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Slovenia’s Prospects Rise With The New Government

By InvestSlovenia Team
Posted: 29th September 2014 08:54
Slovenia’s attractions for foreign investors include its position at the intersection of traditional trade routes, its well-developed physical and ITC infrastructure, its value chains, supplier networks and clusters… And what matters most when a country is on track to excellence is its ability to evolve.  The global economic crisis did not spare Slovenia, but its economic growth is back thanks to quality, efficiency and responsiveness of its people.  Strong FDI flows are expected as the restructuring of Slovenia’s economy gains pace and the country’s perception on international financial markets improves
Good news for potential investors in Slovenia after bank stabilisation and company restructuring start to show results and the first deals on selling the state-owned enterprises are sealed.  The share of Slovenia’s exports on the global market increased for the first time since the outbreak of the crisis and the 5.3% and 3.4% year-on-year rise for exports and imports respectively in July are the first signs of economic recovery.
More structural changes will help revive economic growth and Slovenia’s new government promises to improve conditions for corporate financing by fostering privatisation and better corporate governance of the banking system and the real sector.  Sustainable fiscal consolidation, better performance of the government and its institutions and a proper environment for the functioning of the economy are indispensable for a stable business environment conducive to the creation and growth of sustainable enterprises.  By boosting the innovative capacity of the economy and integrating enterprises into global supply chains, particularly through foreign direct investment, the value added of goods and services will increase as new technologies enable more efficient use of resources without increasing environmental pressures.
In a nutshell, Slovenia’s economic development comes down to a larger inflow of direct foreign investment.  Attracting foreign investors, however, Slovenia has to improve competitiveness by increasing value added through higher innovation capacity of the economy and tangible improvement in the business environmentThe Global Competitiveness Report 2014-2015 published by The World Economic Forum puts Slovenia in 70th place out of 144 countries, but its individual rankings confirm its qualities so important to foreign investors: technological readiness (33), infrastructure (35) and innovation (42).  When we add a highly educated workforce and a location close to European supply chains, Slovenia’s innovation-driven economy is a great opportunity for smart investors. 
Significant progress has been made in improving labour market efficiency by strengthening flexibility and other flexicurity components, and by adapting Slovenia’s education system to the labour market needs.  The number of researchers and population with a tertiary education is a reflection of substantial R&D investment over the past few years, but the transfer knowledge from the research sector to the business sector to enable faster growth in the innovation capacity and competitiveness of the economy has to improve.  More FDI projects are necessary to deploy workforce with tertiary education hit hard by many years of economic slump and decrease the risk of brain drain.  To give impetus to the faster growth in value added and productivity of the economy, Slovenian governments have done a good job in recent years in slashing administrative barriers to doing business.  An improved business environment will benefit the economy by attracting not only fresh capital but also new technologies and the task to integrate Slovenia into global value chains, access fresh capital and convince foreign investors to increase equity capital in their Slovenian subsidiaries will be one of the challenges the new government will have to deal with soon.
However, Slovenia’s key selling points such as well-developed infrastructure and supporting industries, its clusters of specialised suppliers and competitive overall supply chain costs thanks to the country’s position at the centre of the market with 500 million customers, cannot beat the odds.  Europe’s share of global foreign direct investment has fallen and though Slovenia has often demonstrated that it is successful and competitive, it has to work much harder to attract foreign investors.  And this is exactly what the government officials and the investment promotional agency are doing: offering investment opportunities to foreign businesses in all sectors of Slovenia’s economy and looking for investors for state-owned assets such as the cargo port, motorways, national airline, Ljubljana airport, telecoms, insurance companies plus opportunities in the retail sector.  In addition to privatisation opportunities for investors, pharmaceutical and white goods firms, manufacturing industries, strategic services, shared services centres, logistics and distribution centres, as well as R&D and the energy sector, particularly renewable energy, are opportunities not to be missed.
Another great opportunity for inward investment is in tourism.  The country is beautiful and diverse - from the Alps to the Adriatic Sea there is much to see.  Food and wine are exquisite, there are natural phenomena and historical places to visit will satisfy even the most discerning visitors.  In the wake of the Winter Olympics 2014, overall interest in sports has surged after Slovenia won eight medals.  The Washington Post Slovenia named Slovenia “a per-capita powerhouse at Winter Olympics”, so it should not come as a surprise that sports events are becoming a niche market for tourist resorts.  They have positive effects on their reputation and earnings come not only from athletes and teams but also from their fans.  Top level Alpine skiing competitions, biathlon races and ski jumps attract crowds to Pohorje, Kranjska Gora, Pokljuka, Bled and Bohinj and attract recreational skiers, aspiring children and holidaymakers in general.  Foreign investors are invited to Slovenia’s summer resorts that operate year-round and often boast excellent facilities for conventions and other business events.  The Slovenian spas built in the vicinity of thermal and mineral water springs with their wellness and sports facilities are the gems of the country’s hospitality industry, while many casinos, fun centres and arcades offer entertainment and gaming excitement. 
Foreign visitors to Slovenia quickly notice that Slovenians have passion for life and for entrepreneurship.  It's no wonder that successful entrepreneurs think ahead and want to build an ecosystem that will allow them to live and work in such a special place centrally located to serve east and south-east Europe, as well as Asia.  

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