Pleterski Miran (Director of consulting - international corporate strategy and investments in business development, PEMicon), Dr. Ales Štrancar (Director of Bia Separations) Marko Bitenc (GenePlanet, Singularity University, California, USA), G. Bostjan Napast (Representative of Geoplin), Dr. Matthew Breznik (Director of Biogen Idec Slovenia), G. Buyer Robert (Director and Vice Jelovica Windows Jelovica Board), Mr. Radasanu Alexander (Vice president and CEO of SIVECO Romania), MA. Andrej Vizjak (Former Minister of Economy et al. Turk, Minister for Development 2007-2008).
Mag. Marjan Hribar was speaking about companies owned by foreign corporations, reinforcing that they employ 15% of employed people in Slovenia and the percentage of those companies in the Slovenian private sector constitutes around 4 per cent. According to Hribar, a lot of positive effects can be seen as a result of foreign investment; “We also have to pay close attention to the fact that foreign companies represent 40% of exports” Hribar cautioned. He also presented a statistical timeline of Slovenia’s economic development from its independence, until present day. According to these statistics, between 2005 and 2008 Slovenia’s foreign investments doubled in size from 6 to 11.2 million euros. Although there was a fall in foreign investments as a result of the global economic crisis, Hribar claims; “there have been a number of good opportunities which the incumbent government has missed”.
Hribar then moved on to discuss the benefits of investing in Slovenia. According to him, investment in Slovenia is attractive because Slovenia has presence in wider international and macroeconomic structures, mainly as a result of membership of important organizations such as EU, OECD and NATO. The Director of Foreign Investment in the Economic Ministry then concluded; “An important fact to point out is that we are at an idealistic starting point for employment in Eastern European countries. We have good education systems, high standards of investment protection and high quality of life”.
Dr. Peter Groznik’s opinion focused on the premise that Slovenia doesn’t need special policies and strategies to attract foreign investment. This, he applies even at the local level to the foreign investors from EU, with which Slovenia share a geographic neighbourhood. He also said that he is against grand strategies in this area, but stressed that Slovenia needs to be made an attractive and desirable investment destination for business. He expressed concerns about Slovenia’s ability to enforce contracts (1290 days); “we create the company for six days and not one; we are much more expensive in terms of permitting the key areas of set up for businesses. Granting electricity connections is just one example of the slow processes that make set up in Slovenia laborious for the investor, both foreign and local alike making Slovenia much more expensive than the average amount it would cost in other OECD countries.”
Dr. Miran Pleterski discussed the methods of attracting foreign investment, urging a systematic approach; “We have to ask ourselves what kind of foreign investment do we want and how that aligns with Slovenia’s characteristics; we also have to set targets for investment groups and continuously work towards common and specific goals”.
Dr. Boštjan Jazbec, a former member of Slovenian Bank Board and an IMF consultant for the Central Bank of Kosovo, was talking about institutional aspects; the banking system and investment to different projects. Jazbec stated that “Slovenian banks are afraid to loan money because the legal system does not provide enough protection for investors, something which would also encourage private parties to invest.”
According to Dr. Jazbec “The present institutional framework poorly defines such key concepts as ownership rights. In general we are operating in poorly defined legal environment and an ineffective legal system”. Although he doesn’t express despair about the legal system, he thinks that there are problems in the implementation of legal establishments “the workforce within the legal system implements the law inefficiently.
Dr. Aleš Štrancar from the company Bia Separations, spoke about attracting foreign investments using the concrete example of his company.
Mag. Marko Bitenc from Geneplanet also highlighted the connections between innovation, investment and internationalization. Boštjan Napast, the spokesperson for Geoplin, spoke about investments in the field of Energy. Napast mostly spoke about the sources of natural gas and transportation paths in Slovenia; he also highlighted the importance of pipelines and terminals in the region. “We believe, that Slovenia can become an important energy portal” he said. He moved on to discuss the inclusion of Slovenia in the Southern flow project, backing up his speech with statistics and key information. In his opinion; “Slovenia will become a connection point for a wider region, for transport and trade routes.” Napast also said that Slovenia must leave the door open for free economic initiatives whilst, of course, following the guidelines of national energy policies, yet to be established in Slovenia. This is necessary for the functioning of an ethical economy.
Dr. Matej Breznik, director of Biogen iDec in Slovenia, discussed the opportunities for development and investment in the health sector, emphasizing the importance of investing in research and development in the sector. He also presented information about the expenses in healthcare which showed that Slovenia is in an encouraging current situation compared to many other countries.
Dr. Robert Kupec, Director of Jelovica Windows, gave a speech on the state of the timber industry in Slovenia. His opinion is that this industry has an positive future, the evidence of which, he suggests, will be visible in the next few years; “Although the employment level within the timber manufacturing industry drops by 10% every year, could be as a direct result of poor secured or inappropriate investment agreements and outdated or inefficient equipment. Over the past 15 years, there has been little to no investment in this industry, as such, the industry needs serious attention. Dr. Kupec thinks, that at presently, the timber industry is significant, but stressed that its future stability will be determined by securing investments at both the international and local level. He also outlined the three important stepping stones which would “give new life” to the timber industry. He also said that the country should pay more attention to the industry, and apply the efforts, strategy and funding as it did with the tourism sector.
The next discussant was mag. Andrej Vizijak, the former Minister of Economy in Slovenia. In the introduction of his speech he asked what the government can do to attract foreign investment? He noted that it is very important that the government is united in efforts to encourage foreign investment and that the ministries coordinate/cooperate together; “It is very important that all the sectors mutually strive for foreign investment and we recognise the contradictory situations that can arise as a result of opposing it. An example of this the construction of a hydroelectric station at Spodnja Sava, there the government pushes for this investment to succeed, but the ministry of environment is pushing back.
Mag. Vizijak said that in Slovenia there is an ongoing open discussion about which is more beneficial for Slovenia: private or governmental ownership. According to Vizijak, Slovenia needs to believe that “foreign investment can help to improve Slovenia and its economy. SDS has always believed this point and our policies and principles have reflected this”.
Later he also mentioned the selling off of the Slovenian steel industry. A European partner invested 300 million euros in its development, but the question remains; where would the industry be today, if it were not sold off nor involved in a wider international chain?
In his opinion, it is extremely important for local investors that Slovenia knows how to create favourable and stable conditions for investment and business. In this respect, he highlighted six key areas for improvement. He also said that Slovenia needs to develop a solid infrastructure if it wants to achieve these conditions of stability.
In his conclusion, mag. Andrej Vizijak talked about necessary initiatives, he thinks that it is important to promote Slovenia and it is similarly important to have a list of investments and locations for national projects which target investors.
Mr. Radasanu Alexander, Vice President and CEO of SIVECO Romania, presented an example of good practice in terms of investment and implementation of national projects in Romania.
The former Development Minister Dr. Turk, who was also the moderator of the day’s open forum, said that "we are preparing data in view of the concern that foreign investment in Slovenia is lagging behind. In the region of Central and Eastern Europe Slovenia is trailing in the depth, scope and number of foreign investments.” He pointed out the fact that in the last ten years, Slovenia has only represented foreign investments worth U.S. $ 1531 per capita, surpassed by almost all its beloved neighbour countries; "Foreign investment is a key to the objectives pursued by the SDS in these elections" continued Dr. Turk. He pointed out that the SDS aims for social justice; "if you move forward, if we do more and if we pursue a policy of progression, the more we have as a result, the more we can share". Dr. Turk suggested that if we want to create more, we need economic growth that can be achieved with new jobs and the restructuring of existing ones; "To create jobs, we need investments, both domestic and foreign". Turk also stressed that private investment should be encouraged under good economic conditions, when Slovenia has a functioning rule of law and access to space and the ability to build and construct; "The third condition for the creation of good conditions for the economy in general is labour-market regulation. For example, problems arise when foreign personnel in positions of management in Slovenia are treated as seasonal workers" said the former development minister.
According to him, in addition to good conditions for business in general, it is also important to evaluate foreign investment in Slovenian culture. He pointed out also that Slovenia needs to consider the targets of acquisition investments, such as information technology, health, tourism and the timber industry, identifying where demand lies and where the work can be ensured. Dr. Turk spoke about small and medium-sized enterprises, which also present themselves as opportunities for investment, while also pointing out that Slovenia is naturally positioned as a bridge between the knowledge of Eastern European and Western European finance, a positive position in which to be. The former Development Minister further noted that the important issue of discussing whether or not Slovenia even wants foreign investment. In doing this, we need to clarify that foreign investment is positive and provide solid, good examples of this". According to Dr. Turk, the world is evolving exponentially and this needs to be kept in check".
The Open Forum was concluded with an old Chinese proverb that best summarises the issue of foreign investment in Slovenia, namely "as old Chinese conversation says, we are not interested in where a cat is from, what matters is that the cat hunts mice."