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Books on Slovenia
REPUBLICAN REFERENCE
Area (sq.km)
20,273
Population
2,011,473
Capital
Ljubljana
Currency
Tolar
President
Janez Drnovsek
Private sector
% of GDP
40%
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Update No: 105 - (30/01/06)
The meritocrats of the Alpine redoubts
The Slovenes feel themselves to be, if not the aristocrats, certainly the
meritocrats, of the former socialist nations. They are by far the best off of
them. They have the best location, right in the heart of Europe. They are
supremely well educated by international standards, multilingual,
multidisciplinary, indeed multidirectional all round, versed in the skills of
the internet and the modern world and free of prejudices against new ideas.
They have been a little vexed of late that remote Estonia has stolen a march on
them by initiating the flat tax, a bold idea put forward by the US entrepreneur
and thinker, Stephen Forbes. It was too bold even for the Germans to contemplate
at their last election. Angela Merkel perhaps failed to achieve an outright
majority because she had an aide vociferously advocating the flat tax.
The Slovenes have bitten the bullet. They are giving the matter serious
consideration.
Strategic Council Recommends Flat Tax Rate of 20%
A body advising the government on economic matters has made an official
recommendation that Slovenia adopt a flat tax rate of 20%.
Meeting in Ljubljana, the Strategic Council for Economic Development concluded
that Slovenia can afford the flat tax rate in terms of welfare and budget
capacities.
According to Joze P. Damijan, a member of the Council, the body decided to
recommend a flat tax rate after it reviewed results of a preliminary feasibility
study. He said a 20% rate is the most optimal.
The Council believes the flat tax rate should be introduced after Slovenia
adopts the euro, expectedly at the beginning of 2007, in order to avoid major
economic shocks that could derail the adoption process, Damijan said.
Prime Minister Janez Jansa attended the meeting of the Council. According to
Damijan, Jansa supports in principle the idea of a flat tax rate.
"The government will have to decide whether to accept our proposal or not.
It should be aware that the tax reform would require that other reforms be
undertaken: social security payments, health care, etc," said Damijan.
The study shows that the state stands to lose around SIT 200bn (EUR 834m) in
income tax and payroll tax as a consequences of the lower tax rate, Damijan
said. However, some of this can be made up with greater tax revenues from VAT,
while the state will also save on taxes it has to pay for public sector
employees.
According to head of the Council Mico Mrkaic, the flat tax rate would prove
conducive for economic growth. "I hope that this proposal will secure wide
public backing," he said.
Moreover, Damijan said that the Council would recommend to the group studying
the feasibility of a flat tax rate to continue its work so that a final report
on the matter could be presented in two to three months.
Jansa Believes Pace of EU Presidency Preparations Is Adequate
Slovenia is to have the presidency of the EU in 2008. PM Janez Jansa believes
that if compared with other states which were to take on the EU presidency for
the first time, the pace of Slovenia's preparations for the task is adequate, he
told a traditional meeting of Slovenian diplomats on Wednesday, 4th January.
He stressed that alongside the implementation of economic and social reforms,
the preparations for EU presidency are the government's top priority, as he
addressed the meeting focusing on EU presidency preparations.
Jansa added that Slovenia is already working together with Portugal and Germany
as the two countries preceding it at the helm of the EU, as well as with other
EU members which could help with experience.
FM Dimitrij Rupel, on the other hand, stressed that the country's successful
OSCE chairmanship was a good test of state and international credibility and
capability ahead of EU presidency.
Rupel moreover said that the experience gained during the OSCE chairmanship was
a solid basis for leading the EU. Preparing the contents of Slovenia's EU
presidency will be one of the priority tasks of the Foreign Ministry, he added.
According to Rupel, the Western Balkans and neighbourhood policy are the most
likely issues on which Slovenia would focus as EU chair-in-office. Slovenia also
intends to give priority to the role of the EU as global player, inter-civilisational
dialogue, energy and regions.
In their respective addresses, both Jansa and Rupel touched also on current
foreign policy issues, which are also on the agenda of the two-day meeting of
diplomats.
According to the prime minister, there was no essential progress regarding
Slovenia's relations with Croatia in 2005, although Ljubljana did show its
readies for a fresh start with Zagreb.
After a promising start in the first half of 2005, Croatia took an
"unreasonable" step by entering bilateral talks with Italy on the
division of the continental shelf in the Adriatic, Jansa said.
"This act was fatal," Jansa stressed. He however believes that
Croatia's EU accession talks have opened a new field for settling the relations
with Zagreb.
Meanwhile, Rupel stressed that Croatia should understand that its negative
policy toward Slovenia influences public opinion, and this could also affect
Slovenia's decisions in Brussels.
He is convinced that the two countries should agree on and respect certain
common principles. Slovenia will continue to support Croatia's EU and NATO
accessions, Rupel said, adding that he expected Croatia to act in line with EU
and NATO standards.
The foreign minister also pointed to the need for "the country to speak
with one voice" in foreign policy, which is defined by the government and
parliament. Moreover, diplomats are obliged to represent Slovenia's official
foreign policy.
Furthermore, Rupel believes the diplomats should bring Slovenia's official
standpoints closer to the public, especially in the countries with which
Slovenia still has some unresolved issues.
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CREDIT RATINGS
S&P's raises Turkey's Dogus Holding A.S. to BB-
Standard & Poor's Ratings raised its long-term counterparty credit rating on
Turkey-based conglomerate Dogus Holding A.S. to BB- from B, and removed it from
Credit Watch, where it had been placed with positive implications on September
6th 2005 Emmanuel Volland, Standard & Poor's credit analyst said, "The
upgrade reflects the strong positive impact on Dogus' leverage and liquidity
from two recent asset disposals," New Europe reported.
Firstly the sale of a 78.1 per cent stake in food retailer Tansas to Koc Holding
A.S. for US$229 million in November 2005 and secondly the sale of 25.5 per cent
in ordinary shares and 49.2 per cent in founders' shares of its banking arm,
Turkiye Garanti Bankasi A.S. to General Electric Co. for US$1.8 billion from in
December 2005. The group is likely to have a cash position of about US$1.25
billion at year-end 2005, with unadjusted gross debt of about US$500 million at
the holding-company level and Dogus Corporate, compared with US$ one billion at
December 31, 2004.
S&P's expects debt to continue to decline, as the Dogus's large cash pile
will enable the group to repay some outstanding debt.
The group's tender for the Turkish automotive inspection and national lottery
concession business is unlikely to harm liquidity as Dogus plans to finance
these potential acquisitions through special-purpose vehicles. Volland said,
"Management's business strategy for the group's remaining operating
subsidiaries, future dividend policy, and use of disposal proceeds will be key
considerations for the future direction of the ratings."
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FOOD & DRINK
Droga Kolinska CEO talks about company's plans for 2006
Slovenia's largest food company plans a breakthrough to new foreign markets,
strengthen its production network and increase its market share in Southeastern
Europe, Slovenia News reported.
"One of our priorities are markets in former Yugoslavia, where we will make
an effort to achieve a 10% to 15% market share," Droga Kolinska CEO, Robert
Ferko Ferko, said.
Although many of the company's products are already well known in SE Europe,
Droga Kolinska intends to focus on marketing its coffee brand, Barcaffe, more,
Ferko continued.
Therefore, Droga Kolinska plans several partnerships with regional companies. It
has already purchased a majority share in the Serbian coffee giant, Grand Prom,
and is cooperating with Serbia's Soko Stark.
Moreover, Droga Kolinska plans to achieve a 50% market share on the coffee
market in Macedonia, Ferko added.
The company sees the Slovenian market as important, however, it also believes it
is too small, Ferko also said.
The food company is already present in 50 countries, including Austria,
Switzerland, Germany and Sweden. It would like to strengthen its position on the
Russian market.
In 2005, Droga Kolinska exported 1,200 tonnes of products to Western Europe, and
it would like to increase this figure to 1,800 tonnes in 2006, Ferko said.
One of the company's strategic plans is also a breakthrough to Arab markets. For
this purpose, Droga Kolinska has already received a Halal certificate which
ensures that the product is made in line with the Islamic laws, Ferko noted.
Droga Kolinska moreover plans to enter the Turkish market, as around three to
four million emigrants from the countries of former Yugoslavia live in Istanbul
and its vicinity, they are already familiar with the company's products.
Ferko also touched on the layoff plans by the company, saying that 285 workers
will be made redundant, with around 150 given the pink slip in 2005, after the
company was created with the merger of Droga and Kolinska in May.
Ferko also said that Droga Kolinska plans to have 960 employees by the end of
2006, which is 110 less than at the end of 2005.
In the past year, the company generated a total of SIT 37bn (EUR 154.44m) and
the entire group SIT 47bn (EUR 196.18m) of revenues. Ferko expects the company
to increase its revenues to SIT 44bn (EUR 183.66m), and the group to SIT 82bn (EUR
342.27m).
In 2006, the company's net profit is to amount to SIT 1.9bn (EUR 7.93m), while
it plans SIT 10bn (EUR 41.74m) in investments. According to Ferko, Droga
Kolinska annually invests around SIT 1bn (EUR 4.17m) in purchasing and
modernising mechanical equipment.
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FOREIGN INVESTMENTS
Hofer to invest 100m Euro in Slovenia in 2005
Hofer Slovenija, the Slovenian arm of the Aldi Sued discount chain group, plans
to invest over 100m Euro in Slovenia by the end of 2005, a quarter of all direct
foreign investments in the county last year, the company said.
Hofer Slovenija added that investments in Slovenia will reach 300m Euro over the
next few years, Slovene Press Agency STA reported.
The company also plans to employ 3,000 people in the long run. While some 500
employees already work for Hofer, their number will treble by the end of next
year, predicts the company, which opened its first outlet in Slovenia on
December 7th. Hofer Slovenija plans to reach half of its revenues through sales
of domestic products, with the company's mid-term plans anticipating annual
sales to the amount of 100m Euro. Hofer plans to open 10 more shops in Slovenia
in the near future, and will expand its network in the future to cover the
entire country. The Alsi Sued group already has shops in Germany, Austria, the
UK, Ireland, the US and Australia and plans to launch its operations in
Switzerland soon.
Egypt-Turkey sign free trade agreement
Egypt and Turkey concluded a free trade agreement on December 28th in Cairo in a
bilateral arrangement that both sides said was a step towards a
Mediterranean-wide free trade zone by 2010. Egyptian President, Hosny Mubarak,
and his Turkish counterpart Ahmet Necdet Sezer witnessed the signing of the
agreement on the second day of Sezer's two-day visit to Cairo, the Egyptian
official news agency MENA reported.
The arrangement is to come into effect after ratification by the signatories'
parliaments. Minister of Foreign Trade and Industry, Rachid Mohammed Rachid, and
Turkish State Minister, Kursad Tuzman, who signed on December 28th on behalf of
their countries, told a press conference that Egyptian manufactured goods would
enjoy duty free entry into Turkey as soon as the agreement goes into effect.
Turkish goods would see duties gradually reduced in four phases over 16 years.
Each state is to grant the agricultural products of the other favourable entry
conditions.
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FOREIGN LOANS
EBRD grants 7m Euro loan to Slovenian SKB Leasing
The European Bank for Reconstruction and Development (EBRD) provided a loan of
up to seven million Euro to SKB Leasing of Slovenia for the financing of leases
to farms and rural small enterprises in rural areas, New Europe reported.
The loans, which come under the rural leasing sub-window of the EU/EBRD SME
Finance Facility, will be complemented with grants from the European Commission
for training and management improvements and with performance fees. The new loan
builds on SKB Leasing's successful track record, after an earlier 10 million
Euro loan for SME financing, signed in September 2004, which had been over 90
per cent distributed to final customers by December 2005.
As access to finance remains difficult for small enterprises in central and
eastern Europe, leasing is one of the few available sources to support the
development of this vital economic segment. SKB Leasing intends to expand its
business to a rural market niche which, so far, has been out of reach of leasing
companies.
SKB Leasing's ownership consolidation in 2003 and subsequent restructuring
brought the company back to profitability in 2004 and boosted new business
volume. SKB Leasing has become the fourth biggest leasing company in Slovenia
with the forecasted turnover of 80 million Euro in 2005. SKB bank, the owner of
SKB Leasing, has recently increased the company's capital by 15 million Euro.
The EU/EBRD SME Finance Facility, a joint programme of the European Commission
and the EBRD, supports the development and growth of entrepreneurs by
facilitating their access to financing.
The Bank will make available funding of 1.1 billion Euro, of which 880 million
Euro has been committed to signed projects to date. The EC has been contributing
156.75 million Euro in grant financing and for technical assistance since the
launch of the programme in 1999.
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