Slovakia

Business Friendly Slovakia
Get to Know Slovakia as Your Investment Destination
Finish Business Mission
Juraj Mihal, SARIO
28th April 2015
A Country in the Heart of Europe
Fully Integrated in the EU
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Establishment:
Official name:
Area (km2):
Population:
Capital:
Official currency:
Official Language:
Government:
Time zone:
1st January 1993
Slovak Republic
49,035
5,400,000
Bratislava
EURO
Slovak
Parliamentary democracy
GMT + 1hour
Independent
Slovakia
1993
1918
Czechoslovakia
Schengen area
2007
2004
EU Accession
2009
Euro Adoption
2016
EU
presidency
Most Politically Stable CEE Country
According to the World Bank Group project:
The Worldwide Governance Indicators (WGI)
This aggregate indicator
reflects perceptions of the
likelihood that the
government will be
destabilized by unlawful or
violent means.
Source: WB Group 2013, WGI, Political Stability(FI 97th percentile, SK 87th, CZ 84th, PL 83rd, HU 69th, BG 58th, RO 49th)
6
RO
5
BG
4
HU
3 2
PL
CZ
No
1
SK
Slovakia:
8 Self-governing Regions, a.k.a. Higher Territorial Units
Slovakia is divided into
• 8 Self-governing Regions regrouped into
• 4 regions corresponding to the NUTS 2 level used by the Eurostat for statistical
purposes
• Bratislava SK 01 = Bratislava Region
• Western Slovakia SK 02 = Trnava + Trenčín + Nitra Region
• Central Slovakia SK 03 = Žilina + Banská Bystrica Region
• Eastern Slovakia SK 04 = Prešov + Košice Region
TOP Reasons Why to Invest in Slovakia
I Safe investment environment: political and economic stability
I Central European hub & favourable geographic location: great export potential
I Official currency EURO as one of a few countries in CEE
I Fastest growing Eurozone member within the last 10 years (CAGR)
I 10 Year CEE Leader DB 2004 – 2013 /World Bank/
I 6 Year CEE Leader in Physical Property Rights Security 2008 – 2013 /PRA/
I CEE leader in labour productivity and in TOP hard working countries /OECD/
I High adaptability of labor force to different culture management styles
I Large selection of industrial land & offices
I Attractive investment incentives
Business Environment
Strategic Position with Great Export Potential
300 million
clients in a radius of
1,000 km
600 million
clients in a radius of
2,000 km
Gdansk, POLAND
Hamburg, GERMANY
Rotterdam, NETHERLANDS
Bratislava
Road
Railway
Waterway
Koper, SI Constanta, RO
Izmail, RO
Road & Aerospace Network
Krakow (PL) 180 km
Prague
Brno (CZ) 120 km
Prague
Vienna-AT
London-UK
Prague-CZ
Bratislava-SK
All major
European
cities
airport
WORLD
Vienna-AT
WORLD
Budapest-HU
Source: National Motorway Company, Slovak Airports, 2015
Most Open Economy in Europe
Slovakia takes the 1st place in Europe
with the highest export of Goods to GDP index, 2013
100
88 %
50
0
2002
SK
2004
HU
CZ
2006
DE
2008
PL
2010
2012
Developed European Economies
Slovakia takes
- 3rd place in Europe after Luxemburg and Ireland with the export of
Goods & Services to GDP index: 97.6%, 2013
- 25th place in the world after f.ex HongKong, Singapore, and Belgium
with the export per capita, 2013
Source: UNCTAD STAT, Eurostat, 2014
FR
UK
EURO Zone Member - One of a Few in CEE
Euro €
since 1 January 2009
EURO IMPLEMENTATION IMPACT
Limitation of Foreign Exchange Risk
Lowering Transaction Costs
Growth in Foreign Trade
Increased Economic & Financial Stability
Favorable conditions
for long-term business decisions
GDP Prediction
Macroeconomic Overview
by European Commission/OECD
2015f
2016f
Germany
1.5%
2.0%
GDP Growth in Slovakia
Slovakia
2.5%
3.2%
GDP Growth in EU 28
Poland
3.2%
3.4%
Czech Rep.
2.5%
2.6%
Hungary
2.4%
1.9%
Romania
2.7%
2.9%
Bulgaria
0.8%
1.0%
Finland
0.8%
1.4%
12,0%
10,0%
Real GDP growth
8,0%
6,0%
4,0%
2,0%
0,0%Source: European Commission, Spring 2014 forecast
2005 2006 2007 2008 2009 2010
2011
2012
2013
2014 2015f 2016f
-2,0%
Source: European Commission, Winter 2015 forecast,
2008
2009
2010
2011
2012
2013
2014
Real GDP Growth
5.8%
-4.9%
4.4%
3%
1.8%
0.9%
2.4%
HICP Inflation
3.9%
0.9%
0.7%
4.1%
3.7%
1.5%
Unemployment
9.6%
12.1%
14.4%
13.5%
14%
14.2%
Source: f-forecast, Eurostat, OECD 2015
-0.1%
13.2%
Slovakia:
Fastest Growth in Eurozone, 2004-2014
Average Annual Growth Rate
3,97
Slovakia
Latvia
Estonia
Lithuania
Luxembourg*
Malta
Ireland
Slovenia
Austria
Belgium
Germany
Netherlands
France
Finland
Cyprus
Spain
EURO area (19)
Portugal
Italy
Greece
3,33
3,05
2,67
2,51
2,3
1,72
1,57
1,45
1,35
1,29
1,12
1,05
1,02
0,99
0,9
0,87
0,02
-0,28
-1,24
-2
*Data for 2014 missing
Source: European Commission, Eurostat 2014
-1
0
1
2
3
4
Slovakia:
Best Country Credit Ratings in CEE
COUNTRY RATINGS
(Sovereign foreign
currency ratings)
OECD
Country risk
SLOVAKIA
CZECH
REPUBLIC
HUNGARY
POLAND
BULGARIA
ROMANIA
A
positive
AAstable
BB+
stable
Apositive
BB+
stable
BBBstable
A1
stable
A1
stable
Ba1
stable
A2
stable
Baa2
stable
Baa3
stable
A+
stable
A+
positive
BB+
stable
Apositive
BBBstable
BBBstable
A+
stable
A
stable
BBB
negative
A
stable
BBB
stable
BBBstable
A
stable
A+/AAstable
BBBstable
A-/A
stable
0
0
4
0
4
3
Source: www.standardandpoors.com ,www.moodys.com, www.fitchratings.com, www.jcr.co.jp, www.ri.co.jp, www.oecd.org
Simple & Fair Tax System
Slovakia:
3rd Most Promising Pre-Emerging Market
Bloomberg
-
ranked pre-emerging markets based on their overall investment potential through 2016
-
awarded points based on the following indicators:
Economic indicators
• Average projected GDP
growth
• Projected inflation rate
• Government debt
• Total investments
•
•
•
•
Current labor participation
Current account balance
Foreign reserves
Infrastructure
Financial indicators
• Price-to-book ratio of the • Two-year sovereign debt
primary equity
• Credit-default-swap
• Exchange rate volatility
spread
• Liquidity of the primary
equity
Political and social measurements
• Corruption Perceptions
Index
• Political risk score
• Ease-of-doing-business
score
• Adult literacy rate
Saudi Arabia
78,8
Estonia
71,4
Slovakia
67,1
Lithuania
65,8
Bahrain
65,7
Slovenia
65
Bulgaria
63,8
Vietnam
62,4
Kazachstan
61,5
Romania
60,3
Source: Bloomberg, International Monetary Fund, World Bank, Economist Intellligence Unit,
Transparency International, World Economic Forum, CIA , MSCI, FTSE, S&P, JP Morgan as of 2015
10 Year CEE Leadership in DB 2004 - 2013
Starting & Closing Business
Construction permits
Registering property
Paying taxes
Electricity acquirement
DOING BUSINESS
The World Bank Project
•Analyzes the business regulations in
185 countries
•Clasifies economies in 10 areas of
business regulations
Enforcing contracts
Protecting investors
Insolvency resolution
CEE
countries
RO
6
Trading across borders
Getting credit
Slovakia increased in Doing Business ranking in 2015
Slovakia: 37. place
Finland: 9. place
Source: WORLD BANK GROUP Doing Business Report 2014
1
No
SK
7 Year CEE Leadership in Physical Property
Rights Security 2008 - 2014
INTERNATIONAL PROPERTY RIGHTS
INDEX (IPRI) – Physical Property Rights
 1st international comparative study
 analysis of
• 130 countries
• 97% of world GDP
Physical Property Rights
• Protection of Rights
• Registering Property
• Access to Loans
6
HU
5
PL
4
BG
3 2
RO
CZ
Source: PROPERTY RIGHTS ALLIANCE (FI 8.2, SK 6.4, CZ 6.3, RO 5.9, HU 5.8, BG 6.1, PL 6.0 out of 10 points)
No
1
SK
Best Investment Climate in CEE, 2014
JP
USA
CEE
secure
Slovakia
DE
CZ
PL
BG
PHYSICAL
PROPERTY
RIGHTS INDEX
RO
HU
RU
risky
complex
Source: World Bank, Property Rights Alliance, 2014
DOING BUSINESS
easy
Slovak Labour Force
Our People - Our Treasure
Highest Labor Productivity in CEE
Gross monthly salary 2014
Slovakia reaches the highest
labour productivity
951 €
3 980 PLN
Poland
90,0
933 €
80,0
25 686 CZK
Czech Republic
858 €
Slovakia
770 €
237 736 HUF
Hungary
542 €
2 412 RON
Romania
429 €
70,0
60,0
50,0
40,0
30,0
20,0
10,0
0,0
2005
Slovakia
840 BGN
Bulgaria
2006
2007
Hungary
2008
2009
Czech Republic
2010
Poland
2011
Romania
GDP (in PPS) per hour worked as compared to EU 27 (100)
Source: Eurostat 2014
Source: National Statistical Offices of Slovakia, Czech republic, Hungary, Poland and Bulgaria,
National Bank of Slovakia, 2015
2012
2013
Bulgaria
3rd Lowest Total Labour Cost in EURO Zone
2x
Lithuania
Latvia
Slovakia
Estonia
Greece
Slovenia
Spain
United Kingdom*
Italy
Ireland
Germany
Austria
Finland
Netherlands
France
Sweden*
Belgium
Denmark*
6,5
6,6
9,7
9,8
14,6
15,6
21,3
22,3
28,3
29,8
31,4
31,5
32,3
34
34,6
37,4
39
€/hour
40,3
0
Source: Eurostat, 2015
3x
5
10
15
20
Note: Countries with * are non-Eurozone countries and are used just for reference in the grafics
25
30
35
40
45
Multilingual Competencies & Education
I 80% of Slovak people speak foreign language
I Legal obligation for elementary and high school
students to study at least one foreign language
Most studied languages
6%
13%
92%
50%
English
Source: Special Eurobarometer 386: Europeans and their languages, June 2012, Institute of Information and Prognoses of Education, 2015
German
Russian
French
Other
OECD:
Slovakia in TOP 10 Hard Working Countries 2013
MEXICO
USA
JAPAN
SLOVAK REPUBLIC
96% of Slovak employees work more than 40 hours a week.
Part-time work is practically non-existent in Slovakia.
Source: OECD, July 2013. Data reflect wage and salary workers, not the self-employed.
Employment Contract Flexibility
Scale from
0 = least restrictions to
6 = most restrictions
Strictness of protection against individual dismissals
in Slovakia in 2013 was below the OECD average
3,5
3
2,5
the OECD average: 2.04
2
1,5
1
0,5
0
Source: OECD, 2014, data displayed for European OECD members
Dual Education Initiatives
40 high schools cooperating with over 90
companies
2015 New Framework For Dual Education:



Shared theoretical education in schools & practical
training in company
Defined contractual obligation of the student to
work for the company after completing his/her
training
Tax benefits for involved companies
Source: State Vocational Training Institute
Key Sectors
Innovation & Information Technologies
In-Line
with
Traditional
Industries
LEADING
SECTORS
OF THE
SLOVAK ECONOMY
Automotive
ICT/SSC
Electronics
R&D
Key Sector No 1: Automotive
Car Production in Slovakia
2016f
2015f
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
1 090 616
1 040 664
993 000
980 000
926 938
630 000
557 000
463 140
+4,8 %
growth/annum
forecast
575 776
571 071
295 390
215 349
0
200 000
400 000
600 000
800 000
SLOVAKIA, 2014
Leader in World Car Production
per 1000 inhabitants
183 vehicles /1000 inhabitants
World Average
10 vehicles / 1000 inhabitants
Source: Slovak Automotive Industry Association ZAP, VW, KIA, PSA-Peugeot, International Organization of Motor Vehicle Manufacturers 2015
1 000 000
1 200 000
Key Sector No 2: ICT/SSC
I 35 established
SSCs
I Personnel
over 24 800
Slovak Success Stories
Significant global leaders in IT, automotive and machinery sectors
with unique innovation potential
Source: SARIO, 2015
Solar Team Slovakia
▌ Joint cooperation of 2 teams from Academy of Fine Arts and Design in
Bratislava and technical University of Žilina
▌Unique solar vehicle build for 3 000 km race across the Australia
Success Stories from around the World
CANADA
MAGNA SLOVTECA,
KraussMaffei
Technologies,
Martinrea Slovakia
Fluid Systems,
Slomatec
OMV, MercedesBenz, Schenker,
Erste Group
AUSTRIA
USA
PSA Peugeot
Citroen, Dalkia,
Orange, Bourbon,
CCN, Alcatel R&D
GERMANY
BRAZIL
Embraco
SPAIN
Aluminiuim Cortizo,
Jobelsa, Cikautxo,
OHL, O2
KOREA
JAPAN
Panasonic, Sanyo
SIIX, SEWS, Misuzu,
Minebea, Trim
Leader, Brother
Industries, Yazaki,
U-Shin, Makino,
Takenaka, Tamura,
Yamagata, Taisei
FRANCE
US Steel, Emerson,
DELL EMEA Centre
of Excellence,
Whirlpool, IBM, HP
European IT
Operation Centre,
Johnson Controls
AT&T, Accenture,
Amazon
Source: SARIO, 2015
Siemens,
Volkswagen,
T-Systems,
Continental
KIA Motors,
Samsung,
Hyundai Mobis
TAIWAN
UK
SPC International,
KMF, BOXPERFECT,
Amylum, Hi-Tech
Mouldings
FINLAND
Rukki, Itella,
YIT, KONE,
Ojala, Peikko,
AU Optronics,
ESON, Foxconn,
Delta Electronics
CHINA
Lenovo
Finland Friendly Slovakia
33 success stories from Finland
employing almost 2 000 people
Foreign Trade: Slovakia and Finland
200
180,9
173,9
180
163,3
161,6
160
134,2
140
120
100
130,5
113,4
125,1
118
115,4
111,6
100,2
80
60
40
20
mil.
EUR
0
2009
2010
2011
Export
Slovak Export to Finland
▌Vehicles
▌Electrical Equipment
▌Iron and Steel
▌Industrial Machinery
▌Rubber
Source: Statistic Office SR; Ministry of Foreign and European Affairs of SR, Ministry of Economy of the SR, 2014
2012
Import
2013
Balance
Slovak Import from Finland
▌Non-ferrous Metals
▌Paper
▌Machines
▌Electric Machines
▌Iron and Steel
▌Plastics
2014
Foreign Direct Investment: Slovakia and Finland
160 000
Status of FDI from Finland to Slovakia
(ths. EUR)
140 000
120 000
100 000
80 000
60 000
40 000
20 000
0
2007
2008
Foreign Direct Investment
2009
2010
2011
2012
2008
2009
2010
2011
2012
2013
FDI status from Finland to Slovakia
(ths. EUR)
44 166
65 214
126 884
138 984
120 205
-
FDI flow from Finland to Slovakia
(ths. EUR)
22 858
22 835
-
15 419
- 18 330
2 440
Source: National Bank of Slovakia, 2015
Investment Incentives
Unemployment & Registered Job Seekers
Average level of unemployment in Slovakia reached 12.29 % as of Dec 2014.
ŽILINA REGION
10.91 %
36 516 job seekers
PREŠOV REGION
17.45 %
69 330 job seekers
TRENČÍN REGION
9.56 %
28 482 job seekers
TRNAVA REGION
8.03 %
23 435 job seekers
BRATISLAVA REGION
6.13 %
20 601 job seekers
NITRA REGION
11.21 %
39 309 job seekers
BANSKÁ BYSTRICA REGION
17.22 %
55 682 job seekers
KOŠICE REGION
15.92 %
58 378 job seekers
Jobseekers in December 2014:
331 733
*Represents only the number of seekers registered at the unemployment office. Please note, that many
job seekers are not registered.
Source: www.upsvar.sk, Dec 2014, updated Feb 2015
Basic Features
I
I
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Targeted at regions with high unemployment rate
Final decision: Slovak government
Administrative body: Ministry of Economy of SR
Investment intensity up to 35% from eligible costs
ELIGIBLE COSTS :

LAND
 BUILDINGS
 NEW MACHINERY & TECHNOLOGY EQUIPMENT
 LICENSES & PATENT RIGHTS
OR
 WAGE COSTS OF NEW EMPLOYEES DURING 2 YEARS
I FORMS:

INCOME TAX RELIEF up to 10 tax periods
 CASH GRANT (paid ex-post, based on annual costs report)
 CONTRIBUTIONS ON NEW JOBS (paid ex-post, based on annual costs report)
Source: Legal framework: Act no. 561/2007 Coll. on Investment Aid
Eligible Investments & Requirements
INDUSTRY
TECHNOLOGY
CENTER
SHARED
SERVICES
CENTER
TOURISM
ELIGIBLE
INVESTMENTS
NEW FACILITY or EXPANSION
MIN. AMOUNT
MIN. NEW
JOBS
3M€
0.5 M €
0.4 M €
3M€
40
30
(70% university
education)
40
(60% university
education)
40
R&D Tax Deduction
Framework
I New Tax Deduction scheme for companies performing R&D.
I Deductions of costs:
New scheme
since 2015
1st time in accounting as standard operational cost
2nd time in tax declaration as deductable cost from income tax
Eligible Costs
I Costs of employees
I Tax depreciation of tangible and intangible assets
I Other operational costs
I Costs of ordered services provided by selected R&D institutions
I
Incremental form of support – annual growth of relief
N
Numerous similar schemes implemented in other countries (CZ, PL, HU, NL, UK, etc.)
N
No limitations on maximum amount of deduction/region of activity
O
Option to claim for tax deduction in 4 following periods
V
A
Valid for all companies on equal basis
T
Tax saver for innovative companies
E
Easy way to apply through a particular column in tax declaration
Automatically claimable when all conditions fulfilled
Source: Legal framework: Act no. 595/2003 Coll. on Income Tax
SARIO Services
Foreign Trade Department
Investment Projects Department
I Supporting Slovak manufacturers in export
I Package of services for investors:
and investments abroad
Potential
 Support and establishment of Joint Ventures
 In-depth information about Slovakia
 Identification of potential suppliers and
 Tailor-made solutions (HR, real estate, legal)
Established
subcontractors
 Expansion, local suppliers, relocation, work
permits
 Support for SMEs and their promotion
abroad
 Subcontracting activities
I Investment incentives consultancy
 Industry
 Portal of export and cooperation
 Shared services centers
opportunities
 Pro-export training center
 International tenders
 Organization of business missions and B2Bs
 Technology centers
 Tourism
I M&A
I Investment Promotion Events
 In Slovakia
 Abroad
ALL SERVICES FREE OF CHARGE
SARIO BUSINESS LINK 2015
International Engineering Cooperation Day – May 19, 2015, Nitra
International Business Networking:
I Engineering
I Automotive Industry
Program:
I Partners presentations
I B2B negotiations
I Panel discussions
Elosys Fair – October 13–16, 2015, Trenčín
International Business Networking:
I Electrotechnics I Automatization
I Lighting
I Electronics
I Telecomunication
Slovak Matchmaking Fair – November 10, 2015, Bratislava
International Business Networking:
I Engineering
I
I
I
I
I
Automotive Industry
Electrotechnics
Power Industry and Renewable Energy
Chemistry
IT Technologies
Program:
I
I
I
I
Partners presentations
B2B negotiations
Accompanying events
Special conference
The biggest B2B
event in Slovakia
SLOVAKIA
Country where history meets future
5th TOP best travel destination by Lonely Planet
We Are Looking for the Same Goal
World Championships Balance
3
3
Thank you for your attention
For more information, please contact us at:
SARIO
Slovak Investment and Trade Development Agency
Address
Trnavska cesta 100
821 01 Bratislava
Slovakia
Web
Email
www.sario.sk
mihal@sario.sk
invest@sario.sk