Books on Slovenia
% of GDP
Update No: 097 - (26/05/05)
The maverick Slovenes
Guidebooks to this small country like to describe it as "Europe in
miniature," offering the best of things European, but in a compact area the
size of Wales or Israel. The slogan aims to promote the beautiful and varied
geography of Slovenia, which stretches from the Alps to the Adriatic Sea and
east to the continental plains of Hungary and Croatia.
But for many Slovenes, it could just as well apply to their country's exemplary
status among the 10 countries that joined the European Union in May 2004. It is
certainly the odd-one out in the former communist world,
Actually, crossing the border from Italy or Austria into Slovenia, there is
little to indicate that this country was once part of Tito's Socialist
Yugoslavia. There are none of the old rusting industrial hulks seen in many
former Communist-bloc states. From the new highways leading to Ljubljana, the
capital, to the factories and businesses lining them, Slovenia looks clean,
organized, prosperous - indeed, like a part of Western Europe.
During the accession process, Slovenia won praise from the European Commission
for its reforms, many of which took place back in the 1990s. When it entered the
Union, it did so with the highest standard of living of the 10 new member
Economic success story of the region
A year later, it has built on that success, with a 12 percent increase in
exports and growth at 4.6 percent of gross domestic product. Slovenia has by far
the best economy in the entire former communist world, with a higher GDP per
capita than Greece and Portugal, who both joined the EU in the 1980s.
Its GDP is expected to grow by 3.8% this year and 3.9% in 2006, while its
inflation rate is due to fall from 3% this year to 2.7% next year, enabling it
to qualify for membership of the Euroland club. This development would put a cap
on its successful performance and encourage one thing lacking - abundant foreign
direct investment (FDI). FDI is barely over $2bn to date, a poor showing for
such a promising place.
Actually, there are of course other things lacking too. A new tax code came into
force in the New Year on January 1st. But it is proving opaque and cumbersome
for business. It needs to be simplified. A look at Estonia and Russia would not
be amiss here, both with buoyant economies, albeit from considerably lower bases
than Slovenia's, after adoption of greatly simplified tax regimes.
The government economic panel, an inter-ministerial body, has advocated a
re-think of the whole matter. It advised the setting-up of a task force to
deliberate the best way forward to fiscal soundness and probity.
Catching up with the EU
Not content to stay at No. 16 among the 25 members of the expanded Union,
Slovenia's government has set an ambitious target: to reach the EU's average
standard of living within eight years.
Slovenia is also one of just three former Eastern-bloc states - the others are
Estonia and Lithuania - seeking to adopt the euro in 2007.
Both these choices, according to analysts here, could prompt sharp changes in a
country that has prided itself in the gradual nature of its transition, and the
political and social consensus that has accompanied it.
It is generally acknowledged that the roots of Slovenia's current success were
laid down well before the country decided to opt for EU membership. Yugoslavia's
softer brand of socialism had exposed Slovene companies to market economics well
before the country declared independence in 1991.
With its proximity to Western Europe and a well-educated work force, Slovenia
was the hub of Yugoslav exports to the West. With just 8 percent of Yugoslavia's
population, Slovenia generated 20 percent of the socialist federation's gross
domestic product. Slovene efficiency, attributed by some to 600 years of
Hapsburg rule, was a source of admiration, jealousy and humour in neighbouring
Yugoslav states. "Laws are drafted in Belgrade, read in Zagreb and
implemented in Slovenia," ran one joke.
"Slovenia was the most developed area of Yugoslavia," said Anton Rop,
Slovenia's prime minister at the time of EU accession. "It wasn't so
dramatic for us to open our borders in the 1990s. We were in a favourable
position and had a strong service sector and less heavy industry to reform
compared with other former Communist-bloc states," he said in an interview.
The crossroads of the region
Slovenia now sees itself as a bridge between East and West, particularly for
the former Yugoslav states, which at one time shared the same legal framework as
Slovenia. Slovene civil servants have been seconded to other former Yugoslav
states, including Serbia, to help implement reforms. With Serbia, Croatia and
other ex-Yugoslav states still outside the European Union, Slovenia has also set
up a Centre for EU Integration Support in Ljubljana that offers short-term
programmes to help applicants adopt EU reforms.
Two Slovenes are currently playing a prominent role in the shaping of European
policy. Janez Potocnik is the EU's commissioner for science and research,
responsible for one of the commission's largest budgets. Slovenia's foreign
minister, Dimitrij Rupel, is chairman of the Organization for Security and
Cooperation in Europe, which is not part of the EU but is one of the main
instruments of encouraging democratic development in areas such as former Soviet
Central Asia and the Balkans.
Adria Airways sees bigger passenger number for 2005
Slovenia's national airline carried 885,000 passengers in 2004, up 2% over the
previous year, Adria Airways Chairmen Brane Lucovnik told Slovene press agency
on April 13th. According to Lucovnik, the company generated 136m Euro in
revenues and wrapped up the year with a profit of 171,000 Euro.
Lucovnik stated that the company expected to finish the year with an even bigger
profit but is still pleased happy with the final result.
Lucovnik noted that the company finished the year with a profit despite fierce
competition on the tarmac of Ljubljana's international airport, which witnessed
the arrival of a number of foreign airlines. Adria hopes to tap further into
this market this year.
The top priorities of the company for this year is to raise the number of
passengers to one million by boosting the number of scheduled and charter
flights and Lucovnik said that figures from the first quarter suggest that this
target is possible but he refused to reveal forecasts for this year's
operations. He said that there were too many variables for a reliable outlook.
Adria's Marketing Director Bojan Sodnik stated that new destinations for
scheduled flights for this year include Warsaw and St Petersburg.
Adria is a member of the Star Alliance, the world's biggest airline
confederation that recently expanded its fleet to 10 aircraft with a long-range
edition of the popular Canadair Regional Jet 200. Adria, which operates around
140 flights each week to 40 destinations has also been cooperating successfully
with Bombardier in CRJ aircraft maintenance.
The lion's share of Adria's passengers in 2004 flew on scheduled flights but
charter flights saw better growth because the number of passengers increased by
13% to 120,000. According to Lucovnik, Adria is currently trying to overcome the
problems that emerged from high fuel prices leading to the aviation industry.
Adria has spent 1.5m Euro more on fuel in the first quarter of this year than
last year despite using more fuel-efficient jets, Lucovnik said.
However, the company expects to finish the year in the black which can be
considered as a big achievement in comparison to the performance of other
regional airlines. In 2002 it was chosen as the first and only authorised
maintenance service centre in Europe. During this time, it has services 189
Slovenia's second biggest bank to be privatised on stock market, minister says
Finance Minister, Andrej Bajuk, has said the privatisation of Nova Kreditna
Banka Maribor (NKBM), Slovenia's second-largest bank, will be tied to its
listing on the stock market, STA News Agency reported.
Bajuk's comments came after he held a meeting with the management of the Maribor-based
bank as part of the government's visit to the Podravje region recently.
The privatisation of the NKBM will be gradual and transparent, which can be
achieved only on the stock market, Bajuk said.
Bajuk told the press that the promotion of enterprise is a fundamental goal of
the government. According to him, this requires many measures, including those
related to the financial system.
In his view, the NKBM can turn into an indispensable factor of development of
In order to achieve the set goals, the bank will need a capital injection, Bajuk
said, adding that the government has already launched talks with the European
Bank for Reconstruction and Development (EBRD) on this.
He said the privatisation of the bank would be such that the state would
continue to have a crucial say in matters related to the plans of the bank.
Moreover, he said the government would like to implement a model that would
allow domestic investors to play a part in the privatisation, although the
government has no restraints towards foreign investors.
Slovenia ready to take over Croatia's stake in NEK
Slovenian Economics Minister Andrej Vizjak said recently that Slovenia intends
to purchase the Croatian half of the jointly owned Nuclear Power Plant Krsko (NEK).
In an interview for a Croatian daily, Vizjak said he considered this decision to
be economically sound. He told the Rijeka-based daily Novi list that Slovenia
has never seriously considered buying the Croatian stake because the price was
too high. Asked how the decisions recently adopted by the Slovenian-Croatian
commission over-seeing the plant's joint management are being implemented in
practice, Vizjak said he was pleased with the implementation and the plant's
decommissioning programme, adopted by the joint commission in early March. In
line with the plan, production in the plant will be phased out by 2023. Vizek
further stated that he received assurances from his Croatian government would do
everything for a bill on the decommissioning fund to be passed. After the
foundation stone for NEK was laid on December 1st, 1974, construction works
began in 1975 as a joint project of the Yugoslav republics Slovenia and Croatia
in the SE Slovenian town of Krsko.
It then took several years before the power station started producing its first
kilowatt-hours of electricity in late 1981. A trial period then ended on January
1st, 1983 when NEK was fully and officially connected to the national grid.
Krka records strong Q1 sales
Slovenian drugmaker Krka generated sales of 31.6bn tolars (131.8m Euro) in the
first quarter of the year, up almost 13% year-on-year and 24% more than in an
average quarter in 2004. Net profit meanwhile topped 4.2bn tolars (17.52m Euro),
up 10%, Krka CEO, Joze Colaric, said, the Slovene press agency reported.
According to Colaric, Krka's performed well in Poland and Russia, where the
market for pharmaceuticals will treble in the next few years. Colaric noted that
this is due to the fact that Krka has its own production facilities there. Krka
Rus, the Russian plant, already produces 3 drugs for the local market and the
offer will be extended to 5 by the end of the year. He said the company would
continue to focus on the markets of Central, Southeast and Eastern Europe and
predicted that sales in all markets to expand by 14% this year. Eastern Europe
was the fastest growing market for Krka, with growth at 43% and a share in
overall revenues of 28%. Prescription drugs represent 81% of all sales, followed
by over-the-counter drugs with 13% and veterinarian products with 4%. The
company has reduced its product line in cosmetics, so the segment accounts for
no more than 2% of the sales.
Colaric highlighted Croatia as an important future market, as Krka is building a
production plant in Jastrebarsko that is due to be launched at the end of the
year. The Krka management will stage a European tour in April to present itself
as an investment opportunity for foreign investors.
According to Colaric, Krka wishes to increase its liquidity and the liquidity of
the Ljubljana Stock Exchange. The goal of the management is to have 10% of
foreign shareholders, yet Krka intends to remain an independent company, he
Retailer Spar boosts 2004 revenues by 13%
Grocer Spar Slovenija's general manager Igor Mervic was quoted by The Slovene
press agency recently as saying that the company posted sales of 103bn tolars
(429.6m Euro) for 2004, an increment of 13% over the previous year. The company
has grabbed a share of 19.6% in 2004.
However, Mervic refused to reveal more information about the profits. Spar
decided to invest 9bn tolars (37.5m Euro) this year and the company intends to
expand further. Mervic also criticised the city of Ljubljana, which in February
crushed the retailer's plans for the construction of a shopping and
entertainment centre in the northern Ljubljana borough of Siska. The city
council passed the draft zoning plan but rejected the appropriate decree.
Mervic said this has not happened anywhere in Europe and this was a shameful
political decision with which the city councillors rejected 2,000 jobs. Mervic
added that no one is ready to elucidate on the decision, even Mayor Danica
Simsic who has received several letters from him has not replied to date.
However, Mervic said that in spite of the drawbacks, the company would not sell
the plot of land and it is not ready to withdraw from its plans. Mervic said
Spar has good cooperation with dairies and the meat industry, but he is not
pleased with the beverage industry. Spar Slovenija is 100% owned by Swiss
company Aspiag. It has 7 mega markets and 37 stores in the country. While 7 new
stores opened in 2004, 10 more are planned for 2005.
According to Mervic, 66% of the products on Spar shelves are of Slovenian
origin. If Slovenian companies continue to make good products then there is
scope for an increment in the percentage.