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Update No: 059

The Slovenes are negotiating entry into the EU in a tough manner. Their premier, Janez Drnovsek, is concerned that the terms on which Slovenia is being offered entry are the same as other candidates. For the Slovenes are in a different class from other countries in transition. Their per capita income is in the EU class already at $16,800, on a par with Greece or Portugal. 
The premier regards ten years as too long a transition period for agriculture. Brussels is offering just 25% subsidies initially. Regional policy funding in prospect is also too low, in his view.
But precisely because Slovenia is such a success story its pleas for earlier subsidies than for the others are not likely to be met. The Slovenian Minister for European Affairs, Janez Potocnic, was met with a polite refusal to intercede on Slovenia's behalf when he went to London in February.
GDP was rising by 4.6% on an annual basis last year, after a rise of 5.2% in 2000. Industrial output rose by an even more striking 9.4% in 2001 after a rise of 7.4% in 2000. 
There are problems of course. The rate of unemployment at 12% of the work force is far higher than the government would like, as is the rate of inflation at 9%. But the government is maintaining a sound fiscal policy; the public budget is in modest deficit of 1.1% of GDP, while the external account is in deficit to the extent of only 0.2% of GDP.
The clarification of its legislation in its negotiations with Brussels is helping greatly to create a more business-friendly climate. Slovenia has completed most of the 29 conditions of the EU acquis. With a highly educated work force, an excellent location athwart the Alps and impending EU membership, Slovenia should soon be attracting far more foreign investment than it has so far done, around US$2bn.

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AVIATION

Slovenia's Maribor airport sold at auction

Recently, the bankrupt Maribor airport got a new owner. The Maribor-based business consulting company, Gemag, bought it at a public auction for 500m tolars [about US$2m], Radio Slovenia has reported.
Maribor airport official receiver, Majda Jaki, was visibly pleased with the auction result.
Jaki said: "I was not expecting such a high purchase price, although I am, at the same time, very pleased because this means that the legal entity has actual marketing potential and that the purchaser sees a perspective in the purchase of this property..."

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FINANCIAL NEWS

Britain one of Slovenia's most important export destinations

Last year, Britain came second - straight after the Russian market - according to the level of growth of Slovene exports. Compared with the year before that, last year's exports to Britain went up by 38.9 per cent. In this way, Britain is becoming one of the most significant importers of Slovene products, Finance web site has reported.
The level of export growth to the Britain has been increasing steadily since 1999 and in the first six months of last year it made a record jump of 38.2 per cent. In 1999, Slovene companies exported to Britain approximately US$170m worth of goods and in 2000 this figure was US$186.3m. In the whole of last year, exports to the British market amounted to almost US$259m. According to the volume of export, Britain moved into eighth place and overtook the USA and Poland. The Velenje-based [white goods] producer Gorenje and the Crnomelj-based producer of compressors for cooling systems Danfoss Compressors are amongst the largest exporters to the British market...

Slovenian economy up against negative trends

The ongoing decline in industrial output and the rising unemployment have not managed to dampen Slovenia's economic expectations. The monthly publication of Economy Trends noted this fact, adding that the economists' expectations were influenced by the forecast revival of major foreign economies. According to the publication, based on a survey of the Economics Institute at the Ljubljana Faculty of Law (EIPF), economic indications continue to show negative trends, Slovenia Weekly has reported.
These include the high inflation level from January, low industrial output rates and increasing unemployment. The publication cannot ignore the poor trade figures, considering that Slovenia noted a 7.5 per cent fall in exports in December 2001, while imports fell by two per cent. The export trends have been getting more negative since September 2001, with the monthly growth rate standing at 3.59 per cent. Despite this, the survey points to the fact that the trade deficit is not increasing after attaining some US$138m last December. 
The survey also noted that the volume of industrial output began to fall rapidly last December, with the most notable fall seen in the manufacturing sector, while the energy sector managed to peg back the drop somewhat. Last year, the total volume of industrial output was 2.9 per cent higher than that in 2000, up 25 per cent over its lowest point in transition in 1993 and some 25 per cent below a comparable level reached in 1986. 
In addition, the experts at EIPF are worried about the turnaround in employment trends. Since November 2001 the number of employed as been falling, with the number of those registered an unemployed coming close to the 2000 level. The most notable falls in employment were seen in the crude oil, textile and leather sectors. The publication also noted the higher-than-expected growth in prices in January. Although a price increase was expected due to an increase in the rates of value added tax, the 1.6 per cent rate was much higher than originally anticipated. The experts say that, as such, this means that the forecast rate in the budgetary memorandum of 6.4 per cent inflation is almost unattainable now.

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INFORMATION TECHNOLOGY

Joint Venture

Slovenian software developer, Hermes Softlab, and an Irish provider of network storage solutions Eurologic Systems have established a joint venture, called StorScape, reports Slovenia Weekly. 
The partnership was set up at the end of December 2001 and is based in Dublin. It is active in the development of memory systems. StorScape has a development centre in Slovenia and a trade centre in Boston, and will be 51% owned by Hermes Softlab.

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PHARMACEUTICALS

Registers Bromokriptin in the US

The US Food and Drug Administration recently gave the green light to the Slovenian company, Lek, to sell on the US market Bromokriptin in the form of tablets, a medicine that cures Parkinson's disease. Lek has thus become the first producer of genetic drugs to get a licence to sell Bromokriptin on the US market, which will secure the Slovenian company a good market position.
Bromokriptin, which will be marketed by Lek's subsidiary in the US, is expected to be available there soon. This is yet further confirmation that Lek meets the strict US pharmaceutical standards set by the Food and Drug Administration. Thus, Lek is strengthening its position in the US generic drugs market, which is one of the company's strategic markets.

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