Books on Slovenia
% of GDP
Update No: 096 - (26/04/05)
Slovenia is a curious country. It is the one part of the
former communist world that always remained relatively prosperous and civilised.
It naturally still is, a fact appreciated by the cognoscenti in the West.
Key Slovenian role in Kyrgyz crisis
It is being asked by the West to play an important role in the drama unfolding
in Kyrgyzstan because their Foreign Minister currently leads OSCE.
The Organisation for Security and Cooperation in Europe (OSCE) can play an
important role in Kyrgyzstan by bringing parties to the negotiating table, US
Deputy Secretary of State Robert Zoellick said on March 29th during a visit to
Slovenia. "There is a key role (for the OSCE) in terms of trying to bring
the parties together within Kyrgyzstan as they deal with the departure of the
president and looking towards the new government," Zoellick told
journalists after meeting Slovenian Foreign Minister Dimitrij Rupel, who
currently heads the OSCE.
Speaking at the start of a European tour that took him to 14 NATO member states,
Zoellick said the OSCE, currently chaired by Rupel, should also play a
particular role in soothing Russian sensitivities about the crisis in the former
Soviet republic. "The OSCE can also play a role in terms of making sure
that key partners, particularly Kazakhstan, Russia and others, have a comfort
about the process moving forward and supporting it," Zoellick said.
"All this needs to be kept in the context of recognising that the people of
Kyrgyzstan want to determine their own future," Zoellick said.
Moscow, reeling from a series of popular uprisings in former Soviet republics,
has accused the OSCE of triggering the unrest that led to the fall of president
Askar Akayev because the pan-continental body criticised the March elections in
Kyrgyzstan. That election was indeed phoney, so precisely how OSCE could do
anything other than give that verdict defies comprehension.
"What we've seen over the course of past months is an expression by people
in very diverse parts of the world - whether it is Ukraine, Georgia, Iraq,
Afghanistan or the Palestinian elections - of a desire to be free and
participate on their own future with their governments," Zoellick said. He
added that "large changes are afoot but the process of change also requires
careful attention by countries that want to try to support the process taking
Zoellick also said the OSCE should also play a role in Kyrgyzstan in the context
of election assistance and election monitoring, as well as work with the free
press and providing support to the police services.
OSCE Chairman-in-office to visit Azerbaijan
In the frame of his visit to the South Caucasus on April 2, OSCE
Chairman-in-office, foreign minister Rupel was due to visit Azerbaijan, another
country whole elections have been infamously corrupt.
On the agenda were meetings with Foreign Minister Elmar Mammadyarov, the Speaker
of the Milli Majlis (National Parliament) Murtuz Alaskarov, Prime Minister Artur
Rasizade and President Ilham Aliyev.
The OSCE Chairman-in-office was also said to meet with representatives of
political parties and non-governmental organizations, as well as local media and
OECD membership shortly
Membership of other international bodies is also important to Slovenia, now that
it is firmly in the EU, for whose new constitution it has already voted heavily
in favour in a referendum earlier this year.
Slovenia has a good chance of being short-listed among states for which the
confusingly similar-sounding OECD (Organization for Economic Cooperation and
Development) would launch accession strategies. This estimation is a result of
past cooperation between Slovenia and the OECD as well as the wide support among
the member states. The selection will, however, be a matter of political
judgment, the ministry said in a press release on March 29th.
As the ministry explained, the enlargement of OECD is frozen right now, given
that some members, especially non-European ones (Canada, US, Australia, New
Zealand and Japan), oppose the integration of other European states because of
Economic success story of the region
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
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.
The target date is now 2025 for parity with the EU
Slovenia is still not well off by EU standards, trailing all but two of the
established member states on joining in May last year in terms of GDP per
capita. It was after all under communism for fifty years, a sure way to blight
enterprise and individual initiative.
Growth statistics depend overwhelmingly on the base from which you start off.
Slovenia's base line is high, indeed the highest in the former communist world.
Nevertheless, a leading Slovenian economic institute has concluded that Slovenia
is unlikely to catch up to the average GDP per person in the European Union
before the year 2025. This is 12 years later than predicted in the current
national development strategy.
Helios reports 30% surge in sales revenue for 2004
Chemical group Helios recently reported a 30% rise in sales revenues for 2004,
totalling 40.7bn tolars (168.3m Euro). Helios, which acquired paints producer
Colour in 2004, predicted that its sales would increase by 20% volume-wise this
year, Slovene Press Agency recently reported.
The forecast-beating sales facilitated the group's operating profit by 22% to
3.9bn tolars (13.3m Euro). Helios said it managed to meet all operating targets
despite seeing the price of essential raw materials sky-rocket as a result of
dearer crude oil, the group said in a statement.
The company sold 92,802 tonnes of products last year, a rise of 29% on 2003.
Paints and varnishes made up for the bulk of the group's sales. The group made a
net profit of 3.46bn tolars (14.43m Euro) last year, an increment of 8% over the
previous year. The sluggish growth in this department is due to new accounting
standards, the group added.
FOOD & DRINK
Fructal in the red with 3bn tolar loss
The Ajdovscina-based fruit beverages producer, Fructal, recorded a loss of 2.9bn
tolars (12.10m Euro) last year; of this, 1.2bn tolars (5.01m Euro) was from
operations, according to Slovene Press Agency recently.
The Ljubljana-based brewer, Pivovarna Union recently acquired by Slovenia's
leading brewer, Pivovarna Lasko, controls Fructal. Based on unaudited data,
Fructal generated 15.4bn tolars (64.24m Euro) in net sales revenues, down 17 per
cent over 2003. As much as 54 per cent of the revenue was generated on the
domestic market. Fructal Chairman, Miran Bozic, described 2004 as the year of
"sobering up" because the company was not ready for the EU entry. So,
the company has planned a 5 per cent increase in sales on the markets of nearby
EU countries, in particular Italy, Austria, the Czech Republic and Hungary,
which would be the first step in entering the EU market.
While it retained its market position at home, its sales on foreign markets went
down by 30 per cent to seven billion tolars (29.2m Euro). Bozic cited the
increase in the number no-frills products and a surge in own-brand beverages
sold by retailers as the main reason for the drop in sales at home. The slump in
sales on foreign markets, in particular the former Yugoslavia, was largely due
to changed market conditions with the adoption of a single European market order
for sugar and the expiry of bilateral free trade agreements with the countries
of the former Yugoslavia.
Bozic claimed that this year Fructal would not witness any loss and expects to
earn 14.7bn tolars (61.32m Euro) in net sales revenues. The company has planned
to achieve this through changes in its sales strategy and cost cutting. This
year, Fructal wants to focus on the domestic market, where it plans to generate
61 per cent of the overall sales.
The markets of the former Yugoslavia are to be supplied primarily by the Fructal
FYR Macedonian subsidiary, Fructal Mak. A new production line for fruit syrup
that was put in operation there in January is to generate 90 per cent of
Frutal's entire syrup production. The company is also expected to cut labour
costs in order to improve its operations. The workforce is to be cut by 79 to
654. According to Bozic, salaries of all employees were reduced by 12 per cent
as of January 1st. Additional savings are to be made in the purchase of raw
materials as a result of the synergy effects among affiliated beverages
producers, the Fructal CEO said.
FOREIGN ECONOMIC RELATIONS
Slovenian minister meets Azeri businessmen to boost economic ties
OSCE Chairman-in-Office and Slovenian Foreign Minister, Dimitrij Rupel, attended
an economic forum of Azerbaijani and Slovenian business people recently. The
Slovenian minister said that there are conditions for developing economic
cooperation between the two countries and added that his country was interested
in this, Space TV, Baku reported.
Azerbaijani Minister of Economic Development, Farhad Aliyev, said that
Azerbaijan is doing its best to avoid the Dutch syndrome. Special work is under
way to develop the regions, and businessmen who come to the country are being
encouraged to go to the regions.
MINERALS & METALS
Steel Group to boost profits
The Slovenian Steel Group recorded profits at all its units in 2004, the company
announced recently. Combined profits amounted to 2.3bn tolars (9.6m Euro). The
main reasons for the increases were soaring costs of steel and strong demand in
steel-hungry China. Apart from the windfall effects, the group owes credit to
intensive marketing and cost-cutting as two other factors contributing to the
rise in profits, Slovene Press Agency reported.
The supervisory board of the Steel Group reviewed the results of 2004 on
February 17th and declared that the group expects strong performance this year
as well. The six companies in the group, in which the state owns a majority
stake, generated sales of 92bn tolars (384m Euro) in 2004, which is 30 per cent
more than the previous year. In a statement, the group stated it used synergies
among all its components to obtain raw materials on time and at favourable cost.
This year the group expects to generate revenues of 108bn tolars (450.5m Euro)
and earn profit of 2.12bn tolars (8.85m Euro).
Lek gains strong footholds on east European, Russian markets
The CEO of the Swiss pharmaceutical giant Novartis, Daniel Basella, recently
announced that Ljubljana-based Lek, a subsidiary of Novartis' generic group
Sandoz, has a strong position on the markets of Eastern Europe and Russia which
leads to enormous growth potential.
The decision to put Lek's former Chairman, Metod Dragonja in charge of Sandoz
operations in Russia will put a new mark to the weight of this market, Vasella
said, Slovenian Press Agency reported.
Vasella said that Dragonja has many ambitions but would assess the situation on
the market gradually. He believes that Slovenia as a country is well-positioned
in the markets of Eastern Europe and Russia. China and India are identified by
Novartis as very large potential markets with substantial growth opportunity.
"In pharmaceuticals for example, in China we grew about 50% last ear and
had an average growth beyond 25% compounded annual growth in the last five
years," Vasella said. He admitted that Novartis currently has no new
takeover appetites because it is interested in purchasing German Hexal and US
Questioned as to how long Lek would retain its present name, Vasella said the
only guarantee was success: "If somebody is successful, nobody would take
In 2004 Lek made an investment of US$68m in research and development and another
US$110m in a biopharmaceutical plant in Slovenia, Vasella said.
"Investments have been at an all-time high. So I think any concerns people
had when we acquired Lek were just unreasonable fear." Lek's business
strategy would remain the same due to the change at the helm of the company but
some organisational changes are anticipated because of the purchase of Hexal.
Telekom reports exploding operating profits
Reviewing last year's results, the supervisory board of Slovenia's state-owned
telecommunications group, Telekom Slovenije, declared that all key goals had
been exceeded, New Europe reported recently.
The company that witnessed its operating profits explode in 2004 posted a profit
of 157bn tolars (655m Euro) in operating revenues last year, a 14% increase on
2003. The company, which has a monopoly on the Slovenian market, saw its
operating profits increase 45% to 14.9bn tolars. The parent company, which
operates fixed line services, generated 88.7bn tolars (370 Euro) in operating
revenues and 8.5bn tolars (35.5m Euro) in net profit, which represents a jump of
11 per cent and 32 per cent respectively, the company said. Apart from the
fixed-line company, the group also includes Mobitel, Slovenia's leading wireless
carrier, and Siol, the country's top Internet provider.
The company said the management and supervisory board endorsed a plan to list
Telekom's shares on the stock market. In its capacity as the biggest shareholder
of Telekom, the government intends to replace the supervisory board.