Slovenia Business Week no. 15/2006, April 10th, 2006
Table of Contents:
HEADLINES ............................................................................................................................. 3
Parliament Passes Companies Act ......................................................................................... 3
D&B: Slovenia Stays on Top in the Region .......................................................................... 3
IMAD Head Says Upbeat Growth Forecasts Opportunity for Reforms ................................ 4
INTERNATIONAL COOPERATION ...................................................................................... 5
Drnovsek Says the World Needs a Strong Europe ................................................................. 5
EUROPEAN UNION ................................................................................................................. 6
European Commission Employs 111 Slovenians ................................................................... 6
EU Increases Pressure on Slovenia Due to Number Portability ............................................ 6
Minister: New EU Services Directive Departure from Our Stance ....................................... 7
Prime Minister Jansa Hails Final Agreement on EU Budget ................................................. 7
Slovenian EU Presidency Gets Rough Outline ...................................................................... 7
Commissioner Believes EU States Responsible for Lisbon Strategy .................................... 8
Bajuk Expects No Problems in Run-up to Eurozone Entry ................................................... 8
Minister Bajuk Decries Protectionism in EU and Slovenia ................................................... 9
Slovenia Reserved about Common EU Corporate Tax Base ................................................. 9
LEGISLATION ........................................................................................................................ 11
Official Calls for Expedited Passage of Public Procurement Act ........................................ 11
STATISTICS/FORECASTS .................................................................................................... 12
Trade Gap Surges in February ............................................................................................. 12
Foreign Debt at EUR 19.82bn in January ............................................................................ 12
FINANCE................................................................................................................................. 13
Life Insurer Slovenica Zivljenje Tops Plans in Maiden Year .............................................. 13
Bajuk Promises Simplifications of Tax Code ...................................................................... 13
Restructured Pension Management Fund to Handle EUR 2bn ............................................ 13
Wiener Staedtische Aims for Profit in 2007 ........................................................................ 14
Central Bank: Compliance with Convergence Criteria Sustainable .................................... 14
Tax Consultants Call for Simpler Tax Legislation ............................................................... 15
KBC Chief Executive Says Majority Stake in NLB Desired but Unlikely .......................... 15
Cash Machine Adaptation Deemed Major Euro Changeover Challenge ............................. 16
Ljubljana Stock Exchange .................................................................................................... 16
Foreign Exchange ................................................................................................................. 17
REGIONAL INFORMATION ................................................................................................ 18
Four Bird Flu Surveillance Zones Lifted ............................................................................. 18
BRANCH INFORMATION .................................................................................................... 19
Panel: Forests Offer Opportunities for Development of Tourism ........................................ 19
Emission Trading Slow in Slovenia ..................................................................................... 19
Telecoms Regulator Head Promises Prompt Number Portability ........................................ 20
Slovenian Tourist Ad to Be Aired on CNN ......................................................................... 20
Transport Minister Promises Pomurje Motorway until 2008............................................... 21
COMPANIES ........................................................................................................................... 22
Children's Books by Lila Prap to Hit Stores in Italy and Greece ......................................... 22
ISP Siol Posts Record Profits, Revenues in 2005 ................................................................ 22
Iskraemeco Wants Creditors to Convert Claims to Ownership Stakes ................................ 22
Telco Supervisors Appoint Two New Execs ....................................................................... 23
Managers in Control of 97% of Iskra ................................................................................... 23
Droga Kolinska Buys Macedonia's Slovin Jugokokta ......................................................... 24
Adria Leases Ukrainian Boeing 737-500 ............................................................................. 24
AGSS Publishes Bid to Acquire up to 24.99% in Mercator ................................................ 24
Shoemaker Peko Ups Profit by 33% in 2005 ....................................................................... 25
Henkel Slovenija Revenues Increase by 7.3% in 2005 ........................................................ 25
Kolektor Completes Takeover of Postojna-based Plastics Maker ....................................... 25
Post of Slovenia Posts Profit of EUR 15m for 2005 ............................................................ 26
Bled Hotel Chain Selected Women Manager-Friendly........................................................ 26
Managers Discuss Positioning of SE Europe on Global Market ......................................... 26
Gregor Bencina Becomes Young Manager of the Year ....................................................... 27
FAIRS, CONGRESSES ........................................................................................................... 29
Largest Car Show in Slovenia Opens in Celje ..................................................................... 29
Former Mercator CEO Sells His Stake to Altima ................................................................ 29
Cetis Posts Loss of EUR 2.7m in 2005 ................................................................................ 29
SLOVENIA IN BRIEF ............................................................................................................ 31
US Donates Nearly US$ 10m to Demining Fund ................................................................ 31
EU Experts Tell Slovenia to Beef Up Maritime Border Security ........................................ 31
Parliament Passes Act on Slovenians Abroad ...................................................................... 31
Slovenia Candidate for Seat on UN Human Rights Council ............................................... 31
Government Relieves Two Ambassadors of Duties............................................................. 31
Government Establishes Commission for Gas Terminals.................................................... 31
Slovenia Signs CoE Convention against Trafficking ........................................................... 31
Worlds: Mankoc Bags Silver in 100m Medley .................................................................... 32
2
HEADLINES
Parliament Passes Companies Act
Parliament has passed the companies act, a comprehensive piece of legislation that deals
with all aspects of corporate law and will replace the oft-amended 1993 companies act
Parliament has passed in a 53-to-6 vote the companies act, a comprehensive piece of
legislation that deals with all aspects of corporate law and will replace the oft-amended 1993
companies act.
Among the major changes, the act envisages the possibility for establishing a European jointstock company or Societas Europea (SE), a supra-national organisation that can operate in all
EU countries without having to establish subsidiaries or branch offices.
This option SE stems from EU regulations adopted in 2001, which took effect a year ago.
The second major change to existing legislation is that companies will have the possibility to
opt for a one-tier management system instead of the current two-tier system.
Unlike the existing two-tier system, there is no supervisory board in an one-tier system, with
the management board consisting of executive and non-executive members.
The provisions on single-tier management are the most disputable part of the act, which
otherwise enjoys bipartisan support.
Most notably, the opposition Social Democrats (SD) and trade unions claimed it does not
have sufficient safeguards to guarantee co-determination.
The SD wanted to amend the act to guarantee the workers a third of the members in
management boards of companies with single-tier management systems.
The government rejected the proposal and instead granted the workers a single representative
and an additional one for every additional three members of the board.
The act introduces more strict provisions for supervisory board members. An individual will
now be able to sit on a maximum of three supervisory boards, instead of five.
The act also envisages a cut in the minimum start-up capital for a limited liability company
from the current EUR 8,760 to EUR 7,500. Moreover, it will no longer be necessary for at
least a third of the start-up capital to be in cash.
In line with the act, the Economics Ministry would draw up a standard form for a
memorandum of association, thereby facilitating the establishment of companies.
The act also includes provisions linked to Slovenia's adoption of the euro, which is scheduled
for 2007. As a result, companies will have to express their total capital stock in euros rather
than tolars.
Companies will have the option of converting the price of shares into euros or converting the
whole capital stock into euros and then dividing that into a new number of shares in order to
avoid problems with rounding up.
D&B: Slovenia Stays on Top in the Region
Slovenia remained in top spot in Eastern Europe alongside Slovakia, according to the April
report of the international rating firm Dun&Bradstreet (D&B)
Slovenia remained in top spot in Eastern Europe alongside Slovakia, according to the April
report of the international rating firm Dun&Bradstreet (D&B). Both have a DB2c rating,
while Slovenia's trend is still pointing upwards.
The report points to the almost doubled rate of growth in government consumption
expenditure, which in 2005 stood at 3.1% compared to 1.6% in 2004.
3
According to D&B "this reflects increased spending on a range of new guarantees and
benefits for pensioners," exacted by the Pensioners' Party (DeSUS) for staying in the centreright coalition.
The increase was also caused by "payment of wage arrears in the education sector, and
repayments of overcharging by the Tax Administration."
Despite somewhat slower growth in exports, D&B expects positive trends to continue and that
Slovenian GDP would continue to grow.
IMAD Head Says Upbeat Growth Forecasts Opportunity for Reforms
The government Institute for Macroeconomic Analysis and Development (IMAD) projects
economic growth of 4.2% for this year, 0.2 percentage points higher than initially expected
The government Institute for Macroeconomic Analysis and Development (IMAD) projects
economic growth of 4.2% for this year, 0.2 percentage points higher than initially expected.
According to IMAD head Janez Sustersic, this is an opportunity to take economic policy
measures that are urgent if growth is to be sustained over the coming years.
Presenting the IMAD spring forecast on Friday, 7 April, Sustersic said the reforms planned by
the government should be implemented now, as any adverse short-term effects will be less
painful in a period of fast growth. "If we can succeed with that, growth rates could approach
5% in the coming years," he said.
IMAD has made its spring projections on the basis of existing economic policies and budgets
for 2006 and 2007; the effects of the planned measures have not been considered, Sustersic
explained.
According to Sustersic, the revised projection is mainly a result of upgraded growth in
investment spending. Most notably, the volume of investments in motorway construction is
30% higher than last year, housing investment is soaring and investments in the corporate
sector are upbeat.
It is furthermore based on solid growth projections for Slovenia's main trade partners, which
is expected to increase export growth to 8.2% this year, more than IMAD projected in the
autumn report. On the other hand, private consumption is expected to grow only moderately.
The report is also optimistic about the outlook for employment. Survey employment is to
remain below 6.5% and the registered unemployment rate edge to below 9.5%. At the same
time, Sustersic said, wage growth is projected to lag behind productivity gains by a similar
margin than last year (0.9 percentage points).
IMAD also slightly upgraded its inflation projections, with consumer price growth anticipated
to stand at 2% this year. For the subsequent years, inflation is to hover at just above 2%, said
Sustersic, who pointed out that competition is preventing GDP growth from having too big an
impact on inflation.
Whereas the inflation outlook for this year is stable, the forecast for 2007 does carry some
risks, Sustersic said. If prices are rounded up when the euro is adopted on 1 January 2007, and
household electricity prices soar due to energy market liberalisation, inflation could be 0.5
percentage points higher than projected.
4
INTERNATIONAL COOPERATION
Drnovsek Says the World Needs a Strong Europe
President Janez Drnovsek insists that Europe must complete the tasks of adopting the
constitutional treaty and pursuing enlargement. This is about the future of Europe and the
world, which needs a strong Europe, he told the Crans Montana Forum in Zagreb
President Janez Drnovsek insists that Europe must complete the tasks of adopting the
constitutional treaty and pursuing enlargement. This is about the future of Europe and the
world, which needs a strong Europe, he told the Crans Montana Forum in Zagreb on
Wednesday, 5 April.
"There can be no enlargement fatigue," stressed Drnovsek, who said he was pleased that
Croatia, which is a good candidate country, has started membership talks.
Addressing a panel on Croatia as a gateway to SE Europe, the president also underlined that
other countries in the region need to be given the opportunity to join the EU, as there is no
alternative to this process.
Drnovsek said the old EU members should strengthen efforts towards the adoption of the
constitutional treaty. The politicians there must speak honestly to their citizens about the
benefits of enlargement, rather than blame Brussels for everything bad.
The president moreover underlined the EU's role in global stability, peace and prosperity.
"We have to tackle issues such as poverty and climate change. Terrorism stems from the
conviction that the world is unjust; we most do something about that as well."
However, Drnovsek pointed out that police and security measures are not enough, as a
solution needs to be found for all people in the world. This is why the world needs a stronger
EU, which will guarantee security, prosperity and peace in Europe and then in the world, he
stressed.
The panel was also addressed by the founder of the Crans Montana Forum, Jean Paul
Carteron, Croatian PM Ivo Sanader and Austrian Chancellor Wolfgang Schuessel.
5
EUROPEAN UNION
European Commission Employs 111 Slovenians
Almost two years after Slovenia joined the EU 111 Slovenians have been employed at the
European Commission, three of them in top positions and 108 administrators
Almost two years after Slovenia joined the EU 111 Slovenians have been employed at the
European Commission, three of them in top positions and 108 administrators, according to a
report released in Brussels on Tuesday, 4 April.
A total of 1,627 citizens from ten EU newcomers have been recruited as administrators, while
74 representatives hold the highest positions, numbers with which the Commission is pleased.
The highest-ranking Slovenian official in the Commission's administration is Zoran Stancic,
who has been appointed deputy head of the Research DG.
Slovenia is thus among six EU newcomers that have their nationals occupying the post of
director-general or deputy director-general, with two representatives from Hungary and the
Czech Republic each.
The plan is to have at least one representative per new member state at such a high position in
the administration. A total of 240 citizens from the new member states are to get the highestranking jobs in the Commission by 2010, with ten places reserved for Slovenia.
However, the head of the European Commission's Representation Office in Slovenia, Mihela
Zupancic, is the only Slovenian with a middle-level administration position, although seven
out of 189 jobs have been foreseen for Slovenia on this level.
Out of 111 Slovenians, 81 were recruited as administrators in the top category A, while 27 are
employed in the categories B and C, which include assistants' posts and secretarial jobs
respectively.
The Commission's goal in 2004 was to have 3,441 officials from the ten EU newcomers by
2010, and at least 134 from Slovenia.
EU Increases Pressure on Slovenia Due to Number Portability
The letter of formal notice from July was upgraded to a reasoned opinion due to lack of
progress, one step below referral to the Court of the European Communities
The European Commission has stepped up pressure on Slovenia for its failure to ensure full
portability of phone numbers between operators. The letter of formal notice from July was
upgraded on Tuesday, 4 April to a reasoned opinion due to lack of progress, one step below
referral to the Court of the European Communities.
Slovenia should have ensured number portability when it joined the EU on 1 May 2004, but it
has since made only partial progress: the portability of mobile numbers has been possible
since early this year while fixed-line numbers are to be portable in the first half of this year.
While the Commission has upgraded proceedings against Slovenia in this field, it has
wrapped up separate proceedings started due to the non-implementation of telecoms
regulations and the consequent creation of a legal vacuum.
The Commission had issued this warning because of the cancellation of a number of
"significant market power" (SMP) designations in a time that new telecommunications
legislation was entering into force.
Slovenia is the subject of another telecommunications proceeding, which the Commission
launched in October due to the suspicion that the government has failed to ensure full
independence of the telecoms regulatory body.
6
Minister: New EU Services Directive Departure from Our Stance
Vizjak said that the Economics Ministry has not had a chance to thoroughly examine the
document, but that at first glance the wording is no longer in line with Slovenia's views
Economics Minister Andrej Vizjak has said that the new EU services directive, adopted by the
European Commission on Tuesday, 4 April, is a departure from the Slovenian stance.
Vizjak said that the Economics Ministry has not had a chance to thoroughly examine the
document, but that at first glance the wording is no longer in line with Slovenia's views.
"We will establish within days whether this is an acceptable compromise for Slovenia. It is
definitely a departure from our views and expectations," Vizjak told the press on Wednesday,
5 April in Ljubljana.
Vizjak reiterated that Slovenia's stance on the directive has not changed: there should be as
few exceptions as possible, while administrative restrictions to the free flow of services is
unacceptable.
According to Vizjak, the crossing of the country of origin principle opens the door to
restrictions on the free flow of services and as such runs contrary to the basic mission of the
directive.
"We are fully aware that the competitiveness of the European economy is dependent among
other things on liberalisation of the services sector on the single market," he said.
Vizjak said that the current proposal would not allow for the creation of new jobs. "From a
Lisbon Strategy viewpoint, the compromise proposal is not the best. The best solution would
entail the preservation of the principle of source country," he added.
Prime Minister Jansa Hails Final Agreement on EU Budget
Prime Minister Janez Jansa has welcomed the agreement on the EU's 2007-2013 budget
framework, saying it was good for Slovenia
Prime Minister Janez Jansa has welcomed the agreement on the EU's 2007-2013 budget
framework that was reached on Tuesday, 4 April, saying it was good for Slovenia.
Slovenia's net position will not change, as the proposal does not envisage cuts on cohesion
funds, Jansa was quoted as saying by his office on Wednesday, 5 April.
The deal was reached yesterday in talks between the European Commission, the EU Council
and the European Parliament, but it still needs to be formally confirmed by the Parliament and
the Council.
Jansa said the deal was in line with the conclusions of the December summit of the EU in
terms of the division of cohesion funds.
This means four times more cohesion funds that Slovenia has available in the current budget
period, the PM's office pointed out.
Even though the budget may not be ideal for development, it is a realistic compromise in the
given situation, allowing the implementation of EU policies and the full integration of the
newcomers, the office said.
The Government Office for European Affairs (SVEZ) also hailed the agreement, since it
preserves Slovenia's status as a net recipient of budget funds.
Katja Rejec Longar, the deputy head of the SVEZ, said Slovenia would get up to two billion
euros more than it would pay into the budget over the seven-year period.
Slovenian EU Presidency Gets Rough Outline
The government task force in charge of preparing Slovenia for its stint as EU president in the
first half of 2008, headed by PM Janez Jansa, met to assess Slovenian preparations and
define the first guidelines
7
The government task force in charge of preparing Slovenia for its stint as EU president in the
first half of 2008, headed by PM Janez Jansa, met on Wednesday, 5 April to assess Slovenian
preparations and define the first guidelines.
The meeting among other things produced guidelines on the project's graphic design and logo,
and the implementation of logistic and technical tasks, a press release by the PM's office says.
The participants also discussed the proposals put forward by ministries as regards possible
informal ministerial meetings to take place in Slovenia during the presidency.
Also on the table were a draft schedule of meetings with third countries and proposals for
promotional programmes, put together by the Culture Ministry, the Foreign Ministry and the
Government PR and Media Office.
The report on Slovenia's preparations for the presidency will be discuses by the government
by the end of April. In May it will also be presented to the relevant working bodies in the
National Assembly and to Slovenian MEP's.
Commissioner Believes EU States Responsible for Lisbon Strategy
The European Commission cannot shift the EU into a higher gear by itself, said European
Science&Research Commissioner Janez Potocnik as he addressed a public debate on the
Lisbon Strategy in the National Assembly in Ljubljana
The European Commission cannot shift the EU into a higher gear by itself, said European
Science&Research Commissioner Janez Potocnik as he addressed a public debate on the
Lisbon Strategy in the National Assembly in Ljubljana on Friday, 7 April.
EU nations largely agree on the basic priorities of the strategy, namely employment, a rise in
R&D investments, promoting SMEs and a common energy policy, Slovenia's commissioner
added at the debate hosted by the EU and economic affairs committees.
Potocnik was especially pleased with the concrete goals set by EU states for increasing R&D
spending, an area where he sees two priorities: increasing the share of cohesion funds
earmarked for R&D, and a raise in funding for higher education, which should reach at least
2% of the EU's GDP.
Prime Minister Janez Jansa meanwhile said that only higher employment and growth rates as
well as increased competitiveness can help restore the faith in the EU, thereby allowing its
institutional upgrade and enlargement. Indeed, the majority of activities for reaching Lisbon
Strategy goals would have to be done at home, Jansa pointed out.
Janez Sustersic, the national coordinator for implementing the Lisbon Strategy, also stressed
the need for reforms, adding that Slovenia has to decide whether it wants to be a forwardlooking state or a developed state in decline.
Sustersic, the director of the Institute for Macroeconomic Analysis and Development
(IMAD), stressed the need for an efficient financial sector and for reducing the role of the
state in companies.
He claims that besides a labour market reform, people must change their attitude towards jobs
and see them as career opportunities. They must act in a responsible manner in adjusting to
the global changes and the state should help in their efforts.
Bajuk Expects No Problems in Run-up to Eurozone Entry
Slovenian Finance Minister Andrej Bajuk has said he expects no problems in the run-up to
eurozone entry scheduled for 1 January 2007, neither from the European Commission or the
European Central Bank, nor with the convergence criteria
Slovenian Finance Minister Andrej Bajuk has said he expects no problems in the run-up to
eurozone entry scheduled for 1 January 2007, neither from the European Commission or the
European Central Bank, nor with the convergence criteria.
8
Even for the most difficult criterion - inflation - the data is favourable, Minister Bajuk told the
press on Saturday, 8 April during an informal meeting of EU finance ministers in Vienna.
Bajuk pointed out that Slovenia was 0.2 percentage points below the inflation ceiling in
March. In addition, the system of dual price labels introduced in March has not had a negative
impact on inflation as some feared.
The data for March is crucial, as this is the last month that the Commission and the ECB will
consider in their report on Slovenia's readiness to adopt the euro, which they are expected to
release in mid-May.
Based on these reports, the political decision on the expansion of the eurozone is to be made
at the EU summit on 15 June.
Bajuk acknowledged that there was one concern, oil prices, which have a somewhat bigger
impact on inflation in Slovenia than in other countries,
"All countries will have problems if there is an unexpected price hike, but our problems might
be a bit bigger. We cannot do much to restrain them: excise duties are already at the lowest
level," he explained.
The minister is meanwhile confident about the practical preparations for the changeover,
including the minting of coins and the adaptation of automatic teller machines.
Slovenia looks set to become the first and for now only newcomer to join the 12-member
eurozone. Estonia has already given up on the plans, while Lithuania is persisting although it
is unlikely to meet the criteria due to high inflation.
Minister Bajuk Decries Protectionism in EU and Slovenia
According to Bajuk, even in the privatisation of banks this protectionism does not exist in
Slovenia: bank privatisation has to do with the state's responsibility for the stability of the
banking system, he said
Finance Minister Andrej Bajuk has decried protectionism disguised as national interest as he
attended a meeting of EU finance ministers in Vienna on Saturday, 8 April. "Protectionism
does have short-term benefits, but it is dangerous in the long term," he said, confident that
such protectionism does not exist in Slovenia.
According to Bajuk, even in the privatisation of banks this protectionism does not exist in
Slovenia: bank privatisation has to do with the state's responsibility for the stability of the
banking system, he said.
"If the country is responsible for this stability, it cannot renounce supervision. Slovenia may
not take the final step until European regulation in this field is clear," he said, adding that
once foreign owners get a certain stake, there is no way back.
"It makes no sense to make a commitment beyond a certain limit without knowing whether
we will keep control of our own system, for which we are responsible," Bajuk said in
reference to the desire of Belgian group KBC to raise its stake in NLB from 34% to over 49%.
He said the state already had limited supervision over banks that are in majority foreign
ownership, for example Banka Koper, and SKB.
Bajuk moreover underlined that majority Slovenian ownership of the NLB is not tantamount
to state ownership, as the state can withdraw whilst at the same time making sure the bank
remains in Slovenian handsSlovenia Reserved about Common EU Corporate Tax Base
Slovenia is reserved about the proposal that a common consolidated corporate tax base be
put in place across the EU in order to make the system easier and more transparent for
companies doing business in several member states
9
Slovenia is reserved about the proposal that a common consolidated corporate tax base be put
in place across the EU in order to make the system easier and more transparent for companies
doing business in several member states.
"This is not the first issue we have to tackle if we want to realise the concept of the single
market not only in services...but also in traditional markets," Finance Minister Andrej Bajuk
told the press after a meeting of EU finance ministers on Saturday, 8 April.
According to him, the consolidated tax base is "not dangerous as such, but it is an inevitable
step if someone advocated a flat tax rate."
He said the common tax base should probably not be the first step: "It can be introduced
gradually, but first it is necessary to eliminate things that represent a much largest obstacle for
the single market."
Bajuk said the reason why countries such as France and Germany were supporting the
proposal is tax competition: they are afraid that tax reforms carried out by smaller member
states, in particular the newcomers, would hurt their labour markets.
The problems go deeper than taxes, so they have to be tackled where they are the most severe
- in regulation, the minister underlined.
The plans for the common consolidated corporate tax base started taking shape in 2004 and
the first concrete proposal is expected in 2008. If the European Commission fails to convince
all member states about its merit, it will probably opt for a form of closer cooperation.
10
LEGISLATION
Official Calls for Expedited Passage of Public Procurement Act
A third of the budget representing 7% of the GDP is subject to public procurement each year
and the country's legislation in the field is inadequate, so the passage of a new public
procurement act as soon as possible is imperative, Ziga Andoljsek of the Finance Ministry has
said
A third of the budget representing 7% of the GDP is subject to public procurement each year
and the country's legislation in the field is inadequate, so the passage of a new public
procurement act as soon as possible is imperative, Ziga Andoljsek of the Finance Ministry has
said.
The acting head of the state financial assets directorate added on Wednesday, 5 April that if
everything goes according to plans, the act could enter into force in early or late summer.
Andoljsek, speaking at the start of a two-day conference entitled "7th Days of Public
Procurement", which is taking place in the seaside resort of Portoroz, revealed that the bill
deals with technical and general specification of public procurement procedures.
The bill moreover allows electronic access to such procedures and electronic conclusion of
contracts, and gives the option of e-public orders and e-auctions, he pointed out.
The main advantages of electronic procedures, Andoljsek claims, are shorter procurement
dates and computer-based conclusion of agreements and contracts.
He stressed the need of a clear definition of contracting authority, which is defined in the bill
as a legal personality that carries out activities in the public interest.
Regarding public-private partnerships, the government must ensure that the citizens' needs are
met, while the private sector must carry out these assurances.
The head of the legislative department at the Chamber of Commerce and Industry of Slovenia
(CCIS) Stane Valic meanwhile said that 11% of Europe's GDP is spent on public
procurement, making it the motor of Europe's economy.
11
STATISTICS/FORECASTS
Trade Gap Surges in February
Slovenia's exports amounted to EUR 1.24bn in February, a 9.3% rise over the month before
and 18.1% over February 2005, while imports stood at EUR 1.35bn, up 0.7% month-onmonth and 16.7% compared with February 2005
Slovenia's exports amounted to EUR 1.24bn in February, a 9.3% rise over the month before
and 18.1% over February 2005, while imports stood at EUR 1.35bn, up 0.7% month-onmonth and 16.7% compared with February 2005.
The trade gap thus stood at EUR 116.8m, 11.5-times more than in January, putting the exportimport coverage at 91.4%, down 7.8% over the month before, according to preliminary data
from Slovenia's Statistical Office.
In this year's first two months, exports went up 18.9% to EUR 2.46bn compared with the
same period in 2005, while imports increased 16.6% to EUR 2.59bn.
In January and February, the total trade gap reached EUR 126.8m, putting export-import
coverage at 95.1%.
In the first two months, Slovenia imported around EUR 2bn of goods from EU countries, a
9.9% rise over the same period last year, while import from other countries surged 46.8% to
EUR 591m.
In the same period, Slovenia exported goods worth around EUR 1.76bn to EU members
(+16.9%), while EUR 699.4m were exported to non-EU states (+21.1%).
Foreign Debt at EUR 19.82bn in January
Slovenian foreign exchange reserves totaled around EUR 9bn at the end of January, EUR
10.82bn short of the overall foreign debt, which amounted to EUR 19.82bn, according to the
March Bulletin of the Bank of Slovenia
Slovenian foreign exchange reserves totaled around EUR 9bn at the end of January, EUR
10.82bn short of the overall foreign debt, which amounted to EUR 19.82bn, according to the
March Bulletin of the Bank of Slovenia.
The bulk of Slovenia's foreign exchange reserves, EUR 6.98bn, was made up of the reserves
of the central bank, while the remaining EUR 2.02bn belonged to commercial banks.
Long-term debt accounted for EUR 14.69bn, while short-term debt amounted to EUR 3.9bn,
and debt liabilities to affiliated enterprises and direct investors to EUR 1.23bn.
12
FINANCE
Life Insurer Slovenica Zivljenje Tops Plans in Maiden Year
Life insurer Slovenica Zivljenje posted net profits of SIT 355m (EUR 1.39m) in 2005
Life insurer Slovenica Zivljenje posted net profits of SIT 355m (EUR 1.39m) in 2005, 92%
above plans, on insurance premiums totalling SIT 5.02bn (EUR 20.95m), 32% more than in
2004, the company said on Tuesday, 4 April.
As the life insurer made payouts of SIT 1.08bn (EUR 4.5m), 1.4% below plans, Slovenica
Zivljenje managed to exceed its 2005 targets, the company's new CEO Samo Burja told the
press.
The insurer, created in a split of insurer Slovenica in early 2005 - which has since merged
with another insurer, Adriatic - said that the increase in profits was caused by the changes in
accounting standards, enabling the company to add SIT 149m (EUR 621,900) to its profits.
Having managed to collect 57% more insurance premiums (SIT 1.71bn/EUR 7.13m) in the
first three months of 2006 in comparison with 2005, the company is on track to reach its 2006
goal of SIT 7.1bn (EUR 29.63m) in premiums, Burja revealed.
Slovenica Zivljenje, owned by asset management firm KD Group, also wants to start selling
life insurance policies in Romania, Bulgaria, Croatia and Slovakia, with sales in Romania
scheduled to begin in May, he added.
Bajuk Promises Simplifications of Tax Code
Finance Minister Andrej Bajuk has reiterated his pledge to radically simplify Slovenia's tax
code and make tax return forms user-friendly
Finance Minister Andrej Bajuk has reiterated his pledge to radically simplify Slovenia's tax
code and make tax return forms user-friendly.
New changes to income tax legislation are in the works, although there is no concrete
decisions on what changes are to be introduced, Bajuk told the press in Ljubljana on
Wednesday, 5 April
Nevertheless, the finance minister pledged that income tax return forms would be much
simpler as early as next year.
According to acting director of the Tax Administration (DURS) Igor Simic, there are a
number of ways simplifications can made. He mentioned the possibility that DURS sends
partially filled forms to tax payers.
Simic also pointed to the possibility of introducing flat tax, which would greatly simplify the
tax procedure.
Bajuk pointed out that progressivity of the Slovenian tax system must be reduced. However,
the government must keep in mind state spending, as there can be no tax cuts without cuts in
state spending.
He stressed that Slovenia could not make radical changes before 2007 because of the risks
associated with such changes as this could threaten the country's plans to adopt the euro.
Restructured Pension Management Fund to Handle EUR 2bn
The state-run Pension Management Fund (KAD) is to be restructured into a financial group
with KAD as the parent company, consisting of a life insurance company, a management firm
and a grants company
The state-run Pension Management Fund (KAD) is to be restructured into a financial group
with KAD as the parent company, consisting of a life insurance company, a management firm
and a grants company, KAD's chief exec told the daily Vecer on Wednesday, 5 April.
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The new group, which would be 100% state-owned and would manage SIT 500bn (EUR
2.09bn), should help maximise the capital for the owner, Tomaz Toplak said for Vecer.
The restructuring plan has already been discussed by KAD's assembly and the supervisory
board, however, neither has given "the green light for the restructuring yet", he added.
Talking about the companies of the new group, Toplak said the grants company would issue
around SIT 200bn (EUR 834.6m) worth of bonds for a period of 28 years, which should in his
view "define KAD's obligations to the Pension and Disability Insurance Institute (ZPIZ)".
Between 1999 and 2005, KAD earmarked a total of SIT 52.5bn (EUR 219.1m) or SIT 7.5bn
(EUR 31.3m) a year to ZPIZ's budget. Compared with last year, when KAD allocated SIT
6.3bn (EUR 26.3) to ZPIZ, Toplak said the fund intended to increase the figure to SIT 9.3bn
(EUR 38.8m) in 2006.
A new insurance company would include the existing pension funds and the funds of the
voluntary supplementary pension insurance, while a management firm would consist of three
mutual funds, Toplak added.
Commenting reproaches about the state's slow withdrawal from the economy, he said that
KAD is already a portfolio investor, as it does not function as a typical active manager of
investments.
According to Toplak, KAD currently has around 40 market and a little over 100 non-market
investments, and has "cleaned its portfolio" when it withdrew last year from 34 companies. It
is also planning to withdraw from another 40 investments this year.
In Toplak's view, the 21 replacements of company directors that occurred since the incumbent
government took office are not politically motivated; "many were the result of ownership
consolidations in companies with KAD as a minority owner".
Toplak also assured that KAD's stakes in the daily papers Delo and Dnevnik - the latter has
been eyed by the German group WAZ - were profitable, but added that "in case of changes in
ownership structures these investments would be reconsidered".
Wiener Staedtische Aims for Profit in 2007
The Slovenian subsidiary of the Austrian insurer Wiener Staedtische posted a loss of SIT 34m
(EUR 142,000) in 2005
The Slovenian subsidiary of the Austrian insurer Wiener Staedtische posted a loss of SIT 34m
(EUR 142,000) in 2005. This is in line with plans, which see the insurer making profit for the
first time in 2007, director Tomo Mrdjen has said.
Mrdjen told the press on Wednesday, 5 April that the company had a very successful year,
collecting SIT 1.21bn (EUR 5.05m) of premiums, of which SIT 1.04 (EUR 4.34m) were
collected by the life insurance department.
The company, which began operating in Slovenia in 2004, held a 1.9% market share in 2005.
Mrdjen said that it wants to capture 10% of the market in the next 10 years.
Central Bank: Compliance with Convergence Criteria Sustainable
Measured with the ESA95 methodology, the general government deficit was down by 0.5
percentage points to 1.8% of GDP in 2005, the trade balance remains sustainable and the
current account deficit was below expectations at 1.1% of GDP, the central bank said in a
press release
The governing board of the Bank of Slovenia concluded at a meeting on Thursday, 6 April
that the fulfilment of criteria for the adoption of the euro was sustainable, as macroeconomic
balances have been preserved.
Measured with the ESA95 methodology, the general government deficit was down by 0.5
percentage points to 1.8% of GDP in 2005, the trade balance remains sustainable and the
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current account deficit was below expectations at 1.1% of GDP, the central bank said in a
press release.
The board, which also sets interest rates, has left rates unchanged after concluding that
monetary policy is appropriate. Interest rates are consistent with the achievement of a stable
tolar-euro exchange rate, while inflationary expectations are in line with the medium-term
price growth objective, the press release reads.
The last time the board cut interest rates was on 3 March, when the rate for 60-days tolar bills
was reduced to 3.5%, lombard loans to 4.5% and 7-day temporary purchase of securities to
3.5%, all of them by 25 basis points.
Tax Consultants Call for Simpler Tax Legislation
Participants of the panel at the 13th Days of Association of Tax Consultants shared the view
that tax laws could not be more complicated than they currently are, and urged the
authorities to simplify the tax code
Participants of the panel at the 13th Days of Association of Tax Consultants on Thursday, 6
April shared the view that tax laws could not be more complicated than they currently are, and
urged the authorities to simplify the tax code.
The tax consultants moreover agreed that there are numerous problems with the
implementation of the new tax legislation due to unclear laws and regulations, a too extensive
administration system, and incompatibility of the laws.
State Secretary at the Finance Minister Andrej Sircelj told the panel that he is aware of these
problems, and assured them that he will make an effort to simplify the laws in order to make
them more user-friendly.
The proposals on changes to the tax laws should be drafted by the summer, so tax payers and
consultants can expect a simpler and friendlier tax legislation at the beginning of 2007, the
head of the Association of Tax Consultants Petra Mlakar said.
Mlakar also expects the Finance Ministry to ensure that the changed legislation will also take
EU legislation into consideration, as numerous problems result from differences between tax
laws in individual countries.
The amendments will also simplify the tax report forms, which were too complicated this
year, Mojca Centa Debeljak of the Tax Administration (DURS) said.
KBC Chief Executive Says Majority Stake in NLB Desired but Unlikely
The chief executive of Belgian bank KBC has said that the bank would like to raise its 34%
stake in Slovenian bank NLB
The chief executive of Belgian bank KBC has said that the bank would like to raise its 34%
stake in Slovenian bank NLB. But the likelihood that KBC gets a majority stake is very
remote, as there is no political will for that.
Speaking in Brussels on Thursday, 6 April, Andre Bergen explained that KBC has always
said it would not increase its shareholding in NLB if this runs against the people's will. "In the
financial sector, it makes no sense to invest in a country where people dislike you," he said.
Bergen also confirmed that the bank was interested in entering the Croatian market. It has
been hampered in its efforts by the NLB's legacy - its connection to the bank LB and the LB's
alleged debt to Croatian holders of foreign-currency accounts.
KBC has no responsibility for this issue, Bergen stressed, which is also confirmed by its
contract on the purchase of the NLB stake. However, it has nevertheless been making efforts
in talks with both sides to contribute to a solution.
Bergen regretted that it has been impossible to find a solution that would be acceptable for all
sides, and emphasised that KBC had nothing to do with the LB issue, which dates back to
1991 whereas KBC bought its NLB stake in 2002.
15
He moreover acknowledged that KBC had not been aware of all the aspects of this issue when
it entered NLB: NLB and LB are seen as one bank in Croatia, but legally they are separate
entities, he said.
He said that the LB structure still exists technically, so neither KBC nor the European Bank
for Reconstruction and Development (EBRD) or other NLB shareholders are co-owners of the
debt.
Bergen also expressed the hope that the issue of the savers would not hamper Croatia's
accession to the EU. "Belgium, Slovenia and KBC support Croatia's accession to the EU, and
I would regret it if this affected negotiations," he said, adding that a solution therefore has to
be found.
Cash Machine Adaptation Deemed Major Euro Changeover Challenge
A Bank of Slovenia official has said that the adaptation of the cash machines and POS
terminals could pose one of the biggest problems of the euro changeover, which is scheduled
for 1 January 2007
A Bank of Slovenia official has said that the adaptation of the cash machines and POS
terminals could pose one of the biggest problems of the euro changeover, which is scheduled
for 1 January 2007.
The adaptation will therefore begin as soon as 1 May, Bozo Jasovic told a Manager
Association-organised meeting, which concluded on Friday, 7 April with a panel on the
novelties of 2007 tax policy and the euro changeover.
Slovenia has opted for the big-bang euro adoption, with the changeover period, when both
euros and tolars are in circulation, lasting through 14 January 2007.
Jasovic explained that after 1 September 751 tonnes of euro coins and 73 tonnes of banknotes
will be transferred to the Bank of Slovenia to enable the initial circulation of the new
currency. He has therefore called on large scale cash buyers to secure supplies in time.
While the currency conversion performed on individual accounts will be free of charge,
unannounced cash exchange in the days following the changeover will be limited to 1,500
euros per individual to ensure that banks do not run out of cash, Jasovic also stressed.
The panel also touched on the tax reform envisaged by the government, with
Finance Ministry State Secretary Andrej Sircelj pointing to the need to cut the "extremely
high tax wedge that undermines Slovenia's competitiveness".
Sircelj is convinced that a possible flat tax rate would be the only solution ensuring that those
earning more also pay more. According to him, the Finance Ministry is also entertaining the
idea of bringing the abolition of the payroll forward to 2007.
Meanwhile, acting director of the Tax Administration Ivan Simic announced the
administration will strive to further simplify the income tax statement procedures and also to
exempt pensioners from this obligation in the future.
Ljubljana Stock Exchange
The main market SBI 20 index closed 8.18% (363.3 points) higher at 4,802.27, while the blue
chip-heavy SBI TOP added over 8% to 1,088.02 the very first week it was introduced
A flurry of speculations about the acquisition of grocer Mercator culminated last week,
sending scores of investors to the stock market and pushing prices up across the board. The
main market SBI 20 index closed 8.18% (363.3 points) higher at 4,802.27, while the blue
chip-heavy SBI TOP added over 8% to 1,088.02 the very first week it was introduced.
According to Marko Garbajs of the brokerage Ilirika DZU, the overall stock market trend will
depend on Mercator, which stopped the prolonged bearish streak in the first place.
Yet Garbajs also points out that investors may stick around for a while as they come to realise
there are still quite a few "consolidation stories" that can unravel any time.
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Mercator started rising last week on speculation about takeover bids allegedly plotted by Serb
tycoons. But it really took off after London-based hedge fund Altima Partners on Tuesday
announced an offer to purchase one shale less than 25% at a price of SIT 41,000 (EUR
171.12) per share.
The ensuing frenzy pushed Mercator up 20% on the week, to a record SIT 44,019 (EUR
183.72), well above the takeover price. Brokers believe that the biggest Mercator owners,
which said they would not sell, are buying at the higher price with the help of "friendly
companies" to prevent Altima from acquiring a significant stake.
Mercator saw deals worth SIT 8.37bn (EUR 34.9m), including a block deal in which the
former Mercator CEO, the flamboyant Zoran Jankovic, sold his stake to Altima.
Somewhat under the radar, pharmaceutical company Krka added a whopping 9.14% to SIT
137,429 (EUR 573.59). Krka has been buoyed by the overall market frenzy as well as
excellent projections of Q1 profits.
Despite the lack of any news, household appliance maker Gorenje added over 5% to SIT
5,427 (EUR 22.65), with Istrabenz, one of the two biggest Mercator owners, soaring by
14.4% to SIT 8,030 (EUR 33.52).
The total value of deals concluded last week topped SIT 17bn (EUR 70.9m), with block deals
accounting for over 40% of the trading.
As a result of the soaring blue chips, the PIX investment fund index jumped 187.56 points to
4,060.37, as blue chip-heavy funds posted stellar gains. The bond BIO index was down 0.39
points to 119.26.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.59 (+0.01)
U.S. dollar (USD) - SIT 196.68 (-1.41)
Swiss franc (CHF) - SIT 151.99 (+0.27)
British pound (GBP) - SIT 344.09 (+0.45)
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REGIONAL INFORMATION
Four Bird Flu Surveillance Zones Lifted
The National Disease Control Centre has lifted 10-km surveillance zones around four bird flu
outbreak sites in the northeast of Slovenia after the 3-km quarantine zones were removed in
late March
The National Disease Control Centre has lifted 10-km surveillance zones around four bird flu
outbreak sites in the northeast of Slovenia after the 3-km quarantine zones were removed in
late March.
The areas around Dogose, Spodnji Duplek, Starse and Ptuj Lake will therefore be subject to
milder anti-bird flu measures that apply in the rest of the country, the National Veterinary
Administration (VURS) said on Friday, 7 April.
Only quarantine and surveillance zones around Koblarjev zaliv just outside Maribor (the site
of the first bird flu case in the country) and Maribor itself remain in place.
The first case of bird flu was confirmed on a swan on 11 February. According to VURS
director Vida Cadonic Spelic, the virus has so far been confirmed in 44 wild birds found
around Maribor.
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BRANCH INFORMATION
Panel: Forests Offer Opportunities for Development of Tourism
Perspectives for the development of tourism in forest environments which despite the fact that
almost 60% of Slovenia's area is covered by forests lags behind general tourist development,
were discussed at a recent conference hosted by the National Council
Perspectives for the development of tourism in forest environments which despite the fact that
almost 60% of Slovenia's area is covered by forests lags behind general tourist development,
were discussed at a recent conference hosted by the National Council.
All those whose life and work are connected with the forest must cooperate in preparing a
programme for the development of tourism in forest environments, however it should be
stressed that forests cannot support mass tourism, said Marjan Rozic, president of the Tourist
Association of Slovenia (TZS).
Tourism currently represents 5% of Slovenia's GDP and employs 52,000 people. With a
correct approach to planning, forest tourism these figures will rise, the president of the
National Council Janez Susnik is convinced.
Tourism in a forest environment must respect nature conservation targets, Jelena Hladnik
from the Environment Ministry said. This means protected areas are not suitable for mass
tourism. Tourism in this field must be adapted to the environment and the people living there,
she stressed.
Considering the mission of protected areas, it is clear that they can only be home to
sustainable tourism, which is the most environmentally friendly version of ecotourism,
stressed Aleksander Golob of the Slovenian Forestry Institute.
40% of Slovenia's territory belongs to protected areas, which are however not meant
exclusively for nature conservation but also for recreation and sustainable development. The
economical significance of tourism in the world's protected areas is rising, Golob added.
Forest tourism is tightly linked with walking holidays for which Slovenia has many
opportunities with many different routes on offer. Alongside many hiking routes, two of the
eleven European walking routes, the E6 and E7 cross Slovenia.
Nature trails in forests and woods can also provide an interesting tourist attraction. The first
two nature trails were created in 1974 and there are currently 96 of them in Slovenia.
Anton Lesnik of the Slovenian Institute for Forests says these trails are not well-enough
equipped and above all there are insufficient quality tourist-guiding programmes in place.
Emission Trading Slow in Slovenia
Trading in greenhouse gas emission coupons has gotten off to a slow start in Slovenia, as only
seven deals with emission coupons have been concluded since the coupon market registry was
established in Slovenia in November last year, an energy seminar in Ljubljana has been told
Trading in greenhouse gas emission coupons has gotten off to a slow start in Slovenia, as only
seven deals with emission coupons have been concluded since the coupon market registry was
established in Slovenia in November last year, an energy seminar in Ljubljana has been told.
Jussi Nykaenen of the Finnish company Green Stream believes that the slow trading in
emission coupons in new EU members, in comparison with the old member states, is due to
the better knowledge of trading procedures in the old members.
Nykaenen, speaking on Tuesday, 4 April at a panel entitled "Trading with CO2 Emissions - a
Business Opportunity for Companies 2006", believes that these countries have had a lot of
experience trading in oil, gas and electricity, so it is easier for them to launch emission
coupon trading.
19
Additionally, companies in new member states need a lot of time to prepare for such trading
and are very cautious in introducing new activities.
Aleksandra Murks of Slovenia's leading aluminium producer Talum added that some
companies believe that the implementation of the coupons system might be unfair.
"Those that pollute the environment to a larger extent get many more emission coupons and
have surpluses, while companies that have been investing in environmental protection are
running short of them," Murks pointed out.
The Environment Ministry will draft a new plan for handing out coupons for the period until
2012, and revise the operational programme for the reduction of greenhouse gas emissions in
the country, explained Zorana Komar of the national Environment Agency, adding that the
country will distribute the 2006 coupons by the end of April.
Borut Vovk of the Poteza brokerage also believes that Slovenian companies are not informed
enough about the possibilities of trading with coupons.
He also does not believe that a energy stock exchange will be established in Slovenia, as the
country's market is too small, while one company - Holding slovenske elektrarne (HSE),
Slovenia's biggest power producer - owns the majority of the coupons.
The seminar has been organised by the energy portal Energetika.net.
Telecoms Regulator Head Promises Prompt Number Portability
The head of Slovenia's telecommunications regulator has pledged that number portability in
fixed line telephony is to be introduced in Slovenia on 10 May
The head of Slovenia's telecommunications regulator has pledged that number portability in
fixed line telephony is to be introduced in Slovenia on 10 May.
Tomaz Simonic said on Tuesday, 4 April that the Agency for Post and Electronic
Communication (APEK) had brought forward deadlines related to number portability - the
previous launch of fixed line portability was late June.
His comments come in response to news that the European Commission stepped up pressure
on Slovenia for its failure to ensure full portability of phone numbers between operators.
The letter of formal notice from July was upgraded on Tuesday, 4 April to a reasoned opinion
due to lack of progress, one step below referral to the Court of the European Communities.
Simonic said that there should be no reason after 10 May for the Commission to continue
pursuing the case against Slovenia.
He added that Slovenia was putting all available resources to work in tackling delays in the
introduction of number portability.
"I respect the fact that the European Commission is sticking to its stance as this gives the
matter added importance," Simonic added.
Slovenian Tourist Ad to Be Aired on CNN
An advertisement promoting Slovenia as a tourist destination is to start being aired on global
news network CNN on 20 April, Slovenian tourism officials have told the press
An advertisement promoting Slovenia as a tourist destination is to start being aired on global
news network CNN on 20 April, Slovenian tourism officials have told the press.
Slovenian Tourism Board (STO) representatives said on Wednesday, 5 April, the ad would be
aired on CNN International Europe at least five times a day between 20 April and 15 June and
then again in September and October.
According to STO spokesperson Majda Rozina Dolenc, the goal was to play on the emotions
of the viewer. The ad, which was directed by Jasna Hribernik, used existing video material.
The total cost of making and airing stand at SIT 187m (EUR 780,000).
According to STO director Barbara Guncar, the ad is just the first step in a series aimed at
promoting Slovenia as a tourist destination.
20
STO promotions director Brina Cehovin said CNN was selected because of its viewership and
high ratings. The most frequent viewers of CNN represent the biggest potential for the
Slovenian tourism market, she added.
Moreover, STO has also prepared an extensive presentation of Slovenia in anticipation of the
country's stint as EU president in the first half of 2008, officials told the press.
Transport Minister Promises Pomurje Motorway until 2008
Construction works will be underway on the entire 70.5 km section this year
Transport Minister Janez Bozic has promised that the eagerly awaited motorway section in the
northeasternmost region of Pomurje would be completed until 2008. Construction works will
be underway on the entire 70.5 km section this year, he said in Gornja Radgona on
Wednesday, 5 April.
Investment in motorway construction is an absolute priority for the government, and this is
why a special act on state guarantees for motorway construction has been passed, Bozic said
after a meeting of a committee for motorway construction in Pomurje, a local pressure group.
The chair of the committee, Gornja Radgona Mayor Anton Kampus, said people in the region
were pleased with the current pace of construction. But he also urged the ministry to examine
the option that individual sections be opened for traffic as they are completed to divert traffic
from busy regional roads.
Meanwhile, the head of the ministry's directorate for roads, Gregor Ficko, said there have
been some problems due to the inappropriate public procurement legislation, which is causing
delays.
21
COMPANIES
Children's Books by Lila Prap to Hit Stores in Italy and Greece
According to Mladinska knjiga, Prap - the pen name of Lilijana Praprotnik Zupancic - has
been the top selling Slovenian author abroad for year
Illustrator Lila Prap was Slovenia's most successful participant at the Bologna Children's
Book Fair 2006. Publishing rights for her books were sold to Italy and Greece, Praps's
publishing house Mladinska knjiga has told STA.
According to Mladinska knjiga, Prap - the pen name of Lilijana Praprotnik Zupancic - has
been the top selling Slovenian author abroad for years.
Her picture books "Zakaj?" (Why?) and "1001 pravljica" (1001 Fairy Tails) are this-year's
leaders as far as the sale of publishing rights is concerned.
Other Mladinska knjiga children's books which did not pass unnoticed by foreign publishers
in Bologna include "Decek na belem oblaku" (Boy on a White Cloud) by Nina Kokelj and
Svjetlan Junakovic, and "Skrat Zguba in kameleon" (The Loser Dwarf and the Chameleon) by
Jelka Godec Schmidt.
ISP Siol Posts Record Profits, Revenues in 2005
Slovenia's largest ISP Siol generated SIT 13.6bn (EUR 56.76m) in revenues in 2005
Slovenia's largest ISP Siol generated SIT 13.6bn (EUR 56.76m) in revenues in 2005, up 57%
year-on-year, with profits rising by 33% in the same period to SIT 402m (EUR 1.67m), the
company said on Tuesday, 4 April.
Siol, a subsidiary of the national telco Telekom Slovenije, explained that it was especially
successful in increasing the number of broadband ADSL subscribers to 118,191 in 2005,
12,191 above plans.
Besides offering a triple-play package of broadband Internet access, telephone and digital TV,
the company also plans to reach its goal of 150,000 subscribers until the second half of 2006,
by offering high definition TV and video on demand services.
Iskraemeco Wants Creditors to Convert Claims to Ownership Stakes
The management of Iskraemeco, the electric meters maker which has been in administration
since February, has called on creditors to convert their claims worth EUR 51m into
ownership stakes
The management of Iskraemeco, the electric meters maker which has been in administration
since February, has called on creditors to convert their claims worth EUR 51m into ownership
stakes.
Alternatively, the creditors could also accept Iskraemeco's offer, whereby the company would
pay them 50% of the claims within the next eight years, Iskraemeco CEO Karl Rozman told
the press on Tuesday, 4 April.
Should the companies involved post no response, the repayment of their claims would take
place according to legislation, with the height of the reimbursement impossible to predict.
Rozman believes that the creditors will opt for bankruptcy protection, as bankruptcy is not in
their interest.
So far none of the creditors has responded to the offer that was published on Friday, 31 March
in the Official Gazette and which runs out on 14 April.
"We have an operational scenario in case of no capital injection, however, fresh capital is
necessary in the long term if the company wants to develop," he revealed.
22
Rozman expects that Iskraemeco - which owes EUR 61m to its creditors, including EUR 37m
to banks - will be able to find an investor to inject EUR 10m in fresh capital.
The company is in talks with all of its major owners, as the capital injection by a new investor
would bring him almost 30% of the company.
The company also adopted other measures to bring the company which posted a loss of SIT
3.3bn (EUR 13.77m) in 2005 back into the black, including a production shift from analogue
to digital meters, and layoffs, with 300 expected by the end of the year on top of 1,000
workers already made redundant in the last 18 months.
Rozman is optimistic about the fate of the company, as investment could help the company to
retain its 15% market share in Europe and a 5% global share.
Telco Supervisors Appoint Two New Execs
The supervisory board of national telco Telekom Slovenije unanimously elected Filip Ogris
Martic and Zeljko Puljic to the company's management board
The supervisory board of national telco Telekom Slovenije unanimously elected Filip Ogris
Martic and Zeljko Puljic to the company's management board. The pair was nominated by the
recently appointed Telekom Slovenije CEO Bojan Dremelj.
The two new members will assume office on 1 May, replacing Darinka Virant, whose term
runs out on the same date. They will join Dusan Mitic and worker's representative Darja
Senica, the company said on Tuesday, 4 April.
Telekom Slovenije said that Martic, who used to head the Ljubljana tobacco factory Tobacna
Ljubljana and Puljic of the Kranj-based telecommunications system producer Iskratel, have
the necessary expertise and leadership experience.
The appointments come two weeks after Dremelj, former CEO of mobile provider Simobil,
was elected chairman of the telco, replacing Libor Voncina, who stepped down for personal
reasons.
Managers in Control of 97% of Iskra
Maos, the company set up by around 50 Iskra managers, managed to acquire 92.3% of Iskra
with its bid, and another 4.6% outside the bid to hold a total of around 96.7%, the company
said in a press release
Managers of the Iskra conglomerate have acquired nearly 97% of Iskra with their bid to gain a
majority stake in the company.
Maos, the company set up by around 50 Iskra managers, managed to acquire 92.3% of Iskra
with its bid, and another 4.6% outside the bid to hold a total of around 96.7%, the company
said in a press release.
The managers managed to surpass the 51% threshold set by them for the bid after the staterun Restitution Fund (SOD) and Pension Management Fund (KAD) decided to sell at the
offered price in mid-March.
The final bid by Maos of SIT 1,400 (EUR 5.84) per share was then extended until 4 April to
allow other shareholders to sell their shares.
Iskra chairman Dusan Sesok had previously expressed delight with the outcome of the bid,
adding that the large stake acquired by the managers came as no surprise.
Maos was formed by Iskra managers who had opposed a hostile bid for Iskra by Iskra
Avtoelektrika, a maker of car electronics equipment, which offered SIT 1,044 (EUR 4.36) per
share in mid-December.
Maos and Iskra Avtoelektrika then waged a bidding war until Iskra Avtoelektrika announced
in early February that it was pulling out.
Still bent on Iskra takeover, Maos published its last bid of EUR 5.84 a share on 6 March after
the two state-run funds said prior bids did not meet their expectations.
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Droga Kolinska Buys Macedonia's Slovin Jugokokta
Slovenia's largest food company Droga Kolinska has become the majority owner of
Macedonia's Slovin Jugokokta
Slovenia's largest food company Droga Kolinska has become the majority owner of
Macedonia's Slovin Jugokokta. The deal struck at the end of March is worth EUR 3.2m,
Droga Kolinska said on Wednesday, 5 April.
The agreement, which included the acquisition of Slovin Jugokokta's shares as well as debt,
brought Droga Kolinska ownership of the company's trademarks, equipment and property.
It is the second trade-mark motivated takeover by the company's subsidiary Droga Kolinska
Skopje in Macedonia. Last December it paid EUR 1.27 for the rights to eight brands of the
Grand coffee trademark.
The Ljubljana-based parent company Droga Kolinska, a result of last-year's merger of Droga
and Kolinska, operates in Slovenia, Croatia, Bosnia-Herzegovina, Serbia-Montenegro,
Macedonia, Sweden and Russia.
Adria Leases Ukrainian Boeing 737-500
With the start of the summer season, Adria expects to rent another 737-500 for a period of six
months
Flag carrier Adria Airways has enlarged its fleet of aircraft with a 112-seat Boeing 737-500.
The plane has been leased from Ukraine International Airlines for a year, Adria said on
Wednesday, 5 April.
The lease is part of restructuring plans at the struggling airline, as the supervisory board has
been insisting that the inappropriate fleet was one of the carrier's main problems.
With the start of the summer season, Adria expects to rent another 737-500 for a period of six
months.
The Boeing comes after the employment of cargo version of the Saab 340 turboprop, which
entered operation on 1 March and is expected to boost Adria's cargo capabilities by 30%.
The botched lease of an earlier cargo plane also swept away acting Adria chairman Iztok
Malacic at the beginning of March.
Adria said that the Boeing would be piloted by Ukrainian crews (Adria only has Airbus and
Canadier planes), while cabin crews will be trained within two weeks.
Slovenia's flag carrier generated revenues of SIT 32.8bn (EUR 137m) in 2005, with net losses
standing at around SIT 2bn (EUR 8.3m).
AGSS Publishes Bid to Acquire up to 24.99% in Mercator
Altima's offer of SIT 41,000 (EUR 171.12) per share is valid until 28 April noon
London-based Altima Global Special Situations Master Fund (AGSS) published on 6 April its
offer to acquire up to 24.99% in Slovenia's largest retailer Mercator, Slovenian brokerage
Ilirika Fintrade said on Thursday, 6 April.
Altima's offer of SIT 41,000 (EUR 171.12) per share is valid until 28 April noon. The fund
wants to acquire a maximum of 785,106 shares, the head of Ilirika's legal department Rok
Rozman told STA.
He added that Ilirika, which is conducting the deal for Altima, could also change the expiry
date of the offer if it acquires the target share prior to the deadline or in case of "changed
circumstances".
The purchase fee would be settled within ten days of the sale by Mercator shareholders,
Rozman revealed. To acquire the desired share, Altima would have to dish out SIT 32.2bn
(EUR 134.39m).
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Altima's announcement that it wanted to become an owner of Mercator has already elicited a
no-sale reply by Mercator's largest shareholders, holding Istrabenz and beverage group
Pivovarna Lasko.
However, small shareholders own about 40% of Slovenia's largest retailing chain.
Shoemaker Peko Ups Profit by 33% in 2005
Shoemaker Peko finished 2005 with net profits of SIT 168m (EUR 701,000)
Shoemaker Peko finished 2005 with net profits of SIT 168m (EUR 701,000), a 33% rise over
the year before. The result is an indication that the company is getting back on its feet, Peko
said in a press release on Thursday, 6 April.
According to the Trzic-based company, they generated net revenues of SIT 4.6bn (EUR
19.2m), which is 5% more than in 2004 and 3% above plans for the year.
The solid results are a result of increased output, as production rose by nearly 10% last year.
Moreover, the company managed to reduce its inventories and cut costs in 2005.
The turnaround at Peko, which was hit hard at the turn of the decade and has only slowly
gotten back in the black, is a result of the transfer of production to countries with cheaper
labour, Peko said.
The press release adds that the company has managed to increase the value added per
employee four-fold to SIT 4.2m (EUR 17,500) since 2000, when it was facing its roughest
patch.
Henkel Slovenija Revenues Increase by 7.3% in 2005
Henkel Slovenija, a subsidiary of the Henkel consumer goods group, generated revenues of
SIT 28.4bn (EUR 118.53m) in 2005
Henkel Slovenija, a subsidiary of the Henkel consumer goods group, generated revenues of
SIT 28.4bn (EUR 118.53m) in 2005, 7.3% more than in 2004, the company's general manager
Andreas Knoebl told the press in Maribor on Thursday, 6 April.
Cosmetic products still represented the bulk of the revenues with 78%, followed by washing
and cleaning products (12%) and technologies (7%) in what was a record production year for
the company, Knoebl added.
"We have declared 2006 a year of innovation and we expect that every worker comes up with
at least two or three ideas to help fulfil our vision," he revealed.
The company with 619 employees produced 178.3 million cosmetics products in 2005, which
placed Henkel Slovenija second among all of the companies in the Henkel group.
Henkel Austria GmbH and chemical producer Tovarna Zlatorog Maribor signed a contract in
1990 on establishing a joint venture Henkel Zlatorog, with Henkel Austria having a 51%
stake. Zlatorog's share was bought out by Henkel Beteiligungsverwaltung GmbH Vienna in
1997.
Kolektor Completes Takeover of Postojna-based Plastics Maker
Kolektor, one of the world's largest makers of commutators, has completed a successful
acquisition of a majority stake in plastics and mechanised machinery manufacturer, Liv
Kolektor, one of the world's largest makers of commutators, has completed a successful
acquisition of a majority stake in plastics and mechanised machinery manufacturer, Liv.
The Idrija-based Kolektor acquired 98.74% of Liv in a takeover bid that was published on 22
February, Kolektor said on Thursday, 6 April.
Kolektor has already informed the Competition Protection Office of the successful
acquisition.
Kolektor was looking to secure at least 76% of Liv with its friendly bid of SIT 35,700 (EUR
149) per share.
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Liv general manager Bojan Dolar believes the new owner would help the Postojna-based
company implement its development strategy.
Dolar told the daily Delo in mid-March that he believes the new owner will support the longterm development of Liv.
The two companies could offer a wide range of plastic products for the automotive sector, he
told Delo.
Post of Slovenia Posts Profit of EUR 15m for 2005
The Post of Slovenia generated almost SIT 50bn (EUR 208.69m) of revenues last year, an
increase of 10% year-on-year, while its net profit amounted to SIT 3.63bn (EUR 15.15m
The Post of Slovenia generated almost SIT 50bn (EUR 208.69m) of revenues last year, an
increase of 10% year-on-year, while its net profit amounted to SIT 3.63bn (EUR 15.15m), the
company said on Thursday, 6 April.
The company's supervisory board reviewed unaudited business results of 2005, establishing
that the Post carried out 957.5 million services last year, 5% more than the year before.
The supervisors moreover backed the company's business plan for 2006, which they are to
send to the government.
The company will this year focus on introducing new services, entering new markets, and
upgrading traditional services with an cutting-edge technology.
The Post of Slovenia is to invest this year mainly in the renovation of several post offices and
the upgrading of its IT system.
The supervisory board also discussed business results for the first two months of this year, the
report on the implementation of the strategic development programme, and the 2006-2012
strategic guidelines.
Bled Hotel Chain Selected Women Manager-Friendly
Bled hotel operator G&P Hoteli Bled has been conferred the award for Women ManagerFriendly Company at a ceremony held as part of the spring meeting of the Manager
Association business organisation in the coastal resort of Portoroz
Bled hotel operator G&P Hoteli Bled has been conferred the award for Women ManagerFriendly Company at a ceremony held as part of the spring meeting of the Manager
Association business organisation in the coastal resort of Portoroz.
The association said the award, which has been conferred for a fourth year, is aimed at
underscoring the role of women executives.
A criteria for being shortlisted for the award is that women fill at least a third of the
managerial positions in the company. G&P Bled staff consists of 70% women, while women
hold 78% of the managerial positions.
According to general manager Lidija Dokl, the company has a policy of equal employment
opportunities. "We look to fill positions with the best candidates and often it is the case that a
woman is the best candidate," she said.
Dokl explained that the company has established a system of part-time work to allow women
to combine career with family life.
"The hospitaliy industry is a services sector and perhaps this is the reason women are more
successful here, as they are better at listening to the wishes of the customers," Dokl added.
Managers Discuss Positioning of SE Europe on Global Market
A Manager Association-organised meeting that focused on the positioning of Slovenia and SE
Europe on the global market took place in Portoroz
"We need to think global and operate at the local level, as this is where success lies," the CEO
of Austrian mobile operator Mobilkom Austria told on Thursday, 6 April a Manager
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Association-organised meeting that focused on the positioning of Slovenia and SE Europe on
the global market.
Boris Nemsic feels that companies must be aware of the power of partnerships and focus on
the consumer, therefore innovations, as well as promotion of good trademarks and ways of
communicating, are needed.
The EU is the largest market in the world with a diverse common geographical, cultural and
historical background, which increases the power of regions, he added.
The large potential of the regions represents an increase in exports, and an expansion of
industrial structures, however administration will have to be upgraded and local management
trained accordingly, Nemsic also said.
The main problem of the SE European market in a broader European environment in that the
businessmen, investors and bankers do not have a realistic insight into the situation in this part
of Europe, international adviser for SE Europe and Western Balkans Borut Suklje said.
There are doubts as to whether favourable socio-economic changes at the same time lead to
political stability of the countries in SE Europe, he added.
According to Suklje, political changes in the countries in this part of Europe should not be
directly linked to social and economic problems, but foremost to the public's pessimism and a
possible issue of corruption of the authorities.
In the future, also during Slovenia's EU presidency, the bloc will have two main tasks: the
ratification of the EU constitution, and the enlargement to SE Europe, he added.
"Therefore the government should draft a strategic document and form a strategic council
which will deal with Slovenia's relations with other countries in SE Europe," Suklje said.
Franjo Bobinac, CEO of home appliances maker Gorenje, meanwhile said that changes on the
global market are quick and unpredictable. In his view, Slovenia's competitiveness is
dwindling, mainly because other countries are quicker.
"Businessmen therefore support reforms, but only if they will lead to economic growth and
better life," Bobinac continued.
He believes Slovenia needs a better environment to develop small and medium-sized
businesses, innovation and creativity, and should remove administrative obstacles.
Bobinac moreover believes that Slovenia needs a development-oriented tax legislation, and
the state's withdrawal from the economy.
Gregor Bencina Becomes Young Manager of the Year
According to the award's committee, Bencina is an example for other young managers as he
successfully leads a company employing 400 people whose annual revenues from five
different markets is SIT 11bn (EUR 46m)
The managing director of systems integration company SRC.SI, Gregor Bencina, is the
winner of the 2006 Young Manager Award, which was handed out at a special ceremony at a
meeting of the Managers' Association in Portoroz on Thursday, 6 April.
According to the award's committee, Bencina is an example for other young managers as he
successfully leads a company employing 400 people whose annual revenues from five
different markets is SIT 11bn (EUR 46m).
The award for Women Manager-Friendly Company this year went to the hotel company G&P
Hoteli Bled. 70% of those employed are women and women hold 78% of managerial
positions.
This year's spring meeting of the Managers' Association focuses on the positioning of
Slovenia and SE Europe on the global market. On Thursday, 6 April CEO of home appliance
maker Gorenje Franjo Bobinac said Slovenia is lagging behind faster and more competitive
countries.
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"Businessmen therefore support reforms, but only if they will lead to economic growth and
better life standards," Bobinac continued. Bobinac moreover believes that Slovenia needs a
development-oriented tax legislation, and the state's withdrawal from the economy.
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FAIRS, CONGRESSES
Largest Car Show in Slovenia Opens in Celje
In addition to the car show, Celje also hosts the 15th Car and Maintenance Show, the seventh
Moto Boom Show, the sixth Logotrans Show, and the fifth exhibition of commercial vehicle
The 23rd Car Show Slovenia opened for the general public on Friday, 7 April in the eastern
city of Celje in what is the largest car exhibition in the country. The fair, which closes on 13
April, will feature more than 700 exhibitors from 30 countries.
In addition to the car show, Celje also hosts the 15th Car and Maintenance Show, the seventh
Moto Boom Show, the sixth Logotrans Show, and the fifth exhibition of commercial vehicles,
all of which were officially opened by PM Janez Jansa.
Celjski sejem, the company managing the fairgrounds, has ensured a total of 60,000 square
metres of exhibition areas, 29,000 square metres of which are indoor and 10,500 square
metres outdoor areas.
Former Mercator CEO Sells His Stake to Altima
The former CEO of retailer Mercator Zoran Jankovic sold his own Mercator shares to Altima
Global Special Situations Master Fund (AGSS)
The former CEO of retailer Mercator Zoran Jankovic sold on Friday, 7 April his own
Mercator shares to Altima Global Special Situations Master Fund (AGSS), which on
Thursday, 6 April published an offer to acquire up to 24.99% of the retailer at SIT 41,000
(EUR 171.12) per share.
"The sale proved to be a good opportunity, given that only a week ago I would have received
only SIT 35,000 (EUR 146.08) a share," Jankovic told the press in Ljubljana after closing the
deal.
Asked about the reasons for his ultimate withdrawal from Mercator after being sacked as
CEO in November, Jankovic explained he had announced back in 1998 he would withdraw
when the share price reached SIT 38,500 (EUR 160.69).
Jankovic feels that the AGSS's bid is a good opportunity for small shareholders, stressing that
they should decide themselves what to do with their shares.
Meanwhile, the Association of Small Shareholders urged Mercator small shareholders to unite
in a bid to achieve the maximum price for a Mercator share.
Speaking about his future, Jankovic told the press he now intends to buy shares of a company
in which he sees his future, but refused to reveal any details.
Cetis Posts Loss of EUR 2.7m in 2005
However, thanks to a new vision for the development of the company, it succeeded last year in
strengthening its sales at home and abroad
Cetis, the Celje-based graphics and printing company, posted a loss of SIT 652m (EUR 2.7m)
in 2005 on revenues of SIT 6.3bn (EUR 26m), which is SIT 0.7bn (EUR 3m) less than the
year before, the company's boss Simona Potocnik told the press in Celje on Friday, 7 April.
Potocnik said the poor results were due to some unexpected order cancellations in the
beginning of 2005, including the country's abolishment of MOT car stickers.
However, thanks to a new vision for the development of the company, it succeeded last year
in strengthening its sales at home and abroad, she stressed.
For example, in October 2005 Cetis founded a joint lottery company in Gabon for which it
will produce lottery tickets during the next ten years and it has already produced 20,000
passports for Niger, with plans for a further 480,000.
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Key changes in 2005 included new company owners and changes in the management.
Potocnik said the purchase of companies in Croatia and Macedonia were also important
events.
This year Cetis, which employed 430 workers at the end of 2005, will begin printing the new
Slovenian biometric passport and plans to expand to the African, South American and Asian
markets.
Potocnik predicts this year's revenues will be 16% greater than last year, with costs remaining
level, to make a profit of SIT 280m (EUR 1.1m).
Asked whether Cetis will remain a co-owner of the Gorenjski tisk printing company,
Potocnik, whose term as director expires in August, replied that they remained undecided.
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SLOVENIA IN BRIEF
US Donates Nearly US$ 10m to Demining Fund
The United States donated US$ 9.9m to the Slovenian-run International Trust Fund for
Demining and Mine Victims Assistance (ITF), the Foreign Ministry said on Tuesday, 4 April.
The timing of the US donation is not accidental as the UN has declared 4 April International
Day for Mine Awareness and Assistance in Mine Action, Foreign Minister Dimitrij Rupel
said at a ceremony on the occasion at the Foreign Ministry.
EU Experts Tell Slovenia to Beef Up Maritime Border Security
A group of EU experts evaluating the country's readiness to enter the Schengen zone has said
before the completion of a review of maritime border policing that Slovenia will have to
upgrade border protection. The experts have said Slovenia would have to build a border
crossing at the Port of Koper, increase the number of staff at the maritime police station and
buy an additional dinghy, Marko Gasperlin of the General Police Directorate told STA on
Tuesday, 4 April.
Parliament Passes Act on Slovenians Abroad
The National Assembly passed the act on Slovenians abroad. The aim of the legislation is to
regulate relations between Slovenia and its minorities and expatriates as well as to strengthen
national conscience and national identity. According to some assessments, half a million
Slovenians reside outside of the country, with some 60,000 of those holding Slovenian
citizenship.
Slovenia Candidate for Seat on UN Human Rights Council
Slovenia has joined twelve countries of the United Nation's East European group which have
officially announced their candidacy for one of the six seats reserved for the group in the
newly-established UN Council of Human Rights. Beside Slovenia, Poland, the Czech
Republic, Hungary, Ukraine, Romania, Azerbaijan, Armenia, Lithuania, Russia, Albania,
Latvia and Georgia are the states from the East European group running for a seat in the
Council.
Government Relieves Two Ambassadors of Duties
The cabinet relieved of duties two ambassadors whose terms have ran out, the government's
PR and media office said after the government session on Thursday, 6 April. The diplomats in
question are Ambassador to Hungary, Bulgaria and Moldova Andrej Gerencer, and
Ambassador to Sweden, Latvia, Estonia and Finland Darja Bavdaz Kuret.
Government Establishes Commission for Gas Terminals
The government established on Thursday, 6 April an inter-departmental commission which
will deal with the planned construction of two liquefied natural gas terminals in the Gulf of
Trieste, Environment Minister Janez Podobnik told the press after the session.
Slovenia Signs CoE Convention against Trafficking
Slovenia has signed the Council of Europe (CoE) Convention on action Against Trafficking in
Human Beings, the CoE said on Friday, 7 April. The signing was already approved by the
parliamentary foreign policy committee on 23 March.
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Worlds: Mankoc Bags Silver in 100m Medley
Slovenia's top swimmer Peter Mankoc has won silver in the men's 100 metres medley final at
the World Swimming Championships in China's Shanghai.
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