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International Review: Slovak Republic

The second part of the series International Review will describe one of the most developing countries of the European Union - the Slovak Republic. In recent years, Slovakia has managed to reach a qualitatively new level of development of the automotive industry, attract investment of the leading global concerns, and build an effective export policy. Belarusian companies should consider the possibility of working at one of the most promising European markets.

Slovakia occupies the territory in the Central part of Europe, borders with the Czech Republic, Austria, Hungary, Poland, and Ukraine. The country officially has about 5.5 million people (over 80% - Slovaks, 10% - Hungarians). The main religion is Catholicism. According to the human potential index, the country is on the 40th place. The president governs the country; executive power is entrusted to the government. There are about 16 political parties in the country and major political groups are functioning: the Alliance of Companies 500, the Association of Industrial Unions (APZ), the Association of Cities and Villages (ZMOS), the Automobile Industry Association (ZAP), the Association of Entrepreneurs of Slovakia (ZPS), the Confederation of trade unions (KOZ).

The history of the Slovak state dates back to the 9th century, when the early feudal Slavic state of Great Moravia was formed on the Middle Danube. It consisted of the territories of present-day Hungary, the Czech Republic, Small Poland, Ukraine and Slovakia. In the beginning of the 10th century, the Great Moravia split and for the next 1000 years, the territory of modern Slovakia was part of the Hungarian kingdom. After the collapse of the Austro-Hungarian Empire, Slovakia formed into a new state - Czechoslovakia. In 1989, the «velvet revolution» happened, which led to its split into two independent states in 1993. In 2004, Slovakia joined NATO and  entered the EU.

ECONOMY

In the rating Doing Business, Slovakia occupies the 39th position, leading in terms of property registration, resolving insolvency, taxation, international trade. The World Bank experts refer to the protection of minority investors, enforcement of contracts, obtaining construction permits, registration of enterprises as weak points. In the first years after independence and the dissolution of Czechoslovakia, the economy of Slovakia grew at a slow pace. Several factors were the reason for this, amongst which high level of corruption and authoritarian leadership of the country. However, the reforms carried out in 1998 put Slovakia on the path of building efficient market economy with high growth rates.

 

Interesting fact. About 90% of GDP is generated through export, the key market is the EU countries.


Over 10 years, the country's GDP has increased from 22 to 96 billion US dollars. Over the past 20 years, the average GDP of Slovakia has increased by 4%. The country occupies the 45th position in terms of GDP per capita. Export and investment have become key factors in Slovakia's sustained growth. Exports of goods and services totaled $ 85 billion in 2016, an increase of 4.4% compared to 2015, after a decline of 12.3% a year earlier. Import of goods and services amounted to 81.8 billion US dollars, while in 1993 it amounted to 8.2 billion US dollars.

Over the past 12 years, the average growth rate of Slovakia's export was 8.1%, imports - 6.5%. There is a decrease in the share of fuel and energy products in the total volume of import of goods - over10 years from 13.4% to 6.7%. At the same time, the share of provision remains in the range of 5-6%. The share of industrial products, including chemicals, main output, machinery and equipment, other manufactured goods excluding non-ferrous metals, in the total volume of import is 83.6%. About 70% of import comes from EU countries. Key import positions that may be interesting for Belarusian companies:

  • industrial equipment and electrical equipment;
  • cars and spare parts for them; power installations;
  • hydrocarbons; metals; metal products.

The key branches of the Slovak economy are automobile, electrical, chemical, pharmaceutical, woodworking industries, oil refining. Heavy industry and mechanical engineering form more than 50% of the country's export. Among the industrial leaders are the US Steel Kosice (metallurgy), Slovnaft (petrochemical), KIA, Volkswagen, Peugeot, Jaguar (automotive), Sony, Samsung (electronics), Whirlpool (home appliances), ESET (information technology).

 

Interesting fact. Belgian think-tank Cidic called Slovakia an ideal place for building new automobile enterprises.

 

Slovakia is one of the target directions for foreign investors. In 2016, foreign direct investments in the country amounted to 568 million US dollars (25th place in the world). Investors are attracted by favorable business climate, cheap labor, geographical location in the center of Europe. There are 59 industrial parks in the country. In 2017, in the industrial zone of Kosice city, construction of a new plant of the Japanese concern MinebeaMitsumi began. Two years ago investment from Britain - Jaguar Land Rover entered Slovakia. The American technological giant Amazon and the largest Chinese investment campaign CEFC Direct Investment Company are coming to Slovakia as well.

COOPERATION: SLOVAKIA AND BELARUS

The Embassy of Slovakia has been operating in Belarus since 2000, and the Belarusian Embassy has been open since 2002. In 2009, a landmark visit of the Minister of Foreign and European Affairs of Slovakia took place, within  which a meeting with President A.G. Lukashenka was held. In 2016, the first official visit of the Slovak Prime Minister R. Fico to Belarus was organized. The National Council of Slovakia established a friendship group with our country. At the moment, about 10 agreements on cooperation between the regions and cities of Belarus and Slovakia have been concluded.

 

Interesting fact. Grodno is a sister city with the city of Zilina, which is famous for the developed automotive industry.

 

Slovakia is an important trade and economic partner of Belarus in Central Europe. However, the turnover in recent years tends to decrease. Key positions of Belarusian export to Slovakia:

  • devices and accessories for medical purposes;
  • twisted wire of ferrous metals without insulation;
  • oil products; polyamides;
  • packing accessories;
  • chipboard plates.

Key positions of the Belarusian import from Slovakia:

  • equipment for processing rubber or plastics;
  • cars;
  • corn;
  • packing accessories; products from plastic;
  • articles of ferrous metals; refractory cements;
  • furniture fittings;
  • synthetic threads.

Together with Slovak companies, a number of joint projects are implemented in Belarus aimed at qualitative renewal of production capacities of Belarusian enterprises. Slovak companies take part in the modernization of equipment at Belshina, the reconstruction of milk processing enterprises. In Slovakia, there are offices of Bobruiskagromash, Gomselmash, Lidagroprommash, Amkodor, Belshina, Mozyr Machine Building Plant, Smorgon Aggregate Plant, Minsk-Kristall, Bulbash, a joint venture Belarus traktor Slovakia.

PROSPECTS

The turnover of FEZ residents and the Slovak Republic in 2017 amounted to $ 1 million. Prospective areas of cooperation are:

  • machine building;
  • automotive industry;
  • electrotechnical industry.

The forum Slovak Days in Grodno was held in May 2018, within which a mini-exhibition of Slovak goods, business forum and contact-cooperation exchange took place.  The 14th session of the Belarusian-Slovak joint commission for trade, economic and scientific-technical cooperation is scheduled this year.

In case of interest on behalf of Belarusian companies in cooperation with the Slovak business community, FEZ Administration can assist in establishing contacts and organizing negotiations on the implementation of joint projects. To do this, just write an e-mail to invest@grodnoinvest.by or call +375 152 41-23-17.