Slovenia Business Week no. 43, October 18th, 2004
Table of Contents:
HEADLINES ............................................................................................................................. 3
Electoral Commission Releases Official Election Results ..................................................... 3
IMAD Forecasts Higher Economic Growth and Inflation in 2004 ........................................ 3
Iskrateling Penetrating Kazakhstan Market ........................................................................... 4
INTERNATIONAL COOPERATION ...................................................................................... 5
US Ambassador Expects "Level Playing Field" for US Companies...................................... 5
Japanese Ambassador Submits Credentials ........................................................................... 5
Romania and Slovenia Examine Ways to Boost Business Ties ............................................. 6
EUROPEAN UNION ................................................................................................................. 7
EU Foreign Ministers Touch only Briefly on Budget ............................................................ 7
Tender Goes Out for European Commission Representations ............................................... 7
Potocnik Endorsed by European Parliament Committee ....................................................... 7
Slovenia Advocates Changes to EU Directive on Mining Waste .......................................... 8
Potocnik Suggests Ways of Increasing EU Funds for Slovenia ............................................. 9
Slovenia to Get EUR 735,000 to Fight Animal Diseases ...................................................... 9
STATISTICS/FORECASTS .................................................................................................... 11
Trade Deficit at EUR 117.2m in August .............................................................................. 11
Slovenia Loses Two places on WEF Competitiveness Report ............................................ 11
August Wages Rise Slightly Over July ................................................................................ 11
Number of Poor in Slovenia Falling, Ministry Says ............................................................ 12
FINANCE................................................................................................................................. 13
Capital Market Development Vessel of Growth in C and SE Europe ................................. 13
Petrol Prices Reach Record Highs ....................................................................................... 14
Gaspari Claims Inflation Curbing Efforts not in Jeopardy .................................................. 15
Conference: Economy in Need of Restructuring, Better Government Attitude .................. 15
Capital Market Needs to Integrate with EU Markets, Mramor Says ................................... 16
Ljubljana Stock Exchange .................................................................................................... 17
Foreign Exchange ................................................................................................................. 17
REGIONAL INFORMATION ................................................................................................ 18
World's Oldest Vine Harvested in Maribor .......................................................................... 18
BRANCH INFORMATION .................................................................................................... 19
Slovenia Sees Opportunity in SE Europe's Reconnection to Power Grid ............................ 19
National Environmental Programme Introduces All Taxes ................................................. 19
Slovenian Ski Resorts Invest EUR 10m in Infrastructure .................................................... 19
COMPANIES ........................................................................................................................... 21
OMV Istrabenz Gets New Management .............................................................................. 21
Kolektor Makes Official Proposal for Working Time Extension ........................................ 21
Rogla Ski Resort Opens New Toboggan Slide .................................................................... 22
Krsko Vying for Major Danish Investment .......................................................................... 22
Merkur Will Keep Bofex Subsidiary ................................................................................... 22
Luka Withdrawing from Trieste Port ................................................................................... 23
Slovenian Steelworks to Privatise Subsidiary Elektrode ..................................................... 23
Serbian Deputy Premier Surprised Over Court's Ruling on C Market ................................ 24
SLOVENIA IN BRIEF ............................................................................................................ 25
Slovenian Judge Appointed to Head Section at European Court ......................................... 25
New ITF Director Looks for More Funds in Brussels ......................................................... 25
Government Adopts 2005 EU Information Campaign ........................................................ 25
Steklarna Rogaska GM Steps Down Over Restructuring Differences ................................. 25
2
HEADLINES
Electoral Commission Releases Official Election Results
The results confirm the centre-right Slovenian Democrats (SDS) as the winners of the 3
October election
Ten days after the general election, the National Electoral Commission on Wednesday, 13
October released the official results of the vote.
The results confirm the centre-right Slovenian Democrats (SDS) as the winners of the 3
October election. They received a total 281,710 votes or 29.08 percent of the vote compared
with 15.8 percent in 2000.
The centre-left Liberal Democrats (LDS) garnered 220,848 votes or 22.8 percent of the vote, a
major loss compared with the 36.21 percent that the party won four years ago. The centre-left
United List (ZLSD) trailed behind with 98,527 votes or 10.17 percent of the vote. The
showing of this party was just slightly below the 12.07 percent posted in 2000.
The fourth was centre-right New Slovenia (NSi) with 88,073 votes or 9.09 percent of the vote,
almost on a par with the 8.76 percent in 2000. The centre-right People's Party (SLS) was
supported by 66,032 voters or 6.82 percent, while in 2000 it won 9.53 percent of the vote.
The Slovenian National Party (SNS) improved its showing from 4.38 percent in the 2000
election to 6.27 percent (60,750) of the vote this time. The only other party to pass the 4
percent hurdle to enter parliament was the Pensioner's Party (DeSUS), which scrapped in with
39,150 votes or 4.04 percent of the vote. It won 5.16 percent four years ago.
IMAD Forecasts Higher Economic Growth and Inflation in 2004
Slovenia's economic growth in 2004 will be 4 percent, or 0.4 percentage points more than
forecast last spring by the government Institute for Macroeconomic Analyses and
Development (IMAD)
Slovenia's economic growth in 2004 will be 4 percent, or 0.4 percentage points more than
forecast last spring by the government Institute for Macroeconomic Analyses and
Development (IMAD). Annual inflation will be, according to IMAD, higher as well, standing
at 3.5 percent rather than the 3.3 percent forecast in the Spring Report.
The government was acquainted with the revised economic growth and inflation outlook for
the country from the IMAD Autumn Report on Thursday, 14 October.
On the other hand, IMAD analysts did not change considerably their spring forecast of 2005
economic growth; the figure was upgraded by a mere 0.1 of a percentage point to 3.8 percent.
IMAD director Janez Sustersic explained the figure could not have been upgraded more due
to the global uncertainty connected to the rising oil prices.
The inflation forecast for 2005, however, remains the same as in the Spring Report,
expectedly falling to 3 percent by the end of next year, Sustersic told the press after the
government weekly session.
Although inflation is currently higher than expected, the beneficial effects of entering the
exchange rate mechanism ERM II have offset even higher inflation as suggested by rising oil
prices.
According to Sustersic, the stabilisation of the tolar-euro exchange rate and lower food prices
have had a beneficial impact on inflation expectations.
Oil prices, which have contributed one percentage point to inflation growth, have exceeded all
expectations. IMAD based its spring forecast on oil price of US$ 27.7 per barrel - the average
price reached US$ 40.5 in the third quarter.
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The autumn forecast as well as the figures for 2005 are based on the expectation that the
average price of oil will be US$ 37 per barrel until the end of the year, and next year.
Should the oil price be 10 dollars higher, inflation will be another 0.8 percentage points higher
and GDP growth would be 0.3 percentage points lower, Sustersic explained.
The higher than expected GDP growth figure is a result of the one-off effect of EU entry on 1
May and faster global economic recovery, according to Sustersic.
Exports were the main motor of growth, soaring by 11.5 percent year-on-year in the first six
months. The growth of exports is expected to slow down, yet end-year real growth is still
expected to amount to 8.5 percent.
The autumn forecast has also upgraded end-year import growth, from 6.8 to 9.2 percent,
although the domestic consumption outlook has not been corrected.
According to the report, employment will start increasing after two lean years, by 0.4 percent
this year and by 0.3 percent in 2005. Consequently, ILO-compatible unemployment is to
stand at 6.4 and 6.1 percent, respectively.
Iskrateling Penetrating Kazakhstan Market
Iskrateling, the manufacturer of telecommunications equipment, has signed a deal with the
Kazakhstan railway utility on modernising its telecoms infrastructure
Iskrateling, the manufacturer of telecommunications equipment, has signed a deal with the
Kazakhstan railway utility on modernising its telecoms infrastructure. The deal is worth US$
1.1m, the company said in a press release on Tuesday, 12 October.
Iskrateling contracted to build a new telephone exchange, applications for audio and video
conference communication and the ISDN terminal equipment. The company will also train
the utility's workers.
The company says it is proud of beating fierce competition of big multinationals competing
for the deal, and highlights that the contract was a result of two years of intensive cooperation
with the client.
Moreover, Iskrateling has already done a lot of business with the Russian railway utility,
which has also helped them to get the business in Kazakhstan, the Kranj-based company also
said in a press release.
4
INTERNATIONAL COOPERATION
US Ambassador Expects "Level Playing Field" for US Companies
According to the Bank of Slovenia, US foreign direct investment in Slovenia in 2003
amounted to 82.7 million euros, which represented less than 2 percent of total FDI in
Slovenia
The new US ambassador to Slovenia has said he will make it his priority to ensure that US
companies doing business in the country have "a level playing field" as he spoke about ways
to increase the modest flow of US investment into Slovenia.
Thomas B. Robertson said "US investment [in Slovenia] is not really as high as it should be"
and that he was "frustrated" by this, especially because the country has many attractive
features to offer to US investors.
According to Robertson, the major challenge facing the Slovenian economy in terms of
attracting more US investment is greater transparency, particularly as concerns reducing the
state influence in the economy and in terms of the clarity of regulations.
Challenges also include the speeding up of judicial processes and the protection of intellectual
property rights, Robertson told a business breakfast organised by the American Chamber of
Commerce in Slovenia.
Robertson said he had received promises from both the outgoing Slovenian government and
representatives of the opposition parties which look set to form the new government that
problems will be attended to.
Slovenian officials have "talked the talk", Roberston said, adding that it was now time for
them to "to walk the walk".
Asserting that US investment accounts for only 10 percent of total foreign direct investment
coming into Slovenia, Robertson said it is his goal to see this percentage raised in the next
three years.
According to the ambassador, the opportunities for US businesses in Slovenia are great, as
Slovenia boasts a well-educated workforce, excellent infrastructure and is surrounded by
interesting markets.
He suggested it was now up to the Slovenian authorities to ensure that the market is open for
competition and that US companies are treated the same as domestic counterparts.
These comments are also a reference to the struggles of mobile services company Vega,
which is owned by US company Western Wireless International, which has complained of
being discriminated against in its attempts to capture a chunk of the Slovenian mobile services
market.
Although the fate of Vega has been making all the headlines recently, one of the best known
US investments in Slovenia is that of tire maker Goodyear, which owns the Kranj-based
company Sava Tires.
According to the Bank of Slovenia, US foreign direct investment in Slovenia in 2003
amounted to 82.7 million euros, which represented less than 2 percent of total FDI in
Slovenia.
Japanese Ambassador Submits Credentials
Ambassador Umezu will be based in Vienna, but has announced that Japan intends to open
an embassy in Ljubljana in 2006
The new Japanese Ambassador to Slovenia, Itaro Umezu, handed over his credentials to
President Janez Drnovsek. Umezu will be based in Vienna, but has announced that Japan
intends to open an embassy in Ljubljana in 2006.
5
President Drnovsek expressed satisfaction with Japan's decision to open a permanent
diplomatic mission in Slovenia. He labelled the move an important motivation for the
strengthening of bilateral cooperation, according to a press release.
Slovenia has had an embassy in Tokyo since 1993. The current ambassador is Robert Basej.
Ambassador Umezu told Drnovsek that Japan is interested in providing assistance in the
stabilization of SE Europe, and expressed the country's willingness to work together with
Slovenia in the framework of international efforts in the region.
Drnovsek also presented Slovenia's preparations for the presidency of the Organisation for
Security and Cooperation in Europe (OSCE) in 2005, while Umezu expressed Japan's
willingness to cooperate with Slovenia in the OSCE framework, the president's office press
release reads.
Umezu also handed the copies of credentials to FM Ivo Vajgl. The pair discussed Slovenia's
upcoming OSCE presidency and Japan's candidacy for a non-permanent seat on the UN
Security Council in 2005 and 2006.
Romania and Slovenia Examine Ways to Boost Business Ties
The standing Romanian-Slovenian commission on business ties held a session in Ljubljana
The standing Romanian-Slovenian commission on business ties held a session on Friday, 15
October in Ljubljana, and examined ways to boost cooperation in finance, regional
cooperation, clustering, agriculture, tourism and competition promotion.
The two delegations exchanged information on the current economic trends in the respective
countries and took the opportunity to review the progress in business ties since the
commission's last session in October 2003.
The Slovenian delegation at the talks was headed by Economics Ministry State Secretary
Renata Vitez. Economics and Trade Ministry State Secretary Georgeta Molosaga led the
Romanian delegation.
Given its size, Romania is an important potential market for Slovenian companies. Also, the
country is expected to join the EU in the near future, the Slovenian Economics Ministry.
Trade between the two countries is not great given their proximity, amounting to EUR
161.33m in 2003, of which EUR 91.1m were Slovenian exports.
6
EUROPEAN UNION
EU Foreign Ministers Touch only Briefly on Budget
Europe Minister Milan M. Cvikl attended the meeting alongside Foreign Minister Ivo Vajgl
Foreign ministers of EU members only briefly discussed the EU's budget for the 2007-2013
period as they met in Luxembourg on Monday, 11 October. The ministers were also
addressed by Europe Minister Milan M. Cvikl, who said regions hit by the statistical effect of
EU enlargement must be treated accordingly.
The regions that will be hit by the statistical effect are already given special attention by the
draft 2007-2013 budget, said Cvikl, who opened the issue because Slovenia would also be hit
due to the relative increase in development when less developed countries join the EU.
Cvikl, who attended the meeting alongside FM Ivo Vajgl, also called for greater focus on
cross-border cooperation at the Union's external borders. This type of cooperation strengthens
the EU as a whole, he said, so it should be made a priority.
Several ministers talked about specific problems. According to diplomats, Poland, Latvia,
Lithuania and Slovakia called for greater flexibility or elimination of the limit determining
that a country may not receive more than the equivalent of 4 percent of GDP from the Union's
structural funds.
The ministers also discussed the controversial contributions to the common EU budget, where
it is still unclear where the cap will be set.
Tender Goes Out for European Commission Representations
The tender demands that the candidates comply with relatively strict rules, including ten
years of working experience and five years of experience in managerial post
The European Commission published a tender on Tuesday, 12 October for new heads of the
Commission's representation offices in the ten EU newcomers. In line with the rules, the
current EU ambassador to Slovenia Erwan Fouere has to be succeeded by a Slovenian citizen.
The tender demands that the candidates comply with relatively strict rules, including ten years
of working experience and five years of experience in managerial post. They have to be fluent
in at least two EU official languages.
The post ranks quite high in the Brussels hierarchy of bureaucrats, placing right behind those
of director general and director.
Among other things, the would-be representatives will have to sign a statement promising to
act independently and for the public good as representatives of the Commission, not their own
state.
The new head of the Commission's representation office will be appointed for a three-year
term, with a possibility to prolong it for two years.
The candidates have to submit their applications by 10 November.
Potocnik Endorsed by European Parliament Committee
Janez Potocnik, the incoming European commissioner for science and research, was
unanimously given a nod of approval by the European Parliament committee on industry,
research and energy
Janez Potocnik, the incoming European commissioner for science and research, was
unanimously given a nod of approval by the European Parliament committee on industry,
research and energy, according to the committee's evaluation released on Wednesday, 13
October.
7
Members of the committee believe that the candidate has the necessary personal and
professional skills as well as the dynamism and political determination for the position of the
commissioner for science and research, says the evaluation, addressed to the President of the
European Parliament Josep Borrell.
The report says that the committee saw Potocnik as "honest, sensitive to the human factor,
with excellent communication skills, knowledgeable and well prepared, but also willing to
listen and discuss possible points of disagreement".
As a scientist (economist) and someone who worked as a researcher himself, the candidate
was sensitive to the economic and social aspects of research and the need to improve the
conditions of researchers, the evaluation says.
"Although he was new to the field of research, his balanced approach and open-mindedness
left no doubt that he would be in complete control of his area of competence," says the
document, signed by the committee chair, British MEP Giles Bryan Chichester.
There is, however, also some criticism voiced in the document: "One large political group
perceived a relative weakness in his visions for the future but expressed confidence that this
would be overcome as he worked himself into his new tasks". The document does not specify
which political group is in question.
The committee members "highly appreciated" Potocnik's appreciation of the role of small and
middle-sized companies in research, his clear statements in favour of basic science,
simplification of procedures and stimulation of the research potential.
"He saw research as an essential pillar of the Lisbon strategy, advocating a balanced approach
between competitiveness, sustainability and social inclusion," the evaluation says.
The committee also very positively received Potocnik's "clear manifestation of his political
will in favour of doubling the EU research budget".
"Equally appreciated was his openness to dialogue with the parliament and his willingness to
admit shortcomings in the current Framework Programme and initiate the necessary reforms.
Most groups appreciated the nominee's support for the ITER project," the document says.
The evaluation of hearings of commissioners designate is currently discussed by the heads of
political groups in parliament. The parliament is expected to take a vote on the incoming
commission as a whole later in October. If it gets the green light, the commission will assume
office on 1 November.
Slovenia Advocates Changes to EU Directive on Mining Waste
Slovenia advocates a solution whereby provisions of the draft EU directive on mining waste
would not apply for mines that are being shut down, at least not before 1 January 2011
Slovenia advocates a solution whereby provisions of the draft EU directive on mining waste
would not apply for mines that are being shut down, at least not before 1 January 2011.
Slovenian mines that are being shut down will have been completely closed by then, and the
implementation of the directive will not be problematic, Environment Minister Janez Kopac
said on Thursday, 14 October.
Speaking for STA after a debate on the directive at a meeting of EU environment ministers in
Luxembourg, Kopac said that Slovenia, Germany and Great Britain achieved another
solution: that provisions of the directive regulating special financial guarantees for the
management of mining waste will not apply to the mines whose waste is not damaging to the
environment.
The initial draft of the directive stipulated that all mines (including gravel pits and the like)
should have a specially approved plan where they can deposit mining waste, complete with
financial guarantees for potential damages to the environment.
8
"For Slovenia, this would result in the bankruptcy of all mines," said Kopac, adding that new
closure projects would have to be made for all the mines that are already being shut down.
This would halt or at least slow down the closure process, he added.
In the afternoon, the ministers will also debate the funding of the network of protected natural
areas dubbed Nature 2000. Minister Kopac intends to push for greater funding by the EU to
replace the funds that members must allocate from their budgets.
Potocnik Suggests Ways of Increasing EU Funds for Slovenia
Slovenia's European Commissioner Janez Potocnik took part in a seminar organised by the
bank NLB
In negotiations on the 2007-2013 EU budget, Slovenia should make efforts to secure
sufficient money from structural and cohesion funds. Another crucial task for the new
government will be to ensure that the country is capable of phasing the funds, believes
Slovenia's European Commissioner Janez Potocnik.
Potocnik, who took part in a seminar organised by the bank NLB and entitled "Slovenian
Ideas, European Money" on Thursday, 14 October also stressed that Slovenia will certainly be
a net recipient from the EU budget and, at the same time, get much more money from
European funds than so far.
The second concept that can be advocated in the budget negotiations - a real decrease in net
budget contributions - is dangerous and could make Slovenia a net contributor to the budget,
he stressed.
Potocnik, who will be in charge of science and research in the new Commission, again
stressed the importance of the Lisbon Strategy, which he says will be a key task of the new
Commission.
EU members should show greater commitment to Lisbon objectives, and draft their own
strategies that will pursue the same goals - greater competitiveness and concurrent sustainable
development.
Potocnik doubts whether the stated goal of the Lisbon Strategy - making the EU the most
competitive knowledge-based economy by 2010 - can be achieved, at least not from a
narrowly economic viewpoint. Yet the direction is certainly correct, he stressed.
Slovenia to Get EUR 735,000 to Fight Animal Diseases
The aid is part of a financial package in the value of EUR 118m that the European
Commission approved to fight animal diseases in the EU in 2005
Slovenia will get EUR 735,000 worth of financial assistance from the EU to fight various
animal diseases that jeopardise animal and human health. More than two thirds of the sum is
available to tackle transmissive spongiform encephalopathies (TSE), in particular bovine
spongiform encephalopathy (BSE), aka mad cow disease.
The aid is part of a financial package in the value of EUR 118m that the European
Commission approved on Friday, 15 October to fight animal diseases in the EU in 2005.
Slovenia will get EUR 460,000 to tackle BSE and an additional EUR 65,000 to fight scrapie,
a form of TSE affecting mainly sheep. The country has reported one scrapie case and five
BSE cases. A further EUR 200,000 will be available to fight rabies and EUR 10,000 for the
eradication of swine fever.
Overall EUR 98m will be made available from the EU budget for the monitoring of BSE. All
cattle for human consumption older than 30 months, all dead-on-farm cattle and emergency
slaughtered cattle over 24 months and all suspect animals independent of their age have to be
tested for BSE.
The new financial package has been decided following the submission by member states of
their monitoring and eradication programmes for 2005. The programmes have been evaluated
9
by the Commission, which has adopted the maximum possible EU financial contribution. The
overall package for 2005 is by EUR 41m higher than the one approved for this year.
"We are dedicating increased resources in 2005 to fight animal diseases. Healthy animals are
the key to safe food. Today's decision reflects our on-going commitment to supporting proactive monitoring, preventative action, and disease eradication," said David Byrne,
commissioner for health and consumer protection.
10
STATISTICS/FORECASTS
Trade Deficit at EUR 117.2m in August
Slovenia's exports in August totalled EUR 810.3m, while imports amounted to EUR 927.5m
Slovenia's exports in August totalled EUR 810.3m, while imports amounted to EUR 927.5m,
according to preliminary data from the Statistics Office. The trade deficit stood at 117.2m and
the export-import ratio stood at 87.4 percent in August.
Exports rose by 15.3 percent year-on-year, while imports were up 17.4 percent. August export
figures dropped by 25.7 percent over July, and imports were down 19.3 percent over the
previous month.
Slovenia's exports to the EU member states amounted to EUR 496m, while exports to non
EU-member states totalled EUR 314.3m. Imports from the EU, on the other hand, totalled
EUR 733.7m in August. Imports from third countries amounted to EUR 193.8m.
Exports increased by 9.9 percent to EUR 8.02bn in the first eight months of the year. Imports
rose by 11.2 percent to EUR 8.81bn.
The trade deficit amounted to EUR 790.7m in the January-August period, while the exportimport ratio stood at 91 percent.
Slovenia Loses Two places on WEF Competitiveness Report
Finland remains the world's most competitive country
Slovenia has placed 33rd on the World Economic Forum's Global Competitiveness Report
2004-2005, losing two places compared to last year. Finland remains the world's most
competitive country, according to the report released on Wednesday, 13 October.
The World Economic Forum measures competitiveness with the Growth Competitiveness
Index, examining three categories crucial for a country's competitive ability: macroeconomic
environment, public institutions and technology.
In terms of macroeconomic environment, Slovenia places 39th, or two places worse than last
year. The wastefulness of government spending puts it in 53rd place among 104 countries, its
macroeconomic stability puts it in 48th, while credit rating ranks it as 27th.
The situation is somewhat better in terms of the state of public institutions, where Slovenia
places 31st overall. Respect for contracts and law place the country in 47th, while the level of
corruption is quite low, ranking it 27th.
The country lost two places in terms of readiness to introduce new technologies, placing 26th,
although it fared well in the favourable assessment on the promotion of innovation, where it
places it 23rd.
Slovenia remained level at 30th place in the quality of microeconomic environment, which is
measured with another indicator of competitiveness, the Business Competitiveness Index.
The most problematic factors impairing Slovenia's competitiveness include inefficient
bureaucracy (17 percent), tax regulations (15 percent), restrictive labour legislation (14
percent), tax rates and access to financing, according to answers provided for the report by a
total of 8,700 top managers.
August Wages Rise Slightly Over July
Slovenia's average net wage amounted to SIT 167,904 (EUR 700) in August
Slovenia's average net wage amounted to SIT 167,904 (EUR 700) in August, rising by 1.4
percent over July and by 6.4 percent over August last year, the national Statistics Office said
on Friday, 15 October.
11
The August average gross wage meanwhile amounted to SIT 267,878 (EUR 1,116.8), an
increase of 1.3 percent over the previous month and of 6.5 percent over the same month last
year.
In real terms, August gross wages were up 1.8 percent over July and increased by 2.7 percent
compared to August 2003.
In the first eight months of the year, the average net wage stood at SIT 164,233 (EUR 684.7),
an increase of 5.5 percent compared to the same period last year.
Number of Poor in Slovenia Falling, Ministry Says
The latest data show that the at-risk-of-poverty rate in Slovenia dropped by 1 percentage
point since last year and now stands at 11.9 percent
The latest data show that the at-risk-of-poverty rate in Slovenia dropped by 1 percentage point
since last year and now stands at 11.9 percent. This puts Slovenia on par with Scandinavian
countries, who have traditionally been seen as a model of social fairness, the Ministry of
Labour, Family and Social Affairs said at the International Day for the Eradication of Poverty
(IDEP), celebrated on Sunday, 17 October.
The latest data confirms the trend of lower poverty rates in Slovenia, which began after 1998
when the at-risk-of-poverty rate stood at 14 percent.
This means that currently less people live below the poverty threshold, which the ministry
links not only with better welfare but also with lower unemployment rate. Between 1997 and
2003 the number of Slovenians living below the poverty threshold dropped by some 40,000
people.
This number corresponds greatly to the data on the decrease of the number of the unemployed
in the same period. The number of the unemployed in Slovenia fell from 128,000 in 1997 to
89,000 this year.
The fact that the number coincide is interpreted by the labour ministry as proof that the main
generator of poverty is unemployment. However it also confirms that the change in the
poverty levels has not been greatly influenced by better welfare, although this did play a role.
Among improved welfare, the ministry listed higher child benefits, introduction of state
pension, benefits for large families and other changes. Although the percentage of the GDP
for social benefits is not growing and even stands at some 2 percent under the average of the
old EU member states, Slovenia's at-risk-of-poverty rate is lower than in the rest of the EU,
the ministry said.
The National Statistics Office calculates the poverty data based on common methodology
used all across the EU and is prescribed by the Eurostat. This facilitates direct comparisons
between the states, which shows that at-risk-of-poverty rate in Slovenia is lower than the
average rate in old EU member state, where it stands at 14 percent.
12
FINANCE
Capital Market Development Vessel of Growth in C and SE Europe
The second annual meeting of finance officials from central and southeastern Europe was
held in Ljubljana on 11 October
The region's growth and development can only be secured through a prompt development of
capital markets, Finance Minister Dusan Mramor said in his address to the second annual
meeting of finance officials from central and southeastern Europe, held in Ljubljana on
Monday, 11 October.
The conference discussed ways of nurturing growth and investment in the region. Central and
SE Europe is not homogeneous in terms of development, as some of the countries have
already joined the EU, some are candidates, while others are still preparing to become so.
Minister Mramor underscored the importance of central and SE Europe, as well as Russia for
Slovenia. He believes investment must be made in developing the industrial sector, rather than
just boosting retail and services sectors. Moreover, he thinks Slovenia must increase
investment in research and development, education and infrastructure.
Mramor also quoted some highlights on Slovenia's path towards the EU in his address to the
forum. He underscored the significance of legislative alignment for efficient functioning of
the capital market. The number of investment funds increased, from 18 in December 2002 to
25 in May 2004, while the assets under management rose from EUR 231m to EUR 616m,
according to the minister.
The number of investment funds is still on the increase, with increasingly tough competition
on the market. What is more, the level of investors' protection has increased, and business
operations have been made more transparent, Mramor listed the advantages of a regulated
capital market.
Apart from Slovenia's finance minister, the meeting was addressed by his counterparts from
Serbia and Poland, Mladjan Dinkic and Miroslav Gronicki, as well as Bulgarian Deputy
Finance Minister Ilija Lingorski and representatives of Slovak and Montenegrin finance
ministries, Martin Bruncko and Vladimir Kavaric.
The officials outlined their views on ways of boosting the stability of the financial system for
promoting investment and growth in the region. They also looked at economic strategies
promoting economic growth, strategies aimed at reducing sovereign debt risks and creating
fiscal conditions of capital development.
According to its finance minister, Serbia is in a different position than Slovenia. While
Slovenia has already developed its capital market, Serbia is only at the beginning of this path,
Dinkic said. According to him, Slovenia can serve as a model to Serbia in those efforts.
A country can achieve macroeconomic stability through structural reforms, which Slovenia
had to implement to join the EU. "I don't know what would have happened without the EU,
but I do now Slovenia would not be where it is now without it," Finance Minister Mramor
said.
Serbia plans to improve the conditions for strengthening its capital market by cancelling some
taxes and levies that are unique to this country and by amending relevant legislation. The first
phase of privatisation is about to conclude, according to Dinkic. This year companies in the
food industry and some banks are being privatised, while the most difficult part, the
privatisation of big state-owned companies, is only beginning for Serbia.
Montenegro has meanwhile privatised more than 65 percent of the state capital, according to
Vladimir Kavaric of the Montenegrin Finance Ministry. This year some big companies will
go private.
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Montenegro encourages the development of good business environment, which is also a
priority of Slovakia. According to Bruncko of Slovakian Finance Ministry, the country has
extensively simplified its fiscal system, changed indirect taxes into direct and thus created an
environment that is encouraging to foreign investment.
While direct investment in Poland hit the bottom last year and is now picking up, according to
Finance Minister Gronicki, Bulgaria has been recording an increasing investment inflow. This
year foreign investment is expected to amount to US$ 1.6bn. The Polish financial market is
well developed, according to Gronicko, while Bulgaria will have to increase the liquidity of
its capital market, according to Bulgarian Deputy Finance Minister Lingorski.
All countries in the region are changing their fiscal systems, but this is, according to Mramor,
only a part of the process that improves the country's competitive ability. The conference also
touched on the possibility of tax harmonisation.
Mramor believes this would only be possible in the long run, provided that the changes in tax
systems of different countries are reduced. The process would in his opinion first have to
involve simplification of national tax systems, only then a step towards harmonisation could
be made.
The second part of the conference focused on the fiscal conditions of capital growth and the
role of market watchdogs. The topics were discussed by Bank of Slovenia Vice-Governor
Andrej Rant and Governor Zdenek Tuma of the Czech central bank, Andrej Sketa of the
Ljubljana Stock Exchange and Francois Lecavalier of the European Bank for Reconstruction
and Development.
The event was organised by the London-based company EastEuro Link, a provider of
investment promotion events for the region.
Petrol Prices Reach Record Highs
Boosted by soaring crude oil prices on the global markets, prices of petrol raised to new
record highs in Slovenia on midnight on 11 October
Boosted by soaring crude oil prices on the global markets, prices of petrol raised to new
record highs in Slovenia on midnight on Monday, 11 October. Regular petrol costs SIT 207.4
(EUR 0.86), premium SIT 212.1 (EUR 0.88) and diesel SIT 199.8 (EUR 0.83) per litre.
Heating oil soared to SIT 121.8 (EUR 0.51).
The prices of diesel and heating oil increased by over 6 tolars (EUR 0.03), while regular and
premium petrol will be just under 2 tolars (EUR 0.01) dearer.
While excise duty for diesel and heating oil is at the lowest level permitted by EU law, the
government did cut excise duty for petrol, by almost 3 tolars (EUR 0.01), to cushion the
impact on inflation.
Budget revenues will be SIT 224.8m (EUR 0.94m) lower as a result of the curbing of excise
duties for regular and premium petrol.
Petrol prices are set every fortnight in Slovenia in accordance with the government pricing
model, depending on the average price of oil derivatives on the Mediterranean market and the
dollar exchange rate.
According to analysts of Slovenian petrol retailer Petrol, prices on the Mediterranean market
were between 7 and 8 percent higher in the last 14-day period than the fortnight before.
The price of crude oil on the European market, for delivery in November, reached a new
record of US$ 53.42 per barrel on Monday, 11 October. The price of brent oil for delivery in
October topped US$ 50.
Market analysts pin the rising oil prices to possible supply disruptions following a four-day
strike in oil-rich Nigeria, and the slow recovery of production in the Gulf of Mexico, which
was hit hard by hurricane Ivan.
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Much like the rest of the world, Slovenia has seen significant price increases of oil derivatives
since the beginning of the year. Regular petrol is 11.15 percent more expensive, diesel by
19.84 percent, and heating oil by 30.69 percent, although the excise duties have been slashed
to the minimum.
Gaspari Claims Inflation Curbing Efforts not in Jeopardy
The central bank governor addressed a meeting organised by the Association of Slovenian
Economists and the Association of Slovenian Banks
The central bank governor has showed himself pleased with the fall in Slovenia's inflation,
despite the negative impact of soaring global oil prices. The dynamic global growth is
expected to slow down this year, but there is no reason for inflation in Slovenia not to come
down to the level that would allow the country to join the eurozone in 2007, Mitja Gaspari
assessed in his address to a meeting organised by the Association of Slovenian Economists
and the Association of Slovenian Banks at the seaside resort of Portoroz on Wednesday, 13
October.
The Bank of Slovenia governor did not wish to talk about autumn macroeconomic
projections, because the central bank will not release them until Friday, 22 October. He did
say, though, that it was still realistic for inflation to be cut to 2.5 percent before mid-2006.
This would according to him be possible given a limited pressure of oil prices coupled with a
sufficient demand on the key markets for Slovenia. Moreover, Gaspari believes it is
imperative to brindle wages as the most immediate threat to projections, and further
indexation, a process he believes stopped short midway.
Addressing the panel on banking, Gaspari urged for caution about fiscal policy projections,
saying the policy could have been too ambitious.
The public finance deficit could substantially increase along with economic growth (topping 4
percent). Slovenia has a structural deficit, but it would be sensible to assess the flows we have
an impact on: the revenues, like those from European funds, will not be as high as planned,
while expenditures are more or less fixed, Gaspari explained. He therefore called for changes
in the value added tax act and their efficient implementation.
The central bank governor also touched on Slovenia's accession to the ERM II, the grooming
phase for the euro, earlier this year. "The decision for entering the ERM II mechanism,
looking from the experience so far, was credible and prudent," Gaspari said.
He anticipates that the countries which have not yet joined the mechanism will have more
problems, because the EU is slowly closing up in all segments, which means there will be
increasingly stricter terms of joining. Slovenia should keep the priority it gained by entering
the ERM II, something Gaspari believes will be the case in well co-ordinated combination of
economic policies.
The central bank does not see any need for changing the central exchange rate as it has proven
to be adequate. If the other economic policies follow co-ordination, if fiscal policy is slightly
more restrictive and if wages policy is firm, there is no reason for changing the central rate,
Gaspari said.
Conference: Economy in Need of Restructuring, Better Government Attitude
The most promising sectors are retail, financial services and consultancy services
Participants of an annual meeting of financial experts agreed that the Slovenian economy is in
need of restructuring, as industry account for too great a share of GDP while the share of
services in GDP is too small.
The most promising sectors are retail, financial services and consultancy services, which are
expected to develop to achieve a level seen in the rest of Europe, Joze Pavlic Damijan of the
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Ljubljana Faculty of Economics told the 7th annual autumn meeting of financial experts in
Portoroz on Friday, 15 October.
Aleksander Simon of the Kapitalska druzba financial company stressed that mutual funds are
among the most promising sectors in Slovenia, although their development is being hindered
by a lack of quality staff.
The view that service sectors will gain on importance in the future was echoed by Miro Sotlar,
the vice-president of the Chamber of Commerce and Industry of Slovenia (CCIS). He said
that this change is part of Slovenia's decision to join the EU and its 450-million market.
Sotlar also criticised the government for its aid to troubled companies, saying that the state
should not dish out money, but should instead promote innovation and education of
professional staff.
"I hope that the state will hold good to its promise to move out of the economy," Damijan
stressed, adding that the state cannot be a good manager of companies.
However, Damijan drew criticism from the other participants for saying that the state should
invest more in the construction of new industrial zones.
According to a member of the audience, Slovenia should restructure to become a servicesbased economy, since China is expected to dominate manufacturing in the future. This means
that industrial zones will be redundant and will only burden the environment.
Capital Market Needs to Integrate with EU Markets, Mramor Says
The basic aims of the Slovenian capital market in its attempts to develop include integration
with markets in the European Union and the marketing of new services
The basic aims of the Slovenian capital market in its attempts to develop include integration
with markets in the European Union and the marketing of new services, Finance Minister
Dusan Mramor has told an annual meeting of financial experts.
Speaking at the 7th annual autumn meeting of financial experts in Portoroz on Friday, 15
October, Mramor said that banking is still the most important sector of the Slovenian financial
system, although things are changing and the capital market is gaining on importance, with
mutual and pension funds growing rapidly.
He pointed out that the amount of money in Slovenian mutual funds has grown to account for
1 percent of the GDP, while these funds still have much room for growth.
The growth of mutual funds is a result of people moving their savings from banks because of
falling interest rates, Mramor pointed out.
Mramor also stressed that investment funds will have to transform into mutual funds if they
are to survive. Moreover, stock brokerages will have to begin offering new services, including
loans for customers to remain competitive.
The final part of the event saw a round table on the arrival of foreign competition on the
Slovenian market, featuring a number of executives from leading financial institutions in
Slovenia.
According to France Arhar of Bank Austria Creditanstalt, there is no significant competition
on the Slovenian financial market, with the insurance and banking sector dominated by one
dominant player.
The chair of Slovenia's leading insurer, Zavarovalnica Triglav, on the other hand, claimed that
Slovenian insurance companies can survive the arrival of foreign competition.
According to Joze Lenic, Slovenian insurance companies need to raise profitability by
increasing productivity and lowering labour costs to remain competitive after the arrival of
foreign competition.
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Ljubljana Stock Exchange
Volumes were modest, amounting to SIT 5.2bn (EUR 21.68m) or just over SIT 1bn (EUR
4.17m) a day, which is 30 percent below this year's daily average
Most blue chips lost ground in what was a slow trading week on the Ljubljana Stock
Exchange. The SBI 20 benchmark index was off 0.38 percent at 4,779.53 at the end of the
week.
Volumes were modest, amounting to SIT 5.2bn (EUR 21.68m) or just over SIT 1bn (EUR
4.17m) a day, which is 30 percent below this year's daily average.
Investors were somewhat unnerved by two announcement: investment company Infond's
revelation that it would be withdrawing from Slovenia's largest brewer Pivovarna Lasko if the
anti-trust office fails to approve Lasko's takeover bid for Ljubljana-based rival Pivovarna
Union; and the decision of hardware retailer Merkur not to sell-off its loss-making home
entertainment unit Bofex.
Shares in Pivovarna Lasko were down 3 percent to SIT 7,288 (EUR 30.39) on the back of the
announcement made by Infond, Lasko's single largest shareholder.
Merkur, on the other hand, slipped 2.7 percent to SIT 36,015 (EUR 150.16) as a former Bofex
chairman came out to claim that Merkur was again hiding the extent of the entertainment
unit's losses only a day after Merkur said it would not be selling Bofex.
The most active share on the official market last week was that of pharmaceutical group Krka,
which beat the general trend and closed 0.15 percent higher at SIT 80,547 (EUR 335.83).
Other popular shares experienced a mixed week: petrol retailer Petrol was down 1.05 percent
to SIT 63,009 (EUR 262.70), while retailer Mercator remained virtually unchanged at 42,597
(EUR 177.60).
Things were slightly more upbeat on the free market, where popular investment funds in
particular fared quite well given the lacklustre trading. The PIX investment fund gained 0.57
percent on the week to close at 4,364.44 points. The IPT free market index, on the other hand,
edged up 0.05 percent to 3,986.09 points.
The BIO bond index finished the week 0.09 percent lower at 119.07 points.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.85 (0.00)
U.S. dollar (USD) - SIT 193.46 (-1.31)
Swiss franc (CHF) - SIT 155.58 (+1.03)
British pound (GBP) - SIT 347.91 (-0.11)
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REGIONAL INFORMATION
World's Oldest Vine Harvested in Maribor
The ceremony marked the end of the tourist event "In the Arms of the Old Vine", organised by
the local tourist board together with Maribor wine growers and other related groups
Despite the fact that this year the weather was not favourable for wine-growers in the
Stajerska region, the oldest vine in the world offered rich harvest this year, said its keeper
Anton Zafosnik at the grape harvest of the 400-year-old vine.
Despite bad weather numerous visitors came to see the harvest of the oldest vine which grows
in Maribor, Slovenia's second-largest city.
The ceremony marked the end of the tourist event "In the Arms of the Old Vine", organised
by the local tourist board together with Maribor wine growers and other related groups.
Just like every year, the grapes from the oldest vine was harvested and then pressed into must.
Later it will be ripened into wine, bottled in small bottles and used as special official presents
by the Maribor municipality.
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BRANCH INFORMATION
Slovenia Sees Opportunity in SE Europe's Reconnection to Power Grid
The Eles management noted that the reconnection of the grids creates one of the largest
interconnected systems in the world
The reconnecting of the power grids of western and south eastern Europe, which was finalised
in Croatia on10 October, is crucial for Slovenia's economy as it opens the door for power
trading with SE Europe, according to Slovenian grid operator Eles.
The connection, reestablished after 13 years, will improve the reliability of power supply from
the southeast, although this does not mean lower prices for Slovenian consumers, Eles
chairman Vekoslav Korosec told the press on Monday, 11 October.
The Eles management noted that the reconnection of the grids creates one of the largest
interconnected systems in the world. This is expected to increase power trading in Europe and
open the door towards an expansion into Asia.
National Environmental Programme Introduces All Taxes
The resolution on the national environmental protection programme still needs to be adopted
by parliament
The national environmental protection programme introduces the principle according to
which the polluters must pay all environmental taxes. This was highlighted by a government
official while presenting to the press the resolution on the four-year programme, which was
passed by the government.
A total of SIT 60bn (EUR 250m) of environmental taxes and agriculture subsidies
encouraging sustainable agriculture in Natura 2000 are expected to be collected until 2008,
according to Radovan Tavzes, the general director of the Environment Ministry
Environmental Directorate.
Environmental taxes currently amount to SIT 37bn (EUR 154m), Environment Minister Janez
Kopac said, adding that Slovenia places first in Europe according to the number of
environmental taxes.
Slovenia has introduced all environmental taxes but the tax on waste electrical and electronic
equipment and waste batteries.
However, the CO2 tax has been introduced as a general and not as a specific tax, while the
money collected through other environmental taxes is used for the financing of special
programmes.
The national environmental protection programme is based on 24 projects, half of which have
already been adopted.
The programme is in line with the 6th EU Environment Action Programme passed two years
ago. It includes goals concerning climate change, biotic diversity, quality of living, waste and
industrial pollution, while it also considers specific Slovenian features, i.e. public
environmental protection services.
The resolution on the national environmental protection programme still needs to be adopted
by parliament.
Slovenian Ski Resorts Invest EUR 10m in Infrastructure
Ski resort operators expect to launch this season at the beginning of December
Slovenian ski resort operators have invested SIT 2.3bn (approximately EUR 10m) into chair
lifts and artificial snow-making systems ahead of the new ski season in a bid to give the
winter tourism industry a much-needed boost.
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Skiing is an extremely popular past-time in Slovenia, but ski enthusiasts have increasingly
been flocking to foreign resorts, particularly in Austria and Italy, in recent years because of
the poor state of infrastructure at some renowned Slovenian resorts.
The most recent investments are aimed at ensuring more Slovenians choose to stay at home
for their ski holidays, as well as being an attempt to attract more foreign skiers to Slovenia.
According to the Association of Slovenian Chair-Lift Operators, SIT 2.3bn has been invested
into infrastructure this year. New chair-lifts have been installed at two of Slovenia's most
popular resorts, Kranjska Gora (NW) and Cerkno (W), among others.
However, the association also points out that ski resort operators are lagging behind the
investment plan set down in 1998 which anticipates SIT 56bn (EUR 233m) in investment
through 2010.
Between 1998 and the spring of this year, only SIT 10bn (EUR 41.67m) had been invested,
the association concluded. According to Dusan Bozicnik of the association, this means that
much still needed to be done in the next six years if the goals of the investment plan were to
be achieved.
Analysts believe that integration among Slovenia ski resorts is the only way to improve
operations and ensure greater investments. There has been progress in this field recently as the
Kranjska Gora operator was acquired by the company running the NE Slovenian resort of
Pohorje, and the central Slovenian resort of Krvavec was acquired by the company running
the Rogla ski resort in NE Slovenia.
Statistics show that 1.5 million skiers visited Slovenian ski resorts in the last season, which
had around 120 effective skiing days, which is less than ski resort operators had been hoping
for.
Ski resort operators expect to launch this season at the beginning of December, although this
will depend on the weather.
Many ski resorts have already announced their prices will be from 3 to 5 percent higher than
last year due to higher fuel costs.
According to the association, Slovenian resorts will nevertheless remain cheaper than resorts
in Europe, with the average prices for daily tickets standing at between 20 and 25 euros.
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COMPANIES
OMV Istrabenz Gets New Management
Wolfgang Kraus has been named chairman and Karl Strummer deputy chairman
The Austrian company OMV Marketing&Refining, which became the sole owner of petrol
retailer OMV Istrabenz, has named a new management. Wolfgang Kraus has been named
chairman and Karl Strummer deputy chairman.
OMV Marketing&Refining took control of OMV Istrabenz when the Slovenian partner in the
joint venture, the energy and tourism holding Istrabenz, offloaded its 50-percent stake for
EUR 95m and pulled out of the oil business.
According to an OMV Istrabenz press release, the company and its subsidiaries will continue
to specialise in oil and oil derivatives trade, focusing on expansion in Slovenia, Italy, Croatia
and Bosnia-Herzegovina.
Kraus, the new CEO, has been with OMV since 2000. He previously worked for oil giant BP.
The deputy CEO has been with OMV since 1992, coming to OMV Istrabenz in 1998 as
director for accounting and finance. He was named member of the management board in
February this year.
Kolektor Makes Official Proposal for Working Time Extension
According to Kolektor, which claims to be the largest maker of commutators in the world,
current legislation does not promote increasing productivity
Commutator manufacturer Kolektor has put forward an official proposal that working hours
should be extended in exceptional cases to improve productivity and competitiveness. The
proposal, coming months after similar unofficial initiatives, was submitted to the Labour
Ministry and the Association of Employers on 6 October. The trade unions were not
welcoming of the proposal.
According to Kolektor, which claims to be the largest maker of commutators in the world,
current legislation does not promote increasing productivity. The biggest obstacles are said to
lie in the limited amount of overtime work permitted by law, shorter effective working time
than in Europe, and high taxes for overtime work.
The company has proposed that workers be allowed to effectively work 120 hours overtime
per year. The first 60 hours would not be paid, while workers would receive the gross sum for
the following 60 hours; they would be exempt from paying income tax and social security for
the second part.
According to the proposal, overtime work would not be included in the employee's tax base,
nor would it count for pension.
Kolektor claims that extended working hours would only be introduced in extraordinary
circumstances and based upon prior approval by the appropriate ministry, which would be
issued for no more than 5 years. The extension would be decided in the company, so the
unions would have a say.
Extended working hours would give companies the opportunity to increase productivity over
a certain period, which they are forced to due to global competition. Most of the Slovenian
industry will not be able to stand the price pressure from countries with low labour costs,
believes Kolektor.
The Ministry of Labour, Family and Social Affairs said it would examine the initiative, yet
they noted that any change to labour legislation needs to be approved by the Economic and
Social Council, the consultative body featuring employers, employees and trade unions.
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Rogla Ski Resort Opens New Toboggan Slide
The slide is 1,350 metres long and promises a 15-minute ride
Rogla, one of Slovenian top ski resorts, opened a new adrenaline toboggan slide on Tuesday,
12 October in an investment worth of SIT 180m (EUR 0.75m). The slide is 1,350 metres long
and promises a 15-minute ride.
Unior Turizem Zrece, which manages the resort, posted revenues of SIT 2.7bn (EUR 11.2m),
while profits amounted to SIT 270m (EUR 1.12m) in the first eight months of this year, its
director Maks Brecko told at a news conference.
The sports centre Rogla and the nearby spa Zrece attracted 31,253 guests in the first eight
months; the foreign tourists accounted for 34.4 percent and the domestic for 65.6 percent of
the over-nights. The average occupancy rate stood at 71 percent.
Unior Turizem Zrece makes part of Unior, whose main line of business is the production of
hand tools. Unior generated revenues of SIT 18bn (EUR 75m) in the first eight months, an
increase of 3.8 percent over the same period last year.
Unior's chief executive Gorazd Korosec announced a new investment into another major ski
resort Krvavec, which Unior took over this year. Unior plans to invest some 5 million euros
for the resort's modernisation in the next five years.
Krsko Vying for Major Danish Investment
The Danish company is expected to make the final decision on the site of the production plant
by the end of the year
The southern Slovenian town of Krsko is eager to become the location for a major investment
by Danish insulation maker Rockwool, which is also eying Croatia's Pazin. The potential
investment is seen as crucial for the town, where one of the biggest employers, pulp and paper
mill Vipap, will shut down by the end of 2006.
According to Franc Cesnovar, who is in charge of the project at the Krsko municipality, the
town will send a new offer to Rockwool.
The Danish company is expected to make the final decision on the site of the production plant
by the end of the year.
Cesnovar believes that the government has not done enough to attract the investment because
the employment situation in Krsko is currently favourable.
He believes the town's largest advantage is that, unlike Pazin, it is in the EU and has sufficient
building land with all the facilities.
Moreover, transport conditions in Krsko and Pazin are almost equal, although Pazin is said to
be offering the land at a lower price.
If Rockwool decides to settle in Krsko, the region would get an extra 450 jobs when
production is in full swing.
Rockwool employs over 7,000 people worldwide. It posted EUR 1.1bn in sales last year and a
net profit of EUR 36m.
Merkur Will Keep Bofex Subsidiary
The consumer electronics retailer Bofex will remain in the Merkur group
The consumer electronics retailer Bofex will remain in the Merkur group. In this way the
supervisory board of the hardware retailer backed the management's proposal to overhaul the
debt-ridden subsidiary. Merkur and Bofex have essentially taken over the Slovenian market
for small electric and household appliances, and consumer electronics, Bine Kordez told the
press on Wednesday, 13 October.
According to Kordez, analyses conducted in the run-up to the decision have shown that Bofex
can start making profit in a relatively short time. Meanwhile, former managing director and
co-owner of consumer electronics retailer Bofex, Jurij Schollmayer, claimed that the company
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will have significantly higher losses this year than the Merkur chairman claims. Merkur later
categorically rejected the allegations.
Luka Withdrawing from Trieste Port
The company sold its 70-percent stake in the Trieste International Container Terminal (TICT)
to Italian company T.O. Delta Spa, thereby moving out of the seventh terminal in Trieste
Slovenian port operator Luka Koper is withdrawing from the port of Trieste three turbulent
years after launching its venture in this northern Italian port.
The company, which runs the port of Koper in Slovenia, sold its 70-percent stake in the
Trieste International Container Terminal (TICT) to Italian company T.O. Delta Spa, thereby
moving out of the seventh terminal in Trieste.
Luka Koper chairman Bruno Korelic did not wish to reveal the exact sale price, saying only
that his company has withdrawn from Trieste neither as loser nor as winner.
Korelic said that Luka decided to withdraw from TICT, the company that manages the
seventh terminal, because of problems with Trieste authorities.
"We were told unequivocally that Slovenians could not operate the heart of the Trieste port,"
Korelic said.
According to Korelic, Luka is not so much disappointed by the fact it is leaving Trieste than
by the behaviour of Trieste authorities in their dealings with Slovenians.
Moreover, Korelic said the time was right to sell the 70 share to its Livorno-based partner
company T.O. Delta Spa, as it made no sense to wait until 2007 as had been envisaged by a
contract between the companies.
The three years that Luka spent in Trieste were turbulent, marked among other things by the
departure of the Lloyd Triestino shipping company, a leading user of services at the seventh
pier.
Interestingly, Lloyd Triestino's recent announcement to make a comeback to Trieste coincided
with the outbreak of rumours that Luka was leaving the seventh terminal.
In a report on 29 September, business daily Finance wrote that T.O. Delta Spa, the company
that had previously helped supply fresh capital to TICT and acquired Luka Koper's stake in
TICT, was in fact connected to Lloyd Triestino.
Korelic also presented Luka's business results for the first nine months of this year, which
show that Luka upped its operating revenues by 15 percent to SIT 12.5bn (EUR 52.12m). The
company's net profit grew by 19 percent to SIT 3.8bn (EUR 15.84m) in this period, Korelic
said.
The main reason for growth are a 24 percent surge in container transhipments and a 91
percent rise in the volume of cars coming through the port, Korelic explained.
Slovenian Steelworks to Privatise Subsidiary Elektrode
The invitation runs out on 15 November
The state-owned group Slovenian Steelworks on Friday, 15 October put out to tender an 80percent share in its subsidiary Elektrode Jesenice. The invitation runs out on 15 November.
The bidders for the stake have to present, among other things, a business plan for the next five
years and provide documents about their financial situation.
The Jesenice-based Elektrode manufactures welding consumables. Employing 180 people, the
company generated half-year profits of SIT 102m (EUR 0.42m).
The sale of the majority stake in Elektrode comes in line with the privatisation programme of
the Slovenian Steelworks, adopted by the government in September 2001.
The group has already sold its majority stakes in the subsidiaries Energetika Ravne,
Energetika Store and Energetika Jesenice. The privatisation of Acroni, Metal and Nozi was on
the other hand suspended last year due to unfavourable market conditions.
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Serbian Deputy Premier Surprised Over Court's Ruling on C Market
According to Serbian media reports, the agency suspended trading with C Market shares
after it received a ruling from the Belgrade Commercial Court disputing the registration of C
Market shares
The takeover bid published by Slovenia's largest retailer Mercator for Serbia's leading grocer
C Market has hit a snag as the Serbian Securities Agency halted trading with C Market shares.
According to Serbian media reports, the agency suspended trading with C Market shares after
it received a ruling from the Belgrade Commercial Court disputing the registration of C
Market shares.
The trading ban will remain in place until the legal proceedings concerning the registration of
C Market shares are resolved.
Serbia's Deputy Prime Minister Miroljub Labus on Sunday, 17 October expressed surprised
over the move of the Belgrade Commercial Court disputing the registration of C Market
shares. Following the court's ruling on Friday, 15 October, the Serbian Securities Agency
halted trading with C Market shares, thus effectively halting the takeover bid of Slovenian
retailer Mercator.
According to reports of the Serbian media, the trading halt was provoked by a complaint of
small shareholders of C Market.
The trading ban will remain in place until the legal proceedings concerning the registration of
C Market shares are resolved.
Meanwhile, Mercator's bid, which the management of C Market considers a hostile takeover
attempt, got two rivals. Before issuing the trading ban, the Serbian Securities Agency
approved bids by Primer C, a consortium of Serbian companies that wishes to stop Mercator
from buying C Market, and Ashimore Investment Management Limited, a British-based
company.
Labus said he does not understand why the involvement of the Commercial Court, which
together with its president had made some "strange decisions" in the past as well. He pointed
out he was not aware of how the procedure should go on but he believed that those affected
could file a complaint, according to the Serbian agency Beta.
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SLOVENIA IN BRIEF
Slovenian Judge Appointed to Head Section at European Court
Slovenian justice Bostjan M. Zupancic has been appointed to head of one of the four sections
at the European Court of Human Rights in Strasbourg. Zupancic was elected to the post on
Monday, 11 October, and is expected to assume the three-year term on 1 November, he told
STA.
New ITF Director Looks for More Funds in Brussels
The new director of the Slovenian-run demining fund presented the fund's programme and
discussed its future cooperation with the EU, as he met members of the European Parliament
in Brussels on Wednesday, 13 October.
Government Adopts 2005 EU Information Campaign
The government has adopted the 2005 programme on informing the public about EU affairs in
a bid to raise the level of understanding of EU-related affairs and encourage a public debate
about Slovenia in the EU. Europe Minister Milan M. Cvikl said after the cabinet meeting on
Thursday, 14 October that an up-to-date, credible and comprehensive information campaign
about EU matters must be continued even after Slovenia's EU accession, as EU membership
has a number of immediate effects on the work and the lives of the people.
Steklarna Rogaska GM Steps Down Over Restructuring Differences
Davor Senija, the general manager of the Steklarna Rogaska glassworks, has stepped down
over what he claims are efforts to prevent him from restructuring the debt-ridden company.
Senija's resignation was on Friday, 15 October accepted by the supervisory board of Steklarna
Rogaska. The supervisors appointed Bojan Bevc to replace Senija.
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