% of GDP
In 1918 the Slovaks joined the closely related Czechs to form Czechoslovakia. Following the chaos of World War II, Czechoslovakia became a communist nation within Soviet-ruled Eastern Europe. Soviet influence collapsed in 1989 and Czechoslovakia once more became free. The Slovaks and the Czechs agreed to separate peacefully on 1 January 1993. Historic, political, and geographic factors have caused Slovakia to experience more difficulty in developing a modern market economy than some of its Central European neighbours.
Update No: 082 - (01/03/04)
Meciar is not yet dead
There are new presidential elections to be held in Slovakia on April 3rd. The arch-bogy man, and populist politician, Vladimir Meciar, former premier of the country, is standing for president. He clearly sees himself in a new role. To be premier is to conduct government. It is perhaps re-assuring that all that Meciar wants to do now is have the panoply of power as president.
Confirmation of his candidacy came from all 25 members of his own party, the largest in parliament, Movement for a Democratic Slovakia (HZDS). Talks with the nationalists, SNS, are under way, and with the opposition communists in the KSS are not ruled out. In 1999 Meciar finished second to the outgoing president, Rudolf Schuster. This time he rates his chances are better.
The coalition government of Mikulas Dzurinda was widely acclaimed abroad when it was re-elected in 2002. The main point about it was that it was not led by Meciar, who was one of the foursome of dictators in Europe in the 1990s, Milosevic of Serbia, Tudjman of Croatia and Lukashenka of Belarus. Milosevic is in the Hague. Tudjman is dead. Lukashenka remains in power.
Meciar has been out of power since 1998 and failed to regain it last year, as in 1999. But his party, HZDS, won the largest share of the votes, 19%, in a fragmented system of parties. The very fact that he allowed himself to be voted out of office, it can be argued, shows that he is a genuine democrat. Actually, like Milosevic in 2000, he miscalculated and really thought that he was popular. He was and is among rural voters and the old, all in fact nostalgic for the good old days of communism, indeed, he seems to portray himself as all things to all men. It would only need a realignment of the parties to bring him back into government. But that fortunately would not necessarily mean power.
One point that is not appreciated by foreigners is that the Slovaks gained one thing out of the Prague Spring in 1968 that was not rescinded afterwards by President Husak, namely greater autonomy. Their memories of the last years of communism are not quite so bitter, therefore, as those of the Czechs. Husak, like a lot of Czechoslovak party leaders, including Dubcek himself, the leader of the Prague Spring, was a Slovak. There was something of positive discrimination in favour of the Slovaks about communism, explaining the ongoing popularity of Meciar.
Nevertheless Meciar remains leader of the opposition. He tried to make the most of what is probably a minor affair that will blow over, namely Dzurinda sacking his equivalent of the national security adviser, the head of the National Security Office, Jan Mojzis, and the defence minister, Ivan Simko, just before the former was due in Brussels. His NATO counterparts had obviously grown to like and trust him and were very disconcerted by his summary dismissal.
Meciar jumped in to say that the sackings endangered Slovakia's bids to join NATO and the EU. He re-iterated HZDS's commitment to entry to both of them. The Foreign Minister, Eduard Kukan, pointed out reasonably enough that Slovakia has received an invitation to join NATO not just that they like one Slovak official or another. At that Meciar riposted that Kukan in saying that was being a toady because he wanted Dzurinda's support for his presidential candidacy; he was "eating out of his hand." Politics is punchy in style in Slovakia
Korean car maker to build new factory in Slovakia
The Kia Motors car maker, which is part of the Hyundai Motor, has made a preliminary decision to build a factory in Slovakia, TA3 TV reported.
The investment will be worth over 1bn euros. Kia Motors intends to announce the final decision at the beginning of March at the Geneva auto salon at. Representatives of the car maker declined to confirm the press reports.
VW unit to focus on off-road vehicles production
Volkswagen Slovakia, a subsidiary of German carmaker Volkswagen (VW), plans to pay closer attention to the production of off-road vehicles in the future, Josef Uhrik, the company's board chairman, said recently, Interfax News Agency reported.
Towards that end, the firm plans to raise production of its off-road Touareg model by 50% in 2004 to 80,000 units due to high demand, Uhrik said. The Touareg, which is designed in cooperation with the German carmaker Porsche, will account for nearly 60% of VW Slovakia's total production this year.
VW also plans to launch production of an off-road vehicle with its sister firm Audi in 2005 or 2006, the board chairman said.
VW Slovakia's sales for the first 11 months of 2003 stood at 168bn Slovak crowns, compared with 110bn crowns for all of 2002. Full-year figures for 2003 are not yet available. In addition to the Touareg, VW Slovakia also assembles the Polo and Golf models. The firm has also taken on some production of the Ibiza model from its Seat, VW's sister firm in Spain.
Slovakia wins Hyundai production site decision
Slovakia has come out the winner in the race of which country would host the new production plant planned by South Korean carmaker Hyundai. The Korean company said Slovakia will be the site of its new US$1.5bn production facility, Interfax News Agency reported.
But the government did not confirm the report, the Economy Minister, Pavol Rusko, actually denyed the information. "Nothing has been decided yet. On the contrary, the fight is gaining momentum and entering the decisive stage," Rusko said.
STV reported that a six-member team from Korea visited Slovakia to hold talks with sub-contractors carrying out market analysis. Senior management from the firm was also expected in Slovakia, STV said.
Slovakia has been shortlisted, along with Poland, as the site for the investment, while the Czech Republic and Hungary were eliminated from the competition. Slovakia has offered land near the Central Slovak town of Zilina for the facility, while Poland has proposed a site near the city of Wroclaw.
Slovakia has slashed its corporate and individual income tax rates to 19% and kick-started a comprehensive pension reform in a bid to attract more investment from abroad. The new plant is expected to employ up to 4,000 people and turn out 300,000 cars each year.
Hydrostav becomes major shareholder in PSJ Holding
The Slovakia-based company Hydrostav won a majority stake (51%) in the Czech construction concern PSJ Holding, following its acquisition of a 500m Czech crown claim on PSJ and invested another 150m crowns in the company, PSJ spokeswoman, Hana Ansorgova, said, Interfax News Agency reported.
Hydrostav purchased the claim on PSJ from the Czech bailout agency CKA at a public tender last year, which was held as part of the Czech government's restructuring programme known as Exit II. The programme hopes to sell claims on selected companies to strategic investors. Hydrostav will now swap the claim on PSJ for equity through its Dutch subsidiary. The PSJ group posted turnover of 2.79bn crowns and a profit of 37m crowns in the first three quarter of last year. The firm has a 1,000-strong staff.
Fitch upgrades Slovakia foreign, local credibility ratings
International ratings agency Fitch Ratings recently upgraded the Slovak Republic's long-term foreign and local credibility ratings to BBB+ and A, respectively. The agency has also upgraded Slovakia's short-term foreign currency rating to F2, Interfax News Agency reported recently.
The outlook on long-term local currency is stable, and on long-term foreign currency positive. Fitch said the first reflects the balance between "good economic prospects and political risks," while the second represents Fitch's belief in the Country's continued progress toward the Eurozone.
"The upgrade reflects Slovakia's success in reducing its twin deficits, as its centre-right government has made great progress in implementing public finance reforms and cutting the budget deficit, while booming exports have slashed the current account deficit," said David Heslam, associate director in Fitch's Sovereign Group.
Export growth, in part connected to new capacity in the automobile sector, as a contributing factor in the "remarkable" improvement in Slovakia's current account deficit from 8% of GDP in 2002 to an estimated 1% in 2003.
Cheap, skilled labour and tax reforms should mean more FDI, said Fitch, with positive implications for "exports, GDP, and external financing."
Political uncertainty is the only fly in the ointment, now that the ruling coalition has become a minority government. Nevertheless, the breakaway MP's have said they will continue to support economic reforms and recently did so by supporting the government's bid to overturn a presidential veto on pension reforms.
J&T Finance eyes purchase in Slovnaft refinery
J&T Finance Group, a Czech-Slovak joint venture with headquarters in Bratislava, recently decided to participate in a mandatory buyout offer by MOL, a Hungarian oil and gas concern, selling its minority stake in the Slovnaft refinery, J&T spokesperson, Maros Sykora, said, Interfax News Agency reported.
J&T has proposed its partners in the consortium, which has a 15% stake in Slovnaft, follow suit, Sykora said. The Hungarian company has made a buyout offer for Slovnaft shares of 1,379 Slovak crowns per issue. MOL began its takeover of Slovnaft four years ago. The company initially sought to buy minority shares in Slovnaft at 1,200 crowns last year, but J&T succeeded in getting the offer upped to the current level.
In another development, J&T Finance has forged an agreement with Britain's International Group which sees the latter buying two tenths of Skrobarna Brno from J&T Finance, J&T said in a statement. The contract was signed recently. J&T is bidding for the Czech brown coal mining company Severoceske doly (SCD) through Skrobarna Brno.
The transfer of the Skrobarna shares to International Power should take place immediately after the successful completion of the privatisation process by J&T, J&T spokesman, Petr Malek, said, adding the contract confirms previous agreements concluded between both parties on cooperation in the privatisation of SCD.
"The aim of the alliance is the creation of a solid basis for the future development of cooperation between SCD and International Power as the second largest buyer of brown coal in the Czech market, as well as using the great experience of International power on the European energy market," J&T partner, Daniel Kretinsky, said.
In line with an agreement with J&T, International Power will have one seat each on the boards of directors of Skrobarna Brno and SCD. At the same time, said Kretinsky, Skrobarna Brno will continue to be controlled by J&T and International Power's stake will not be raised in the future.
At the outset, International Power submitted a bid in the tender for SCD alone, but the government's expert commission did not allow the company through the pre-qualifying round.
Three bidders have remained in the tender for 56% of SCD, namely J&T through Skrobarna Brno, the Appian Group through the Mostecka uhelna spolecnost (MUS) mining firm, and the Penta financial group through Oakfield. The SCD privatisation commission is reported to have recommended J&T, which bid 6.8bn Czech crowns, as the winner.
Cabinet is expected to determine the new owner, as it is not obligated to follow the commission's recommendation. International Power is the largest British investor in the Czech Republic. It owns the Elektrarny Opatovice power plant.
Ministry may transfer 34% of Slovenske telekomunikacie
Slovakia's Transport Ministry may transfer its 34% stake in the country's leading fixed-line operator, Slovenske telekomunikacie (ST), to the economy ministry or the National property Fund (FNM), Transport Ministry spokesperson, Tomas Sarluska, said, Interfax News Agency reported recently.
"According to the European Commission, the transport ministry should not be the owner of the operator and market regulator at the same time," Sarluska said. It is only a recommendation and not binding, he noted. Sarluska did not offer details on when the possible share transfer might take place. He said only that it would not be linked to Slovakia's accession to the EU on May 1st, 2004. Germany's Deutsche Telekom holds a 51% stake in ST, which it acquired in 2000. The FNM holds a 15% stake.
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