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SLOVENIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 26,284 21,108 18,800 63
         
GNI per capita
 US $ 11,830 9,810 9,760 51
Ranking is given out of 208 nations - (data from the World Bank)

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% 



 
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 place peacefully." 
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 OSCE mission. 

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 regional stability. 

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 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.

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. 

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CHEMICALS

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.

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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.

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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. 

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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).

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PHARMACEUTICALS

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 Eon Labs. 
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 away investments."
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. 

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TELECOMMUNICATIONS

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.

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