Slovakia Facts - about Business in Slovakia

EU member since 2004

19% VAT tax
19% flat tax rate (corporate, capital gains, etc.)
0% dividend tax

Euro will be adopted in January 2009
(as confirmed by the European Central Bank)
7.9% GDP growth 2006, 10.4 last year, more normal 7.5% this year
World’s leader in car production per capita & a growing force in eletronics
Qualified skilled cheap labour force

In 2003 Slovakia clearly showed the highest education level for a workforce in Europe: 94.1% of young people aged 20-24 attained at least upper secondary education level while only 72.5% of those in Germany, 74.4% in Denmark, or 78.1% in the UK. Slovakia leads the pack in Europe followed by Norway 93.3% and Croatia 90.7%. As James McCollum, General Manager with recruitment agency Key 6 Business Solutions, with offices in Prague and Bratislava, mentioned: “We recruit lower and mid-management and everybody highly praises the technical skills of the local people... basically anything which is technical, mechanical or can be objectively measured is done very well”. He added “…people’s dedication to quality and attention to details are highly valued by international firms”.
Computer engineering

Companies like SAP, IBM, HP, Dell, Siemens, Microsoft, and Oracle are already well established and growing in Slovakia.

Slovakia signed an investment agreement with Samsung Electronics LCD in March 2007 and announced that the South Korean firm would invest €320 million in the new plant, which will produce LCD flat panels in Voderady near Trnava. The investment will create 1,200 direct jobs.

The investor is to launch production of LCD modules in March 2008, and the plant should be running at full capacity by 2012. Samsung will produce ten million LCD modules. Samsung already has a plant in Slovakia, in the western town of Galanta, which is the company's biggest plant for the production of TV sets with LCD monitors in Europe. Samsung invested €3.9 million in Slovakia between 2002 and 2006 and has employed more than 3,000 people. In September 2006 Sony announced its new investment of an initial €73 million in Nitra, where a manufacturing site for LCD TVs is being established. With an annual production capacity of three million sets at its new plant, it is expected to further expand the market growth of its European TV business. Sony currently operates two manufacturing sites for LCD TVs in Europe, i.e. Barcelona, Spain and Trnava, Slovakia. One of the key deciding factors in favour of Nitra was the close proximity to Sony’s existing plant in Trnava in Slovakia, enabling the company to capitalize on its existing highly skilled workforce currently employed in Trnava.

Car industry

Slovakia is becoming the EU’s Detroit as more and more automotive companies move in. Since 2004 Slovakia became the world leader in car production in terms of car units produced per capita (180 units per 1000 population). This type of industry is not new for Slovakia: Skoda and Tatra car brands produced large amount of cars here during the Communist era. After the change of the system, Volkswagen acquired the Skoda Company in the Czech Republic and started to turn its attention towards Slovakia. VW started production with the Golf platform, but soon extended the platform range to the Passat and then subsequently the Toureg platforms. It was the skill of the workers and their cost, which was a great attraction to VW, but the increase in the platform range is a credit to the skills of the Slovak workforce. This plant now produces some 280,000 cars per annum.

By 1998 a government decree gave special tax status to automobile enterprises in the country. Within a short space of time over 100 companies entered the car industry as major suppliers and sub-contractors established themselves. These included such names as Continental, Magna, U.S. Steel, Johnson Controls, Siemens, Krupp, Delphi, Faurecia, Leoni and many others.At the beginning of 2003 the government and the city of Trnava signed an agreement with TPSA - Toyota Peugeot to build a new assembly plant on the edge of the city. This had immediate impact on Trnava’s real estate market, where prices of some properties increased by more than 100% in two years from the announcement. This plant produces 300,000 cars per annum. In 2004 KIA – Korean car producer completed its agreement with the government to build its new car production plant. This plant will be in full production by 2008 and will produce an additional 200 to 300,000 cars per annum. As a result Slovakia by 2010 is anticipated to be able to deliver 1,100,000 new cars per annum to the market. The majority of these will go for export.

Growth Potential in the Central European Region

A new report by The Boston Consulting Group (BCG) confirms that Central and Eastern Europe (CEE) can be highly competitive with Asia as a location from which to source products and services for Western European markets. Four areas in which CEE countries compare favourably with China and other rapidly developing economies (RDEs), says the BCG, are: (1) Cost competitiveness, (2) Growing markets, (3) Talent pools, and (4) The business environment, notably in intellectual property. Author of the report and BCG’s vice president mentioned: “There is a misperception that worker productivity in the region is low relative to Western Europe. In fact, our research confirms that given the same level of capital and technological investment, workers in the region are at least as productive as their counterparts in Western Europe.” In addition, the new EU member countries represent a particularly secure business environment, with regulations governing intellectual property rights, harmonized with EU standards. The report claimed speed is critical: “The largest competitive advantage will lie with those companies that move soonest and make the strongest commitments.”Slovakia with its substantially lower input costs, compared to those in the other new EU member states, provides enormous sourcing opportunities for the fast movers. Taking the whole operation of a profitable business to the East may be a risky venture, but opening cooperation with eastern firms for non-core or even semi-essential activities is undeniably a low-risk opportunity with enormous potential for long-term cost savings and sustainable competitive advantage.

Strategic location of Slovakia

Slovakia is strategically positioned, connecting the former Soviet Union (Ukraine) with the West (Austria). Its capital, Bratislava, seemingly a suburb of Vienna, Austria, is split by the Danube River which connects the two cities with Budapest, Hungary. Bratislava has its own international airport, train and bus stations, and a port on the Danube River, making it perfectly suited for a logistics and distribution hub covering the four countries - Austria, Czech Republic, Slovakia, and Hungary. Relatively rare and scattered traffic jams when compared to the other cities provide more time for value-added activities and a higher quality of life. Moreover, you can visit your country offices in the four countries within the fastest time from Bratislava—375 minutes. The same trips, however, would take 702 minutes from Prague. Also, there is a direct flight connection to Bratislava from almost any major city in Europe.

Beautiful landscapes with fields, virgin forests, villages virtually untouched by modern civilization, popular lakes, beautiful dams, medieval towns, health spas, old castles, numerous caves, and stunning mountains can be easily found in the country. Slovakia offers over 1,300 mineral water sources located in 23 thermal spas used for curing numerous diseases. The value at low costs persuades many to fly halfway around the world for various treatments. The country has over 4,000 caves, 14 of which are open to the public. In this small country, barely the size of New Hampshire in the US, a total of 13 items are on the list of UNESCO’s world, cultural and natural heritage.

The limits of the free market

maybe the west will follow Fico's election manifesto

Up to the mid 80es strong unions, progressive taxation, managed trade and controls on capital and immigration produced higher living standards for the majority. As the authors note, "A fifth factor, immigration controls, also contributed to rising real incomes of blue-collar workers." Now the opposite policies are producing stagnant or falling incomes, massive debts, tepid growth, and soaring income inequality and economic insecurity. Workers are subjected to material losses and moral uplift. GB plc is not a decent industrial company but a dodgy hedge fund.

Elliott and Atkinson blame what they call the twelve gods of globalisation - communication, financialization, privatisation, liberalisation, competition, and their partners speculation, recklessness, greed, arrogance, oligarchy and excess. They show how the Labour party, the European Commission, the IMF, the World Bank, the World Trade Organisation and the International Court of Justice have all embraced these gods. As the authors note, bodies like the EU "far from being essential in order to exercise some sort of control over large companies ... look rather more like being essential to the simplification of large companies' dealings with political authorities."

The present crisis arose because US companies promoted enormous `ninja' loans to those with No Income, No Job or Assets. So US household debt is now three times the economy's annual output, the highest proportion since 1929. Two million insolvent borrowers means insolvent lenders, builders and hedge funds. Every previous crash in the US housing market has led to a full-blown recession and this one will too, largely because the US economy has relied not on increased production but on growing debt. Its productivity has grown less since 1973 than it did in 1947-73 and it created no more jobs between 2000 and 2005 than anywhere else.

Elliott and Atkinson show how the Treasury, its Financial Services Authority, and the Bank of England all failed in the Northern Rock debacle which signalled the start of the crisis in Britain. Their answer was to nationalise the losses and privatise the profits. The authors sum up finance capitalists' plight, "They have to borrow money from the public purse because their system does not work."

Instead, Elliott and Atkinson urge a New Populism focusing on a real-world agenda of jobs, living standards and security in retirement. Its aims should be to subordinate finance to industry, establish personal and social security (mainly by providing high-quality pensions), enhance democracy, curb the semi-detached super-rich, strengthen the professions, value social stability above market efficiency or shareholder value, and reaffirm the liberty of the person.

They urge protection for our industries, tighter controls on lending and credit, splitting retail from investment banking, smaller banks, proper vetting of all financial products, higher taxes on hedge funds and private equity partners, and deregulation for smaller businesses and the self-employed.

This is a bold set of proposals, whose implementation would go a long way towards saving industry and rebuilding Britain. Those who worship the twelve gods would, of course, fiercely resist, and it would take the strength of the organised working class to make this New Populism work - but we could do it.