Slovenia Business Week no. 11/2007, March 19th, 2007
Table of Contents:
HEADLINES ............................................................................................................................. 3
Eight Execs Conferred Business Excellence Awards ............................................................ 3
IMF: Market Integration and Denationalisation Primary Targets .......................................... 3
Hong Kong Important Gate to Chinese Market, Trade Official Says .................................... 4
INTERNATIONAL COOPERATION ...................................................................................... 5
Meeting Calls for Speedy Launch of Third Development Axis............................................. 5
Slovenian, Macedonian Transport Ministers Discuss Cooperation ....................................... 5
Lord Grenfell Praises Slovenia's Role in the EU ................................................................... 5
Successors Confirm Schedule for Handover of Diplomatic Assets ....................................... 6
EUROPEAN UNION ................................................................................................................. 7
EU Ministers Agree on Cutting Roaming Prices ................................................................... 7
LEGISLATION .......................................................................................................................... 8
Government Office Proposes 14 Provinces ........................................................................... 8
STATISTICS/FORECASTS ...................................................................................................... 9
Trade Gap Shrinks in January ................................................................................................ 9
Slovenians Prefer Europeans as Foreign Owners, Survey Shows.......................................... 9
Survey: 63% of Slovenians Support Warnings on Alcohol Bottles ....................................... 9
Wages Down in January, Up 8.5% Y/Y ............................................................................... 10
Registered Unemployment Edges to 8.7% in January ......................................................... 10
FINANCE................................................................................................................................. 11
Petrol Prices Surge ............................................................................................................... 11
Slovenia Issues First Benchmark Eurobond ......................................................................... 11
Slovenia to Apply For Extension of Reduced VAT for Housing ........................................ 11
ECB Sees Significant Budgetary Imbalances in Slovenia ................................................... 12
IMF Urges Pension, Budget Reform .................................................................................... 12
Ljubljana Stock Exchange .................................................................................................... 13
REGIONAL INFORMATION ................................................................................................ 14
Maribor City Vinedresser Prunes World's Oldest Vine ....................................................... 14
BRANCH INFORMATION .................................................................................................... 15
Slovenian Tourist Board Satisfied With Winter Season ...................................................... 15
Majority of Slovenian Farmers Received Low Subsidies in 2005 ....................................... 15
Motorway Construction Allocated EUR 700m in 2007 ....................................................... 15
Cabinet Establishes Power Distribution Company .............................................................. 16
Pig Not Infested with Swine Fever, Radio Reports ............................................................. 16
COMPANIES ........................................................................................................................... 17
Beverage Group to Publish Takeover Bid for Publisher Delo ............................................. 17
EU Approves EUR 40m in Restructuring Aid for Sugar Plant ............................................ 17
Food Company Management Buyout Successful ................................................................ 17
No. 2 Mobile Provider Posts Best Results Yet ..................................................................... 18
Croatia Rejects Bid by Slovenian Tour Operator ................................................................. 18
New Boss of Railways Operator Appointed ........................................................................ 19
State Run Funds Selling Stakes in Almost 100 Companies ................................................. 19
Mobile Operator Mobitel Selected Advertiser of the Year .................................................. 19
FAIRS, CONGRESSES ........................................................................................................... 21
Slovenia Gets Prominent Place at Leipzig Book Fair .......................................................... 21
SLOVENIA IN BRIEF ............................................................................................................ 22
Eye Clinic Presents New Method for Treating Tear Duct Blockage ................................... 22
Mate Praises Role of Central European Police Academy .................................................... 22
Minister Discusses Civil Servants Wages with IMF Delegation ......................................... 22
Mitja Bricelj Appointed State Secretary at Environment Ministry ...................................... 22
Drnovsek Says New Central Bank Governor Nominee in April ......................................... 22
2
HEADLINES
Eight Execs Conferred Business Excellence Awards
Eight Slovenian executives received awards for exceptional business and entrepreneurial
achievements in 2006, handed out by the Chamber of Commerce and Industry of Slovenia
(CCIS)
Eight Slovenian executives received on Thursday, 15 March awards for exceptional business
and entrepreneurial achievements in 2006, handed out by the Chamber of Commerce and
Industry of Slovenia (CCIS). The award ceremony saw Prime Minister Janez Jansa praising
the companies.
The 39th CCIS awards were handed out to chief executives Joze Colaric of pharma company
Krka, Boris Gorup of the Instalacija company for oil derivatives storage, Edi Kraus of the
artificial fibres maker Julon, Branko Kurbus of mobile containers maker Arcont, Vasilij
Presern of the Acroni steelworks, Jost Rupnik of electric motors maker Ydria Motors, Bogdan
Savli of plastics manufacturer TBP and Ludvik Span of the tyre retailer Span.
Jansa congratulated the recipients and stressed that good companies enabled Slovenia to
record its best economic results so far.
"Exports are increasing, growth is high, GDP per capita is to reach EUR 20,000 this year, a
number inconceivable ten years ago," said the prime minister.
Slovenia's upcoming stint as president of the EU will meanwhile allow companies to improve
their cooperation with various countries, he said.
CCIS president Samo Hribar Milic stressed the importance of the awards at the news
conference. Apart from being the oldest such award in Slovenia, it is also handed out by
previous recipients.
According to the chair of the commission, Zdenko Pavcek of the Viator&Vektor logistics
company, the awards were handed out not only for the companies' operating results but also
for their successful expansion, promising vision and clear long-term strategies.
The award has so far been conferred on 278 executives.
IMF: Market Integration and Denationalisation Primary Targets
The delegation of the International Monetary Fund (IMF) presented their viewpoints on the
challenges facing Slovenia after the euro adoption, pointing out the further integration of the
financial market and denationalisation as the primary objective
The delegation of the International Monetary Fund (IMF) presented on Wednesday, 14 March
their viewpoints on the challenges facing Slovenia after the euro adoption, pointing out the
further integration of the financial market and denationalisation as the primary objectives.
The budget analysis meanwhile revealed that Slovenia has to pay more attention to the longterm sustainability of public finances, the IMF representatives said at the seminar organised
by the central bank Banka Slovenije.
Slovenia has achieved good results and changes are afoot, but they do not ensure
sustainability of public finances in the long run. "The challenge is so great that it has to be
focused on as soon as possible," said Anita Tuladhar of the IMF.
The budget has to be more flexible, said Tuladhar, adding that Slovenia should increase the
efficiency of public spending and make changes in the pension system in accordance with
demographic trends.
An analysis of the banking system, based on the data throughout 2005, shows that state
ownership should be decreased, while the financial market should be more integrated into the
eurozone.
3
The Slovenian market is less profitable and efficient than other EU markets primarily due to
access barriers and the structure of ownership, said Rudolfs Bems.
The IMF analysis also shows that Slovenian banks are less profitable in comparison to the EU
average and that the banking sector is still underdeveloped.
"The contribution of the sector to productivity and growth is below the potential," said the
head of the IMF delegation Piritta Sorsa.
In the analysis of the Slovenian capital market, Jochen Rainer Andritzky has concluded that
more major companies should enter the stock exchange, because the number of companies
listed is relatively low.
"The entrance of Telekom Slovenije is a good and encouraging example," said Andritzky,
adding that Slovenia should make efforts for further integration of the capital market into the
EU markets and improvement of cross-border infrastructure.
Hong Kong Important Gate to Chinese Market, Trade Official Says
The Slovenian economy is making rapid progress and there are may opportunities to increase
foreign trade activities, the director of the Hong Kong Trade Development Council, Winchell
Cheung, told the press prior to a seminar on business opportunities in Hong Kong held in
Ljubljana
The Slovenian economy is making rapid progress and there are many opportunities to increase
foreign trade activities, the director of the Hong Kong Trade Development Council, Winchell
Cheung, told the press prior to a seminar on business opportunities in Hong Kong held in
Ljubljana on Thursday, 15 March.
The adoption of the euro can play an important role in boosting foreign trade, Cheung added.
Trade between Slovenia and Hong Kong is on the upswing, recording a 25% increase in 2005
over the year before, and while Hong Kong is a small market compared to China, it is an
important starting point for companies wanting to enter the Chinese market, Cheung said.
Chinese companies are on the other hand increasingly interested in opening offices in Hong
Kong, with Hong Kong being part of China, but at the same also having a completely
independent economy based on an open market with low taxes, no VAT and a strong financial
system, Cheung said.
Turning to China, Cheung said that entering this attractive market required a lot of know-how
and patience. He suggested that foreign companies could seek the partnership of Chinese
companies and should first focus on a specific area of China, the whole of the Chinese market
being to big.
Cheung was speaking to the press ahead of the seminar dubbed "Hong Kong and the Pearl
River Delta - Business Opportunities for Small and Medium-Sized Enterprises". The event
was being staged by the Frankfurt-based Hong Kong council, a non-profit organisation, and
the Slovenian Chamber of Commerce and Industry of Slovenia (CCIS). It was being attended
by representatives of around 40 Slovenian SMEs.
4
INTERNATIONAL COOPERATION
Meeting Calls for Speedy Launch of Third Development Axis
The participants of a meeting on the construction of the third development axis, a transport
link between northeastern and southeastern Slovenia, agreed that the construction of the NE
part of the link should begin as soon as possible
The participants of a meeting on the construction of the third development axis, a transport
link between northeastern and southeastern Slovenia, agreed in Slovenj Gradec on
Wednesday, 14 March that the construction of the NE part of the link should begin as soon as
possible.
The ministers of environment and transport, and mayors of municipalities in the NE regions
of Korosko and Savinjsko-Salesko, agreed that the link is important for the economy.
Environment and Spatial Planning Minister Janez Podobnik said that he hoped the national
assembly would pass a new spatial planning act this month and that the government would
adopt a zoning law by the summer of 2008.
Podobnik added that he would invite the mayors for a consultation on the possible versions of
the road link in three weeks.
Transport Minister Janez Bozic meanwhile said that the 59-kilometre link would cost some
EUR 700m and added that construction could begin in 2009.
Slovenian, Macedonian Transport Ministers Discuss Cooperation
The development of transport infrastructure between Slovenia and Macedonia, and new
opportunities for bilateral cooperation in transport, topped the agenda as Macedonian
Transport Minister Mile Janakieski held talks with Slovenian counterpart Janez Bozic
The development of transport infrastructure between Slovenia and Macedonia, and new
opportunities for bilateral cooperation in transport, topped the agenda as Macedonian
Transport Minister Mile Janakieski held talks on Thursday, 15 March with Slovenian
counterpart Janez Bozic.
The Macedonian delegation was particularly interested in the concept of development of
airports and the organisation of civil aviation, Bozic said after the talks.
Minister Janakieski, who is paying a working visit, added that he was also interested in the
financing of road construction. He asked Slovenia for technical assistance and training.
Slovenia will provide technical assistance on motorway construction and maintenance, while
the Motorway Company (DARS) would show the delegation the motorway management and
tolling system, Bozic said.
Bozic further stressed that Slovenia's Port of Koper could be a good starting point for
Macedonian companies wanting to do business in the EU.
The Slovenian minister said the talks were "very welcome and useful", representing a
"continuation of traditionally good relations between the two countries."
Lord Grenfell Praises Slovenia's Role in the EU
The chairman of the British House of Lords EU Committee, Lord Grenfell, praised Slovenia's
role in the EU as he held talks with Slovenian officials in Ljubljana
The chairman of the British House of Lords EU Committee, Lord Grenfell, praised Slovenia's
role in the EU as he held talks with Slovenian officials in Ljubljana on Thursday, 15 March.
"Slovenia is playing an important role in the EU, as it will be the first new member state to
preside the EU and the first newcomer to adopt the euro," he said.
5
Lord Grenfell met Parliament Speaker France Cukjati and chair of the parliamentary EU
Affairs Committee Anton Kokalj, the latter saying that the two committees could cooperate in
preparations for Slovenia's EU presidency in the first half of the EU.
According to Lord Grenfell, the British delegation did not come to Slovenia only to help with
the experience it gained as EU president in 2005. On the contrary, even a much older member
state like the UK can learn much from Slovenia, he said.
Cukjati, Kokalj and Lord Grenfell also agreed it was necessary to strengthen the institutional
role of national parliaments in the adoption of EU policies. A stronger role of national
parliaments can help bridge the democratic gap between EU institutions and the people, Lord
Grenfell said.
Successors Confirm Schedule for Handover of Diplomatic Assets
While residences are to be handed over by the end of June 2007, embassies and consulates
will get new owners by the end of this year
The Joint Committee for the Distribution of Diplomatic and Consular Property of the former
Yugoslavia agreed in Ljubljana on Friday, 16 March on the schedule for the division of the
assets. While residences are to be handed over by the end of June 2007, embassies and
consulates will get new owners by the end of this year.
According to a Foreign Ministry press release, Slovenia is entitled to 14% of some 120
embassies, consulates and residencies that constitute the diplomatic property of the former
joint state.
Slovenia has so far got all that it was entitled to according to the succession agreement in
countries which are members of the OECD, while the assets in other parts of the world are
still to be divided.
Slovenia will soon take possession of the residency in Rome, consulates general in Austria's
Klagenfurt and Italy's Milan, while it had already been allocated the embassy in Washington
as part of a previous agreement, representatives of the Foreign Ministry explained to STA.
The ministry further said that the details of the handover in Rome and Milan were still to be
arranged as Serbia first needed to appoint a new government in order to give its delegation a
full mandate - this would also enable the joint committee to sign final declaration.
The successor states which signed a framework succession agreement in 2001 - Macedonia,
Serbia-Montenegro, Bosnia-Herzegovina, Croatia and Slovenia - have so far managed to
agree on the division of 44 properties.
The next meeting of the committee will be held in Serbia in mid-May and will see the talks
expanding to European assets outside the OECD area and to assets in Latin America, Asia,
Northern Africa and Sub-Saharan Africa.
6
EUROPEAN UNION
EU Ministers Agree on Cutting Roaming Prices
EU ministers responsible for telecommunications agreed o on a plan for regulating mobile
phone roaming charges, with the final deal expected in June
EU ministers responsible for telecommunications agreed on Thursday, 15 March on a plan for
regulating mobile phone roaming charges, with the final deal expected in June. Slovenia
supports the regulation, Economy Minister Andrej Vizjak told STA after the meeting in
Germany's Hanover.
Vizjak believes that regulating wholesale and retail charges could reduce the costs for
individual users. Slovenia moreover believes the cuts should be proportionate and
harmonised, the minister added.
The Economy Ministry told STA that Slovenia believed both types of tariffs should be
reduced in order to force a drop in retail prices.
The European Commission proposed a series of measures in July aimed at cutting the tariffs
by up 70%. The Commission wanted to set the maximum wholesale prices - charged between
mobile operators - while retail prices would be allowed to be up to 30% higher than wholesale
prices.
European Information Society and Media Commissioner Viviane Reding said that the
Commission was thinking about EUR 0.44 for calls made into foreign countries and EUR
0.15 for receiving calls from abroad.
7
LEGISLATION
Government Office Proposes 14 Provinces
The Government Office for Local Government and Regional Policy sent to deputy groups five
draft bills that deal with establishing provinces
The Government Office for Local Government and Regional Policy sent to deputy groups on
Monday, 12 March five draft bills that deal with establishing provinces. The documents
propose that the country be divided into 14 provinces.
The legislation package envisages that municipalities take part in establishing provinces.
Bordering municipalities will be able to hold a referendum on which province they would
want to belong to, but only if their inclusion into another province would not substantially
impact the proposed area of the province.
The deputy groups have until 23 March to submit their proposals on the four bills (on
provinces, on regional elections, on financing and on the establishment procedure) and a draft
bill on the provinces.
The draft bill requires a two-thirds majority of all present MPs and defines the area, names
and seats of the provinces.
The bill anticipates the following provinces and their seats: Zasavsko (Trbovlje), Notranjsko
(Postojna), Savinjsko - Salesko (Velenje), Spodnje Podravsko (Ptuj), Posavsko (Krsko),
Korosko (Slovenj Gradec), Primorsko (Koper), Dolenjsko (Novo mesto), Gorisko (Nova
Gorica), Pomursko (Murska Sobota), Gorenjsko (Kranj), Podravsko (Maribor), Savinjsko
(Celje) and Osrednjeslovensko (Ljubljana).
The provinces vary in size and population from the smallest provinces of Zasavsko with
46,000 inhabitants to the largest provinces of Osrednjeslovensko with 498,000 people.
8
STATISTICS/FORECASTS
Trade Gap Shrinks in January
Slovenia's imports amounted to EUR 1.52bn in January, up 20.9% year-on-year
Slovenia's imports amounted to EUR 1.52bn in January, up 20.9% year-on-year, while
exports jumped by 15% to EUR 1.42bn. The trade gap stood at EUR 100.28m, less than half
of the trade gap in December (EUR 265.63m). The export-import coverage was at 93.4%, the
National Statistics Office said on Monday, 12 March.
The country imported EUR 1.2bn from EU countries in January, up 21.1% over January 2006,
while imports from other countries increased by 20.2% to EUR 312.93m.
Exports to EU member states increased by 14.7% year-on-year to EUR 1.05bn, with exports
to the rest of the world expanding by 16% to EUR 365.4m.
Slovenians Prefer Europeans as Foreign Owners, Survey Shows
While the large majority of Slovenians are favourably inclined towards foreign owners
coming from the EU (80.7%), the remaining choices provided by the survey received rather
modest support
Slovenians perceive entrepreneurs from the EU as the most suitable foreign owners of
Slovenian companies, a survey published by financial daily Finance on Wednesday, 14 March
has shown. Americans, Russians, Serbians and Croatians on the other hand enjoy far less
trust.
While the large majority of Slovenians are favourably inclined towards foreign owners
coming from the EU (80.7%), the remaining choices provided by the survey received rather
modest support.
Americans are preferred by 4.9%, Russians by 3.2%, while Serb and Croat owners convinced
only 3% of the respondents.
Asked whether Russians, who have been increasing their foothold in Slovenia in several
areas, were good owners for Slovenian companies, 20.9% of the respondents replied with a
yes, 37.5% said they were not, while 41.6% were undecided.
Almost 39% of the respondents meanwhile said that Janez Drnovsek, prime minister between
1992 and 2002, had the best economic policy of all Slovenian prime ministers to date.
The current prime minister Janez Jansa placed second with 30%, while Anton Rop (20022004) got 10% of the votes. 20% of the respondents refused to make a choice.
The survey was carried out for the daily by the polling agency Episcenter among 474
respondents.
Survey: 63% of Slovenians Support Warnings on Alcohol Bottles
Three quarters of Europeans and 63% of Slovenians support warning labels on alcohol
products that would highlight the hazards drinks have for pregnant women and drivers,
according to the results of the latest Eurobarometer poll, published in Brussels
Three quarters of Europeans and 63% of Slovenians support warning labels on alcohol
products that would highlight the hazards drinks have for pregnant women and drivers,
according to the results of the latest Eurobarometer poll, published in Brussels on Wednesday,
14 March.
The warnings, modelled on those that can be found on cigarette packs, were not included in
the strategy for limiting the consumption of alcohol, presented by the European Commission
in October last year.
9
The data also shows that 64% of Slovenians believe individuals themselves are responsible
for their health, while the EU average stands at slightly over 50%.
Slovenians scored above the EU average regarding the frequency of alcohol consumption.
While some 70% said that they consumed alcohol in the last month, the EU average stands at
66%.
Furthermore, 21% of Slovenians said that they had not consumed alcohol within a one year
period, with a quarter of Europeans saying the same. Among the EU nations, alcohol is the
least favoured by Italians, with 40% abstaining.
The heaviest daily drinkers of alcohol in Europe are the Portuguese (47%), followed by
Italians (26%), while the number of Slovenians stands at 9%, the data also shows.
When drinking, Slovenians usually have a glass or two (63%), 16% have three or four glasses,
12% less than one and 6% get drunk, meaning that they consume more than four units of
alcohol.
Slovenia is also one of the 14 EU countries where drivers can have 0.5 grams alcohol per litre
of blood.
Some three quarters of Europeans, including 54% of Slovenians, agree that the level of blood
alcohol should be reduced for young drivers to 0.2 g/l.
Wages Down in January, Up 8.5% Y/Y
The average net wage in Slovenia dropped 0.4% in January over December, to EUR 815.68
The average net wage in Slovenia dropped 0.4% in January over December, to EUR 815.68,
but it was up 8.5% over the year before, the National Statistics Office said on Thursday, 15
March.
Figures suggest that the average gross wage was 0.9% lower on a monthly comparison, at
EUR 1,250.34, but up 6.4% year-on-year.
In real terms, however, the drop was lower - 0.2% on a monthly comparison for gross wages as Slovenia posted deflation in January, the Statistical Office explained.
Eurostat data released meanwhile indicates that labour costs increased by 9.3% in nominal
terms in the last quarter of 2006 compared to the same period in 2005.
This compares to 2.7% for the entire EU and 2.4% for the eurozone, said the EU's statistical
office, which includes wages as well as non-wage costs in the equation.
Between 2000 and the last quarter of 2006, labour costs in Slovenia increased by 59.3%,
suggests Statistical Office data.
Registered Unemployment Edges to 8.7% in January
A total of 79,969 people were registered as unemployed in January
Slovenia's registered unemployment rate was 8.7% in January 2007, 0.1 of a percentage point
higher than in December last year, the national Statistics Office said on Friday, 16 March.
A total of 79,969 people were registered as unemployed in January, 2.1% up on December
and 16% down year-on-year. The registered unemployment rate was 7.2% among men and
10.6% among women.
Slovenia's labour force meanwhile numbered 917,974 in January, out of whom 838,005 were
employed. The number of these rose by 0.6% in comparison with December and increased by
3.1% over January 2006.
Of the employed, 88,546 were self-employed while of the 749,459 who worked for other
people 682,780 held jobs at companies and 66,679 worked for entrepreneurs. The number of
farmers rose by 12.1% in the year to 31,426.
The ILO-compatible unemployment rate reached 5.6% in the third quarter of 2006, the latest
period for which data is available.
10
FINANCE
Petrol Prices Surge
Petrol prices are adjusted every two weeks to oil prices and the exchange rate of the US
dollar
Petrol prices are higher as of Tuesday, 13 March. Regular unleaded costs EUR 1.015, which
is a 4.8 cents increase, while premium is being sold at EUR 1.024, 4.5 cents more than now.
Diesel went up by 2.2 cents to EUR 0.929, whereas the price of heating oil increased by 2.3
cents to EUR 0.571,
Petrol prices are adjusted every two weeks to oil prices and the exchange rate of the US
dollar.
Slovenia Issues First Benchmark Eurobond
Slovenia will enter the European market of debt securities on 22 March with its first issue of
benchmark 11-year Eurobonds in a nominal value of one billion euros and with a fixed
interest rate of 4%
Slovenia will enter the European market of debt securities on 22 March with its first issue of
benchmark 11-year Eurobonds in a nominal value of one billion euros and with a fixed
interest rate of 4%, the Finance Ministry said on Tuesday, 13 March.
The collection of bids started on Monday, 12 March after a roadshow featuring Finance
Minister Andrej Bajuk which included London, Milan, Frankfurt, Amsterdam, Brussels and
Paris.
The bond issue was four-times oversubscribed and the final price was set at 10:35 AM on
Tuesday, 13 March.
Some 29% of the issue was sold to Germany and Austria, 19% to investors in France, 16% to
Great Britain and Ireland, 9% each to Italy and the Benelux countries, 5% to domestic
investors and 1% elsewhere.
Broken down by type of investor, 53% of the bonds went to asset management firms, 33% to
banks, 6% each to insurance companies and central banks and 1% to funds managing shortterm assets.
The money thus raised will be used by the government to fund current budget expenditures
and refinance existing debt with a view to reducing the overall debt burden, the Finance
Ministry said.
The bond issue was managed by the banks Dresdner Kleinwort, Societe Generale Corporate
and Investment Banking and Bank Austria Creditanstalt Ljubljana (a member of Unicredito
Group).
Slovenia to Apply For Extension of Reduced VAT for Housing
The government is to address to the European Commission an initiative for an extension of
the reduced VAT rate on construction, renovation and maintenance work for residential
housing
The government is to address to the European Commission an initiative for an extension of
the reduced VAT rate on construction, renovation and maintenance work for residential
housing, the Finance Ministry confirmed on Wednesday, 14 March.
Slovenia hopes to have extended the transitional period that it obtained for VAT on housing
as part of its EU accession negotiations, which is scheduled to end this year.
11
In case the initiative fails, new dwellings would have to be sold in 2008 at a VAT rate of 20%
and no longer at the reduced rate of 8.5%. In line with the relevant EU directive the reduced
rate can only be used for housing provided as part of a social policy.
Like in other EU members, the renovation, repairs and maintenance of residential housing
will meanwhile continue to be subject to a reduced VAT rate, this being the result of an
agreement reached by all EU member states after prolonged negotiations in 2006.
Slovenia requires the consent of all EU member states to be approved an extension in its
transitional period.
ECB Sees Significant Budgetary Imbalances in Slovenia
The European Central Bank (ECB) has found "significant budgetary imbalances" in Slovenia
in its March bulletin on the economic situation in the eurozone, placing Slovenia among the
countries which are "not yet in safe budgetary positions"
The European Central Bank (ECB) has found "significant budgetary imbalances" in Slovenia
in its March bulletin on the economic situation in the eurozone, placing Slovenia among the
countries which are "not yet in safe budgetary positions".
Slovenia is expected to meet its medium-term objective by 2009, but its updated stability
programme points to "backloaded adjustment strategies with risks on the expenditure side,"
reads the report, which was published on Thursday, 15 March.
The 2006-2009 stability programme which Slovenia submitted to the EU at the end of last
year envisages a general government deficit growing from 1.5% of GDP in 2007 to 1.6% the
following year and dropping to 1% in 2009.
The European Commission assessed the programme as plausible but lacking in ambition. It
said most of the planned measures were geared towards 2009, which is why it called on
Slovenia to take these measures faster, especially in light of the current strong economic
indicators.
IMF Urges Pension, Budget Reform
A delegation of the International Monetary Fund (IMF) has urged Slovenia to undertake
substantive reforms of the pension system sooner than later" in order to ensure its
sustainability
A delegation of the International Monetary Fund (IMF) has urged Slovenia to undertake
substantive reforms of the pension system sooner than later" in order to ensure its
sustainability. "If nothing is done now to improve the parameters of the system, calculations
show that the system would be completely unsustainable by 2050," the head of the delegation,
Piritta Sorsa, said at the end of the annual IMF mission on Friday, 16 March.
Sorsa noted that Slovenia had one of the most rapidly ageing populations and the pension
system was very generous compared to other European countries.
There are plans for reforming the system, for example by raising the retirement age and
putting in place an active ageing policy, but "more needs to be done".
According to Sorsa, Slovenia must look at the amount of benefits and the indexation of
pensions, as well as develop private pensions.
"The minimum guaranteed returns [for private pension funds] discourage people from saving,
as returns are not very good. If this is lifted, pension fund managers might take more risk,
which would increase returns."
At the same time, there is a need to accumulate more public savings to cover future pension
liabilities, she said.
Overall Slovenia is doing well, Sorsa said, but euro membership brings new challenges.
"Maintaining prudent fiscal and wage policies, and increasing economic flexibility and
12
productivity, will be key to ensuring that the economy can continue to grow without building
up inflationary pressures."
According to her, if wages grow faster than productivity, Slovenia could eventually "lose
competitiveness and fall into a low-growth trap."
The IMF mission therefore recommended a "tighter than budgeted fiscal stance for 2007-08",
underpinned by reforms in rigid spending. This would also help improve the flexibility of
fiscal policy, create room for capital spending and accommodate the recent reduction in taxes.
Streamlining measures need to be targeted on inefficient expenditure to ensure the quality of
public services in which implementation of performance budgeting will be important.
Sorsa also called for the further privatisation of the banking sector, which she said would
"increase efficiency and enhance transparency."
She lauded the government's "ambitious plan for privatisation in 2007, which includes the
Slovenska industrija jekla steel group and the telco Telekom Slovenije, which the IMF
"supports very much".
Asked about the low level of incoming foreign direct investment (FDI), Sorsa said foreign
investors were still facing a lot of red tape and a rigid labour market with a relatively costly
labour force.
However, the promised one-stop-shop for the setting up of company could go a long way
towards eliminating administrative barriers, and a solution for rigid labour regulations could
also be found quickly if Slovenia wants to accept more foreign investors.
Ljubljana Stock Exchange
SBI 20 benchmark index ended the week 52.85 points (0.73%) lower at 7,102.15
Investors in Slovenia showed caution last week, prompting a slide in big name blue chips. The
SBI 20 benchmark index ended the week 52.85 points (0.73%) lower at 7,102.15, while the
SBI TOP index of the six biggest shares was down 21.6 points (1.32%) at 1,608.7.
Shares of telco Telekom Slovenije were the most active issue last week, generating EUR
15.2m in turnover, which is more than a quarter of all turnover. Telekom was also the
outstanding performer among the big names, as it bucked the general trend to put on 5.88% to
EUR 377.87.
On the other side of the board, shares of pharma company Krka, which generated EUR 8m in
turnover, were down 4.19% on the week to close at EUR 812.45.
Shares of energy group Petrol and retailer Mercator followed in Krka's footsteps, sliding by
3.11% to EUR 522.28 and 3.37% to EUR 226.96 in downbeat trading.
Among the winners, shares of newspaper publisher Delo surged 8.15% to EUR 134 on the
back of news it was being acquired by the Pivovarna Lasko beverage group for EUR 135 a
share. Lasko, which already owns 44% of Delo, was down 1.13% to EUR 44.54.
Joining Telekom in the winners column were shares of the Istrabenz holding, which surged
4.45% to EUR 51.17.
Meanwhile, shares of the flavourings and essential oils maker Etol nosedived last week,
losing 39.19% to EUR 135 in a strong sell-off.
The losing trend also extended to the free market, where popular investment funds were hit by
investor edginess. The PIX investment fund index ended the week 73.87 points (1.32%) lower
at 5,489.29.
Meanwhile, the BIO bond index was up 0.24 points (0.2%) at 118.08.
Brokers concluded a total of EUR 55.81m worth of deals, with EUR 8.87m of that coming in
block trade.
13
REGIONAL INFORMATION
Maribor City Vinedresser Prunes World's Oldest Vine
The Old Vine is a protected item of natural heritage and a symbol of Maribor, as well as all
the wine-growing regions of Slovenia
The world's oldest vine was pruned as part of a traditional tourist event in Maribor on Friday,
16 March, as the city vinedresser Tone Zafosnik dealt the expert cut which will ensure this
400-year-old Guinness World Record-holding lady gives a plentiful crop.
The Old Vine is a protected item of natural heritage and a symbol of Maribor, as well as all
the wine-growing regions of Slovenia. Pruning controls its growth, fruitfulness, quality and
stability.
Mayor of Maribor Franc Kangler, symbolically handed over grafts to representatives of
various municipalities. A few grafts of the Slovenian vine will also find their homes in
Germany, Switzerland, France and Montenegro.
The venerable age of the vine was scientifically proven in 1972. Its grapes usually produce
about 25 litres of wine every year. It is put in custom-made bottles and used by the Maribor
City Council for special occasions.
This year's 28th pruning session was attended by numerous locals and tourists, and
accompanied by a rich cultural programme.
14
BRANCH INFORMATION
Slovenian Tourist Board Satisfied With Winter Season
Even though there was not much snow and despite the fact that the number of skiers dropped
by half, the 2006/2007 winter season was a success, the head of the Slovenian Tourist Board
Dimitrij Piciga told the press
Even though there was not much snow and despite the fact that the number of skiers dropped
by half, the 2006/2007 winter season was a success, the head of the Slovenian Tourist Board
Dimitrij Piciga told the press on Tuesday, 13 March.
The number of visitors between November 2006 and January 2007 increased by 7% year-onyear, while the number of overnights went up by 5%, according to unofficial data from the
National Statistics Office.
The most frequent guests were Italians, followed by tourists from Croatia, Austria and
Germany.
While last winter was very successful, the number of skiers fell by half this season, said the
secretary of the Ski-lift Operators Association, Dusan Bozicnik.
However, there were no cancellations of bookings during holidays despite the mild winter,
which tells a lot about the supplementary offer of Slovenian ski resorts, added Bozicnik.
Certain ski resorts are still operating, as Kanin (NW) will be open until the end of April, while
Krvavec (central Slovenia) and Vogel (NW) will operate until the Easter Holidays.
On the other hand, Slovenian spa operators had 10.8% more vacancies available this February
than in the same month in 2006, while hotels operated at 61.9% of capacity, an increase of
0.2%.
In February, Slovenian spas had 21.1% more guest than in the same month of 2006, while the
number of overnights increased by 16.4%, according to the secretary of the Slovenian Spas
Community, Rudi Rumbak.
According to the Slovenian Tourist Board, this year's objectives are 4% growth in overnight
stays, 6% growth in the number of guests, and 8% growth of income from tourism.
Majority of Slovenian Farmers Received Low Subsidies in 2005
EU subsidies for Slovenian farmers totalled EUR 24.5m in 2005
Of the 57,360 Slovenian farmers who received EU subsidies in 2005, some 95% (54,610)
received less than EUR 1,250, while none received over EUR 50,000, according to data
published by the European Commission on Tuesday, 13 March. EU subsidies for Slovenian
farmers totalled EUR 24.5m in 2005.
Around EUR 10m was given to some 40,000 farmers for plants and plant products, while
some EUR 14m were paid out for animal premiums.
Around 2,000 farmers received between EUR 1,250 and EUR 2,000 and some 750 received
between EUR 2,000 and EUR 5,000.
Some 60 farmers got between EUR 5,000 and EUR 10,000, while around 20 farmers received
up to EUR 20,000. Only around 10 farmers got between EUR 20,000 and EUR 50,000.
Motorway Construction Allocated EUR 700m in 2007
The cabinet adopted the programme for the construction and maintenance of motorways in
2007
The cabinet adopted on Thursday, 15 March the programme for the construction and
maintenance of motorways in 2007. The EUR 734.5m plan includes opening 17.7 kilometres
of new motorways and construction of over 100 kilometres of existing and new sections.
15
Transport Minister Janez Bozic told the press after the session that the opened sections would
include: Maribor-Spodnja Senarska in the NE; Peracica-Podtabor in the north; and the first
phase of the Sentvid-Koseze motorway near Ljubljana.
Construction will meanwhile begin on the 14.8-kilometre Pluska-Ponikve and PonikveHrastje sections in the SE part of Slovenia while works will continue on 101.9 kilometres of
motorways and 18.7 kilometres of dual carriageways.
The costs are meanwhile the highest yet and will be financed through the budget and EU
funds as well as with loans, bonds and other means, the minister added.
Cabinet Establishes Power Distribution Company
The company will get a license to manage the network of the current five power distributors
and will be headquartered in Maribor
The cabinet decided on Thursday, 15 March to set up a national power distribution company
(SODO). The company will get a license to manage the network of the current five power
distributors and will be headquartered in Maribor, the Economy Ministry wrote in a press
release.
The establishment of the operator was necessitated by the EU rules for regulating the common
electricity market. The rules call for complete liberalisation by 1 July and demand that power
production and distribution may not be carried out by the same company.
According to the energy act, the government can determine the power distributor for a
maximum of 50 years. The company is independent in concluding deals of up to EUR 4m and
needs government approval for deals over that amount. Its start-up capital is EUR 7,500.
Pig Not Infested with Swine Fever, Radio Reports
Laboratory tests of a pig from a farm near Brezice (E) have come out negative to swine fever
Laboratory tests of a pig from a farm near Brezice (E) have come out negative to swine fever,
public broadcaster Radio Slovenia reported on Saturday, 17 March.
The negative results however do not mean a lifting of the protective measures, brought into
effect after an outbreak of swine fever was reported from nearby Croatia.
The possible case of the disease was discovered by veterinary authorities on Friday, 16 March
at a small farm in Slogonsko near the Croatian border.
The two pigs from the farm were culled and brought to Ljubljana for testing.
16
COMPANIES
Beverage Group to Publish Takeover Bid for Publisher Delo
Pivovarna Lasko already holds a 44.15% stake in the company that publishes Slovenia's
leading broadsheet
Beverage group Pivovarna Lasko said on Monday, 12 March it would publish a takeover bid
for publisher Delo within 30 days. Pivovarna Lasko already holds a 44.15% stake in the
company that publishes Slovenia's leading broadsheet.
Lasko added that it had notified the Securities Market Agency (ATVP), the Competition
Protection Office, the management and representatives of workers at Delo of its takeover
intention.
The group also confirmed for STA that it would offer EUR 135 per share of Delo. It added
that it would set no acquisition threshold for the success of the bid.
Delo said that the investment reflected the potential of the company. "Changes to the
ownership of Delo are in the hands of its owners," the company wrote.
Delo also wrote on Monday, 12 March that Probanka, the Maribor-based bank, sold its 10%
stake in Delo as did investment firm Infond ID.
The combined 20% stake, Delo wrote, was probably bought by mineral water producer
Radenska, which is part of the Lasko group. According to Delo, the deal was worth EUR
17.2m, with shares exchanged at EUR 135 per share.
Other major shareholders of Delo include the state-owned Restitution Fund (SOD) and
investment firm Infond holding, which hold 11.7% and 10.7% respectively.
EU Approves EUR 40m in Restructuring Aid for Sugar Plant
The European Commission said that the fund for restructuring Europe's sugar industry
contained enough funds to pay out aid to all who requested it
The European Commission said that the fund for restructuring Europe's sugar industry
contained enough funds to pay out aid to all who requested it. This means that Tovarna
sladkorja Ormoz, Slovenia's lone sugar plant, will get EUR 39.8m, the Agriculture Ministry
said on Monday, 12 March.
Out of the total, EUR 3.87m would go to sugar beet growers, EUR 8.25 for severance pay to
redundant workers and the rest would go for closing down, decommissioning and
environmental restoration of the plant in the NE Slovenian town of Ormoz.
The plant was forced to end operations in the wake of the EU-wide sugar reform, which the
bloc confirmed in late 2005.
The Agriculture, Food and Forestry Ministry added that the cabinet would send the plan for
the restructuring of the plant to Brussels this week. The plan is for the Commission to review
but not assess its suitability, the ministry said.
Efforts are underway to have the plant converted to biofuel production. Jurij Dogsa, the
chairman of sugar factory Tovarna sladkorja Ormoz, said recently that the plant would have to
undergo a EUR 35m overhaul in order for it to be able to produce 50,000 cubic metres of
bioethanol a year.
Food Company Management Buyout Successful
The Irgram counselling company, owned by 13 senior managers of food company Jata
Emona, said that its takeover of Jata Emona was a success
17
The Irgram counselling company, owned by 13 senior managers of food company Jata
Emona, said on Wednesday, 14 March that its takeover of Jata Emona was a success.
According to the latest data Irgram now holds an over 90% stake in the company.
The bid for 44.44% of the shares that Irgram published on 14 February ended on 14 March.
The company already owned over 55% of Jata Emona and offered EUR 5.22 for the
outstanding shares.
"According to the latest report by bank Abanka which is in charge of the shares acquisition,
some 91% of the outstanding shares were acquired," said Jata Emona management board
member Marko Mocan, who is also taking part in the takeover.
The new owners are currently not planning on making any changes to the way the company is
run, Mocan added.
No. 2 Mobile Provider Posts Best Results Yet
Simobil, Slovenia's second largest provider of mobile services, generated operating revenues
to the tune of EUR 131.2m in 2006, 30.2% more than in 2005
Simobil, Slovenia's second largest provider of mobile services, generated operating revenues
to the tune of EUR 131.2m in 2006, 30.2% more than in 2005. Its operating profit meanwhile
soared by 149.6% to EUR 11.2m, the company told the press in Ljubljana on Wednesday, 14
March.
The company assessed that its market share stood at 24.9% in 2006, up 2.2 percentage points
over 2005. It increased the number of users by 17% to 420,900, with 57.5% of them being
subscribers, an increase of 8.4 percentage points over 2005.
"2006 was the best year in Simobil's history," Simobil chairman Andreas Maierhofer told the
press and added that the company would invest its profits in third-generation mobile
technologies such as EDGE and HDSPA.
According to Maierhofer, Simobil acquired 135 base stations of the defunct wireless operator
Vega last year, got 90% of former Vega users to switch to Simobil and started to lease its
network to retailer Mercator, which added mobile telephony to its services.
The company also acquired a EUR 6.5m license for third-generation UMTS technology last
year. Simobil plans to erect some 100 UMTS base stations this year, covering Ljubljana and
the country's second largest city Maribor.
Croatia Rejects Bid by Slovenian Tour Operator
The agency will however submit a bid for a new tender
The Croatian Privatisation Fund rejected on Tuesday, 13 March a bid by the Slovenian tourist
agency Relax for the purchase of a 51.17% stake of hotel operator Podgora, which manages
three hotels on the Croatian coast, the fund's representative Vedran Kukavica confirmed for
STA on Thursday, 15 March.
According to Kukavica, the fund's chairman Damir Polancec, who is also the deputy prime
minister, said on Tuesday, 13 March that Relax, the only bidder for the deal, had an invalid
bank guarantee.
Relax meanwhile told the press that it had not received an official response from the fund and
that the agency had learnt about the rejection from media reports.
Relax expressed disappointment over the decision, since it was the only bidder with complete
documentation and guarantees from major Slovenian banks. The agency will however submit
a bid for a new tender.
In the first tender, the fund demanded at least EUR 1.4m, while Relax offered EUR 2m. Relax
had promised to keep all of Podgora's 125 employees for at least a year and employ an
additional 50 within the next five years.
The bid also included investments and other obligations to the state amounting to EUR 20m.
18
Hoteli Podgora is a hotel operator which manages three hotels - Minerva, Podgorka and
Mediteran, the Sutiklo camping site, as well as several restaurants and bars.
The Relax group, established in 1990, includes nine companies from Slovenia, the Czech
Republic, Serbia, Croatia, and the Netherlands, with 150 employees.
New Boss of Railways Operator Appointed
The supervisory board of Slovenske zeleznice, the national railways operator, has appointed
Peter Puhan the new chairman of the company
The supervisory board of Slovenske zeleznice, the national railways operator, has appointed
Peter Puhan the new chairman of the company. Puhan was selected among eight candidates
who applied for the post in a public call published on 19 February.
Chief supervisor at Slovenske zeleznice Peter Verlic said that "Puhan was the best candidate,
given his interview, references and programme".
Puhan promised that his first task would be to carry out a thorough evaluation of the situation
at the debt-ridden railways operator. Following the evaluation, Puhan promised to build a
team that would start putting together plans for improvements at the company.
He promised that his main goal would be to upgrade railways infrastructure in Slovenia.
In his opinion, the company can be put on the right track despite some problems. The aim is
to transform Slovenske zeleznice into the best railways operator in this section of the 5th and
10th pan-European transport routes, he added.
Puhan said he was aware of the strength of the trade unions at the company and said he would
do his best to lead a constructive dialogue with them.
"This is the biggest challenge of my life," added Puhan, who will assume the post on 1 April.
He is currently employed at steelmaker Metal, while before that he was the head of the
Internal Market Directorate at the Economy Ministry.
Puhan fills the post that was vacated in October 2006 by Joze Jurkovic. The company was
headed by deputy director Branko Omerzu in this time.
The first public call to applications for the post was published in October, but the supervisory
board established that none of the 10 candidates met the requirements.
State Run Funds Selling Stakes in Almost 100 Companies
The state-run KAD and SOD funds, and the DSU management and consultancy enterprise
published an invitation for bids for their shares in 96 companies, among them printworks
Cetis, Slovenia's largest dairy Ljubljanske mlekarne and chemical company Cinkarna Celje
The state-run KAD and SOD funds, and the DSU management and consultancy enterprise on
Friday, 16 March published an invitation for bids for their shares in 96 companies, among
them printworks Cetis, Slovenia's largest dairy Ljubljanske mlekarne and chemical company
Cinkarna Celje.
KAD and SOD are selling a 11.94% stake in Ljubljanske Mlekarne, a 15.28% stake in Cetis, a
33.47% stake in Cinkarna Celje and a 12.94% stake in clothes manufacturer Mura.
The funds were joined by the DSU in the sale of the stakes in chair manufacturer Stol
(89.84%), and vehicle producers Tovarna vozil Maribor (TVM) (81.67%).
Also being sold is a 24.04% stake in the Central Securities Clearing Corporation (KDD) and
separate 1.03% stakes in power producers Savske elektrarne and Soske elektrarne.
Bidding is open to Slovenian and foreign persons and companies and closes at noon on 7
May.
Mobile Operator Mobitel Selected Advertiser of the Year
Mobitel, the largest wireless operator in Slovenia, has been awarded the "Advertiser of the
Year" award by the Slovenian Advertising Chamber (SOZ)
19
Mobitel, the largest wireless operator in Slovenia, has been awarded the "Advertiser of the
Year" award by the Slovenian Advertising Chamber (SOZ). Mobitel won the award for its
original and inventive market approach, SOZ said in a press release on Friday, 16 March.
The company earned the award for changing and adapting its corporate trademark to the
marketing and strategical goals of the company, while at the same time maintaining the
trademark's original visibility, SOZ said.
Runners-up were last year's winner, wireless operator Simobil, internet service provider Siol
and retailers Mercator and Spar Slovenija.
The selection procedure consisted of three rounds. Mobitel was selected in the third round by
an unanimous vote from the 7-strong jury, the press release reads.
Mobitel is by far the largest wireless operator in Slovenia with a 72% market share. It is in
100% ownership of telco Telekom Slovenije.
20
FAIRS, CONGRESSES
Slovenia Gets Prominent Place at Leipzig Book Fair
Slovenian Literature will get a prominent place at the Leipzig book fair which will take place
in the German city between 22 and 25 March
Slovenian Literature will get a prominent place at the Leipzig book fair which will take place
in the German city between 22 and 25 March. The fair that has its roots going all the way to
the second half of 15th century will focus on Slovenia as part of presenting literature from
Central and Eastern European countries.
Slovenia will be represented by a slogan that could be translated as "Hospitable
Loquaciousness". According to Urska Perne, who heads the Slovenian delegation along with
Ales Steger, the slogan wishes to convey that Slovenian literature is alive and kicking despite
of its "smallness", while also expressing the concept of Slovenia's diverse and dynamic
presence at the fair.
Along with an eclectic mixture of readings, music and exhibitions, the Slovenian stand will
offer a host of gastronomic delights, some of Slovenia's best wines, as well as host a number
of foreign guests.
Slovenian authors at the event will include writers Florjan Lipus, Boris Pahor, Drago Jancar,
Brina Svit, Mojca Kumerdej and poets Tomaz Salamun and Ales Steger.
Slovenian philosophers will meanwhile be represented by Mladen Dolar and, arguably
Slovenia's best known writer, Slavoj Zizek. Zizek, however, does not want to be a part of the
official Slovenian delegation, because he wants to maintain his "political and ethical
integrity".
The country's young photographers will also get a chance to present their best shots with
Tanja Verlak, Jasna Klancisar, Barbara Ogric and Spela Kasal being chosen by Breda Kolar
Sluga, the curator of the Maribor art gallery.
Slovenia's stand is financed by the Culture Ministry.
Exhibition Director Oliver Zille told the press in January that last year saw 2,162 exhibitors
from over 30 countries. Leipzig is the venue for some 30,000 new German titles every year,
while other European literatures also play an important part.
The event stresses literature, humanities, comics, audio books and monographs.
The organisers also believe that writers are the books best advertisers. This year's event is
expected to be attended by Guenter Grass, Martin Walser, Hans Magnus Enzensberger,
Thomas Brussig, Julian Barnes, and others.
21
SLOVENIA IN BRIEF
Eye Clinic Presents New Method for Treating Tear Duct Blockage
The Ophthalmology Clinic at Klinicni center, the central hospital in Ljubljana, unveiled on
Monday, 12 March a new laser surgical method for the treatment of tear-duct obstruction
which is considerably faster than traditional surgery and shortens the period of recovery, the
clinic said in a press release.
Mate Praises Role of Central European Police Academy
Interior Minister Dragutin Mate, speaking in Vienna on Monday, 12 March at the ceremony
marking the 15th anniversary of the Central European Police Academy, said that the academy
was among the first to provide for the cooperation of policemen from different systems, the
Interior Ministry said.
Minister Discusses Civil Servants Wages with IMF Delegation
Public Administration Minister Gregor Virant met on Tuesday, 13 March the visiting
delegation of the International Monetary Fund (IMF). Talks with the representatives of the
annual IMF mission focused on wages of civil servants, according to the Public
Administration Ministry.
Mitja Bricelj Appointed State Secretary at Environment Ministry
The government on Thursday, 15 March dismissed State Secretary at the Environment and
Spatial Planning Ministry, Marko Starman, and appointed to the post Mitja Bricelj, the
undersecretary at the ministry, government spokesman Valentin Hajdinjak told the press.
Drnovsek Says New Central Bank Governor Nominee in April
President Janez Drnovsek announced on Friday, 16 March he would name a new nominee for
central bank governor in time for April's regular session of parliament. This means that
Slovenia will be without a central bank governor for nearly a month, as the term of incumbent
Mitja Gaspari ends on 31 March, while parliament is expected to start April's session on 23
April.
22